Failure, it is sometimes said, can be a two-faced Janus.

For some, it is a terrific teacher: a catalyst for reflection and change and an opportunity to learn from mistakes.

For others, it risks an unhealthy retreat from reality, fostering a spiral of ever-deepening crises.

In the aftermath of last week's disastrous Wentworth by-election, which recorded one of the biggest swings in a byelection in modern history, Coalition leaders have doubled down on climate and energy policies.

According to several shock jocks and some party stalwarts, Wentworth is an aberration, an electorate not truly representative of the rest of the nation.

Like a jilted lover, the attitude is: It's not me, it's you.

Climate policy, or the lack thereof, was a regular gripe within the electorate, resonating throughout the campaign.

Instead, since the drubbing, Mr Morrison and Energy Minister Angus Taylor opted to go for the hip pocket, unleashing their "big stick" on power companies.

It is an approach far removed from traditional Liberal free market/small government philosophy given it involves a punitive combination of price control and possible subsidies for new electricity generation, perhaps including coal.

While there is little acknowledgement in Canberra at the moment, the two issues — climate and energy — are inextricably linked.

A major reason for our power crisis is that the chaotic about-turns in climate policy during the past 15 years has deterred power companies from investing in new generation.

It's a simple equation: less supply equals higher prices.

Carbon price back on the agenda

It took less than a day for enthusiastic outsiders to offer advice.

"We've always been really clear that we support a carbon price — obviously there's different ways a carbon price can be designed, but from our perspective a carbon price is a really important part of a long-term and effective response to climate change."

If you were wondering whether these were the rantings of a green lobby group, some business fringe dwellers or a left-wing think tank, you'd be horribly mistaken.

This was from BHP, Australia's biggest company and the world's biggest miner which also happens to be a major coal producer and exporter.

Then came this from Kerry Schott, a business heavyweight and the Federal Government's top energy advisor:

"Commercial reasons will be made about retiring coal plants and they're likely to get dropped out the door faster than their technical lives would suggest," she said at a Committee for Economic Development of Australia event in Melbourne.

Rattled, moderate Liberal backbenchers reportedly began lobbying their embattled leadership to come up with an environmental policy that may resonate with voters, urging Mr Morrison to tip another $1 billion into the Emissions Reduction Fund, better known as Direct Action.

Direct Action's indirect cost

So far, the Emissions Reduction Fund has spent more than $2 billion on projects designed to curb carbon emissions.

While initially criticised as a fund that merely would hand out cash to major polluters, big business largely has steered clear of the scheme.

The vast bulk of the projects have been around either tree planting or landfill.

The government maintains the fund has been a "stunning success", claiming it is one of the most cost-effective systems in the world for reducing carbon emissions.

Academics who have analysed the fund disagree.

Australian National University fellow Paul Burke argues that many of the projects that have been funded would have gone ahead anyway without the subsidy.

University of Melbourne researcher Tim Baxter, meanwhile, claims the complexity of the scheme and the diverse range of projects has resulted in a serious overstating of the benefits.

Either way, there's no escaping the logic that underpins modern economic theory and Liberal Party philosophy: that the best way to send a message to a market is via a price signal.

Eliminating the Gillard government's carbon tax may have saved business and consumers money.

But it has been replaced by a $2.55 billion impost on taxpayers, all of whom are consumers and businesses.

The bill merely has been shifted.

How effective is indirect action?

Australia has had a vast array of clean energy initiatives since former prime minister John Howard introduced subsidies with the Renewable Energy Target in 2001 and his Clean Energy 2020 target just before the 2007 election.

Isolating the impact of any one initiative is difficult.

As the graph below shows, greenhouse gas emissions were in decline well before the 2012 introduction of the carbon tax as Australians embraced rooftop solar and as the strong dollar decimated industry.

Emissions dropped until March 2013. ( Department of the Environment and Energy )

Since 2013, however, emissions have resumed their rise and the most recent report from the government's own Department of Environment indicates they now have risen to their highest since 2010, mostly from fugitive leaks from our burgeoning gas export industry.

Electricity generation is the largest source of pollution, accounting for 34 per cent of all Australia's carbon emissions.

The good news is the shift to renewables has seen emissions drop almost 14 per cent since the peak in 2009.

Clearly, the power sector will be vital if Australia is to meet the international targets to which former prime minister Tony Abbott committed us when he signed the Paris agreement.

Can we lower emissions and power prices too?

The answer is yes. It now costs less to finance, build and run a new renewable energy plant than to build a new coal-fired plant.

That's why our power companies have rejected the idea of keeping open old coal generators or building new ones and instead shifted to solar and wind. It's why banks won't finance coal generators.

Those trends are only likely to accelerate. In Western Australia this month, wholesale power prices dropped to zero four times in one week as renewable energy — which has zero marginal cost because there is no fuel — flooded the system.

Local power companies had jacked up prices to compensate for the loss of taxpayer funded coal and gas subsidies which the State Government could no longer afford.

Those soaring power bills, coupled with a dramatic drop in the cost of solar installations, saw households and consumers take to renewable energy in unprecedented numbers, leaving the utilities with reduced demand and higher costs.

It is a classic case of economics and markets at work.