Going back to go forward? The road to climate bi-partisanship in the 2016-19 Parliament

The 2016-19 Federal Parliament will play a major role in defining Australia’s long-term climate policy framework, with the major parties expected to work towards policy bipartisanship, and market certainty, as the last parliament prior to the conclusion of the Kyoto Protocol in 2020.

Should the government be returned, a RET-style compromise on climate policy may be within reach between the ALP and Coalition. While the major parties are divided on the most effective mechanism to reduce Australian greenhouse gas emissions, the influence of expected kingmaker Nick Xenophon, may support this process, with Xenophon’s 2009 ‘baseline and credit’ policy (adopted by then opposition leader Malcolm Turnbull) potentially creating a bridge between the ALP’s proposed ETS framework, and the government’s safeguard mechanism.

Agreement on a preferred policy structure may – in theory – be readily achieved, with the similarity of the Coalition, ALP and Xenophon policy frameworks able to provide a platform for compromise between the parties. Notably, the existing design of the ALP and Coalition policies, including separate schemes for the power and industrial sectors, a low ambition first phase prior to 2020 and greater ambition in the post-2020 period, suggests that Australia may already be surprisingly close to climate policy bipartisanship. In this context, the willingness of the parties to engage, and the ability of the Prime Minister to find consensus within his own party room, are likely to be greater roadblocks than policy design.

In this update, we take a closer look at the platform for bipartisanship in the 2016-19 parliament and the potential structure of a compliance market formed between the Coalition, ALP and Nick Xenophon Group. We also analyse timing scenarios for the implementation of policy, amid speculation that a returned Coalition government may explore a “fast tracked” policy review process in order to establish a more workable climate policy earlier than expected.

 

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