VZCZCXRO4851
OO RUEHPT
DE RUEHBY #1070/01 3360706
ZNR UUUUU ZZH
O 020706Z DEC 09
FM AMEMBASSY CANBERRA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2380
INFO RUEHBJ/AMEMBASSY BEIJING 9664
RUEHCP/AMEMBASSY COPENHAGEN 1172
RUEHJA/AMEMBASSY JAKARTA 5572
RUEHLO/AMEMBASSY LONDON 2156
RUEHOT/AMEMBASSY OTTAWA 0015
RUEHUL/AMEMBASSY SEOUL 9968
RUEHKO/AMEMBASSY TOKYO 3755
RUEHWL/AMEMBASSY WELLINGTON 0172
RUEHBN/AMCONSUL MELBOURNE 6817
RUEHPT/AMCONSUL PERTH 5082
RUEHDN/AMCONSUL SYDNEY 5086
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/HQ EPA OIA WASHINGTON DC
RHMFIUU/HQ EPA ADMINISTRATORS WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RHEHAAA/THE WHITE HOUSE WASHINGTON DC

UNCLAS SECTION 01 OF 02 CANBERRA 001070 
 
SENSITIVE 
SIPDIS 
 
STATE FOR S/SECC STERN, PERSHING, OES/EGC TALLEY, EEB 
MONOSSON, WHITE HOUSE FOR BROWNER 
 
E.O. 12958: N/A 
TAGS: SENV KGHG PREL AS
SUBJECT: RUDD'S EMISSIONS TRADING SCHEME DEFEATED IN SENATE 
 
REF: A. CANBERRA 1053 
     ¶B. CANBERRA 920 
     ¶C. CANBERRA 893 
 
¶1.  (SBU) Summary:  The Rudd government's Carbon Pollution 
Reduction Scheme (CPRS) was defeated in the Senate after the 
Opposition changed leadership and subsequently rejected the 
scheme.  The government will re-introduce the bill on 
February 2, but consensus is that the current deal is dead. 
In the meantime, Rudd will not benefit from the added 
leverage that an approved CPRS legislation would have given 
him in international negotiations at Copenhagen.  The Greens 
could now acquire the role of power broker in future climate 
change votes in the Senate.  End Summary. 
 
CPRS FALLS SHORT BY 5 VOTES 
--------------------------- 
 
¶2.  (SBU) The CPRS identified a reduction target between 
5-25% over 2000 levels by 2020 (depending on the outcome of 
international negotiations) and did not include specific 
targets that were to be announced at Copenhagen. 
Nevertheless, the CPRS was defeated following several days of 
intense debate (more than 40 hours in the Senate).  The 
election of new Liberal Leader Tony Abbott (ref A) on 
December 1 was the final blow, as he immediately signaled he 
would not vote for the bills, characterizing them as "a $120 
billion tax on Australians."  All the Independent, Green, 
National Party and Liberal (save two) senators voted against 
the bill. 
 
¶3.  (SBU) Major Australian industry groups generally accept 
the CPRS and want an end to the uncertainty over a future low 
carbon framework.  The government failed to convert that 
acceptance public pressure on the Opposition from key 
industries ahead of the vote.  The government plans to 
reintroduce the bills on February 2, but Abbott's outspoken 
opposition to climate change and the CPRS in particular will 
make it very unlikely that the government can negotiate a 
deal in 2010. 
 
FRONT AND CENTER FOR 2010 ELECTIONS 
----------------------------------- 
 
¶4.  (SBU) General opinion is the turnabout on the CPRS will 
weaken the Opposition in future elections, which could come 
as early as March if Rudd chooses to use the defeat as a 
trigger for a double-dissolution of parliament.  The only way 
the existing plan could be passed now is through a joint 
sitting of parliament following an early election.  Few 
believe that Rudd, not known as a risk-taker, will take that 
route.  Climate change should therefore be one of the 
predominant campaign issues in the regular elections, which 
are scheduled for late 2010. 
 
¶5.  (SBU) The Opposition will need to devise a 
counter-proposal to the cap-and-trade scheme in the first 
quarter of 2010.  The Liberals will be hesitant to embrace 
carbon taxes - since they axed the CPRS by portraying it as a 
tax - and so will likely rely on alternative approaches, such 
as increased funding for clean technology, voluntary 
agricultural offset programs and sequestration, and subsidies 
Qagricultural offset programs and sequestration, and subsidies 
for higher renewable energy investment.   Given the Liberals' 
overall electoral weakness, the Greens could gain several 
Senate seats and become the swing party in the Senate, and 
further complicating passage of future legislation. 
 
WILL IT IMPACT COPENHAGEN? 
-------------------------- 
 
 
CANBERRA 00001070  002 OF 002 
 
 
¶6.  (SBU) Comment: The government's position fell apart due 
to a perfect storm of growing unease about the impacts of the 
national cap-and-trade system's cost, irreconcilable 
differences within a skeptical opposition, and the Rudd 
government's inability to convincingly link the CPRS to 
Australia's future welfare, at least among enough members of 
the Opposition.  The defeat means little for Australian 
industry and emissions in the short term, as the CPRS was not 
due to enter into force until 2011.  Rudd will be unable to 
use passage of the bills to demonstrate Australia's strong 
leadership role on this issue in Copenhagen.  Australia's 
failure to enact a comprehensive scheme could further stoke 
fears that developed countries may not be able to follow 
through domestically on commitments made in Denmark. 
 
BLEICH