Liberal leadership: how Direct Action works in Malcolm Turnbull's favour

Climate policy cost Malcolm Turnbull the Liberal leadership and it looks like the biggest hurdle to any hopes he has of winning it back. But the solution to his dilemma could be hidden in Tony Abbott’s own Direct Action policy – which in its original inception Turnbull once described as “bullshit”.

Conservative colleagues want Turnbull to promise never to bring back an emissions trading scheme. But he once said he didn’t want to lead a party that wasn’t as committed to climate action as he was, and he also described the Coalition’s current climate policy as a “a recipe for fiscal recklessness on a grand scale” and “a very expensive charge on the budget in the years ahead”.

He said lots of other things besides. Labor is helpfully distributing quotes in case anyone has lost them.

When asked now, he repeats what he said on the ABC’s Q&A program last year, that “emissions trading schemes have worked better in theory than in practice” and that Direct Action should be given a chance to work.

“If there is a global agreement that requires larger cuts in emissions – and I think that would be good if there were, but it’s got to be a global agreement – then obviously Australia would play its part and the government would consider what changes or extensions or whatever to Direct Action would need to be made to achieve that,” he said then.

But the possible “changes and extensions or whatever” for a tougher scheme – and a carbon price – are buried in the deal Tony Abbott’s climate minister, Greg Hunt, did with crossbench senators to pass the Direct Action legislation. They were put there because they are the only thing that would give Australia a chance of meeting the deeper emissions reduction targets it will almost certainly have to agree to at a United Nations meeting in Paris this December.

The first is through “safeguards” the government must develop to make sure businesses that are not seeking money from his “direct action” fund don’t increase their emissions and undo all the reductions the government is buying.

The idea is to set baselines that emitters are not allowed to exceed. The tougher the baselines, the bigger reductions in emissions. That will be up to the government. But Hunt’s policy says if baselines are exceeded, the offending companies could make up for it by “purchasing credits created by other accredited emissions reduction projects”.

The policy also says that companies that promise a certain quantity of reductions in return for money from the $2.5bn emissions reduction fund, but then don’t manage to live up to their promises, could buy credits from companies that reduce emissions by more than they had envisaged.

Both those scenarios involve trading – and a carbon price. And depending on how the baselines were drawn, they would give Australia a good chance of deeper, cost-effective emission reductions within the existing Direct Action legislation.

The scheme would be more credible still if some of the emissions reduction fund was set aside to buy cheaper international carbon permits if Australia looked like missing its target – something that business wants but Abbott vetoed. (He once described buying international permits as being like sending “money … offshore into dodgy carbon farms in Equatorial Guinea and Kazakhstan”.)

Abbott dragged down Turnbull’s leadership because of his support for emissions trading. Abbott’s alternative policy, a little bit “changed or extended or whatever” could help Turnbull find a way to return to the job and still have a reasonably credible policy on climate change.