As international climate commitments dampen demand for fossil fuels worldwide, the Centre for Policy Development warns Australia could be caught "holding the bag" if it does not prepare for the inevitable.
"We know that a lot of our trading partners are shifting as rapidly as they can away from using fossil fuels," the think tank's economic director Toby Phillips told a high-profile parliamentary hearing into gas export levies.
"And so there is an imperative for us to be part of those new value chains and not play the simple role of the fossil fuel exporter that's left holding the bag at the end."Â
Momentum has been building behind a push for a 25 per cent tax on gas export revenues.
A broad array of crossbenchers, Liberal industry spokesman Andrew Hastie, Commonwealth Bank chief executive Matt Comyn and Labor backbencher Ed Husic have supported raising taxes on gas exporters in the May budget.
The Centre for Policy Development supports a simple, permanent and immediate gas export levy.
It recognises existing attempts to capture windfall gains, namely through the Petroleum Resources Rent Tax, have not raised as much revenue as hoped.
Longer-term, the think tank calls for an energy export trade mechanism that grapples with the structural decline of fossil fuels and levels the playing field for Australia's domestic, energy-intensive industries.
Peak body Australian Energy Producers, which points out the oil and gas industry paid almost $22 billion in taxes and royalties in 2024/25, argues raising taxes would discourage investment in Australia, pushing companies to explore projects elsewhere.
Opposition resources spokeswoman Susan McDonald said major investments in gas exploration projects were supporting regional towns and local jobs.
She asked The Australia Institute's co-chief, Richard Denniss, what would happen if gas producers took their business to other countries.
"They are playing us for fools," he replied.
"When they say, 'if you don't give me free gas, I'll take my bat and ball, but not your gas, and go somewhere else'."
The left-leaning think tank presented fresh analysis on public revenue generated by one of Australia's top gas buyers, Japan, by taxing imports of the resource.
It found the Japanese government was earning more public revenue on its gas imports than the Australian government was raising taxing exports of the valuable resource.
Plans to implement a tougher export tax regime have not been announced by the federal government and Resources Minister Madeleine King has previously signalled no change to export tax policies and highlighted the importance of the gas industry.
Opposition Leader Angus Taylor has been critical of the 25 per cent export tax proposal as a disincentive to investment, but he does favour a better deal on gas sent overseas.
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