CANBERRA (Reuters) - Australia's planned carbon trading scheme faces sweeping revision and possible delays after opposing upper house lawmakers joined forces to agree on an intensive two-month review.
Draft laws on the proposed emissions trading scheme (ETS) will be released later on Tuesday and the government wants them passed by the end of June, a year before the July 2010 start, but Climate Change Minister Penny Wong has conceded the laws might not pass by the July deadline.
The major conservative opposition and rival Australian Greens have struck a deal to ensure a two-month Senate committee inquiry to look at the scheme's flaws and alternatives to the approach preferred by the ruling center-left Labor government.
Greens Senator Christine Milne agreed her party's preferred scheme with tough emission reduction targets was poles apart from conservative support for a softened scheme, but said on Tuesday the inquiry would hear evidence from all possible sides.
She said the inquiry would look at green jobs and transformation of the A$1 trillion ($632.9 billion) energy-reliant economy, as well as renewable energy and adequacy of the government's 5 percent emission reduction target by 2020.
"It is just not high enough. It doesn't meet the demands of the science," Milne said.
Australia, the world's biggest coal exporter and a growing supplier of LNG, accounts for 1.5 percent of global carbon emissions but is one of the highest per-capita polluters, with 80 percent of electricity from coal-fired power stations.
Milne said the committee would report in time for the Senate's scheduled June consideration, but debate on the measures could stretch beyond that date, with conservatives controlling the largest bloc of upper house votes.
Wong has come under mounting business and political pressure as conservative MPs want the scheme's start delayed until 2011 or 2012. They argue that more free emissions permits should be granted to major polluters by the government to ensure a soft start to the scheme amid the current global financial tumult.
The architect of the government's scheme, academic economist Ross Garnaut, said it would receive public advice through the Senate process and it would be disappointing if the package had no commitment to low emissions technology development.
He added that Prime Minister Kevin Rudd's 5 percent target was a "reasonable position" if global talks in Copenhagen later this year on a post-Kyoto climate deal for the world collapsed.
($1=1.58 Australian Dollar)
(Reporting by Rob Taylor; Editing by Valerie Lee)