June 22, 2009 / 9:47 AM / 10 years ago

SCENARIOS-Possible outcomes for Australian carbon trade laws

CANBERRA, June 22 (Reuters) - The Australian government’s plan to set up a carbon emissions trading scheme (ETS) in July 2011 hangs on a package of 11 bills, which face defeat or delay in parliament’s upper house Senate over the coming days.

The cente-left government wants the bills passed by the end of the week, but it is seven votes short of a Senate majority.

For full coverage and factboxes on the carbon trade debate in Australia and New Zealand, double click on [ID:nSYD32519].

Here are some of the possible outcomes for the government and the ETS.

FORCE A VOTE WITHOUT CHANGES

If the government forces a vote in the Senate, the laws in their current form will fail. The conservative parties want a vote delayed until after global climate talks in Copenhagen in December. Independent Senator Nick Xenophon wants a delay until September. The five Greens want a vote to defeat the current laws, while independent Steve Fielding is not sure the scheme is even needed.

The conservative opposition wants its 37 senators to drag out the debate in a filibuster, which would force a delay by ensuring the Senate runs out of time to formally vote on the package. But it is more likely a formal vote will defeat the package.

DEAL WITH GREENS, INDEPENDENTS

The government’s best chance to pass the scheme is to negotiate with the five Greens and two independents, who themselves pull in different directions. The government has proposed emissions cuts of between 5 percent and up to 25 percent on 2000 levels if there is a global deal for deeper cuts from the Copenhagen talks.

The Greens want cuts of up to 40 percent on year 2000 levels, and Xenophon wants a target of around 30 percent. But even if the government did increase its emissions target, there is no guarantee it would win support from Fielding, who is not convinced human activity is responsible for global warming. Without Fielding, the package would be defeated by one vote.

BRING LAWS BACK, SET UP ELECTION TRIGGER

If the ETS laws are rejected or delayed, the government can bring the package back to parliament in the Spring session. If the Senate blocks or rejects the laws a second time, after an interval of three months, it will hand Prime Minister Kevin Rudd a trigger to call a early double-dissolution election, occurring in both houses of parliament.

To qualify as a trigger, the earliest the Senate could vote on the package a second time would be in late October, based on the current parliamentary programme. That would give Rudd the option of a December election, or in early 2010. If the government went on to win a double-dissolution, it could then push the laws through a special joint sitting of the lower house and the Senate to clear the political deadlock.

POLITICAL SOLUTION

Rudd is well ahead in opinion polls and the opposition parties believe he wants an early election option to avoid having to deliver a pre-election budget next May in a slowing economy.

But the opposition wants to fight an election later in the year. It believes its best chance of victory is to fight a late election on the issue of economic management, rather than fight an early election on climate change.

At the same time, the government is working hard to win support for the ETS from the business community, and hopes business will pressure its usual allies in the conservative opposition coalition to allow the ETS laws to pass.

Some political analysts think the Liberal Party, the major part of the opposition, may change its mind and allow the ETS laws to pass in order to kill off the chance of an early election. This would be more likely if the government delayed a second vote in the Senate until early 2010.

WAIT FOR THE NEXT NORMAL ELECTION

The next regular election is due in late 2010. If the laws are not passed by then, the ETS will become a major campaign issue. (Reporting by James Grubel; Editing by Bill Tarrant)





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