Australia faces further carbon-scheme delay
CANBERRA (Reuters) - Australia's plan for the world's most comprehensive carbon-trading scheme faces defeat or parliamentary delay after the opposition resolved on Tuesday to postpone passing laws underpinning the scheme.
The carbon-trading system is central to Prime Minister Kevin Rudd's promise to fight global warming, but his government has been unable to find seven extra votes it needs in the upper house Senate, where conservative opponents hold the largest bloc.
The opposition's decision comes weeks after the government put back the start of the scheme a year to July 2011 and eased costs for business after months of criticism.
Delaying the vote till 2010 could mean the start date slipping further and raise the possibility of more design changes as a recession intensifies pressure on the government to ease the scheme's economic impact.
In a closed-door party meeting, the conservatives agreed to try to force a deferral in any Senate vote on the emissions trading system (ETS) laws, already before parliament, until after December talks in Copenhagen on a global climate pact to succeed the Kyoto Protocol.
"Common-sense and prudence, the importance of getting this right, of pursuing a practical outcome that is effective for the environment and does not destroy jobs, demands that the decision on the scheme and the final design of the scheme should be postponed until after Copenhagen," Opposition Leader Malcolm Turnbull told reporters.
Laws setting up Australia's scheme have been introduced into parliament's lower house, but have yet to come before the Senate. If conservatives and minor parties reject the laws twice, Rudd could call an early election.
THREAT TO INVESTMENT
Rudd's leftist government has pledged to push emissions trading through the Senate ahead of the Copenhagen talks.
As part of the concessions to opponents, particularly the Greens who have five Senate seats, the government has promised to cut greenhouse gas emissions by up to 25 percent on 2000 levels by 2020 if other rich nations agree on deep reductions as well.
But with the conservatives only two votes shy of majority in the Senate, one key independent senator with strong reservations about emissions trading immediately promised to back Turnbull, while another said he wanted a delay until August.
"I believe the scheme is fundamentally flawed in its current form. My message to the government is if you force it, you break it," said independent senator Nick Xenophon.
Leading climate change analyst Rupert Posner said likelihood of more delays to carbon trading was disappointing.
The country is the world's biggest coal exporter and a leading per-capita greenhouse polluter.
"What is pretty clear in Australia is that business knows that there will be a price on carbon," he said.
"If we just keep delaying it's going to make it impossible for anyone to undertake any major investment," said Posner, Director, Australia, for The Climate Group, an international NGO advising governments and business on how to reduce carbon emissions.
But the most important thing for international negotiations in Copenhagen would be what global deal Australia was prepared to strike on emissions targets and financial support for developing nations, Posner said, and not whether the scheme had already passed parliament.
On that, Turnbull offered Rudd a concession, offering to support the government's target of a 25 percent maximum cut, giving Rudd and Climate Change Minister Penny Wong vital support for their negotiating stance in Copenhagen.
Developing nations want rich nations to commit to deep 2020 emissions cuts at Copenhagen to prove their seriousness in the fight against climate change.
France and Germany suggested on Monday that rich nations collectively guarantee deep cuts of 25 to 40 percent below 1990 levels by 2020 while giving flexibility to other countries to catch up later.
Australia's carbon trading scheme aims to be the world's broadest, covering 75 percent of emissions from 1,000 of the country's biggest polluters.
(Additional reporting by James Grubel in CANBERRA and David Fogarty in SINGAPORE; Editing by David Fogarty)