Australian taxpayer dollars will no longer fund international fossil fuel projects, after the government signed on to a global shift towards renewable energy.
The government signed on to the Glasgow Statement at the United Nations climate change conference in Dubai, joining 39 other countries in a commitment that will end international public investment in climate polluting projects.
The US, Canada and Fiji are among other signatories who joined the agreement after it was launched by the United Kingdom at COP26 in 2021.
Climate Change Minister Chris Bowen said joining their ranks demonstrated Australia's commitment to a clean energy transformation and a net-zero economy.
"It's really aligning our international financing efforts, whether it be aid or loans or other things, on the global decarbonisation effort," he told ABC radio on Wednesday.
"Australia is finally being taken seriously as a constructive international trading partner and investor determined to take meaningful action on climate change."
Scientists including Climate Council research director Simon Bradshaw says Australia is a "significant force" at COP28 and welcomed the government's decision.
"As a major fossil fuel producer, what we do and say matters," he said.
"This is a positive step that will help Australia continue to rebuild its reputation on the world stage and regain some trust from vulnerable communities in our region and beyond.
"Australia must do everything we can to ensure COP28 ends with a global commitment to the phase-out of coal, oil and gas."
Mr Bowen is expected to arrive in the United Arab Emirates on Thursday to attend the conference, but has not indicated whether Australia would commit to a "phase out" or a "phase down".
This debate first raged at COP26 when India intervened in the Glasgow climate pact at the last minute to change the wording from a "phase out" of coal to a "phase down", bringing conference president Alok Sharma to tears as the watered-down agreement passed.
With COP28 likely to discuss a shift away from all fossil fuels, including coal, these semantic arguments are expected to reignite.
Asked whether Australia was comfortable with a "phase out", Mr Bowen said wording could change a lot between a draft and the final pact.
"Certainly we are supporting stronger language on that sort of thing, but in my experience, as I said, some countries like China and the African Union have already said they are not comfortable with that sort of language - so that makes the negotiations difficult," he said.
"In my experience you go into these negotiations with a degree of flexibility but you also go in pushing for stronger and more action.
"That's what I'll be doing on Australia's behalf."
