What does the hung parliament mean for climate policy ?  

In the continuing uncertainty about who the new Australian government will be, I quite enjoyed this interview on Lateline with Rob Oakeshott - one of the 3 independent rural populists who seem likely to decide who gets to govern.

While Bob Windsor seems to just be a saner and nicer version of your typical National Party MP (albeit one with a seething hatred of Barnaby Joyce) and Bob Katter looks as mad as a hatter, Oakeshott seemed to be a pretty nice guy - and far more moderate on social issues than you'd expect from a country MP, saying he wanted both a carbon price and better treatment for refugees, amongst other things.

He named two major influences during the interview - the first was the last minister in Australia to be found guilty of heresy, the other South African activist Steve Biko. Clearly rural politics have changed over the years !

The Climate Spectator has a trio of article looking at the election result and the impact on climate policy. The first, from Giles Parkinson : Farm Force.

Australia may have a New Zealand-style emissions trading scheme – centred around agriculture – quicker than anyone might have expected before the election.

It is just one of the fascinating scenarios being painted by observers and analysts as the trio of country, or “populist agrarian”, independents prepare to begin negotiations with the mainstream political parties.

The very idea of an ETS, in any form, seemed inconceivable last Friday. But one focused on agriculture, and possibly the energy industry, could be a deal-maker, along with the broadband network.

The great irony of this would be that agriculture was excluded from the ill-fated CPRS because the leading farming bodies couldn’t get their mind around the matter.

But what has made a change entirely conceivable is the huge popularity of the recently introduced ETS among the farming community in New Zealand, and a wholesale change of attitude in the US.

This has been accompanied by a growing appreciation in Australia – including among the three independents in question – that a carbon trading scheme could provide enormous opportunities for farmers.

For the past several weeks, New Zealand government ministers and bureaucrats have barely missed an opportunity to trumpet the positive reception to that country’s ETS. The decline in forestry plantings has been dramatically reversed, and farmers are finding new and profitable uses for marginal lands, particularly those that have steep, erosion-prone and largely unproductive land.

Bloomberg reported late last week that New Zealand’s sheep farmers are flocking to a government carbon trading program because some of them are finding that it pays more to plant trees than sell wool and mutton.

“The New Zealand experience shows that bringing in an ETS could be very positive,” says Anthony Hobley, the head of climate change practice at legal firm Norton Rose. Hobley says that, while the US legislation didn’t get up, the idea of an ETS was receiving positive support from the agricultural community because of the way that it was designed.

One of the three country independents, Rob Oakeshott, made it clear yesterday that re-engaging the mainstream parties on the subject of an ETS would be one of his biggest priorities. The other two are likely to be sympathetic if it can be skewed in favour of their rural constituencies.

“The independents, on balance, seem to support action on climate change,” Deutsche Bank analyst Tim Jordan wrote in a report on Monday. He says an ETS could be accelerated, particularly under a minority Labor government. ...

An agricultural-based scheme would be relatively simple – at least compared to Labor's CPRS – and simplicity and clarity is key if a carbon price is to successfully introduced.

To make any sense at all, any ETS would need to include at least an energy-based carbon price, as either a tax or a market-based scheme. But that should not be too controversial, because it is now well accepted that the tens of billions of investment so desperately needed in the sector cannot be made without it.

In the energy industry, no one pretends that a carbon price of some sort will not emerge at some point: better for all to deal with it now.

The Greens, however, will be in a position from next July to demand less indulgence towards the heavy emitters than was offered in the CPRS, and might be convinced to allow a staged introduction – with mechanisms to bring in a softer tax-based scheme in other sectors over time – if that was the case. That is the sort of hybrid scheme that was entertained by US Congress before it was all put in the too-hard basket so close to the mid-term elections.

The influence of the country politicians, and their ability to guide the debate towards the substantive issues, rather than rhetoric, could provide a surprising and unique opportunity to develop good policy. That is the attraction of an influential third force.

If Labor ends up in coalition this time – which I think is most likely because otherwise the Senate becomes very difficult – the path is clear. Their best hope to turn things around will be to work with the independents and the Greens to fashion a sensible climate strategy.

The independents will most likely ensure this strategy is reasonably centrist and good for regional Australia, with renewables and agriculture being key focus areas. The Greens will ensure that the policy cuts CO2 emissions by 2020, a key result missing from the CPRS.

It is very hard to imagine Labor wanting to go the next election looking so incredibly lame on this issue again, especially given all the indications are the issue will build globally in this time frame.

If the Liberals end up in government, they are going to have a difficult time in the Senate, even if they can hold the lower house together. Accordingly, fashioning stronger climate action could become critical strategy to get the Greens on side on other issues. We might even see a Really Small New Tax! I look forward to the spin on that one.

Either way, the result should be very interesting. Who would have thought an election fought on climate change between Tweedle Don’t Now and Tweedle Don’t Ever would actually result in us doing something soon. A week is indeed a long time in politics.

Given the results of this weekend's federal election, it is now likely that the whole of the Australian economy is going to suffer the same indecision and paralysis that members of the renewable energy community have been suffering for the last three years.

If anyone thinks that a hung parliament is going to be beneficial to Australia, they should think again. The clean energy industry has been crippled by indecision. With a selection of independents controlling the lower house and the Greens in control in the upper house, one can only suspect that this indecision is going to last considerably longer.

If Tony Abbott or Julia Gillard are to seriously consider forming a stable government they need to reach agreement with the Greens on a responsible policy to tackle climate change. It's already looking like support will come from Oakeshott, Bandt and the Greens. (Malcom Turnbull might even cross the floor to get the job done).

The type of policy could simply be a circular carbon tax with border controls (a tariff on carbon-intensive imports). I'm sure anything with border controls would excite Bob Katter, and a circular tax – where the revenue raised is returned to individuals – could not be classified as a 'great big tax' by Mr Abbott.

The independents should also be attracted by a leader that undertakes the necessary action to commence dealing with climate change in a way that benefits the farming sector.