Have Clive Palmer and Al Gore given Turnbull the last laugh?

It is a story truly stranger than fiction and one that has the renewable energy sector celebrating and incumbent electricity suppliers in shock. It could also potentially mean a carbon trading scheme may still yet survive.

Yesterday evening Clive Palmer – the man who for a period of time defied paying an overdue $6 million carbon tax bill and hopes to develop one of the world’s biggest coal mines – stood side by side with Al Gore, a Nobel Peace Prize winner for his campaign on global warming aimed at consigning coal to an early grave.

Clive gave a speech of soaring rhetoric, suggesting a 'Road to Damascus'-like conversion. He explained that his discussions with Al Gore had, “enabled me to reconsider important issues facing all Australians and the rest of the world”.

He told the media that America was the loser in Al Gore failing to win the presidency, but the world was the beneficiary thanks to Al Gore’s subsequent “leadership” and “courage”, presumably in his Inconvenient Truth campaign. In a subsequent ABC Lateline interview Palmer told an incredulous Tony Jones that his past dismissive views about global warming were because he “lacked a full picture of the issues”. He also noted that recent carbon emission policy initiatives by US President Barack Obama as well as signs that China was now acting had influenced his views.    

In terms of the concrete substance flowing from his Road to Damascus conversion there were several key elements, set out under the headings below.

PUP will not support reductions in the Renewable Energy Target

Palmer told the press conference that his party will not support any attempt by the government to lower the Renewable Energy Target until such time as the government had put any proposed changes to the electorate at the next election. Palmer said that the Coalition at the previous election had promised to keep the Renewable Energy Target and had not told the electorate of any plans to reduce it.

PUP will reject repeal of Clean Energy Finance Corporation and Climate Change Authority, undecided on ARENA

He also said his party will block the government’s attempt to abolish the $10 billion Clean Energy Finance Corporation which provides loans to support renewable energy and energy efficiency projects. According to Mr Palmer, he couldn’t see much point in abolishing such an institution when it was making a profit and would cost jobs.

He also said his party would vote against the repeal of the Climate Change Authority, intended to provide transparent, arms-length advice to government and the public on climate change policy.

In an interview with ABC Lateline, when asked about whether PUP would block the government's move to abolish the Australian Renewable Energy Agency along with its budget for emerging renewable energy technologies, Palmer said they had not determined a position.

PUP to vote in favour of scrapping carbon tax but will push for an emissions trading scheme. Not clear whether they will amend or accept wholesale repeal of current carbon pricing legislation

But it is the future of carbon pricing where Palmer has thrown a major spanner in the works and got everyone guessing. That’s because it appears to open up a crack for the current carbon pricing scheme to survive.

He said his party would support repeal of the carbon “tax” but would move an amendment to implement an emissions trading scheme that took effect once Australia’s main trading partners also established such a scheme. He said that initially the scheme would have a carbon price that was “zero rated”, and at a future time the government would adjust its “financial parameters” based upon the actions of Australia’s trading partners – listing the US, Europe, China, Japan and Korea.

Now this could have very major implications or it could amount to very little depending upon how PUP seeks to approach the legislation.

It is possible that with a few tweaks you could get the current scheme to work, as Palmer outlines, by playing with the existing legislative provisions that set a maximum limit on how much a company would ever have to pay for their carbon permits (a price cap). You set the price cap to zero dollars and then allow the Climate Change Authority to propose incremental increases each year based on a review they undertake of climate policies being implemented by US, Europe, China, Japan and Korea. Given several of these countries have implemented emission trading schemes or are progressing equivalent carbon constraint measures, it’s possible the price might not remain at zero for long.

Now it’s conceivable that PUP could pretty much reject the government’s repeal bills as they stand now and instead just leave the legislation for the most part intact. The fixed price of about $25 would be removed, and prices of permits allowed to float freely up to as far as where the price cap was set.

This might result in a pretty inadequate carbon price, but it would leave in place a quite robust legal architecture that both government and businesses are already geared-up to administer. This could then be reasonably easily ratcheted-up in stringency over time in line with international emission reduction progress.

The alternative path would be that PUP simply waves through all the government’s carbon price repeal bills (other than the two relating to the Climate Change Authority and the CEFC) and then separately moves bills to establish its proposed model for an emissions trading scheme. Under such an approach the government faces no great headache. The carbon price could be abolished relatively quickly and PUP would face an extremely difficult battle getting new legislation for its ETS up because they’d have given away their chief bargaining chip.

Palmer's responses during his Lateline interview seem to suggest he'd be choosing the later path but one gets the feeling he's still a bit a hazy on the details. Ultimately the first path is the one that will give Clive the better opportunity to grandstand, and that seems to be his very reason for being.

When a colleague told me a few weeks ago he was still actively trying to persuade parliamentarians to not repeal the carbon price, I said if I was him I would have given up months ago.

His response in return was a quote from Nelson Mandela:

“Every important change in history was impossible until it happened”.

This has not yet qualified as an important change in history. But Clive Palmer sharing the stage with Al Gore, praising his work promoting action of global warming, while saying Australia needed to do its part for the sake of our children – well that was truly impossible until it happened.

And it leaves you wondering – did that dinner with Malcolm Turnbull and Martin Parkinson (who was the architect of the carbon price before becoming Treasury Secretary) have anything to do with Clive's sudden change of heart?