Published: October 16, 2025 |

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Queensland has officially reversed its previous commitment to close coal-fired power stations by 2035, signaling a major policy shift that will impact Australia’s energy transition.

The state government announced that its coal plants — among Australia’s youngest — will now operate “for as long as they are needed in the system and supported by the market,” potentially extending operations into the 2040s and beyond.

This dramatic reversal marks a significant change in Australia’s coal-dominated state, which currently relies on coal for approximately 65 percent of its electricity needs. The decision comes with substantial financial backing, including an $1.1 billion (AUD$1.6 billion) commitment over five years to maintain state-owned coal, hydro, and gas plants.

Queensland’s economy remains heavily dependent on coal, with the fossil fuel generating substantial export revenue and royalties. Recent financial data underscores this economic reliance:
• Coal exports valued at $3.2 billion (AUD$45.8 billion) in the year through May 2025
• Coal royalties contributed $3.6 billion (AUD$5.5 billion) to state coffers in the 2024-2025 financial year
• Queensland exports approximately one-eighth of the world’s coal
• The government claims extending coal operations will reduce system costs by approximately $17 billion
  (AUD$26 billion) through 2035

The state treasurer has emphasized that running coal assets to their technical life rather than closing them early presents significant decarbonization benefits. This approach prioritizes maximizing existing infrastructure investments while gradually transitioning to cleaner energy sources.

The policy shift reflects the political change following Queensland’s 2024 election, where the Liberal National Party won office after campaigning explicitly against the previous Labor government’s renewable energy targets and coal phase-out plans. The current administration has prioritized what it describes as practical energy security over what Queensland Treasurer David Janetzki called an “ideological decision” by the previous government.

This political reorientation represents a broader trend in energy policy that emphasizes energy security, affordability, and economic stability over accelerated decarbonization. The state government has framed its decision as protecting Queensland consumers from potential energy transition security issues that could arise from premature coal plant closures.

Queensland’s new energy roadmap outlines substantial financial support for extending the life of its coal-fired power stations:
• $1.2 billion (AUD$1.6 billion) investment over five years for state-owned coal, hydro, and gas plants
• Focus on maintaining rather than retiring what officials describe as “the youngest coal fleet in Australia”
• Extended operational timelines for major power stations into the 2040s
• Additional investment in gas generation capacity as complementary to coal

State-owned companies operate all but one of Queensland’s remaining coal-fired plants, giving the government significant direct control over the generation mix. This arrangement allows for coordinated planning and implementation of the extended operational strategy.

Despite the Queensland government’s policy support for coal power, market pressures continue to challenge the sector’s long-term viability:
• Major mining companies announcing closures of Queensland coal operations
• BHP Group and Anglo American recently cited lower prices and rising costs, including higher royalties
• Rio Tinto announced Gladstone power station may close in 2029, six years earlier than previously planned
• Economic headwinds challenging the business case for continued coal operations

These market signals suggest that government policy alone may not be sufficient to ensure the long-term economic viability of coal power generation. The decision by Rio Tinto regarding the Gladstone power station — Queensland’s largest at 1,680 MW — indicates that commercial factors may override policy preferences in determining actual operational timelines.

Queensland’s decision mirrors similar trends in other major economies:
• Global coal consumption reaching record levels despite climate commitments
• U.S. under President Trump pursuing pro-coal policies
• China and India continuing to expand coal-fired generation capacity
• Growing tension between energy security concerns and climate goals worldwide

This international context highlights the global challenge of balancing immediate energy security needs with longer-term climate goals. Queensland’s policy shift occurs against this backdrop of renewed focus on energy security and affordability following recent global energy price volatility.

Source: Discovery Alert

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