News Analysis: Election - Climate is unlikely winner in Australia

In an unlikely twist, wind power is set to score a victory from an election that many feared would see renewable energy development and action on climate change placed in the shade.

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In Australia's fraught election, the climate-sceptical centre-right lost. Meantime, the centre-left lost the courage of its convictions on climate and, with it, its majority. Indeed, the only real winner of the election was the Green Party, which has now emerged as the undisputed third party. In 2007 the Greens got just 7.8% of the primary vote - an increase of only 0.6% on the previous election. But three years on, with both main parties failing to provide a convincing vision, votes for the Greens - who back a carbon price and want to see emissions slashed by 40% on 2000 levels by 2020 - rose 3.6% to 11.4%.

Consequently, the Greens will now hold the balance of power in the senate, Australia's upper house, from early next year - and secured their first seat in parliament. They will play a critical role in influencing the government that Prime Minister Julia Gillard of the centre-left Labor Party has now formed with the support of Green member of parliament (MP) Adam Bandt and three independents. Gillard's centre-left government now holds power, with 76 MPs to the centre-right coalition's 74.

In securing the support of the Greens, Gillard agreed a deal on climate change that will see the government set up a cross-party committee - including members of the science community - to consider the best way to put a price on carbon. It is a seemingly modest initiative, but one that John Connor, chief executive of think tank The Climate Institute, calls a big step forward. He says it is now very possible that Australia will get a carbon price in the next two years. The move could help underpin the profitability of the wind sector in coming years.

Much will depend on whether Gillard's minority government can see out its three-year term. The three independents she courted have offered her their votes on a voluntary, so-called confidence-and-supply basis and, although all three hail from rural constituencies - where action on climate change is regarded with some suspicion - they have backed support for more investment in renewable energy.

Matthew Warren, chief executive of the Clean Energy Council, says traditionally conservative rural communities in Australia are now beginning to realise the economic development potential of renewable energy. "Most new jobs and more than $20 billion of new investment in clean energy will be located in regional and rural Australia," he says. "Renewable energy is great news for country Australia."

Warren says momentum is now building towards a carbon price, which is needed to provide the renewable energy industry with the certainty to invest in clean-energy projects. Last month, 19 Australian energy companies wrote an open letter in support of a price on carbon, arguing that investors wanted a clear political direction on climate change so they can get on with planning the "energy transformation the country needs". Mining giant BHP has added its voice to the calls.

Gillard has moved quickly to appoint her new cabinet, with former junior climate change minister Greg Combet promoted to the cabinet as climate change minister.

On taking the role, he says his three priorities are boosting renewable energy, improving energy efficiency and working towards the introduction of a price on carbon. "In the new parliament, climate change policy will require broad consultation and the building of consensus," he says.

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