CANBERRA (Reuters) - Australia's embattled carbon-trade laws are set for almost certain defeat in a hostile Senate after the country's opposition on Tuesday elected a new leader opposed to the government's emissions trading scheme.
Prime Minister Kevin Rudd has struggled to have his carbon-trade laws passed by the Senate, expected to vote on the legislation this week.
If the upper house rejects the carbon scheme for a second time, Rudd will have a trigger to call an early 2010 election on climate change, with polls suggesting his government would be returned with an increased majority.
If Rudd wins a special double dissolution election of both house of parliament, he can then push his laws through a special joint sitting of the houses.
The main opposition Liberal Party elected conservative lawmaker Tony Abbott, who has said he opposes the ETS, as its new leader after disgruntled opposition lawmakers forced a challenge to Malcolm Turnbull.
"The party room has voted following Mr Abbott's accession to the leadership," desposed leader Turnbull told reporters.
"The party room has voted to defer the legislation to a Senate committee and if that is not successful then to vote it down this week."
Rudd, who is campaigning for a strong global agreement at next week's Copenhagen climate summit, wants emissions trading to start in Australia in July 2011, covering 75 percent of emissions in the developed world's bigger per capita emitter. The planned carbon-trade scheme would be the biggest outside Europe.
The United States is closely watching Australia's debate and a political agreement on carbon trading in Australia would help garner support for action from other countries.
Debate on the carbon trade laws resumed in the Senate on Tuesday, where the government needs seven opposition Senators to support the laws to secure passage.
The government's only hope of passing its scheme now rests with disaffected opposition lawmakers, who may defy the new leader and vote with the government. However, Abbott's victory in a leadership ballot makes that less likely.
An opposition source told Sky television the opposition had decided to vote against the carbon trade scheme in the Senate if the government puts the laws to a vote.
Defeat of the ETS laws would be a severe blow to Rudd, who met U.S. President Barack Obama in Washington on Monday to discuss climate change.
Rudd has repeatedly said he does not want an early poll and would prefer elections to be held on time in late 2010. But some analysts said Rudd's now has no option but to call an early election if he wants to pass his carbon trade laws.