The Lima climate summit wasn't pretty and the outcomes weren't perfect, but they do represent progress.

In an important evolution, all significant countries now need to come forward with details on how they will limit greenhouse gas emissions well before the Paris meeting next year, where the post-2020 framework will be resolved. Draft climate contributions from all major emitting nations are expected to be on the table around mid-2015, and Australia has committed to meet this deadline.

These commitments will continue to provide an impetus for domestic action regardless of the details of any Paris agreement. The Lima decision established standards for countries to justify their new post-2020 targets as 'fair and ambitious' and to show how it stacks up against the agreed goal of limiting global warming to less than 2 above pre-industrial levels. It stipulates that new targets must be more ambitious than our current goals to 2020.

However, Lima didn't create a completely smooth runway to Paris. A broad outline of the Paris agreement was defined, but a lot more work is to be done – the year ahead will be  vigorous for climate diplomacy.

In advance of the meeting, the US, China and the EU announced indicative post-2020 emissions goals. There were also pledges to the multilateral Green Climate Fund. Australia took a welcome first step towards a more credible position internationally with its own US$166 million contribution to the Fund.

Lima also continued to see many developing countries in the G77/China group articulating their national interest in climate action instead of sitting behind this broad bloc at all times.

In some respects, this meeting saw the emergence of Latin American leadership. The Independent Association of Latin America and the Caribbean (AILAC from the Spanish version) asserted itself by offering ambitious proposals that differentiated it from larger developing countries like China and India. AILAC – which includes Chile, Colombia, Costa Rica, Guatemala, Panama and Peru – was supported by regional neighbours like Mexico. AILAC and other progressive developing countries helped counter the old bastions of North-South divide in the oil producing states and countries in the Like Minded Developing Country group.

It was also noteworthy that the Philippines withdrew from the Like Minded Group of Developing Country group. It undertook a concerted effort at the meeting to articulate its own interests in stronger global action.

What about Australia and its interests? This depends on how you define them. But it's clear that unless the Government starts to realign its position, it is going to continue to face domestic and international challenges from the process to Paris and beyond.

The Government's posture appears designed to minimise the perceived threat to a section of Australian business reliant on increasingly outdated emission-intensive technologies. It is understandable that the export revenues of fossil fuels are an important factor in Australia's diplomacy. But this and other ideological barriers are limiting Australia's worldview. We are blocked from seeing opportunities to maximise our influence and minimise future economic threats. In short, the Government is currently taking a very polluted view of our national interest.

In the first week or so of the Lima meeting, the Australian Government foundered diplomatically because it was one of the few advanced economies that had not contributed to the Green Climate Fund. Eventually a pledge came, but the pressure to contribute to climate finance, through the Fund and other means, is not going away.

Such financing will be important to the stability of the new agreement, which needs to be fair, or its legitimacy will be diminished. An investment in climate resilience is an investment in the regional economy and stability. This ultimately also benefits Australia. As the World Bank notes, our current climate change trajectory threatens to set back decades of development among vulnerable countries. Asia and the Pacific, in particular, will not be immune. Building resilience to climate change increases the ability of nations to remain stable, minimise displacement of their people, and grow in the face of accelerating climate damage.

Being at the table to help develop innovative and sustainable sources of public and private finance, as Australia was during the development of the Green Climate Fund some years back, allows Canberra to maximise the efficiency and value for money from these finance flows. And this investment is not just about money: it's about building capacity and technology and skills transfer.

Reconciling climate realities with aspirations to continue to expand unabated fossil fuel expansion is a fundamental challenge for any Australian government. But Australia itself is vulnerable to climate change. Our scientists suggests that the current trajectory of 4* of warming by the end of the century will challenge Australia's ability to feed itself, let alone be part of the food bowl of Asia. And as the International Energy Agency, OECD and IMF have pointed out, continuing to expand fossil fuel use is neither necessary, desirable nor without costs. Crossing the bridge to a more middle-ground position on the future of the global energy system will be difficult for the Government (and the ALP) in the short term. However, this is not something that can avoided. Money talks, and investors are increasingly looking at whether a nation has a credible decarbonisation pathway before making decision on major capital investments. Climate impacts will also continue to increase.

Paris is coming fast and if successful this will involve tough negotiations ahead. Many nations are increasingly seeing that action on climate change is in their national interests. In the wash up from Lima and on the road to Paris, Australia should broaden its horizons and do the same.