Australia government seeks talks on emissions scheme

CANBERRA (Reuters) - Australia's government challenged conservative rivals on Thursday to support deadlocked emissions trade laws after both sides reached agreement on a new national target to sharply lift the use of renewable energy.

The center-left government said it was talking to neighboring New Zealand about "harmonizing" emissions schemes in the South Pacific's two biggest economies as Australia's upper house agreed renewables should supply 20 percent of energy by 2020, four times more than at present.

"This is a matter where the two governments are considering possibilities," Australian Climate Change Minister Penny Wong told the Senate during debate on the controversial scheme.

The renewable laws aim to come into effect on January 1 next year and target production of 45,000 gigawatt hours of clean energy by 2020.

Australia's government plans to start imposing a cost on carbon emissions from 2011 through a carbon-trading scheme, while New Zealand is reviewing its emissions-trading laws and is expected to announce a watered-down scheme by the end of 2010. But in the biggest setback to Australian Prime Minister Kevin Rudd since his 2007 election win, the upper house last week rejected his emissions plan after conservative, green and independent lawmakers joined forces against it.

The scheme aims to cut Australia's emissions by between 5-25 percent over the next decade, with the higher target dependent on a matching agreement out of global talks in Copenhagen in December on a new climate pact for the world.

Rudd could have the option of calling a snap election if the Senate rejects the emissions laws a second time.

Conservative environment spokesman Greg Hunt said negotiation on the renewable energy laws proved the government and opposition could reach a negotiated outcome on carbon trade without the need for an election, if Wong agreed to talks.

"We have already put forward very clear propositions," Hunt told Australian television. "We'll talk, but we're ready to talk now without preconditions."

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But Wong's junior Climate Change Minister Greg Combet said the conservatives must quickly come up with amendments for its scheme if it wanted negotiations.

Wong has said the government will bring the package back to parliament try to pass it before the Copenhagen meeting, where developing nations like China and India will try to reach agreement with major economies on a broad climate pact.

"The next major priority for our parliamentarians ... is to strengthen and pass the emissions trading legislation to show Australia is prepared to walk the talk on climate change action," said Australian Conservation Foundation chief Don Henry.

New Zealand Prime Minister John Key, meeting Rudd in Canberra, said it did not make sense to have a divergent emissions scheme from Australia, despite concern from Australian farmers that inclusion of agricultural emissions from 2015 could see them lose out.

New Zealand is aiming to cut its emissions between 10 and 20 percent by 2020 from 1990 levels.

Underlining business interest in Australia's scheme, the country's dominant stock exchange operator, ASX Ltd, said it planned to list carbon-trading instruments once legislation for the carbon trade scheme passed parliament.

The influential Australian Greens, who control five of the seven key swing votes the government needs to pass laws through the Senate, said the renewables deal pointed to an eventual government-opposition agreement on emissions trade.

"The bipartisan support on this scheme points to the government and opposition getting together to pass the major legislation," Greens Leader Bob Brown told reporters.

The renewable laws will see electricity retailers offer a portion of renewable power to consumers, eating into the dominance of coal-fired generators, and unlocking $22 billion in wind, solar and geothermal energy investment.

The 20 percent target matches one set by the European Union two years ago and which the European Commission hopes will create 2.8 million new jobs and boost European GDP.

(Additional reporting by James Grubel in CANBERRA, Mark Bendeich and Michael Perry in SYDNEY, and Leonora Walet in HONG KONG; Editing by Nick Macfie)