Australia can reach political deal on carbon -govt
* Australia govt says carbon compromise would be good
* Farm and coal sectors at the heart of political talks
* Opposition says talks satisfactory (Adds quotes from minister, opposition; background)
By Bruce Hextall
GOLD COAST, Australia, Oct 27 (Reuters) - The Australian government on Tuesday talked up the prospects of a compromise deal on its hotly contested plan to cut carbon emissions, citing the farm and coal sectors as key issues in political talks.
Australia's plan for the world's most comprehensive emissions trading scheme (ETS), scheduled to start July 2011, have been stalled with a hostile Senate refusing to pass the ETS laws.
The laws are due for a second vote in November, with the government making veiled threats that it will call a snap election on the issue if rejected again.
But deputy climate change minister Greg Combet used more conciliatory rhetoric at a carbon-trading conference on Tuesday, talking more of compromise than brinkmanship.
"I think it would be a positive public policy outcome were the government able to reach a good faith negotiation process and accommodation with the opposition," Combet said.
"It is conceivable that the government can reach an accommodation with the (opposition) Liberal Party but that remains to be seen," he added.
Combet's comments suggest the ETS laws may pass through parliament next month, though with amendments in some industry sectors such as agriculture and coal, both major emiters.
Opposition parties, whose conservative constituency represents farmers, want agriculture exempt from the ETS and more compensation for emissions-intensive export industries such as aluminium, cement and coal mining.
The opposition also sounded on Tuesday as if an agreement was possible. "Those negotiations are going along very satisfactorily and we expect they will go on into next week," Ian MacFarlane, opposition climate change negotiator, told reporters in Canberra.
Combet said the question of whether to exclude agriculture or include it at a later date, remained an issue being negotiated.
"This is an issue that is subject to discussions at the moment," he said. Under the government's scheme a decision whether to include agriculture from 2015 would be made in 2013.
The debate is being closely watched overseas ahead of December global climate talks in Copenhagen, aimed at reaching agreement on a post-Kyoto deal to cut greenhouse gas emissions.
Prime Minister Kevin Rudd says Australia must pass its ETS laws before Copenhagen to show leadership at Copenhagen.
Australia's ETS aims to curb emissions by 5 percent by 2020, or by up to 25 percent if there is a deal at Copenhagen. The opposition supports a 5 percent reduction target.
The Australian scheme will cover 75 percent of Australian emissions from 1,000 of the biggest companies and be the second domestic trading platform outside of Europe. Companies will need a permit for every tonne of carbon they emit.
The government plans to give the biggest polluting companies up to 95 percent of permits free in the early years of the scheme, with 66 percent of permits free to industries such as cement and aluminium smelters.
Australia produces about 1.5 percent of global emissions. But it is the world's biggest coal exporter and one of the highest per-capita emitters due to reliance on coal for 80 percent of electricity. (Writing by Michael Perry; Editing by Mark Bendeich)
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