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The political fate of direct action appears to be still in the mix

PUP leader Clive Palmer has committed to no change to the renewable energy target in this term. Dave Hunt/AAP

Now that Clive Palmer has declared the government’s “direct action” plan a “waste of money”, is it dead?

That would leave Australia without even a fig leaf of a carbon policy to reach its emissions-cut target by 2020.

The government believes (or hopes) that it can still implement its direct action measures, by getting the needed legislation though – or, in extremis, by a back door route.

It has some leverage by virtue of the fact that the Senate last Wednesday passed $2.55 billion in funding for the plan over the budget period. This was embedded in the appropriations and went through Parliament on the day Palmer, announcing his support for repeal of the carbon tax, gave direct action the thumbs down.

To spend the money the way it wants – on “buying” emissions and contracting for clean ups – the government needs to amend the present carbon farming legislation.

It is banking on pressure from industry and possibly environmental groups coming on the crossbench, or even on Labor and the Greens, to enable this to happen.

Whatever the criticisms of the inadequacy of “direct action” (and they are many and strong), now that the money is already available there will be a lot of voices saying it should be used.

The government believes the vacuum left by the repeal of the carbon tax is likely to make it harder for the Senate to refuse to pass the legislation.

But if the Senate says no, the Coalition’s fallback would be to try to spend the money through the states.

This would be an inefficient way of operating – and could run into state resistance - but there would be no other way to implement the policy in any comprehensive way.

It would be an ironic situation, given that the government’s broad approach to federalism (on which it has just announced terms of reference for a white paper) is to avoid overlap between the functions of state and federal jurisdictions and to leave as much to the states as possible.

A recent High Court decision may see the federal government forced to fund its chaplaincy program by tied grants to the states, and a recalcitrant Senate could see the same approach with “direct action”.

On another front, Palmer has committed to no change in the renewable energy target during this term. But precisely what this would mean in practice is not clear. The target – 20% of total energy coming from renewables by 2020 - was couched as a fixed volume (41,000 gigawatt hours). On present figures that would represent some 26%, because of the reduced demand for electricity. The government would probably try to get parliamentary approval to have this cut to represent an actual 20%.

Palmer has also said his senators will not abolish the Clean Energy Finance Corporation, which mobilises investment in renewables, low-emission technology and energy efficiency.

The legislation for this corporation was to some extent “Abbott-proofed”. The government can’t replace board members. But it can shift the priorities for the Corporation’s investments. It will seek to use this power to move it away from wind farms towards investments in solar and energy efficiency.

While it hasn’t seen the detail, the government will not agree to the Palmer “shell” emissions trading scheme which would only commence when Australia’s trading partners had such schemes.

Palmer’s compromise will leave some of Australia’s climate policy outbuildings in place, while sweeping away the house itself.

But the claims that the government will not be able to build any of its proposed new structure, its direct action plan, are probably premature.

Independent senator Nick Xenophon, for one, will be working very hard to try to convince fellow senators to let an amended form of direct action through.

“With modification, direct action could do some good things environmentally,” he says. The reverse auction process (of buying emissions) could be modified eventually into a market-based mechanism - an emissions trading scheme. Changes he would like to see include the provision of longer term contracts and penalties for those companies not meeting their obligations.

Xenophon is deriving some ideas from the Carbon Market Institute, which describes itself as an independent membership-based not-for-profit organisation that is the peak body for carbon market participants.

Labor opposes the direct action policy but its future attitude on legislation is not yet clear. Shadow treasurer Chris Bowen told the ABC on Sunday: “If the Government is determined to deny Australia an emissions trading scheme, then the Labor Party will consider its position after that”.

Glenn Druery, adviser to Motoring Enthusiast Party’s senator-elect Ricky Muir, says Muir hasn’t been briefed on direct action (or the carbon tax, for that matter). “It’s too early for him to be making a decision.”

The political fate of direct action appears to be still in the mix. The legislation for it is not included in the package now about to go to the new Senate.

As Xenophon says, unless something gets through after the repeal of the carbon tax “there will be nothing to work on. It will be a very bad outcome”. The question is whether that prospect could galvanise enough reluctant support for the direct action plan to pass.

Listen to our podcast from the Liberal federal council, featuring interviews with Victorian Premier Denis Napthine, Queensland Premier Campbell Newman and outgoing Federal Liberal President Alan Stockdale, here.

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