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The toxic political debate of climate change -

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LEIGH SALES, PRESENTER: It's six years since Kevin Rudd called climate change "the great moral challenge of our generation".

At the time there was largely bipartisan support to address the issue via a market-based emissions trading scheme.

But that agreement has long since dissolved into a toxic political debate.

It was a key factor in Malcolm Turnbull losing the Liberal leadership, in Mr Rudd being dumped as Prime Minister and replaced by Julia Gillard in 2010 and then in Ms Gillard's removal in June.

Amidst the brawling, public support for action on climate change has diminished.

As the election looms, the two parties have similar targets for reducing carbon emissions, but totally different policies for how to get there.

Shortly I'll be joined by the Climate Change Minister and his Coalition counterpart, but first Chris Uhlmann has this report.

CHRIS UHLMANN, REPORTER: The diabolical politics of global warming has helped fell three prime ministers and two opposition leaders.

KEVIN RUDD, THEN PRIME MINISTER: Climate change is the great moral challenge of our generation.

MALCOLM TURNBULL, THEN OPPOSITION LEADER: A major political party must have a credible policy on climate change.

CHRIS UHLMANN: Over six years carbon pricing has morphed from Labor's weapon to the Coalition's.

KEVIN RUDD: We tried three times to get an emissions trading scheme through this parliament, although we failed.

JULIA GILLARD, THEN PRIME MINISTER: The will be no carbon tax under the government I lead.

TONY ABBOTT, OPPOSITION LEADER: We will abolish the carbon tax.

CHRIS UHLMANN: Community sentiment has shifted so much that both sides now want credit for axing the carbon tax.

KEVIN RUDD: The Government has decided to terminate the carbon tax.

TONY ABBOTT: He's not The Terminator, he's The Exaggerator.

CHRIS UHLMANN: So what are the bones of the major parties' climate policies? The starting point is the same. Both pledge to cut carbon emissions by five per cent below year 2000 levels by 2020. They also agree on the mandatory renewable energy target which aims to ensure that the equivalent of at least 20 per cent of Australia's electricity comes from renewables by the end of the decade and right now it's that target that's doing most of the heavy lifting.

MATT HARRIS, FRONTIER ECONOMICS: At the moment the target is for 41 terawatt hours by 2020. That's - on current demand growth, that's around 26, 27 per cent of our electricity by 2020.

CHRIS UHLMANN: That's where the agreement ends. The Coalition's other plan is called Direct Action, to set up a capped $3 billion fund to support companies that cut emissions.

MATT HARRIS: The Direct Action scheme works more on a credit-based system, so this rewards companies for reducing their emissions below a baseline or a target.

CHRIS UHLMANN: And the Government has a carbon price. It's fixed at $24 a tonne of carbon until July next year; then it will fleet float in line with the European carbon market price. There, a tonne of carbon is currently trading for about $6.

MATT HARRIS: So the carbon price mechanism is more of a penalty-based scheme. So this charges companies for their emissions and that in most cases gets passed through to consumers and that's intended to create an incentive to reduce emissions to reduce that cost.

CHRIS UHLMANN: But the Government muted a lot of that incentive when it poured billions in compensation into households and businesses. That compensation will stay no matter who wins on September 7.

TONY ABBOTT: Keeping the carbon tax compensation without the carbon tax.

CHRIS UHLMANN: Serious questions hang over the design of the Coalition's plan. There's no hint of what happens beyond 2020 and meeting the five per cent target might blow the budget. A recent study sponsored by the Climate Institute found it $4 to $15 billion short of what would be needed.

MATT HARRIS: Firstly, there's uncertainty as to how much these emissions reductions will cost. As it stands, the funds have only been allocated for the next four years. But as it's been proposed, the total funding for emissions reductions is capped. So presumably if the abatement costs more than what has been anticipated, then there's a chance of a shortfall in meeting that target.

CHRIS UHLMANN: By moving early to a floating price, the Government has tacitly admitted its carbon price started too high. Now it looks set to fall so low it won't drive any change in behaviour.

WARWICK MCKIBBIN, CRAWFORD SCHOOL OF PUBLIC POLICY, ANU: The problem with the Government policy that we've seen is that the carbon price was so high, the input costs of energy went up so much, that people were hurt, which is why there was compensation, and industries were made less competitive, which is why we were shedding manufacturing jobs - one reason why. So the trouble with that was it was too much too soon, but it didn't give us the long-term incentives because you didn't know what the price of carbon would be in 10 years.

CHRIS UHLMANN: Professor Warwick McKibbin has spent years working on the design of carbon pricing. He proposes a domestic emissions trading system linked to long-term targets.

WARWICK MCKIBBIN: Going forward we need a policy where if the world takes severe action, that we can join it, and if the world doesn't, we don't damage our economic competitiveness.

CHRIS UHLMANN: And routine policy shifts have done real damage.

WARWICK MCKIBBIN: Uncertainty kills investment. Investment is being killed by chopping and changing. Also, bipartisan policy's critical, because without the bipartisan support, as soon as you have an election, policy could switch and that increases uncertainty. So the benchmark, the starting point should have been a bipartisan approach.

CHRIS UHLMANN: That looks unlikely.

TONY ABBOTT: You walked away from a price of carbon. It's one of the reasons why you lost the prime ministership.

KEVIN RUDD: Tony, you voted it down twice in the Senate! That's why it didn't happen!

TONY ABBOTT: And you dumped it. And you dumped it as your policy.

KEVIN RUDD: You voted it down twice in the Senate! It was gone! That is just an extraordinary proposition. You and the Greens hopped into bed and killed the Emissions Trading Scheme.

CHRIS UHLMANN: This fight has a long way yet to run.

LEIGH SALES: Chris Uhlmann there.