THE Rudd government has conceded its emissions trading scheme could be delayed beyond the 2013 election, and that the politically inspired decision to leave the country in policy limbo for at least three years will make it much more expensive for Australia to meet greenhouse gas reduction targets.
Electricity generators have warned ''untenable'' and uncertain climate policies from both main parties will have ''dire consequences'' for investment decisions and possibly even electricity supply.
The Climate Change Minister, Penny Wong, told the Sydney Morning Herald the government would not try to legislate the ETS even by its new delayed start year of 2013 unless there is ''credible action'' by the end of 2012 from countries such as China, India and the US. It would also require a resolution of the Copenhagen deadlock over how national efforts are checked.
''We will only [legislate] if there is sufficient international action,'' Senator Wong said, declining to explain exactly what that meant. She admitted the delay would ''make meeting our [emission reduction] targets more expensive'' and that without a carbon price Australia would not meet the targets at all.
''You can't get to your targets without a cost on carbon … we have been very clear that we have to put a price on carbon,'' she said.
The new stance means the government will go to three critical international meetings demanding other countries implement emission cuts, but with no legislated policy of its own.
When the Coalition proposed the same ''wait and see'' policy, the Prime Minister, Kevin Rudd, described it as an ''absolute failure of leadership''. Yesterday he said it was ''a reasonable … and responsible course of action'' in response to slower than expected progress at the United Nations Copenhagen talks.
There is deep division and disquiet within the government over the new strategy, particularly the 2013 date, which implausibly suggests the government would restart the difficult ETS legislative process in an election year.
Sources say the backflip was pushed by the NSW Right but opposed by Senator Wong and several other ministers. Many ministers were unaware there had been a final decision on the policy retreat before it was revealed in the Herald on Tuesday.
The backflip was designed to neuter the Coalition's ''great big new tax'' scare campaign, but the Opposition Leader, Tony Abbott, continued regardless.
''The only way to avoid Mr Rudd's emission trading scheme is to elect a Coalition government because he still believes in it, the only difference is that he won't talk about it before the election because he lacks the courage to fight an election on this issue,'' he said yesterday.
The chief executive of the Energy Supply Association of Australia, Brad Page, said his industry was deferring decisions on investment in new baseload power stations, but would face ''crunch time'' in 2012.
''Neither side of politics has a tenable policy … the consequences will be quite dire if people can't make investment decisions,'' he said.
The Investor Group on Climate Change said the decision would mean lower investment in renewables and the Santos oil and gas company said it would stall lower-emitting gas projects.
In a bid to revive his battered environmental credentials Mr Rudd is rushing in new energy efficiency policies and yesterday said the government was about to introduce the biggest investment in renewable energy. He cited programs such as the $1.5 billion ''solar flagships'' announced in last year's budget.
Senator Wong said the ''biggest ever investment'' claim would already be justified by the renewable energy target and investments previously announced.
''Businesses will have to make [investment] decisions on the basis of what the Prime Minister has announced,'' she said.
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