The controls force the 200 biggest greenhouse gas emitters to cut emission by about 5 per cent a year to 2030, but also impose controls over new gas fields which mean they would have to be net zero emitters from the start.

“This could add significantly to the cost of gas production of higher CO2-content fields. New gas fields with lower CO2 content will have lower costs imposed on production and are more likely to proceed,” the QIC said in its weekly commentary.

“Whether sufficient new gas developments proceed to support a smooth energy transition remains to be seen with the Australian Energy Market Operator recently warning about the urgent need for investment to plug reliability gaps.”

The impact could be felt in Queensland’s gas sector which has been a lifeline for the east coast energy markets.

The QIC said business remained concerned about access to affordable and reliable energy.

It said the “hard cap” on emissions, which was an amendment to the Safeguard Mechanism from the Greens.

“This has two potential impacts. First, it should force physical emissions reductions and limit widespread use of carbon offsets. Second, it leaves the door open to future policy changes being required if new entrants to the Safeguard Mechanism scheme breach the hard cap,” QIC said.