A Western Australian government decision to reject guidelines requiring major liquefied natural gas (LNG) projects to be carbon neutral leaves Australia without a state or federal policy to address its biggest source of growth in heat-trapping emissions.

The most recent federal government emissions report says the booming northern WA LNG industry is the main driver of an 0.9% increase in national emissions in the year to September, continuing a trend in place since 2015. LNG exports to Asian markets jumped 19.7% over those 12 months.

Authorities had hoped the rise in LNG emissions would be slowed by a carbon capture and storage project at the country’s largest natural gas development, Chevron’s Gorgon operation in the Pilbara, coming online early this year.

Gorgon was approved on the condition it would capture fugitive emissions from an underwater gas field and inject them into a reservoir beneath Barrow Island and, late last year, Chevron said it expected the long-delayed storage project would be running by March. But it now says ongoing technical difficulties have pushed back the expected starting date until later this year.

In the absence of federal government policy to counter rising emissions, the state Environment Protection Authority (EPA) released guidelines recommending large new and expanding projects in WA should have to buy carbon credits to offset their emissions.

But after intense pressure from the oil and gas industry, and criticism from the federal government, Labor premier Mark McGowan said he would not endorse the guidelines.

Industry representatives said the 100% offsets requirement had not been raised in its consultations with the EPA and would impose unreasonable costs compared with developments in other states and countries.

After receiving a call from McGowan, the EPA chairman, Tom Hatton, withdrew the revised guidelines pending further consultation with industry. The premier denied pressuring the chair of an independent advisory body.

The state government does not have to follow EPA guidelines but McGowan said it was important the guidelines be withdrawn because of the “message it sends and the lack of confidence it might show in West Australian opportunities around the world”.

“Climate change is a big issue but Western Australia can’t solve it on our own,” he said.

Piers Verstegen, director of the Conservation Council of Western Australia, said Labor’s rejection of the EPA guidelines was at least in part motivated by avoiding an industry campaign against the party during a federal election campaign.

Federal Labor has promised a policy to deal with industrial and fugitive emissions, including those from LNG, before the election but is yet to release details. The Morrison government says it is addressing the issue with the safeguard mechanism, which requires large industrial sites year to report and manage their emissions but allows companies to increase production and pollution without penalty.

At a state level, McGowan says the state government will release a climate change policy in the next year.

While Shell reportedly supported the WA EPA approach if adopted on a national scale, Verstegen said the aggressive oil and gas industry attack on the EPA proposal showed it did not have a plan to cut pollution.

“Their only plan is to bully governments into letting them get away with doing nothing,” he says. “That’s running out of credibility because you’ve got independent agencies that aren’t subject to that process making recommendations that are quite clear and polling shows that the public is no longer buying the idea that gas is a clean fuel.”

The LNG industry is undergoing rapid expansion, with several developments proposed. Woodside Petroleum has applied to build the long-mooted $28bn Browse project, drawing gas from beneath the ocean north of Broome. The offshore part of the development alone is expected to emit up to 200m tonnes of carbon dioxide over 50 years. Woodside is also looking for partners to help tap the Scarborough gas field off Karratha.

The federal government’s most recent Resources and Energy Quarterly report found LNG exports were expected to increase 60% this financial year, from $31bn in 2017-18 to $50bn in 2018-19. Science and policy institute Climate Analytics found the related emissions growth in Australia between 2015 and 2020 would effectively wipe out the carbon pollution avoided through the national renewable energy target. The industry responds that any climate policy should recognise that LNG exports help reduce emissions elsewhere when gas is substituted for coal.

The rejection of the EPA guidelines has thrown into doubt how it will handle upcoming recommendations relating to two existing Chevron LNG projects – Gorgon and Wheatstone.

The WA government asked the agency to investigate the state’s approval of the Gorgon development in light of the delay to the carbon storage project. The WA environment minister, Stephen Dawson, said last year it would be clear by April whether Chevron could meet its target of 80% of fugitive emissions being buried over five years. If not, discussions would start about how it could offset its emissions.

In the case of Wheatstone, a requirement that Chevron offset some of its emissions was dropped by the former Liberal state government when a national carbon price was introduced in 2011. With the carbon scheme abolished, Labor asked the EPA to advise on whether the offset condition should be reinstated.

The EPA advice on both projects had been expected this month but has been delayed.

Guardian Australia asked Woodside and Chevron what, if any, climate change policy should apply to its LNG projects.

A Woodside spokeswoman said the company had a responsibility to reduce emissions and was on track to improve efficiency by 5% by 2020 compared with its baseline performance.

She said in the absence of an ideal policy – global, stable, with targets based on science and goals delivered at lowest cost – policies should be pragmatic and incremental while trending towards the ideal. They should be controlled by national governments, and energy-intensive export industries that sell to countries less ambitious in tackling climate change should not face the full cost of any policy.

A Chevron spokeswoman did not nominate a preferred climate policy. She said increasing the supply of natural gas would “help realise the objective of low-cost solutions for reducing greenhouse gas emissions” and the company was confident the Gorgon carbon storage project would be operating this year.