Australia has approved its first thermal coal project since Prime Minister Anthony Albanese came to power, drawing criticism from climate groups and the Greens party.

The decision, made on Friday, allows Idemitsu Kosan Co. to mine power-station coal at Ensham in Queensland for another nine years. The Japanese company will be producing 4.5 million tons a year of the fuel at the mine, which is equivalent to around 2.5% of Australia’s thermal coal exports in 2022.

The decision shows the tricky environmental and economic balancing act for Albanese’s Labor government. It won last year’s election on a platform of stricter emissions targets and support for renewable energy, but it has also backed the expansion of coal and natural gas production, Australia’s second- and third-biggest export earners.

Albanese’s government approved another mine in Queensland for metallurgical coal, used in steel-making, in May.

The greenlighting of new fossil-fuel projects may complicate Labor’s legislative agenda in the Senate, where it doesn’t hold the balance of power and often needs the support of the Greens.

“Labor’s current climate strategy is to condemn a decade of Liberal inaction in Parliament, whilst hoping you don’t notice their massive expansion of coal & gas at the exact same time,” Greens leader Adam Bandt said on Twitter on Tuesday.

The Ensham decision was made according to existing environmental rules, Environment Minister Tanya Plibersek said in a statement, adding she had blocked three coal mines since coming to office. The government remained committed to rolling out renewable energy, she said.

Climate advocacy group Lock the Gate said the approval would worsen climate change, estimating it would contribute an additional 100 million tons of carbon dioxide to the atmosphere over its lifetime — about a fifth of Australia’s annual emissions.

The coal would be mined after Idemitsu sells the project to a consortium led by South African coal miner Thungela Resources Ltd., in a deal reached earlier this year. Thungela was spun off from Anglo American Plc in 2021.

Growing demand for coal in India and Southeast Asia will underpin an increase in Australia’s exports of the fuel by volume for at least the next three years, according to an Australian government report released this week. The country earned A$113.8 billion ($76 billion) from coal shipments in the year through June 2022, almost a fifth of total export earnings.

(Updates with comment from Greens party in 6th paragraph.)