Green Wombat

Australian voters on Saturday tossed out the decade-old government of conservative Prime Minster John Howard, installing Labor Party leader Kevin Rudd (left) as the new PM. Howard was a staunch ally of the Bush administration on climate change, joining it in refusing to ratify the Kyoto Accord despite — or because of — Australia’s status as the planet’s biggest per-capita emitter of greenhouse gases.

Australia is a proverbial canary in the coal mine when it comes to suffering the consequences of climate change, and Saturday’s election may foreshadow how environmental issues will play out elsewhere in the coming years. With the country in the grip of the worst drought on record, global warming — and the Howard government’s emu-in-the-sand stance that prompted corporate Australia to push its own climate change agenda — became a hot campaign topic. The Australian Labor Party’s environment spokesman, former Midnight Oil front man Peter Garret (right) — a rock-star-environmentalist-turned-politico — hammered the government at every turn. Meanwhile, Rudd promised to sign Kyoto, up investment in green technology and establish a nationwide carbon trading market to help achieve a 60 percent reduction in greenhouse gas emissions by 2050. Labor also set a target of obtaining 20 percent of this coal-dependent nation’s electricity from renewable sources by 2020.

Just how much Labor’s climate change policies contributed to its landslide victory is up for debate, though such was the voters’ wrath that it appears that even Howard will lose his seat in Parliament, the first sitting prime minister to do so since 1929. But here’s one indicator: The Australian Greens scored 20 percent of the votes in some electorates and will take as many as six seats in the Senate, possibly giving the environmental party the balance of power in the upper house. The Greens also contributed to the Labor landslide because under Australia’s preferential voting system, ballots cast for unsuccessful Green candidates were re-directed to the ALP.

So with a charismatic greenie like Garrett as Australia’s presumptive new environment minister, Australia is set to become the Scandinavia of the South Pacific, right? Not quite. Australia’s current prosperity owes much to the resource boom under way as China buys up just about any mineral that can be dug out of the ground. (See my Fortune colleague Brian O’Keefe’s excellent story on the iron ore gold rush in Western Australia.)

Green Wombat got a first-hand look at the pressures Rudd will face during a visit last month to Queensland, the new PM’s home state. Driving through central Queensland’s coal belt, a never-ending procession of trains piled high with the black stuff flanked the two-lane highway, running 24/7 between the mines and the port, where China-bound coal ships are stacked up by the dozens off shore. Bulldozers scaled mountains of coal sitting on the side of the road, scooping up bucketfuls to be put on a conveyor belt that straddled the highway to connect to a train depot. At the Dingo roadhouse, a big color-coded wall map charts central Queensland’s major coal seams and Shift Miner Magazine is on sale, chronicling the explosion in coal mining that has turned places like Rockhampton into boom towns. Riding in from the Rockhampton airport, a former coal miner-turned-taxi driver tells me she rues passing up the chance a couple years’ back to buy a house for $A10,000 in a nearby mining town; such homes now go for $A300,000. Out on a cattle ranch about 500 kilometers from Rockhampton, a mining company is drilling for gold but rancher John Dennis tells me he hopes they find something else. “Black gold,” he says. “Coal.” (The biggest corporate takeover attempt now under way Down Under is Aussie mining giant BHP Billiton (BHP)’s $150 billion offer for rival Rio Tinto (RTP).)

So no surprise that Rudd wants to spend $A500 million on so-called clean coal technology to capture and store greenhouse gas emissions from coal-fired power plants. While sun-drenched Australia has some of the world’s best solar resource it currently gets about 86 percent of its electricity from coal. In fact, in recent years, Australian solar energy companies like Ausra have relocated to California, frustrated by the government’s lack of support for renewable energy. But with the new Labor government pledging to fund a $A150 million Energy Innovation Fund to stop the brain drain as well as increase the mandatory renewable energy targets, Australia may be the next frontier for green business.