S&P/ASX 200 Index (ASX: XJO) energy shares finished ahead of the benchmark index today, the second day of trading since Anthony Albanese and the Labor party took the reins in Canberra.
The ASX 200 closed down 0.28%, while the Woodside Petroleum Ltd (ASX: WPL) share price was up 0.28%.
Meanwhile, Whitehaven Coal Ltd (ASX: WHC) shares were up 0.97%, the Beach Energy Ltd (ASX: BPT) share price finished 0.93% higher, while Santos Ltd (ASX: STO) shares were down 0.12%.
For the moment, it appears, ASX 200 energy shares aren't feeling the heat from this weekend's election results.
But risks to the Aussie fossil fuel energy sector remain.
A key risk for ASX 200 energy shares
Perhaps the biggest potential headwind on the horizon for the big oil, gas, and coal producers is that Labor might not win the majority.
With the final count in a few core seats still ongoing, Labor may need to negotiate with the Greens and teal independents. With far more stringent emissions reduction goals than either the Coalition or Labor, this could hamper the growth outlook for ASX 200 energy shares.
According to Goldman Sachs economist Andrew Boak (quoted by the Australian Financial Review):
[A] key risk to watch is whether increasingly influential Green and climate-focused independents eventually push the ALP towards more ambitious targets on emission reductions.
Morgan Stanley analysts added: "On the face of things, Labor climate policies were more specific in targeting decarbonisation goals in tighter time frames versus the Coalition."
Why Labor is unlikely to pull the emissions trigger yet
As reported by The Australian, Credit Suisse analyst Saul Kavonic cautioned that numerous other national governments aren't imposing strict emissions reduction targets, opening the door to more fossil fuel production heading offshore.
That means ASX 200 energy shares "could be left less competitive if forced to decarbonise while global competitors in places like the Middle East and Russia are not subject to similar pressures".
Kavonic added that Russia's invasion of Ukraine and the resulting global energy crisis could delay any moves to ramp up emissions reduction targets Down Under.
"Australia's role to assist global allies and trading partners with democracy gas in wake of the Ukraine crisis could also temper any stricter approach to project approvals," he said.
Kavonic's views look to be supported by Madeleine King, who's been flagged to be Australia's new resources minister under the Labor government.
According to King:
The government will not rule out or shut down export industries and the jobs and investment that come with them. All that would do is send resources jobs to other countries with lower standards. It is vital that high quality environmental standards are upheld.
ASX 200 energy shares CEOs speak out
Commenting on Labor's election win, Whitehaven Coal chief executive Paul Flynn said (quoted by the AFR):
Given the new government's concerns around budget repair, we see our booming export industries playing a major role in paying down Australia's burgeoning debt so we can more responsibly rise to meet the challenges we face as a nation.
It's "essential the government supports the competitiveness of our export industries, including our more emissions-intensive sectors", he said, adding:
This is why we have called for further detail around proposed changes to the Safeguard Mechanism, and we look forward to consulting with Labor ahead of any further policy design and implementation.
The Safeguard Mechanism, if you're not familiar, sets an emissions baseline above which big emitters, like ASX 200 energy shares, are not meant to tread.
A spokeswoman for Woodside sounded a diplomatic note, saying: "Woodside congratulates the incoming senators and looks forward to working with all of them to achieve outcomes that are in the national interest."
The ASX 200 energy share has already received the green light from state and federal regulators to proceed with its US$12 billion Scarborough LNG project in Western Australia.
