On Wednesday night, after 50-odd Liberal MPs had filed out of a marathon session on energy policy in their party room, most cleared out of Parliament and flew home. But the lights stayed on in senator Anne Ruston’s office, where furious Liberals had come to vent with the senior moderate.

The group, which included Jane Hume, Maria Kovacic, Richard Colbeck, Andrew McLachlan and Melissa Price, had each spoken in favour of a net zero emissions goal at the five-hour meeting earlier that day. They were in the minority. With the Liberals about to abandon long-term climate targets, the MPs spoke existentially about what would come next for Opposition Leader Sussan Ley, their party and themselves. Some feared they faced electoral oblivion. They speculated about whether they would continue to support Ley.

These musings were interrupted when energy spokesman Dan Tehan came to the door. Inside, he found a group licking their wounds. Ruston told him that maintaining an aspiration to net zero was a red line for the moderates, according to one MP who witnessed the exchange. The moderates were making a significant sacrifice, Ruston said, and the tense conversation turned to what the party’s right would cede in return.

But there was no change to the offer on the table. The Liberals would remain in the Paris Agreement, but net zero was dead, as both a legal target and an aspiration. Tehan told her the party room had spoken.

That day’s meeting had arrived at a clear 60-40 split in favour of dumping net zero by 2050. The emissions reduction target was introduced by the Morrison government at a time when the US was pursuing climate action, Australia had been ravaged by bushfires and interest rates were low. It has since become a two-word lightning rod for the climate change debate on the right. And in the Liberal party room, it had become the biggest test of Ley’s leadership.

The party’s right faction knew it had the numbers. It paraded its confidence by striding as a pack into Wednesday’s meeting. Newly elected conservative senator Jess Collins and firebrand Jacinta Nampijinpa Price took the front, flanking senator Sarah Henderson, who had publicly attacked Ley’s leadership less than a week before. Angus Taylor and Andrew Hastie, Ley’s most likely rivals, walked shoulder to shoulder right behind them. They assembled in the office of Henry Pike, an anti-Ley backbencher whose influence is rising as the right faction rebuilds.

Twenty-four hours later, on Thursday afternoon, Ley was fronting cameras in that same room to announce net zero was gone from the Liberals’ policy platform. With a steady and smiling performance, she put her stamp on the decision, casting herself as a consultative leader who had let her party debate an issue and was happy with the outcome.

But the months of public posturing and backroom negotiations that preceded the moment have been damaging. Ley, who told voters she wanted to move to more centrist ground after the Coalition’s dire performance at the May election, has ultimately adopted the Nationals’ policy. This week proved the influence of the right; and it seeded doubt into the minds of moderates about Ley’s ability to lead. Ley’s key frontbenchers had acquiesced to a vociferous backbench campaign.

While the image of more than a dozen Liberal MPs headed into the party room was striking, the pictures that came afterwards could prove more telling. Victorian senator James Paterson – the pragmatic right-winger who has been supporting Ley’s leadership – turned to Hastie and shook the aspiring leader’s hand for the cameras.

Ley had not even secured the Liberal leadership when the fight over net zero began.

Nationals senator Matt Canavan fired the first shot. The Queenslander claimed net zero would create a catastrophe as he unsuccessfully challenged David Littleproud for the junior party’s leadership in the aftermath of the May election. “I lost the battle,” Canavan said after the vote. “But net zero is mortally wounded, so mission accomplished.”

Troops lined up quickly after that.

The Nationals, which had voted to stick with net zero at their 2023 federal conference, decided to review the policy, with Canavan leading that work. Former Nationals leaders Barnaby Joyce and Michael McCormack, typically rivals, joined forces to come out swinging against net zero in July. State Liberal branches started voting against the target.

Ley found herself on the back foot, but she said the Liberals must go through their own policy review, led by Tehan, before deciding a position. Today host Karl Stefanovic spotted problems early. “You’re not going to be able to faff about too much longer with net zero because it’s coming,” he told Ley on July 23. “So when will you make a decision?”

The opposition leader would not be rushed. She refused to commit to a timeline. Privately, Tehan was telling colleagues he planned to finish a detailed review in March next year. He had wanted to explore gas and carbon capture technologies as a first port of call. “We’re working through a process,” Tehan said at a press conference at the end of July. “If you looked into what you need to do to get to net zero, this is a very complicated issue.”

But clamouring from right-wing MPs, including Price, only escalated when parliament returned from the winter break. In September, Hastie lit a fuse, saying in a radio interview he would quit the frontbench unless net zero disappeared from the Liberal policy platform. Jonno Duniam, a rising talent on the right, backed the WA MP the next day, saying a “mass exodus” of frontbenchers would follow if Ley pursued net zero at any cost.

The Liberals’ first federal female leader looked like she was in trouble. Brushing questions about her authority aside, Ley shifted her language to appease agitated MPs. “Something that my colleagues and I agree with wholeheartedly … [is] that we will not have net zero at any cost because the cost can be too high,” she said that week.

Ley’s leadership was being kept afloat by a core group of MPs. They included centre-right faction leader Alex Hawke and Ley’s unaligned deputy, Ted O’Brien, neither of whom had expressed strong positions on net zero. The support of Paterson, who has been brought into Ley’s inner circle, was crucial. Taylor, too, was playing his part in keeping unrest at bay by staying open to a compromise.

When those four key figures started changing their minds, the battlefield shifted.

Paterson, who is seen as a future Senate leader, had argued internally for months that there needed to be a compromise between the party’s factions. He was a key player pushing for a bargain that involved maintaining net zero as a loose target, to satisfy the moderates, but removing the goal from the Climate Change Act, to appease the right.

On a Friday two weeks ago, about 30 Liberals met to hash out that position. They left the three-hour discussion broadly united in favour of reducing emissions while abandoning an iron-clad legislated pledge to get to net zero by 2050, but still divided on whether to retain the “net zero” terminology.

But two days later, the Nationals held their own meeting in Canberra. They came out with a pledge to junk net zero, and to instead reduce Australia’s carbon emissions in line with the rest of the world.

Conservatives saw the opportunity for Liberals to follow their junior partner. Moderates saw another example of the tail wagging the dog. Paterson, watching the tide turn for weeks, saw it could no longer be held back.

Net zero had to go, Paterson told colleagues, or the civil war over energy driven by right-wing backbenchers would never end. “They won’t stop,” was the message he put to angered moderates. If the party room voted narrowly in favour of net zero, he feared mass defections of MPs to One Nation and the Nationals, and branch-level revolts.

Ley’s other influential supporters also sniffed the wind. Hawke, the opposition leader’s key numbers man, pushed Ley to the right on the energy debate. In a critical set of leadership group meetings convened immediately after the Nationals’ announcement, on Sunday night and Monday morning, Taylor and Paterson said net zero had to go. Hawke, O’Brien and Queensland moderate tactician James McGrath agreed.

When the Liberals met for their five-hour final meeting on Wednesday, all five of them spoke against net zero. They were in the majority of 29. Other MPs who had given a more nuanced position at the Friday meeting two weeks before – such as shadow assistant ministers Simon Kennedy and Aaron Violi – also spoke against a mandated target. Just 17 MPs remained in favour.

Ruston was one of them. As the most senior moderate, she was the one who fronted up next to Ley, Tehan and Duniam to unveil the Liberals’ position on Thursday. The South Australian senator lacked energy, but she toed the line. “Reality tells us that we were always going to have to come to a compromise,” she said.

Some MPs believe that compromise would have looked vastly different if Ley had acted earlier.

Paterson, O’Brien and other senior MPs had warned Ley and her office months ago that she needed to settle the net zero issue soon, while there was still majority support to retain it, or risk the populist right and Nationals gazumping them.

All through that time, Ley was giving her colleagues contradictory indications of her thinking. She considered advice from former prime minister Scott Morrison — who has described a global shift on climate change orthodoxy since 2021 – but she didn’t articulate a personal view during leadership meetings.

One MP says the opposition leader told them privately, two weeks ago, that net zero could stay, the party just needed to change its tone. Other MPs say Ley told them a month ago the target would have to go. Ley has disputed that she expressed an opinion either way.

When Ley decided, two weeks ago, that the Liberals’ final policy would be decided in a larger shadow ministry meeting rather than a smaller shadow cabinet group (the shadow ministry has a higher proportion of moderates in it), party sources said this was designed to weigh the numbers in favour of net zero.

“She was still trying to engineer a pro-net zero outcome,” said one Liberal source. But by the time the meeting took place, the numbers were gone. “The 60-40 against net zero on Wednesday would have been about 60-40 [in favour], or 70-30, before the Nats made their call. This was handled disastrously from the top.”

The lack of conviction coming from the leader has only amplified MPs’ questions about Ley’s judgment, particularly after her calls to attack Kevin Rudd’s ambassador position and the prime minister’s Joy Division T-shirt dampened their confidence.

Paterson’s reputation has also been on the line. The Victorian senator’s attempts to push a compromise in recent weeks had caused right faction MPs to grow suspicious of him. A speech Paterson gave last month, calling out populist movements, annoyed Hastie and his supporters. Michaelia Cash, the Senate leader, made critical remarks about Paterson to colleagues. But when he stepped out in front of the cameras on Wednesday to shake Hastie’s hand, the pair sent a signal that the right was united. It is the moderates who now feel that Paterson showed weakness by following the right this week.

Now Ley’s leadership rests on if, or when, Taylor, Paterson and Duniam – who had been trying to temper backbench disquiet – determine the time is right to challenge her.

The moderates are bemused by the Liberals’ patchwork of energy policy, angered by Ley’s refusal to stick with net zero, but unclear on their next steps. They have more fight in them than the previous generation led by Simon Birmingham, and they can see the life being sucked out of Ley’s leadership. In the lead-up to Thursday, MPs including Wilson, Kovacic and Andrew Bragg were mulling quitting Ley’s frontbench if she dropped net zero. That hasn’t happened yet, but some dejected MPs are speaking in hushed tones about the possibility of doing a deal with Taylor if Ley’s authority diminishes further.

The opposition leader does not have a traditional praetorian guard. Even her closest ally, Hawke, has this week demonstrated he can work with Ley’s rivals in the right. The powerbroker is divisive in the party room, but his small centre-right faction has a track record of backing winners.

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