Ross Garnaut’s new emissions trading report represents a double bonus for the Rudd Government. It is desperately needed. Garnaut has given Rudd more policy flexibility and better political options on the nightmare issue. The unknown test is how Garnaut’s ideas will carry in the international arena.

The lofty ambitions of Ross Garnaut’s draft report in July have been curtailed by economic modelling. Earlier rhetoric that Australia needed to lead global action has been diluted to more modest aspirations: a 5 per cent emissions cut by 2020 in the absence of a comprehensive global deal, or a 10per cent cut if such a deal can be brokered.

The long-awaited Treasury modelling partly unveiled yesterday in Professor Garnaut’s interim report on emissions trading revealed that a 10per cent emissions cut - within a global agreement - would come at a surprisingly low cost for Australia, about 0.1 per cent of GDP a year or a 1.1 per cent reduction in growth by 2020.

It’s time Opposition Leader Brendan Nelson went. It’s time the Liberal Party stopped genuflecting to John Howard, quit its dithering and got on with the business of renewal. It’s time the Liberal Party stopped giving Brendan Nelson the benefit of the doubt.

The first publicly available results from the Treasury’s emissions trading modelling reveal that a 10 per cent emission reduction would reduce Australia’s GDP by 1.1 per cent by 2020 and result in a carbon price by that date of about $34.50.

Ross Garnaut warned in his draft report that “intense lobbying” could lead to “serious distortion of policy-making processes”. But this lobbying will extend from smokestack industries and miners, through driving organisations and the pensioner lobby, to millionaire wind-farm financiers, solar panel-makers and insurance companies.

After weeks of escalating complaints about its emissions trading scheme, the Rudd Government has agreed to work with the major polluting industries to find a fairer way of distributing compensation in the early years of the scheme. The Government had been warned that its proposed formula might seriously harm the economy.

Kevin Rudd is determined to be different, to live up to his promise of being a fresh politician who not only has new ideas but also sticks to what he says. What’s more, he is not just making this comparison with John Howard and the previous government.

The Kyoto model is fundamentally flawed, as it focuses on the production of carbon emissions rather than their consumption. It should be easier to get global agreement on a consumption-based emissions trading deal because it involves no regrets in terms of trade competitiveness.

An informal paper circulated by the Department of Resources ahead of a meeting between the Resources Minister and industry peak bodies and chief executives “canvasses alternative approaches” for compensating high-polluting industries that are unable to pass on the cost of emissions permits.