Has the high court set Australia's fossil fuel producers shaking in their boots? They should be | Jacqueline Peel

A high court victory sets a new baseline for coal and gas projects in New South Wales - and potentially for the rest of Australia

Fossil fuel producers across the country are shifting uncomfortably, after the high court of Australia handed down its first climate case decision in MACH Energy v Denman Aberdeen Muswellbrook Scone Healthy Environment Group on Wednesday.

For the climate conscious, the outcome was largely what was hoped for: the court ruled that the Independent Planning Commission, the body that approved the extension of Mount Pleasant open-cut coalmine's life by 22 years - doubling its output to 21m tonnes a year until 2048 - did not do enough to consider the mine's scope 3 greenhouse gas emissions or how they might be mitigated.

Scope 3 emissions, which cover broad indirect emissions, include those that are produced downstream when the mine's coal is burned by customers. In the case of the Mount Pleasant mine extension, these emissions accounted for 98% of its estimated climate footprint.

If this welcome news conjures ideas of a unified judicial manifesto against the climate harms of fossil fuel production, I'll encourage you to consider it more moderately. It was a restrained and technical decision, split between three judges in favour and two against.

But even so, it sets a new baseline for coal and gas projects in New South Wales and potentially Australia-wide. Where the law requires decision-makers to consider a fossil fuel project's greenhouse gas emissions, that should mean all of them, including scope 3.

The majority ruling rejected the idea that scope 3 emissions are someone else's problem when they are emitted overseas. Scopes of emissions, as Justice Gordon noted, are just an accounting concept. "The impact of greenhouse gas emissions is the same, regardless of how they categorised."

A majority of the judges also ruled that how emissions are counted under international treaties like the Paris agreement doesn't answer the question whether the decision-maker should try to mitigate them. In essence, the entire carbon footprint of these projects needs to be assessed, including their downstream emissions.

The decision provides Australia with some much-needed climate credibility, as it faces pressure from Pacific neighbours over fossil fuel approvals at the pre-COP31 negotiations in Fiji and Tuvalu this week. This also brings us in line with recent judicial findings elsewhere in the world.

In the UK and Norway, for instance, courts have required decision-makers to deal with the emissions from burning fossil fuels, wherever that happens, rather than looking only at the emissions from the project site.

And in its landmark Advisory Opinion issued last year, the International Court of Justice found that countries' international climate obligations require proper assessment of the downstream effects of fossil fuel projects in their territories.

But the outcome of this case reaches further than this one mine.

For every NSW coal and gas approval, decision-makers must now consider whether conditions are needed to deal with scope 3 emissions, such as requiring the company involved to purchase offsets - a questionable solution in itself.

And while the high court's ruling is focused on NSW law, courts and decision-makers across the country are taking note. The case has the potential to provide a legal template for future climate litigation against fossil fuel projects.

So, what's next for the Mount Pleasant mine?

The case will now return to the Land and Environment court, which can suspend the mine extension's approval or set conditions on its scope 3 emissions. If conditions are imposed, requiring the buying of offsets, this is potentially a very expensive option for MACH, with carbon credits cosing around $A38 per tonne and the extension's lifetime emissions estimated at 860m tonnes.

If fossil fuel proponents have to take scope 3 emissions into account and pay to reduce them, it could drastically shift the economic case for continuing fossil fuel production in the country.

Where concern for human and planetary wellbeing won't move the needle, financial pain may well do.

For climate litigation in Australia, the decision signals a hopeful path forward. Community groups now have a clear, high court-endorsed basis to challenge fossil fuel projects where decision-makers haven't properly considered their full climate impacts.