Australia opposition proposes rival carbon scheme

CANBERRA (Reuters) - Australia's opposition rolled out what it said was a cheaper and greener plan to cut carbon emissions on Monday, just days before it was expected to vote down the government's stalled carbon trade legislation.

Climate Change Minister Penny Wong dismissed the scheme as a "mongrel" offshoot of a failed Canadian plan, and said the government was determined to pass its own emissions trading scheme (ETS), which is being watched around the world in the lead up to December's global climate talks in Copenhagen.

Laws for an emissions trading scheme (ETS) are set to be defeated in parliament's upper house Senate on Thursday, and could become a trigger for an early election if the opposition and minor parties reject the plan a second time later this year.

Opposition Leader Malcolm Turnbull, who is struggling in the polls and wants to avoid an early election, on Monday proposed a plan that would promise a carbon emissions reduction of 10 percent by 2020, based on 2000 levels.

That target, which hasn't yet been endorsed by his party, would put one of the world's most carbon-intensive economies at the low end of global efforts to roll back climate change.

The government is fighting to push through its own ETS scheme that includes a pledge to cut emissions by at least 5 percent -- or as much as 25 percent if other countries take equally firm action -- but needs an extra seven votes to pass its plan through a hostile Senate, which appears unlikely.

"We will press on with this reform for as long as we have to," Wong told the National Press Club. "One way or the other, we are going to get this through."

Rudd is due to face elections in late 2010, but could have the option of a poll in early 2010 if the Senate continues to block the ETS laws. The latest opinion polls show Rudd well ahead of the opposition, which is divided over climate policy.

RENEWABLE ENERGY

Under Turnbull's plan, Australia's coal industry and major export industries would receive full protection from the cost of purchasing carbon permits, compared to up 95 percent of free permits for major polluters under the government scheme.

Turnbull's scheme would see only 30 percent of Australian carbon permits auctioned, compared to 70 percent of permits auctioned under the government's plan.

"It shows with relatively modest changes, the proposed emissions trading scheme can be made far less harmful to jobs, investments, regions and the Australian economy," Turnbull said.

But Wong said Turnbull's proposals were a copy of a failed Canadian plan to set up a baseline for carbon emissions.

"It is not a credible alternative, it is a smokescreen," Wong said. "Rehashing the failed Canadian experiment puts at risk Australia's ability to meet its national targets."

Australia wants carbon trading to start in July 2011. Companies would have to buy permits for every tonne of pollution they produce, putting a price on emissions and providing a financial incentive to clean up pollution.

Meanwhile, Wong again ruled out separating laws for a 20 percent target for renewable energy from the ETS laws.

The renewable energy laws have wide political support, but remain locked in the Senate because compensation measures are linked to carbon trade laws. The Clean Energy Council said delays are costing business A$2 million ($1.7 million) a week.

The opposition and the Greens have said they would use their numbers in the Senate to remove the link between the two sets of laws, so the renewable energy target could pass, but Wong on Monday said the government wanted to keep the link.

"We need both. Australia needs both," Wong said.

Australia, the world's largest coal exporter, accounts for 1.5 percent of global emissions, but is one of the largest per-capita emitters due to a reliance on coal for 80 percent of electricity generation.

($1=A$1.20)

(Editing by Clarence Fernandez)