Sussan Ley's net zero problem won't only impact the Coalition

Sussan Ley put on a brave face this week, fronting up for a round of interviews to insist everything's fine. "'Tis but a scratch," as Monty's Python's Black Knight would say.

But the opposition leader's suggestion that the torturous process of settling the Coalition's climate policy has been "good", is not the view of many across both sides of the great net zero divide within the Liberal Party.

This drawn-out process, and the confusion around whether the Liberal Party has even had a separate track to the Nationals for settling its net-zero position, is coming in for sharp internal criticism.

It's part of the reason why Ley is now on such thin ice.

Gazumped by the Nationals

If the Liberals really did have their own process for reaching a position on net zero, rather than the combined "Coalition working group" announced back in June and led by Shadow Energy Minister Dan Tehan, they may have known by now where they stand.

They wouldn't look like they're being forced into a position by the Nationals.

Indeed, had a Liberal-only decision been settled a couple of months ago, senior party figures across the factions privately concede it would most likely have involved retaining some sort of net zero commitment.

Now, that moment has passed. Liberal conservatives have hardened their view. "There's no way this ends with us remaining committed to net zero," said one, after being gazumped by the Nationals over the weekend.

Liberal moderates, on the other side, insist net zero isn't dead yet, and are putting up a fight. They're reminding Ley it was the moderates who made her leader six months ago. Post-election polling, they point out, showed most voters who deserted the Coalition want the party to demonstrate a credible climate policy.

"If she drops net zero, she's dead. She can't survive," said one moderate. 

"It doesn't look like she's at all in control of events," said another.

Giving everyone a say

A leader who wanted to avoid Peter Dutton-style captain's calls is now facing criticism for going too far the other way in her effort to give everyone a say.

The reluctance by Ley or deputy leader Ted O'Brien to state a conviction position on net zero over the last six months was aimed at giving colleagues room for a thorough debate.

Ley stands by the process and didn't want to prematurely announce a position that could then lead to messy disagreements and frontbench resignations.

But the risks in vacating the field for so long are clear.

On Friday, just before the Nationals move, Tehan was still insisting his working group could take another three months to leisurely complete its work.

Now, finally, the process has been accelerated.

A series of Liberal meetings

A special meeting of Liberal MPs will be held in the next two weeks, followed by a meeting of Liberal shadow cabinet ministers to settle the party's net zero position, before the final parliamentary sitting week for the year.

Nothing has been decided yet, but the most likely landing position will involve giving priority to lowering power prices and remaining committed to the Paris Agreement, with vague assurances about gradually cutting emissions in line with developed countries.

Ultimately though, Ley and her senior colleagues will have to decide whether the Liberal Party backs a net zero target or not. That remains the most difficult question.

If, as expected, the target is abandoned, the long delay in reaching this point will leave the Liberals looking like they've capitulated once again to the Nationals.

The junior Coalition partner will be emboldened to continue with its modus operandi of forcing policy positions on the Liberals.

The government, for what it's worth, is convinced Ley is finished and won't make it to the end of the year. In question time, ministers have been highlighting their opponents' woes and happily twisting the knife.

But there are potential red flags for Labor too if bipartisanship on net zero is finally broken.

Lessons for Labor

As shambolic as the Coalition appears this week, another chapter in the climate wars may not be all upside for the government.

Energy prices continue to rise, contributing to higher inflation. Two aluminium smelters are now facing an uncertain future as they struggle to find affordable power. There are parts of Australia where the words "net zero" won't necessarily be celebrated.

The Coalition may not have an alternative policy to magically fix the problem, but it will have a blunt message linking every higher price to Labor's policy.

The government knows it will need to keep making the case for why the great energy transition is necessary for both the environment and the hip pocket.

Treasurer Jim Chalmers, for one, has been sharpening his lines in parliament this week about the "economic insanity" of abandoning net zero, warning it will hurt jobs and investment and drive prices even higher.

The Liberal Party might be facing the darkest days so far since its worst ever election defeat six months ago. But as one Labor minister yesterday noted, the tide will always turn.

David Speers is national political lead and host of Insiders, which airs on ABC TV at 9am on Sunday or on iview.