This article provides an overview of the politics of climate policy with a focus on carbon pricing politics under recent Australian Labor governments. It reviews and explains the impact of politics upon climate policy and draws attention to the influence of the fossil fuel lobby. It reviews historical context, including early, failed attempts to set and pursue emissions reduction; the domestic and international recalcitrance of neoliberal leaders; and the recent shift to embrace carbon pricing. It considers the impact of politics upon climate policy outcomes, piecing together political and policy efforts to price carbon, and drawing attention to the agenda setting of the Australian States and Territories, and of Kevin Rudd both as Labor opposition leader and as Prime Minister. It argues that the capacity of industry to thwart effective carbon pricing was only checked by institutional influences once Labor assumed minority government in 2010. In these circumstances, Labor relied upon the Australian Greens, not only to support in part its government in office, but also to pass legislation in the Senate where the Greens hold the balance of power. Under these circumstances, carbon pricing could be negotiated and agreed upon by a Multi‐Party Committee on Climate Change (MPCCC) comprising the government and its parliamentary supporters, including independents and the Greens. Whilst political and economic interests have largely shaped Australia's climate change agendas, it is concluded that policy shifts are nevertheless possible where there is a propitious combination of political, normative, and institutional influences. WIREs Clim Change 2013. doi: 10.1002/wcc.239 Conflict of interest: The author has declared no conflicts of interest for this article. For further resources related to this article, please visit the WIREs website.