Emerging Disputes Trends In The Energy Transition: Strategic Considerations For Boards And Senior Leadership

Amid ongoing geopolitical upheaval and economic uncertainty, Australia's energy transition is giving rise to new and complex risks for businesses.

Across the energy and natural resources (ENR) sector, corporate leaders are contending with a rapidly evolving disputes and litigation landscape, marked by increasingly sophisticated climate activist litigants, protracted regulatory processes and emerging technologies. Whilst global developments will continue to influence business certainty, there are five key trends set to shape ENR disputes in the coming year and beyond.

1. Strategic climate litigants will find new claims and targets

Recent decisions haveall but closed the door in Australia for strategic climate litigants to bring claims against the Commonwealth relying on novel duties of care in negligence. The Federal Court and Full Federal Court¹ have found that decisions by the Commonwealth concerning climate policy, such as the setting of greenhouse gas emission targets, are non-justiciable as they involve complex value judgments that are inappropriate for the court to assess.

But as one door closes, others may open. We expect to see litigants pursuing new claims against government to compel climate action. For example, the ICJ's recent Advisory Opinion² found that States are legally bound under the Paris Agreement and international law to limit global average temperature increases to 1.5 degrees above pre-industrial levels. While the decision is non-binding, the Court found that the failure of a State to take appropriate action to protect the climate system may constitute an internationally wrongful act, the consequences of which may require the payment of reparations to affected states. This may trigger a wave of claims against governments - first internationally, then in Australia.

It is also likely that plaintiffs and class action funders will pivot toward duty of care and human rights claims against private entities in Australia. This remains a dynamic area of law internationally and is yet to be tested in Australia. While some international courts have been prepared to find that private entities have a duty of care to mitigate the impacts ofclimate change, they have not gone so far as to impose specific emissions reduction targets.

2. Climate litigants will increasingly target specific projects

We expect to see environmental groups increasingly challenging regulatory approvals for mining and other carbon-intensive projects on climate change grounds.

Environmental groups have sought to disrupt planning approvals of coal mines in both NSW³ and Queensland⁴ on the basis of the impact of downstream (i.e. scope 3) greenhouse gas emissions, as well as on other environmental and human rights grounds. In a very recent decision, which is being challenged in the High Court, the NSW Court of Appeal (overturning the decision of the primary judge on this point) found that, in assessing the impact of the contribution of the emissions arising from the extension of a coal mine to climate change, consideration of the impact of climate change on the specific locality must be considered.

The Land Court of Queensland⁵ also recently rejected the expansion of a thermal coal mine on the basis that the applicant did not show real and significant progress towards mitigating its greenhouse gas emissions, despite the objecting party leading no evidence on this issue. The proceeding demonstrates that some specialist courts will scrutinise climate change impacts. While coal attracts a significant amount of attention from the environmental lobby, we expect to see a similar trend in other mining and carbon-intensive projects.

Boards and senior leadership will be acutely aware of legal challenges to new and expanded projects and the need to ensure development applications carefully consider tangible and measurable actions.

3. Emerging technologies will continue to bring new risk

The energy transition partly comprises investment in novel technologies for the generation, transmission and storage of energy. In many cases, the feasibility of these technologies - both technically and from a cost recoverability perspective - is evolving. Disputes arise where the technology fails to perform as expected, increasing the risk of claims in contract, negligence and misleading or deceptive conduct.

We expect to see an increase in litigation related to emerging technologies. This will include investor and shareholder claims relating to representations made about the commercial or technical prospects of particular technologies (such as early-stage renewable energy projects), and disputes between contracting parties focusing on whether particular technologies have been demonstrated to be viable.

Contracting parties can mitigate or reallocate risk through contractual mechanisms, including conditions precedent that suspend substantive contractual obligations until project viability is demonstrable. Businesses should ensure that these contractual frameworks are carefully designed to mitigate or allocate the risk of future late-stage litigation, and conversely, scrutinise counterparties' terms to avoid hidden exposures that could materially affect project delivery, financing, reputation and litigation risk.

4. Greenwashing will remain a regulatory priority, and enhanced reporting obligations will only raise the bar

Unsurprisingly, greenwashing claims will remain a focus for Australia's corporate regulators. The Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have continued to identify environmental, social and governance (ESG) related representations as an enforcement priority and have commenced proceedings against energy companies and financiers of energy projects over alleged misrepresentations of ESG claims.

The commencement of the mandatory climate reporting regime for large businesses and financial institutions will increase scrutiny of climate-related disclosures. While ASIC has indicated that it will take a "pragmatic and proportionate approach" to enforcement as industry adjusts to the new requirements, we expect to see enforcement activity in the near future.

Additionally, there are significant amendments proposed in the revised JORC Code - the mandatory classification system for the public reporting of exploration results, mineral resources and ore reserves - which is expected to be released in the upcoming months. These revisions go beyond technical adjustments and reflect a global push for transparency, consistency and accountability in resource reporting. For listed companies, particularly in the mining sector, where these obligations are already well established, the changes will continue to intersect with ASX Listing Rules, corporate disclosure requirements and broader ESG expectations.

Investors, financiers and regulators increasingly demand reliable, comparable resource reporting. We expect to see an increase in disputes arising from discrepancies between public disclosures and operational realities - particularly in shareholder class actions, regulatory enforcement and disputes with financiers.

5. Resource nationalism, protectionism and tariff volatility

The energy transition is coinciding with a surge in protectionism and resource nationalism. Foreign governments, particularly the United States and China, are intensifying protectionist measures such as export controls, tariffs and sanctions to secure critical minerals and energy supply chains. In some cases, resource-rich jurisdictions face political pressure to align with a major economic or geopolitical power and adjust their export policies accordingly. These geopolitical and market volatilities heighten the risk of contractual and investment disputes, particularly as project economics and commercial relationships come under strain. We expect to see an increase in disputes involving contractual mechanisms which seek to allocate and modify risk, particularly addressing force majeure, change-of-law, extensions of time and material adverse change provisions.

Businesses should ensure that dispute resolution clauses, and contracts more broadly, are calibrated for cross-border investment, trade and sanctions risks, where relevant. Additionally, active government relations and stakeholder engagement in high-risk jurisdictions is crucial to identifying and mitigating risk.

The energy and natural resources sector has long excelled at balancing its appetite for risk alongside proactive commercial activity. These instincts will prove increasingly valuable in the years ahead as businesses factor emerging disputes trends into their strategies for capitalising on ongoing commercial opportunities.

Footnotes:
¹ Pabai v Commonwealth of Australia (No 2)[2025] FCA 796; Minister for the Environment v Sharma[2022] FCAFC 35 [868] per Wheelahan J upheld on appeal in Minister for the Environment v Sharma[2022] FCAFC 3.
² Obligations of States in Respect of Climate Change (Advisory Opinion, International Court of Justice, General List No 187, 23 July 2025).
³ Denman Aberdeen Muswellbrook Scone Healthy Environment Group Inc v MACH Energy Australia Pty Ltd [2025] NSWCA 163.
⁴ Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21.
⁵ Re Sungela Pty Ltd & Anor [2025] QLC 5.

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