Australia's Greens win the battle, but the war continues

To use a suitably Australian idiom it would be wrong to piss on the chips of the country's Green Party just hours after it secured a powerful hold over the future direction of Labor's new minority government. But at the same time those environmental commentators lining up to suggest Labor's narrowest of victories will result in the rapid adoption of a progressive climate change policy are likely to be disappointed.

In the short term at least, it is entirely understandable for low carbon businesses and environmental groups to celebrate Labor's victory. A victory for the Liberal-led coalition would have led to the evisceration of Australia's already weak climate change policy, killed off any hopes of a carbon pricing mechanism being introduced, and provided a major boost to those climate sceptics within the Liberal Party who loudly condemn global warming as a socialist hoax. In contrast, the successful stitching together of a Labor-led coalition following 17 days of talks not only revives hopes of a climate change bill being passed, it drives environmental issues right to the top of the political agenda.

With independent MP Rob Oakshott revealing it was the Liberal position on climate change that played a major factor in driving him to support a Labor government that has suffered a major blow to its authority at the polls, and newly elected Green MP Adam Bandt vowing to push the government every step of the way to deliver on its promise of a carbon pricing mechanism, debates about climate change policy will dominate the early days of the new government.

Labor is also likely to conclude that despite its failure to deliver a clear majority, its mandate for taking action on climate change has actually strengthened.

There is little doubt that the standing of both former Prime Minister Kevin Rudd was fatally damaged by his failure to deliver a promised emissions trading scheme, just as Julia Gillard's credibility was damaged by her decision to oust Rudd ahead of the election. Moreover, the only party that can declare any kind of election victory is the Greens, who enjoyed a larger swing than in any other country, saw their share of the vote reach 11.7 per cent, obtained their first seat in the lower house, and picked up nine seats in the 76 seat Senate. Taken as a whole, the support for Labor, the Greens and those independents that made it clear they favoured action on climate change means there is a clear electoral mandate for rapid action, regardless of Liberal complaints that Labor does not have a right to govern.

The net result is that the chances of Australia introducing a wide-ranging climate change bill, built around a meaningful price on carbon and a huge increase in renewable energy investment, have increased significantly. Those energy firms and green businesses who last week called for urgent action to tackle carbon emissions may just get what they wished for.

However, there are still numerous challenges to overcome before such a scenario materialises. Gillard's grip on power remains precarious in the extreme, with Labor relying on a majority of one vote in the lower house. She will lead a minority government that is reliant on the political support, good will, and health of every single MP who has tied their colours to Labor's mast.

In order to get the Greens on board, Labor has agreed to the formation of an independent climate change committee that will assess the best way to put a price on carbon emissions. This seems a suitably non-partisan way of ironing out the differences between Labor and the Greens. But what if either side is not happy with the recommendations put forward by the committee?

The Greens opposed the last government's climate change bill because it was not ambitious enough and it is easy to imagine them doing the same again if the final version of the bill is not to their liking. Equally, Labor MPs and the two rural independents could also quickly withdraw their support were the bill to threaten the interests of their constituents. A very delicate compromise will be required if Gillard is to steer the legislation through.

Meanwhile, it is inconceivable that the Liberal Party will change its tactics when it comes to attacking the Labor-Green alliance. Having lost out on becoming Prime Minister by one seat, Liberal leader Tony Abbot is bound to opt for a strategy of more of the same - only more so.

With the row over climate change policy likely to run and run, energy firms and green businesses operating in Australia can expect to endure at least another year of the political uncertainty that has consistently undermined low carbon investments for much of the past five years.

Labor and the Greens have the best chance in a generation of passing ambitious and wide-ranging carbon legislation. But if the Australian election has taught us anything, it is that effective climate change policy is extremely difficult to adopt in a country where global warming has been politicised.