Fossil Free Japan, a coalition of over 30 civil society organisations working to end Japan’s support for fossil fuels, today released a statement backing a 25% tax on Australian gas exports, as the US war on Iran drives international LNG prices up by 50%.
Japanese companies, including INPEX and JERA, hold over $50 billion equity across 13 Australian LNG projects. Yet, since 2015 INPEX has paid minimal royalties, Petroleum Resource Rent Tax, and corporate tax in Australia, while profiteering from Australian public resources as war-driven prices surge. People in Iran and around the world are paying the price of escalating conflict with their lives, homes, and rising costs—while fossil fuel companies cash in. Fossil Free Japan rejects claims made last week by Kazuhiro Suzuki, Japanese Ambassador to Australia, who described a 25% gas export tax as a “bad surprise” to investors. The real bad surprise is that countries like Japan and Australia continue to enable the war-profiteering of fossil fuel interests and the devastating harms they impose on ordinary people struggling with their energy bills, and the communities and ecosystems from which these resources are extracted.
Mia Watanabe, Campaigner at Oil Change International, said:
“Japan’s involvement in Australian gas is not about meeting domestic energy needs, it’s about profit. Japanese companies and financiers cash in on Australian gas by reselling it to other countries while giving back almost nothing to the Australian public. It’s time for Japan to pay up, get off gas, and transition to an affordable, renewable energy system built for the people.”
James Sherley, Senior Climate Justice Campaigner at Jubilee Australia Research Centre, said:
“This senseless violence in the Middle East has exposed the fragility of the global oil and gas supply chain, yet Japanese and Australian gas companies are quietly cashing in on the sideline. It is absurd that these companies are allowed to hoard wartime profits whilst the rest of us are struggling to make ends meet. The Albanese government has been neglecting this issue for far too long, nothing less than a flat 25% tax rate on all Australian gas exports is acceptable.”
Full statement below:
The current war between the United States, Israel and Iran is disproportionately affecting civilians across the Middle East region, violating international humanitarian law. This conflict is blatantly rooted in imperialism and resource extraction, and is fracturing the global energy market, inflating international LNG prices by more than 50% since its outset. As civil society organisations committed to a future on a healthy, liveable planet, Fossil Free Japan is also a network committed to a future free of war and conflict. We stand in solidarity with communities across the Middle East, and those in the Asia-Pacific region affected by this volatility, and we are urging all state actors to exert full diplomatic pressure in calling for an end to the war.
As just one toxic byproduct of this conflict, Fossil Free Japan is shining a spotlight on the major stakeholders of the Australia-Japan gas trade and the wartime profits they are reaping from the closure of oil and gas supply routes out of the Middle East.
Japanese financiers are the single biggest backers of Australian LNG. Japanese fossil fuel companies, including INPEX and JERA, hold more than USD $50 billion in equity across 13 Australian LNG export projects. The Japan Bank for International Cooperation (JBIC), Japan’s export credit agency, is involved in nine of these projects. This is the same INPEX that has paid no royalties, no Petroleum Resource Rent Tax, and astonishingly little corporate tax in Australia since 2015. Today, that same company is reaping the profits of crisis-inflated gas prices – profits built on Australian public resources that have been extracted, effectively, for free.
These profits are lining the pockets of corporate shareholders — not Japanese households struggling with rising energy bills nor ordinary Australians hit by skyrocketing petrol prices and interest rate hikes. Across Asia, Australian gas exports are entrenching communities deeper into fossil fuel dependency, accelerating the climate crisis, and derailing the renewable energy transition that communities across the region urgently need. Without intervention, our energy system will remain dangerously exposed to geopolitical shocks, with prices and supply dictated by conflict rather than public need.
Japan does not simply import Australian gas for domestic use or to bolster its own reserves. Through overcontracting more than it needs, Japan now resells more LNG to other countries than the total volume it imports from Australia. This lucrative practice prioritises corporate profits over energy security, allowing trading houses to capitalise on crises and volatile markets. Now that gas prices are spiking due to the war in Iran, these resale profits are even larger. Australia is effectively subsidising Japanese trading house profits through a broken tax regime, while households in both countries bear the cost.
At the same time, LNG is proving to be increasingly unreliable. The recent shutdown of the Barossa gas project in Australia – in the midst of a global energy crisis – underscores how LNG supply can never deliver energy security.
There is widespread support amongst polled Australians for a 25% tax on gas exports. It is high time the gas industry and its backers paid their fair share every time gas is exported, not just when companies report windfall profits. A flat 25% tax on gas exports will generate more stable revenue for essential services, while creating a predictable policy environment for trading partners. Decades of deferred taxes and diplomatic pressure to protect corporate profits at the expense of our communities and the planet must come to an end. It is embarrassing that Japan’s Ambassador to Australia has called such a tax a “bad surprise”. The real bad surprise is that countries like Japan and Australia continue to enable the war-profiteering of fossil fuel companies, even in the midst of the devastating impacts caused by intense global market volatility.
The war in Iran emphasizes the need for Japan and Australia to work together to build a resilient, homegrown energy system that shields households from global price shocks and accelerates decarbonisation. It exposes, once again, the fragility and injustice of an energy system built on fossil fuels and geopolitical volatility. The alternative is clear. By harnessing renewable energy potential, Japan could increase its energy self-sufficiency to around 75% by 2040. Taxing companies profiteering from the extraction of fossil fuel volatility is an important step in this transition.
Contact:
Mia Watanabe, Oil Change International, mia@oilchange.org