By guest contributor Peter Shmigel, Director of P&P's Sustainability portfolio

Will Kevin Rudd and Penny Wong return to our shores with Australia committed to new greenhouse gas reduction targets or just with their hair braided and cases of Bali belly? The UN Framework Convention on Climate Change Conference in Bali, Indonesia is down to the short strokes and it is the new Rudd Labor Government’s first big challenge. How will Labor achieve the right balance between environmental considerations and the reality of Australia’s resource-based economy?

What’s mainly on the table at Bali is the so-called Draft Decision. If adopted, it is a major step toward a future international decision on binding greenhouse gas emission rules after the overall UN Convention and its Kyoto Protocol expire in 2012. The Decision – while not de jure binding at this point – would strongly push signatories along toward a new set of post-2012 obligations and timeframes primarily including:

· Net emission reductions between 25% and 40% by developed countries including Australia by 2020 – as opposed to the 8% increase off 1990 base that we’re currently committed to, and;
· Slow-down in overall emissions by developing countries by 2020 – including many of Australia’s major trading partners.

The stars are aligned for progress in four ways: a) strongest possible scientific consensus on the extent and implications of the problem through the International Panel on Climate Change; b) strong economic evidence that inaction is costlier than action through the UK’s Stern Report; c) rising community expectations off the back of Al Gore’s Inconvenient Truth, and; d)unprecedented calls from business leaders for policy certainty, including targets and carbon pricing.

So, the bold OTR prediction: by week’s end, Australia will commit in principle to Bali’s 2020 target reduction of between 25 to 40% subject to the cost/benefits currently being identified on behalf of the Commonwealth, States and Territories by Professor Ross Garnaut. Labor will get the symbolism right while leaving itself some wriggle room on the substance (which is completely kosher under the likely Bali Decision). Call it a measured risk.

Indeed, games theoreticians say that you just don’t play for today, you play for tomorrow and tomorrow’s tomorrow. Building on the precision and acumen of his leadership takeover and election victory, Kevin Rudd is very likely to further prove his gamesmanship at Bali.