![Labor leader Bill Shorten is ready to end the long-running policy war over climate change.](http://web.archive.org./web/20170710115245/http://www.afr.com/content/dam/images/g/w/e/2/c/7/image.related.afrArticleLead.620x350.gwkcar.png/1496708363425.jpg)
Labor could back the Coalition's compromise Low Emissions Target to combat climate change if it means putting to an end the decade-old policy war on emissions reduction policy, Opposition Leader Bill Shorten says.
Chief scientist Alan Finkel will recommend a LET, also known as a clean energy target, as an option on Friday when he hands down his final report into energy reform. Mr Shorten said even though Labor backs a more rigorous Emissions Intensity Scheme (EIS), it recognises the political reality facing Malcolm Turnbull whose right wing would skewer him if he adopted an EIS.
"We will wait and see what the Finkel Review says at the end of this week," Mr Shorten said on Monday.
"Labor is on the record supporting an emissions intensity scheme. We think that something that looks like that is what needs to be considered.
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"I understand it's not straightforward for Mr Turnbull with his party, but if the Finkel report provides constructive direction going forward then we will approach it with a desire to actually end the climate change wars and start getting on with dealing with climate change in the most economically efficient way, which achieves a better climate future."
Mr Shorten's olive branch is the the most significant gesture in years, which could end the bitter policy battles that have raged since 2009 when Tony Abbott took the Liberal leadership and opposed Labor at every turn. It would also spare Labor another electricity price scare campaign from the Coalition going into the next election.
Kevin Rudd's embrace of a Carbon Pollution Reduction Scheme in 2009 ended his leadership and the opposition leadership of Malcolm Turnbull. Julia Gillard's embrace of a carbon price in 2011 helped end her and the Labor government. While Labor supports an EIS, there is strong support from business, industry and others to end the squabbling once and for all to provide badly needed investor certainty in a volatile and fragmented energy market.
Dr Finkel is expected to also canvass an EIS among other options for helping the power sector transition to cleaner energy.
Under an EIS, polluting is free to a certain level above which penalties are imposed.This would lead to a quicker demise of existing coal-fired power than an LET and Mr Turnbull has ruled out an EIS to stymie any backbench revolt.
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Dr Finkel will also propose as a compromise a LET. Under this scheme, a certain percentage of energy must be generated from "low emissions" sources.
These would be technology agnostic and would include renewable energy, gas and coal that uses carbon capture and storage technology, if it can be developed.
A LET would take effect after 2020 to help Australia meet its Paris climate change targets of reducing emissions by 26 per cent to 28 per cent on 2005 levels by 2030.
It would replace both the Renewable Energy Target and the Coalition's direct action policy, both of which expire in 2020, and give a longer life to existing coal generators.
Mr Turnbull's greatest obstacle will still be conservatives in his ranks. A small rump thinks Australia should do nothing and follow Donald Trump in withdrawing from the Pairs accord. Others will fight anything that puts upward pressure on power prices. Business and industry are desperate for an end to the policy uncertainty, which has caused investor uncertainty, leading to volatile power prices and supply as the states go it alone with their own schemes amid an absence of federal leadership.
Mr Turnbull made the argument on Monday for an LET, saying his energy policy would be driven by economics and engineering, not ideology "which is Labor's mistake".
"Labor has created a shocking state of affairs and most notably in South Australia, where, as you know, they have this huge renewable energy resource – wind," he said.
"They did no planning. They didn't think about storage or back-up. So they have got a situation in SA where the wind farms can generate 100 per cent of the state's electricity one minute, or zero per cent the next. That's just dumb. That is just reckless, putting ideology and politics ahead of hard-headed planning."
Mr Turnbull said the priorities were "affordability, reliability, and meeting our global commitments to reduce our emissions as we agreed in Paris".
Labor's environment and energy spokesman, Mark Butler, said the Coalition, which has fought against market-based climate change policy for years, was responsible for the current policy mess and its internal troubles meant the national would most likely have to settle for a LET.
He said a EIS had the support of Labor and "pretty much every business group except the Minerals Council of Australia, which is understandably talking its own coal book".
"Mr Turnbull and the Minerals Council are forcing the country to have a debate about a second or perhaps, third best option," he told Sky News. "It's a pretty extraordinary situation or us to find ourselves in."
But like Mr Shorten, Mr Butler left open the possibility to support a LET.
"We are going to keep an open mind," he said.
"We'll wait and see what the Finkel report says on Friday."
During talks in Sydney on Monday, US Secretary of State Rex Tillerson played down the US withdrawal from the Paris accord, an issue which was raised in the meeting of Australian and US defence ministers and foreign ministers.
"He's not walking away from it - he's simply walking away from an agreement he felt did not serve the American people well," he said.
"Again, in our relationship with Australia, I think we will continue to have shared interest in addressing these daunting challenges that face us all."