SYDNEY/SINGAPORE (Reuters) - Australia could accelerate action on climate change, possibly resurrecting an emissions trading scheme, after independent and Greens MPs won the balance of power in elections that left a hung parliament.
Businesses like power retailer AGL and leading electricity provider Origin Energy have repeatedly said they need regulatory clarity on carbon pricing as they look to invest billions of dollars in energy infrastructure.
Now a deadlock that saw emissions trading laws stall in parliament in April could be broken.
“The election outcome could help pull Australia’s pollution politics out of the quagmire of scare campaigns, paranoia and deception from the major parties and big polluters,” John Connor, CEO, The Climate Institute, said on Tuesday.
Saturday’s election resulted in neither incumbent Labor nor the Liberal/National coalition with the 76 seats needed in the lower house of parliament to claim victory, with experts predicting the final count to be 73 each.
Australia’s Greens party saw its national vote double to 12 percent, electing seven Green senators who will control the balance of power in the Senate, and a Green MP in the lower house who will help decide the next minority government.
“The election provides the Greens with a clear legitimacy... and we would expect the Greens to immediately push for stronger action on climate change,” said Martijn Wilder, global head of Baker & McKenzie’s climate change practice.
Climate change is set to be a major focus of talks between Labor Prime Minister Julia Gillard, opposition leader Tony Abbott and the three independents and Green MP who will determine which of the two forms a minority government, say analysts.
“The independents, on balance, seem to support action on climate change,” said Deutsche Bank in a research note.
“Combined with the pressure from Greens holding the balance of power in the Senate from July next year, there is a possibility that an emissions trading scheme could be accelerated under a minority Labor government,” the note said.
Both parties in coal-reliant Australia, one of the developed world’s worst carbon polluters on a per-capita basis, back at least a 5 percent emissions cut from 2000 levels by 2020 but differ on how to achieve it.
Labor twice tried to push through carbon trading laws during its last term, but shelved them in April until at least 2012 because of fierce opposition.
The delay angered voters who had elected Labor in 2007 on a platform of climate change action, and Gillard has since said she believes a markets-based carbon price is inevitable.
In contrast, the opposition sees a carbon price as a tax which will hinder business and has a A$3.2 billion plan to raise a “Green Army” to foster energy saving and plant 20 million trees by 2020 to reduce planet-warming CO2 emissions.
Three of the four political “kingmakers” support a carbon price, while the fourth is opposed but backs investment in renewable energy such as ethanol and sugar cane.
“At some stage we will probably see some global price on carbon. Whether that be an actual market mechanism or it gets built into incentives like renewable energy,” independent Tony Windsor told Reuters on the eve of the election.
“There will be a price on pollution,” said Windsor, who in 2008 sponsored a climate protection bill that called for an emissions cut of at least 30 percent below 1990 levels by 2020.
The Greens also hold another climate card. In July 2011, a new Senate line-up will mean the Greens hold the balance of power in that chamber with nine seats, from 5 now.
The Greens want deeper cuts to emissions than either major party is offering and have proposed a two-year A$23 per tonne carbon price and a long-term 100 percent renewable energy target.
Greens Leader Senator Bob Brown said the election showed the “greening of this nation” and that the next government must take action.
“The minimum for climate change is to take action, to get something under way,” said Brown.
Analysts, though, say a carbon price is the only way to bring about substantial emissions reductions across industries.
“We think there are grounds to fast track the CPRS discussion and in fact that is what we want to see,” said Nathan Fabian, Chief Executive of the Investor Group on Climate Change, which represents institutional investors with total funds under management of approximately $600 billion.
(A$ = 88.9 U.S. cents)
Editing by Michael Urquhart