By Rob Taylor
CANBERRA (Reuters) - Australia's government announced a one-year delay to its carbon emissions trading scheme on Monday, promising more support to big industry but opening the door to a tougher 2020 TARGET (TGT.NY)in a bid to win its approval.
In an effort to ease the strain on an economy now on the edge of recession, Prime Minister Kevin Rudd said the government would delay the start of the world's most sweeping cap and trade scheme outside of Europe until mid-2011, but still aimed to push the emissions trading laws through parliament this year.
While maintaining his interim 2020 emissions reduction target at 5 to 15 percent below 2000 levels, Rudd said the government could increase the cut to 25 percent if other rich nations agreed to similar reductions, a measure aimed at appeasing Green party legislators and environmentalists.
Major emissions industries and political opponents had complained about the original plan for the scheme to start on July 1 next year, saying it would hamper any economic recovery.
The delay could give Rudd, who has been under pressure from industry and opposition politicians to water down or even ditch the scheme, more time to win approval for the plan.
Major emissions industries, from aluminum-smelters to airlines, had complained about the planned July 1, 2010, launch date next year, saying it would hamper economic recovery and destroy jobs at a time when unemployment was rising fast.
A slower start but tougher reduction target might help the government push the carbon-trading laws through an obstructive upper house of parliament dominated by conservative opponents, five Green senators and two swing-vote independents.
Rudd also said there would be a fixed carbon price for 1 year to July 2012.
Conservatives have been calling for the scheme to be delayed and the influential Greens want tougher interim targets.
"I'm a little surprised but I suppose the good thing is at least it gets resolved... The worst outcome is continued uncertainty about what is going to happen," said Gary Cox, vice president of commodities and energy at global brokers Newedge.
INDUSTRY WELCOMES DELAY
The Australian Chamber of Commerce and Industry (ACCI), representing business, last week told a Senate inquiry into carbon trade that the scheme should be delayed until financial turmoil had passed and the economy returned to trend growth.
"We will certainly welcome any changes," said Greg Evans, director of industry policy for the ACCI, said on Monday.
"Clearly, the balance of interests warrants delay in the implementation of the operational elements of the...scheme in Australia," Evans said.
The Australian Greens wrote to Rudd with an offer to break the political impasse in the Senate and support carbon-trading legislation if amendments made it environmentally effective.
The Greens want Australia to make an unconditional emissions cut of 25 percent below 1990 levels by 2020, with a commitment to move to a 40 percent cut if world climate talks in Copenhagen in December forge a new global climate pact.
Rudd was considering extending the upper limit to 25 percent, political sources told Reuters. But in preparing changes, the government would still aim for laws setting up the scheme to pass parliament this year, but delaying its start until 2011.
($1=1.357 Australian Dollars)
(Reporting by Rob Taylor; Editing by Mark Bendeich and Jonathan Leff)
