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Australia is starting 2026 the same way it started the past two decades: still fighting its "climate wars." The conservative Coalition promises coal and gas forever; Labor keeps approving new fossil-fuel projects; and Treasury projects demand for the country's coal and gas exports to plateau and then decline. In April 2025 the EU-Australia free trade deal was signed — with exactly the climate commitments the Coalition had vowed to block. As of January 1, 2026, Canberra's political class is still arguing about whether the climate science is real. Americans should watch closely, because the script is uncomfortably familiar.
Politics can be a force for good. In Australia, most of the time, it is a waste of that power. The "climate wars" that John Howard helped ignite in the late 1990s have hardened into a permanent culture war, fought at the expense of a serious national energy policy.
The strange thing is that climate was never supposed to be a left-wing issue. Margaret Thatcher, no friend of the left, argued for an energy transition on economic grounds — the side benefit of breaking Britain's mining unions did not upset her. Angela Merkel, the most cautious politician of her generation, made the EU's climate program a strategic and industrial priority because she thought it was rational, not because she was chasing ideology. Even Boris Johnson supported the transition before the culture war consumed him.
America's obstructionist turn was manufactured too. George W. Bush's advisers used the infamous Luntz memo — which told Republicans to fight climate change on emotion rather than fact — to build a new consensus of denial. John Howard imported that playbook to Australia, shifting from Keating-era talk of "just plant some trees" to "not sure I even believe in this anyway." Australia has been paying for that choice ever since.
The current opposition, led by Peter Dutton, now sits close to One Nation on climate. Its platform calls for repealing the 2022 Climate Change Act, abolishing the Net Zero Economy Authority, scrapping the Climate Change Authority and rolling back subsidies for electric vehicles, solar and batteries.
Angus Taylor, the shadow energy minister who once repeated "technology over taxes" until the whole country twitched, now runs on ideology over technology. Barnaby Joyce wants the expert climate body abolished outright. The Coalition's message is simple: keep digging, keep burning, and hope the rest of the world doesn't notice.
These positions are being sold during a cost-of-living crisis, as wealthier households use rooftop solar, home batteries and efficient vehicles to shield themselves from energy prices, while lower-income households absorb every swing of the international fossil-fuel market. As one Australian commentator put it, this is "a very, very stupid debate." Stupid, and expensive — and the bill lands on the people who can least afford it.
None of this makes Labor a leader. Anthony Albanese says the right things — "decades of science and advice on climate change that it is real. I support responding to the science of climate change." His government also keeps opening and expanding coal and gas projects. Its preferred climate accounting is offsetting, the convenient trick that lets a polluter increase emissions as long as someone, somewhere, promises to plant enough trees. Between the two major parties, the difference is mostly presentation, not direction.
That is why the LNP's Llew O'Brien was right when he interrupted Albanese's climate defence in parliament in 2023 and called it "bulls—t." He was right, but for the wrong reason. It is not just Labor's words that are broken. It is the whole debate.
The EU made that point in the cruellest possible way. Brussels insisted, publicly and repeatedly, that finalising a free trade agreement with Australia would require meeting its climate commitments. The Coalition threw a tantrum and demanded Australia be treated as a special climate-emitting unicorn.
The deal was signed anyway in April 2025, climate provisions included, over the objections of the Coalition — which had promised to renegotiate it, or junk it, if it won the May 2025 election. It lost. The climate conditions the Coalition fought so hard against are now locked into one of the world's biggest trade agreements.
And from January 2026, the EU's Carbon Border Adjustment Mechanism is scheduled to start charging importers for the carbon embedded in their products. It will initially cover steel, cement, aluminium, fertilisers, hydrogen and electricity, and it will eventually reach Australian coal, gas and industrial exporters with a direct bill. This is not left-wing ideology. It is the European Union protecting its own economy and security.
The economic signals have moved too. Treasury's intergenerational report warns that demand for Australia's fossil-fuel exports will "likely plateau and then decline" as global buyers shift away. It also flags rising insurance and disaster-response costs as the climate digs in. Meanwhile, China and Japan buy Australian gas at contract prices, convert it into manufactured goods, and sell those goods back into the region — while Australian households pay some of the highest energy costs in the developed world. Australia is exporting cheap energy and importing expensive products, and calling that a strategy.
Three reasons this story is not just an Australian curiosity.
First, Australia is the alliance partner the United States relies on most in the Indo-Pacific, and its political class is spending a decisive decade of the global energy transition debating whether the evidence is optional.
Second, the US is closer to the Australian pattern than most Americans would like to admit. The climate provisions of the Inflation Reduction Act have been partially rolled back, and the federal government has withdrawn from international climate coordination. Yet state governments, private capital and corporate buyers keep building what the first policy wave started. Washington is not Canberra. But the temptation to treat climate as a culture war instead of a market reality is exactly the same.
Third, the EU is now making climate a trade issue and a security issue. Brussels treats emission commitments as an entry requirement for partners, and its carbon border levy will reach American exporters, not just Australian ones. Australia tried to exempt itself from that system and failed. The US, with a much larger market, has more negotiating room. The arithmetic still points the same way.
The silver lining is that denial rarely stops an energy transition. It only determines who is left behind when the transition arrives. Australia will eventually be dragged along — by Treasury projections, by export contracts, by insurers, by courts and by communities that can no longer afford to rebuild. It should not take more fires, floods, cyclones, mudslides and drowned coastal towns for a rich country to accept what its own departments already model.
The debate is stupid. The uncomfortable part for Americans is how easily it could become theirs.
