Australian PM waters down energy bill to dampen leadership pressure

SYDNEY (Reuters) - Australian Prime Minister Malcolm Turnbull on Monday averted a possible leadership challenge by dropping targets for cutting greenhouse gas emissions to appease his critics, say local media, as a poll showed his government losing voter support.

Conservatives in his coalition were reportedly sounding out colleagues for a possible leadership challenge before Turnbull on Monday announced the removal of emission reduction targets from the National Energy Guarantee (NEG) policy.

Under headlines such as “PM’s leadership on knife edge” major papers said some government members were gauging support for Home Affairs Minister Peter Dutton to replace Turnbull. Dutton said he supported the prime minister.

Asked whether his leadership was under threat, Turnbull declared: “I enjoy the confidence of the cabinet and my party room”.

The leadership talk was fueled by an Ipsos poll published in Fairfax newspapers, which showed support for Turnbull’s Liberal-National coalition falling four points to 45 percent, 10 points behind opposition party Labor and enough for a crushing electoral defeat. The next election is due by 2019.

Turnbull said his slim parliamentary majority and internal dissent, with some government members saying they would vote against the energy policy, left him no option but to remove the emission cuts that were part of the Paris Climate Agreement.

“Politics is governed by the iron laws of arithmetic and in a House of Representatives with a one-seat majority... if a small number of people are not prepared to vote with the government on a measure, then it won’t get passed,” Turnbull told reporters.

Though Australia remains a signatory to the Paris accord, the removal of emissions targets from the NEG mean the country has no legislative or regulatory path to meeting the agreement’s requirements.

Turnbull’s move may relieve immediate pressure on his leadership, though internal peace is seen as fragile as the government’s re-election prospects look dim. And having conceded on energy, he may face demands for other changes.

“It’s a complete capitulation to the right-wing members of the Liberal Party of Australia,” said Robyn Eckersley, Professor and Head of Political Science at University of Melbourne.

“Turnbull is desperately hanging on to his leadership above and beyond everything else.”

In 2009, Turnbull, then leader of the Liberal Party in opposition, crossed the floor to vote with the Labor government in favor of an Emissions Trading Scheme, a move that ultimately lost him the party leadership.

A successful challenge to Turnbull’s prime ministership would have been the fifth change in national leadership since 2009, with no prime minister seeing out a full term in office since 2007.

Reporting by Erin Cooper and Tom Westbrook; Editing by Michael Perry