Bankers have been accused of "industrial-scale greenwashing" by financing a huge new gas field.
But National Australia Bank and Westpac insist they're on board with the global push for net-zero emissions.
Woodside and BHP signed a $16.5 billion offshore LNG joint venture in November, which will cement another 30 years of gas exports from Australia.
Woodside has now completed the sale of a 49 per cent stake in the infrastructure that will process the new gas onshore at a $5.6 billion expansion of the existing Pluto facility near Karratha in the Pilbara region of Western Australia.
The developers say the eight million tonne per annum Scarborough project will be among the lowest carbon intensity sources of LNG for North Asian customers, with its 11.1 trillion cubic feet of gas.
The first LNG cargo from Pluto Train 2 is targeted for 2026.
Investor activist organisation Market Forces says some of Australia's biggest banks are funding a "carbon bomb" on the scale of 15 heavy emitting coal power stations spewing out pollution for three decades.
Campaigner Jack Bertolus told AAP the "industrial-scale greenwashing" also poses unacceptable risks to fragile marine life and irreplaceable Murujuga Aboriginal rock art, which is under consideration for World Heritage Listing.
Ethical investors - big and small - are looking for genuinely sustainable and environmentally friendly places to put their capital.
Lenders and industry are keen to oblige.
"Climate action is everyone's job. NAB wants to be part of the solution. We fully support net zero by 2050," NAB has said as a member of the global Net Zero Banking Alliance.
Some groups, including Market Forces, are being given a seat at the corporate table to share concerns.
NAB, ANZ and Westpac are among 18 global banks in the consortium lending $US3.486 billion ($4.85 billion) to specialist investors Global Infrastructure Partners (GIP) for a stake in the Scarborough to Pluto project.
Releasing the bank's oil and gas policy in November, NAB chief executive Ross McEwan said he would limit fossil fuel lending.
But the bank reserved the right to support integrated liquefied natural gas in Australia, New Zealand, Papua New Guinea and selected LNG infrastructure in other regions, under the oil and gas exposure cap.
NAB does not comment on specific customers or transactions but said they will align their lending portfolio to net-zero emissions by 2050.
"It is the latest science that is guiding our methodology," a spokeswoman told AAP.
NAB said it was training its bankers to ensure they understand this complex topic.
"We want the best climate bankers supporting our customers," she said.
"NAB has set a cap on our oil and gas lending at $US2.4 billion and we are the first Australian bank to do so publicly and transparently."
The bank says the exposure cap will reduce from 2026 through to 2050, aligned to the International Energy Agency's net-zero emissions scenario.
But that scenario also includes "no investment in new fossil fuel supply projects," according to the agency's executive director Fatih Birol.
Mr Bertolus dismissed NAB's oil and gas policy as a greenwashing exercise that allows the bank to continue funding the expansion of the fossil fuel industry.
"Despite a clear commitment to net zero, NAB has just led a global banking consortium to enable a 1.6 billion tonne carbon bomb, with ANZ and Westpac as part of the deal," he says.
"The immensity of the fossil fuel project is matched only by the banks' willingness to repeatedly con their customers and their investors, who are all demanding action on the climate crisis."
Westpac told AAP it supports a net-zero economy by 2050 and was the first Australian bank to back the Paris Agreement in 2015.
"We will support our existing customers and work with them to ensure they have Paris-aligned business strategies," a spokeswoman said.
"We also expect any new oil and gas exploration, production and refining customers to have publicly disclosed Paris-aligned business goals."
The bank is developing Paris-aligned financing strategies and portfolio targets, particularly for sectors representing the majority of financed emissions.
The project has also been subject to legal challenges citing "staggering amounts of pollution".
The Environmental Defenders Office, acting on behalf of the Conservation Council of WA, says the Scarborough development will result in 1.6 billion tonnes of carbon dioxide-equivalent emissions over its lifetime.
Woodside boss Meg O'Neill has described the project as a "world-class resource, globally competitive project and a game changer for Woodside".
"The development of Scarborough gas through Pluto Train 2 is expected to deliver significant value to our shareholders, create thousands of jobs and deliver energy to domestic and international customers for decades to come," she said.
Ms O'Neill told analysts late last year that Scarborough was "an appropriate investment from a decarbonisation perspective," given the push away from coal in the region.
"With approximately 0.1 per cent carbon dioxide in the reservoir and a new, efficient LNG train at Pluto, it will be one of the lowest carbon intensity sources of LNG delivered into Asia."
ANZ says social, environmental and credit checks are used for any potential financing of large business customers.
"We have specific requirements for energy customers, in line with our climate change commitment released in November," an ANZ spokesman told AAP.
"This includes backing those customers with plans and commitments to reduce their climate impact, seeking to provide more finance for lower emissions."
He said ANZ has a target to reduce the emissions intensity of its power generation lending portfolio by 50 per cent by 2030, aligning lending with the Paris goals.
"We also have a target to fund and facilitate $50 billion by 2025 to support our customers' transition to a low carbon economy, which includes renewable energy, 'green buildings' and emerging technologies such as hydrogen."
But an independent analysis of the Scarborough project in December found it "represents a bet against the world implementing the Paris Agreement" for limiting global warming.
"The company's arguments - that the project is Paris Agreement consistent - are incorrect," Climate Analytics said in the report.
Nor was it found to be consistent with the global movement by business and many governments towards net zero emissions by 2050, or sooner.
"The Scarborough to Pluto project is not 1.5 degrees consistent and consequently is a major stranded asset risk," the analysts said.
The project was also found to result in a substantial increase in Western Australia's emissions, and a significant lock-in of carbon intensive activity well beyond that of the LNG plant itself.
Much of the proposed emissions reductions for Scarborough will be achieved through offsets, including $A100 million Australia-wide Pluto LNG tree plantations, along with energy efficiency in design and operations.
"Carbon offsets are often used to greenwash fossil fuels, diverting the focus from the critical need to rapidly reduced CO2 emissions from fossil fuels," Climate Analytics found.
"Evidence suggests offsetting CO2 from burning fossil fuels through tree planting is scientifically flawed."
The WA Labor government welcomes the thousands of jobs the massive project aims to deliver.
Australian Associated Press