WA’s fossil fuel exports could drop by $28 billion under net-zero future: report

Western Australia's fossil fuel exports could shrink by as much as $28 billion over the next 25 years, according to a recent report from the Bankwest Curtin Economics Centre. This projection highlights the growing concern about the economic implications of the global shift toward net-zero emissions and the potential transformation of the state’s primary economic engine. The report outlines three distinct scenarios—accelerated, baseline, and sustained—to illustrate how the state might navigate this transition. Under the accelerated scenario, which assumes a rapid move toward net-zero by 2050, fossil fuel exports could fall from $39 billion in 2025 to just $11 billion by 2050. Even in the more moderate baseline scenario, where fossil fuels remain a significant part of the energy mix, the export value would still decrease significantly.

The report underscores the importance of critical minerals such as lithium, cobalt, and rare earth elements, which are essential for the production of batteries, electric vehicles, and renewable energy systems. These minerals are projected to generate up to $100 billion annually by 2050—a fivefold increase from their current contribution of $20 billion. This growth is particularly notable even after the closure of the U.S.-based Albemarle’s Kemerton lithium hydroxide processing plant in early 2026, which raised questions about the sustainability of the local supply chain. However, the report suggests that Western Australia has the necessary resources and expertise to become a leading producer of these materials, provided it takes decisive action.

The economic impact of this transition is already evident. In 2025, mining and petroleum royalties contributed nearly $10 billion to the state government, representing approximately one-fifth of total state revenue. While the resource sector currently accounts for $200 billion annually in economic activity, with iron ore alone contributing $126 billion, the report warns that the dominance of iron ore in the state’s economy is likely to wane over time. As global demand shifts toward cleaner energy solutions, the proportion of iron ore in WA’s export portfolio is expected to decline, necessitating a strategic pivot toward other high-value commodities.

To ensure long-term prosperity, the report calls for a comprehensive overhaul of the state’s approach to resource management. Co-authored by Alan Duncan, director of the Bankwest Curtin Economics Centre, and Silvia Salazar, the report emphasizes the need for coordinated efforts among government, industry, and the broader community. Duncan argues that the challenge lies not in the availability of resources but in transforming today’s mining wealth into sustainable industries, jobs, and fiscal stability for future generations. He stresses that without proactive planning, the state risks losing its competitive edge in the evolving global market.

Salazar adds that while Western Australia possesses the raw materials and technical know-how to lead in the clean energy transition, success is not assured. She notes that other nations are actively vying for similar opportunities, and the state must invest in the right infrastructure, workforce development, and policy frameworks to secure its position. The report also explores alternative fiscal models, including reforms to royalty structures and the possibility of a public equity stake in large-scale liquefied natural gas projects. A hypothetical 30 percent ownership in a $50 billion LNG development, for instance, could provide a stable revenue stream that extends far beyond the lifespan of the resource itself, should profits be reinvested wisely.

As the global push for carbon neutrality intensifies, the fate of Western Australia’s economy hinges on its ability to adapt swiftly and strategically. With the stakes high and the window for action narrowing, the state faces a pivotal moment in its economic history—one that will determine whether it remains a powerhouse of resource extraction or evolves into a hub of innovation and sustainable development.