The Coalition is on track to “axe” the carbon tax this week, but faces a stand-off with the Palmer United party over its Direct Action scheme.



The Coalition and the PUP have done a deal over the amendments demanded by Palmer to ensure power price savings are passed on to consumers – the only hurdle the crossbench party placed in the path of its three votes in the Senate to support the repeal.

Those votes, along with the backing of the Liberal Democrat senator David Leyonhjelm and the Family First senator Bob Day, will ensure the tax’s repeal.



The government was initially thwarted in its attempt to rush the start of debate on the repeal on the very first day of the new Senate’s sittings – with Labor, the Greens, the three PUP senators and independent senator Nick Xenophon twice voting to adjourn discussion until next week when a parliamentary inquiry had reported.



The PUP did not side with the government in the first two votes despite visits to the crossbench in the Senate chamber by the leader of the government in the Senate, Eric Abetz, and the leader of government business, Mitch Fifield, to press the Coalition's case. It is understood they were wary because the government had not included a bill they are seeking to amend in those listed for debate.



But the government was set to succeed in its bid to bring on the debate on Monday night, with the PUP senators switching sides to support it. A vote is now likely within days.



While the argument about the carbon tax repeal was one of timing, the future of the government’s own Direct Action scheme remains in doubt. Palmer had said the scheme was “dead” because it was a “waste of money”, but now says his senators could vote for it if the Coalition backed his alternative “dormant” emissions trading scheme with an initial price of zero.



Palmer will introduce the scheme – replicating the existing laws but with no price and a provision for the independent Climate Change Authority (CCA) to decide when there should be one – as an amendment to a government bill designed to repeal the authority. Under the PUP proposition, the CCA would survive to carry out the new advisory role.

Referring to a Sunday night meeting he had with the environment minister, Greg Hunt, and Abetz, Palmer told the National Press Club: “We certainly spoke about the need to have an ETS and the need for it to be an international basis to have one and we said that our support for Direct Action would be very much dependent upon how they dealt with an ETS issue and they're going to look at that I think.”

Asked whether there was any chance the government could back the zero-price ETS to get Direct Action through the Senate, a spokesman for Hunt said: “The government’s opposition to an emissions trading scheme has not changed.” But government sources said the plan could be at least considered.



Hunt remained confident Direct Action would be legislated.



“I am increasingly hopeful that the Senate will realise a gap in terms of a primary mechanism isn’t a desirable outcome. That we can reduce emissions, but also do practical things for the environment,” he told Sky News.



Labor and the Greens have also said they will vote against Direct Action, although it is possible Labor could reconsider its position after the tax is repealed.



The government has already appropriated the money for the scheme, but without enabling legislation there would be no crucial safeguards or assurances that the abatement was actually delivered.



Palmer also clarified that his previously announced opposition to changes to the existing renewable energy target for the term of this parliament applied to the goal as currently expressed in the legislation – that 41,000 gigawatts of power be sourced from renewables by 2020. Because electricity demand has fallen, that figure represents more than the originally intended 20% of the market and the government was hoping some paring back of the renewables incentive would still be possible.

But speaking to the National Press Club, Palmer said the 41,000-gigawatt target was his “understanding” of the PUP promise – a policy that will frustrate the strong desire by the prime minister and many in his party to water down the renewable energy target.