SNAP ANALYSIS: Australia to delay carbon trade: media

CANBERRA (Reuters) - Australia is set to delay its carbon trading plan by 12 months, pushing the start out to July 2011, and to announce tougher greenhouse gas reduction targets in an effort to win political backing for the most sweeping trade scheme outside Europe, media reports said on Monday.

* The decision gives the government more flexibility in global negotiations at the Copenhagen climate summit later this year, where nations will try to hammer out a replacement for the Kyoto Protocol, which expires in 2012. The government had wanted laws for the scheme to be in place by July 2009, so it could go to Copenhagen with a firm commitment.

* Business groups in Australia, the world's second-biggest exporter of thermal coal and a major producer of liquefied natural gas, will welcome the decision. They had been calling for a delay, warning that the added costs of carbon trading would come at a time when business is already struggling with the global economic downturn. But business and the conservative opposition parties had called for a two-year delay to the plan.

* The government always faced a tight deadline to get the carbon scheme up and running by July 2010. The delay gives the government time to fine-tune the scheme, and gives business more time to prepare. But the delay adds to the uncertainty, and business will be looking for the government to set a realistic, and solid start date for the scheme.

* The carbon trade plan faced an uncertain passage through the upper house, the Senate, where the Greens were demanding tougher emissions cuts, and where the conservative parties wanted delays and more compensation for big emitters. The delay may help the government secure the numbers in Senate, but Prime Minister Kevin Rudd will need to significantly boost the emissions reduction target, from between 5 to 15 percent by 2020, to secure the support of the five Greens senators.

* Rudd is due to go to elections in late 2010. The delay will ensure he can go to the election campaign without the added complication of bedding down the new carbon trade scheme. His promise in 2007 to ratify the Kyoto Protocl was a key issue in his election victory. The delay means the issue will be back on the agenda for the next election campaign.

(Reporting by James Grubel; Editing by John Chalmers)