The law and regulation of the energy sector in Australia is subject to overlapping responsibilities of both federal and state governments. Crucially for energy transition efforts, neither energy, environment nor climate is mentioned in the Australian Constitution. Australia has a tradition of creative cooperative federalism solutions for responding to problems of national importance. In the energy sector this has resulted in an intricate national framework for energy markets, which relies on mirror legislation passed by participating states, with oversight by state and federal executive governments. Independently of these frameworks, both federal and state governments have passed climate change legislation, which crucially includes renewable energy support mechanisms. At a time when a rapid transition to a decarbonized energy system is essential, legal frameworks struggle to respond in a timely fashion. The political discourse around energy has become increasingly toxic – reflecting a dysfunctional state–federal relationship in energy and climate law. Australia needs to consider whether its cooperative federalism solutions are sufficient to support the energy transition and how climate law at the state and federal levels interacts with energy market legal frameworks.