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

Fossil fuel exports out of Western Australia could decline by $28 billion over the next quarter of a century, according to a new report, raising concerns over the future of the state’s prosperity given its reliance on the sector.

Under one future scenario modelled in the latest report from the Perth-based Bankwest Curtin Economics Centre, fossil fuel exports could decline from $39 billion in 2025 to $11 billion by 2050.

At the same time, critical minerals – needed for batteries, electric vehicles, renewable energy and emerging technologies – could generate $100 billion a year by the same deadline, a fivefold increase from the $20 billion today.

That is under the report’s “accelerated scenario” – which assumes the world will achieve net zero by 2050.

Even under the report’s “baseline scenario”, which reflects the current trajectory of decarbonisation where fossil fuels continue to play an important role, the earnings from critical minerals still increases by 58 per cent.

And its “sustained scenario” resulted in an increase of 142 per cent.

The report claimed WA risked falling behind unless it moved beyond its traditional “dig and ship” model.

“For decades, our prosperity has been built on extracting and exporting resources,” report co-author and Bankwest Curtin Economics Centre director Alan Duncan said.

“That model has served Western Australia incredibly well, but the next chapter will look different.

“The big question is not whether we have the resources. It’s whether we can create more jobs, more industries and more long-term value from them before they leave our shores.”

“The challenge is making sure today’s mining wealth becomes tomorrow’s industries, jobs and fiscal value.”

Bankwest Curtin Economics Centre director Alan Duncan

The resources sector currently contributes $200 billion to the state’s economy each year, according to the report, with iron ore generating around $126 billion, accounting for more than 80 per cent of WA’s royalty revenue.

But the report claimed iron ore would account for a declining share in output over time, while demand for critical minerals like lithium was expected to grow.

That is despite US lithium giant Albemarle shutting down its Kemerton lithium hydroxide processing plant in February.

Report co-author Silvia Salazar said WA had an opportunity to build on its existing strengths if it acted now.

“We have the minerals, the expertise and the global reputation to be a leader in the industries emerging from the global energy transition,” Salazar said.

“But success isn’t guaranteed.

“Other countries are competing hard for the same opportunities, and if we want to capture a larger share of global demand we will need the right energy, infrastructure, skills and investment settings in place.”

Mining and petroleum royalties delivered almost $10 billion to the WA government in 2025 – around one-fifth of total state revenue.

Duncan said that level of reliance highlighted the need for coordinated action across government, industry and the community to capture the full benefits of the transition.

“WA earned almost $10 billion last year from finite resources and that prompts an important question – what are we leaving behind for future generations?” he said.

“Resource wealth has helped build our hospitals, schools, roads and public services. But these resources won’t last forever.”

The report also examined a range of alternative fiscal settings, including royalty reform, changes to resource taxation arrangements and a hypothetical public equity stake in a major LNG (liquefied natural gas) development.

A hypothetical 30 per cent public equity stake in a new $50 billion LNG project could create a long-term revenue stream extending well beyond the productive life of the resource if returns were invested through a future fund model.

“The difference between one fiscal arrangement and another can amount to billions of dollars over the life of a project,” Duncan said.

“The challenge is making sure today’s mining wealth becomes tomorrow’s industries, jobs and fiscal value.”