Changes to Australia's sea dumping laws will allow carbon dioxide to be stored under the seabed after legislation cleared the upper house.
The government pushed the sea dumping bill through the Senate on Monday evening, with the support of the coalition.
It will allow the export and transportation of carbon across oceans, and intends to bring Australia's laws into line with amendments to the London protocol, a global treaty on the prevention of marine pollution.
The legislation will allow a permit to be granted for the export of carbon from Australia, to be stored under the sea.
Labor has said the legislation is crucial to helping unlock $30 billion worth of investment.
Gas companies including Woodside, Inpex and Santos need the legislation to meet the government's climate targets.
Korea and Japan also want to invest in carbon capture and storage (CCS) projects across the nation, as they rely on Australia for their energy needs.
Environmental groups, independent senator David Pocock and the Greens opposed the legislation.
They are concerned the laws will allow an expansion of the gas industry in the midst of a climate crisis.
"Do what is the right thing, the morally right thing in the face of what we know about climate change, and that is to act," Senator Pocock told parliament.
He said he feared future generations would not look back kindly on the decisions made by current leaders.
Greens Senator Sarah Hanson-Young slammed Labor for its "deception" of the bill being an "environmental compromise".
"This isn't about Australia folks, this is about the Labor Party looking after the gas cartel and their fossil fuel mates, and it is a disgrace," she said.
Senator Pauline Hanson raised safety concerns over materials or contaminants that might also potentially be pumped into the seabed, and pressed the government for a guarantee only carbon would end up there.
Assistant Climate Change Minister Jenny McAllister said the government was undertaking a review of the environmental management regime for offshore petroleum and greenhouse gas storage activities.
"Those are the arrangements that are in place in Australian waters and that review, seeks to ensure that the regulatory regime for offshore CCS projects manages risks to the marine environment and workplace health and safety," she said.
Opposition environment spokesman Jonno Duniam criticised the government for "incompetence colliding with intransigence," which he said contributed to the bill taking almost a week to pass.
The opposition agreed to support the legislation on condition the government agree to an inquiry into the rollout of transmission lines for renewable energy.
But Labor refused the request.
