By Lenore Taylor
Julia Gillard reckons that by this time next year she will have an agreement with the Greens and the independents on how to put a price on carbon. If she does, she will have succeeded in doing the sensible thing on climate policy when, for more than a decade, governments of both persuasions have done nothing or, more often, done things that are both expensive and stupid.
If she actually manages to sell the idea to the public she will have achieved another Australian first for a policy that has proved as popular as Enron shares, costing Malcolm Turnbull and, arguably, also Kevin Rudd their jobs.
She wasn't always so keen. When the minutes of the June caucus meeting at which Kevin Rudd was deposed somehow found their way into The Australian on Wednesday - which just happened to be the third anniversary of the election of his government - they revealed the former prime minister had ''placed on record'' before the caucus what was subsequently reported - that Lindsay Tanner and Penny Wong had strongly argued against dropping the ETS but ''Wayne and Julia'' had provided ''equally strong advice … that the ETS had to be abandoned''.
What we didn't already know was what Rudd advised the party that was about to depose him: that it should immediately return to its previous stance. ''Whatever happens here today on the question of the leadership, let me state what should happen on this policy,'' the minutes record him saying.
''We should return to our position on the emissions trading scheme and embrace it without ambiguity. Absent [an] emissions trading scheme, absent a price on carbon, we cannot bring about effective change when it comes to climate change.''
It wasn't clear how he would have executed a second backflip on ETS policy to end up back where he started, but in the event Gillard won the leadership and she didn't take his advice.
Instead, she went to the election with a policy that was fatally confused, saying Labor would stick to Rudd's ETS delay until at least 2012, even though she believed a carbon price was the only way to meet our greenhouse gas reduction targets, and in the meantime she would assemble a ''citizens' assembly'' of 150 ordinary folk to test opinion on a policy she had already decided was essential. Voters quickly figured it was a crock and flocked to the Greens, even though they had voted down the ETS in the first place.
Labor's nonsense policy was quickly ditched post-poll and, since the
election, Gillard and her Climate Change Minister, Greg Combet, deserve credit for beginning the long and difficult process of selling the reform, doggedly explaining that the science of human-induced global warming really is persuasive, that a carbon price is the cheapest and most efficient way to reduce greenhouse emissions and meet our targets and that electricity prices are set to go up by a lot even without one because of investment uncertainty.
But there are early indications of how hard it will be to get the job finished, including some aggressive initial positioning by the Greens. The second meeting of the multi-party climate committee, on November 10, was supposed to conclude the policy principles on which the committee's deliberations would be based.
It didn't because, despite four hours of closed-door talking, Combet and the Greens senator Christine Milne could not agree on the ''principle'' about industry compensation.
As she made clear in a recent interview with the Herald, Milne thinks ''rent-seeking'' big business should get limited compensation and electricity generators should get none. The expert adviser to the committee, Ross Garnaut, is on the record with similar views. The Greens are determined not to allow the government to lock in a ''bad'' outcome by setting unacceptable parameters at the outset.
But Labor offered electricity generators $3.3 billion over the first 12 years of its ETS, because of the ''principle'' that a sudden loss of asset value might see some generators simply shut up shop and jeopardise power supply. The figure for ''trade-exposed'' industries was $35 billion over the same period.
Labor says it has to contend with the political reality of the Coalition's scare campaign over power prices and the backlash from state governments, industries and unions. Combet has conceded that industry compensation is ''one of the most important areas of policy difference'' between Labor and the Greens.
The principles are now supposed to be agreed when the committee meets again on December 21 when Combet has returned from climate talks in Cancun, Mexico, but private meetings haven't got anywhere yet.
Milne has distributed a calculation of what Australia's fair share would be in an international effort to reduce emissions sufficiently to keep global warming to 2 degrees - it comes up with emission cuts by 2020 of about 40 per cent.
Labor and the Coalition are committed to unconditional cuts of just 5 per cent and it was the fact that they were being asked to ''lock in'' such small reductions that caused the Greens to vote down the ETS in the first place.
The multi-party committee is looking at a carbon tax or a trading scheme with a fixed initial price to try to avoid this impasse, but the argument will still be had by proxy when it gets up to fix the carbon price.
Milne's 40 per cent calculation was a clear signal she will be arguing hard for the ambitious end of the price spectrum.
The chief executives in Canberra on Friday for the first meeting of the business advisory committee on climate change, including Alan Joyce of Qantas, David Peever of Rio Tinto and Don Voelte of Woodside, will no doubt take a different view.
But political self-interest for both Labor and the Greens dictates that the multi-party committee come to a successful outcome.
Julia Gillard simply cannot go to another election without a credible policy on climate change. The Greens are unlikely to again get away with the argument that doing nothing is better than the climate policy ''something'' being proposed by Labor.
With the issue inextricably entwined with the politics of Labor's effort to win back its support base on the left, and the determination of the Greens to continue to differentiate itself from the party it backed to form government, it will be one of the most fascinating battles of 2011.