Labor has meanwhile tried to hose down coalition demands for federal intervention to shore up black gold's future.
The High Court on Wednesday delivered a 3-2 split ruling in favour of community environmentalists who challenged a major open-cut mine expansion in NSW's Hunter region.
It upheld a ruling from the state appeals court that found planning authorities must consider climate impacts of downstream emissions when reviewing projects.
In his reasons, Justice James Edelman cited expert Professor Penny Sackett's estimate that the project, if it went ahead, would be one of the 650 largest greenhouse gas-emitting projects worldwide.
The mining industry feared the judgment's wider implications.
"Mines may have to work out how to reduce emissions from their export customers, or Scope 3 emissions," Minerals Council chief executive Tania Constable said.
"Investors in Australia's resource sector will carefully review the outcome from today's High Court judgment and the potential ramifications for other projects."
The mining body called on the NSW government - overseeing some of the nation's richest coal deposits - to further protect planning approvals.
Reacting to the decision, Environment Minister Murray Watt said the "novel decision" did not automatically impact federal environmental approvals.
"The decision from the High Court is in relation to a NSW government decision based on NSW legislation," he told News24 on Wednesday.
"To my knowledge, that's the first time the High Court has made that kind of a finding."
But the coalition called on state and federal governments to intervene to leave no room for legal doubt among trading partners that Australia would still be a top coal exporter.
In a pointed message to the lucrative sector, NSW Natural Resources Minister Courtney Houssos calmed down fears about coal mine extensions
"It does not mean the expansion cannot be reconsidered or that coal mine extensions cannot be approved."
Muswellbrook landowner Wendy Wales led the case against the planned expansion of the Mount Pleasant mine.
The retired science teacher dubbed the decision a win for Hunter communities.
"We have experienced the change from a country town with a mine over the hill, to a town that is now encircled by mines," she said.
"Especially when the temperature rises, that town bears that burden straight up.
"We're grateful to be in that position to actually be part of this today."
A spokesman for MACH Energy said the mine's workers had lived with fear and uncertainty for too long.
Lawyers involved in the case said the court's decision would be groundbreaking for climate litigation in Australia.
"This decision is one that will be studied around the world," Elaine Johnson said.
The ruling comes after MACH Energy, owned by an Indonesian conglomerate, sought to extend the life of Mount Pleasant coal mine in the Hunter by 22 years and nearly double its yearly output.
The state planning commission in 2022 approved the plans before local Hunter Valley residents launched a legal challenge.
They failed on their first attempt, before NSW's highest court unanimously ruled the approval unlawful in 2025.
The appeal court found planning authorities are legally required to consider the climate impact of Scope 3 emissions - caused when the coal is eventually burnt, including when exported overseas - on local communities.
The court suggested that could involve conditions to refine the coal before export, only export to signatories of the Paris Agreement or require expected Scope 3 emissions to be offset.
MACH Energy took the finding to the High Court, which struck down the appeal on Wednesday morning.
As a stop-gap measure, NSW in August allowed the mine - employing about 500 full-time equivalent jobs - to operate until 2032, and slightly increase yearly production.
The 22-year expansion proposal will return to the NSW Land and Environment Court, which will consider whether the matter must return to the Independent Planning Commission.
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