The incumbent leader Malcolm Turnbull was defeated by Tony Abbott on the second ballot; Joe Hockey also stood as a candidate.

The spill was the culmination of a dispute within the Liberal Party over its response to the Rudd government's proposed emissions trading scheme (ETS).

As Environment Minister, he had overseen the introduction of an emissions trading scheme (ETS) as a policy of the Liberal Party shortly before the Howard government's defeat.

In June 2009, he indicated in principle support for an ETS proposed by the Rudd government despite the opposition of his Coalition partner, the National Party.

[12] Turnbull subsequently outlined the Coalition's position that it would oppose the ETS introduced to Parliament by the government, but would be open to negotiating an amended version.

[14] On 18 October 2009, Turnbull fronted a meeting of Coalition MPs with a proposal to negotiate amendments to the government's ETS.

[18] The divisions within the Coalition were laid bare in an episode of Four Corners, aired by the Australian Broadcasting Corporation on 9 November 2009.

The program featured the Coalition's leader in the Senate, Nick Minchin, suggesting that man-made climate change was a conspiracy of the political left and disputing Turnbull's authority to strike a deal with the government on the ETS.

[21] On 23 November 2009, the Coalition's climate change spokesman Ian Macfarlane agreed to a deal with the government to amend the ETS legislation.

[23] Anger at Turnbull's response to the 23 November 2009 meeting triggered a spill motion against his leadership three days later.

[24][25] Andrews was not seen as a genuine prospect for the leadership, so the close vote on the spill motion was considered a blow to Turnbull.

[28] Several others joined Abbott in resigning, including Nick Minchin, Eric Abetz, Sophie Mirabella and Tony Smith.

[31] A Newspoll released on 30 November placed Hockey at 33%, Turnbull at 30% and Abbott at 19%, when voters were asked who would be the "best person to lead" the Liberal Party.

[36] Hockey attempted to resolve his dilemma by declaring that as leader he would allow a conscience vote on the ETS legislation.

[52] Upon his election, Abbott acknowledged his propensity for making controversial public statements—which with his Catholicism and background as a trainee priest earned him the moniker of "the Mad Monk"—and apologised for all his "errors of the past".

Three Howard government veterans—Kevin Andrews, Philip Ruddock and Bronwyn Bishop—were recalled from the backbench, and outspoken National Party MP and climate change denier Barnaby Joyce was appointed to the shadow Finance portfolio.

[58] Speaking in the House of Representatives in February 2010, Turnbull attacked Abbott's climate change policy and praised the government's ETS legislation.

[60] Turnbull subsequently gave qualified support to Abbott's climate change policy, arguing that while it was inferior to an ETS in principle, it was preferable to the government's approach of delaying action until 2013.

For Hockey it is viewed that his failure to come up with a firm position on the ETS had blown what turned out to be his only chance to become Liberal leader in 2009.