The Labor MP Jerome Laxale says it’s “reasonable to expect more” from mining giants, breaking ranks to publicly back changes to the generous tax concessions blamed for holding back decarbonisation after revelations BHP delayed major projects to cut emissions.

Labor’s grassroots environment action group has also renewed calls to wind back the diesel fuel rebate following an exclusive investigation by the Guardian and the ABC, which revealed BHP scrapped a project to significantly reduce global emissions, delayed vast renewables projects in the Pilbara and war-gamed options to push the electrification of its polluting diesel truck and train fleets into the next two decades.

Experts and analysts say the slowdown in BHP’s decarbonisation progress shows the failure of a key climate policy, the safeguard mechanism, and the influence of the diesel tax break the federal government gives to big miners including BHP.

Analysis provided to the Guardian suggests BHP paid less than $9m under the safeguard mechanism for its excess emissions last financial year.

At the same time, the analysis suggests it received $622m in fuel tax credits from the federal government for its use of diesel, including about $379m for its Western Australia iron ore mines.

BHP’s use of diesel is a major contributor to its emissions.

Laxale, an outspoken voice within the federal Labor caucus on climate and environmental issues, suggested the miner needed to do better.

“For a number of reasons it’s reasonable to expect more from our resources sector,” the Bennelong MP said.

Laxale confirmed he would join rank-and-file Labor members in arguing for changes to the diesel tax credits scheme at the party’s national conference in July.

More than 270 local ALP branches across the country have passed motions supporting a Labor Environment Action Network (Lean) campaign to cap diesel fuel tax credits at $50m per company, building momentum ahead of the Adelaide conference.

Lean’s national co-convener, Louise Crawford, said: “[We] have been saying for months that the diesel fuel tax credit needs reform – it should be pushing the biggest miners toward electrification, not the opposite.

“Capping the rebate at $50m would free up funds to invest in electrification for those companies and others. And it would send a clear signal to get on with it.”

Andrew Forrest’s mining company Fortescue – which is a major beneficiary of the scheme – is among a broad coalition of groups that support the changes, pitting it against others in the resources sector who want the rebate left alone.

The climate change and energy minister, Chris Bowen, played down the prospect of immediate reform to the fuel credits scheme, which provides some companies with a full rebate on the 52.6c a litre applied to fuel.

“We just had a budget a couple of weeks ago – we decided not to make that change,” he said.

The independent MP Kate Chaney said the rebate should be restricted for large companies such as BHP but left in place for farmers and small businesses.

“Large resource companies like BHP produce a huge chunk of Australia’s emissions,” she said. “Without strong decarbonisation from these companies, Australia will not be able to meet its emissions targets and international commitments.

“But companies will always play within the rules that have been set. This speaks more to weakness in government policy than a failure of business.”

The resources minister, Madeleine King, said she was not concerned about the revelations and BHP was “doing their job”.

“BHP is committed to cutting emissions. They will make their commercial decisions, as do others. BHP and other miners are subject to the safeguard mechanism,” she told ABC radio, referencing the government’s main policy to drive down emissions at the nation’s biggest polluting sites.

In a statement, BHP said it was making significant strides in emission reduction, cutting emissions by 36% from 2020 levels. It has a medium-term target of 30% by 2030 and a goal of net zero by 2050. BHP points to analysis that it is one of the best performers on emission reductions among large publicly listed companies and has transitioned 70% of its energy use to renewables.

The company blames its slowed progress on operational decarbonisation on the lack of availability of battery-electric trucks. It says it is trialling the technology, which is not yet ready to deploy at scale.