Australia parliament set to reject carbon laws

CANBERRA Tue Dec 1, 2009 6:11pm EST

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CANBERRA (Reuters) - Australia's parliament is poised to reject the government's plan to cut carbon emissions on Wednesday, handing Prime Minister Kevin Rudd a constitutional trigger to call snap elections that could come as soon as March.

Opponents of the cap-and-trade scheme are set to vote it down in the Senate after a climate-change skeptic seized the opposition leadership on Tuesday, reducing the chance that it might pass with the support of opposition rebels.

"There is no bigger reform at this time in our lives and reforms of this type are never easily won," Climate Change Minister Penny Wong told Australian radio ahead of a vote expected anytime from 2300 GMT (6 p.m. EST).

The scheme would be the biggest outside Europe, covering 75 percent of Australian emissions and starting in July 2011. It would effectively force polluters to pay for their emissions, requiring them to purchase emission permits from a carbon market.

Failure of the laws would hand Rudd a legal trigger to allow him to call an early election on climate change, and to then ram his laws through a special joint sitting of both houses of parliament if he is returned to power.

Senior opposition lawmaker and frontbencher Christopher Pyne said he expected a double dissolution election early in the new year, ahead of polls due around late November.

"I think the election will be on March 6. I think the government will call a double dissolution election if the ETS (emissions trading scheme) is voted down this week," Pyne said.

Wong said defeat would be a setback to global climate negotiations next week in Copenhagen, with developing countries possibly seeing it as a sign that wealthy countries were unwilling to curb greenhouse emissions blamed for global warming.

"Obviously this does make Copenhagen harder if we don't get this scheme up," Wong said.

Market analysts believe defeat of Australia's emissions trading plans could temporarily dent political momentum ahead of next week's U.N. climate talks, but the impact is unlikely to affect global carbon prices until at least 2013.

European emissions traders told Reuters that regardless of whether some opposition rebels backed the government's bill or it failed completely, an Australian scheme in its proposed form would have little immediate impact on carbon prices.

Australia's population of 21 million has the rich world's highest per capita carbon emissions. It is heavily reliant on coal, shipping and motor transport, so its environmental policies and carbon-cutting potential are closely watched.

New Opposition Leader Tony Abbott, a combative social conservative who has been skeptical of climate change, said he was confident the emissions legislation would be rejected in the Senate, where his party holds the largest vote bloc.

"I am confident ... based on what I have been told, based on the public positions of the minor parties and the independents, this legislation will be defeated," he said.

Rudd's Labor party needs the support of at least seven non-government senators to pass its package of 11 bills.

Trade Minister Simon Crean, speaking in Geneva, said the government was not looking for a reason to hold early elections, although Rudd has also said he will act in the nation's interest to protect the economy if necessary, holding the option open.

"I'm not a believer in early elections," Crean told Reuters. "I believe governments should serve their full term."

Rudd met President Barack Obama on Monday in Washington and is due to arrive back in Australia on Wednesday, at around the same time as the Senate vote.

(Reporting by Rob Taylor in CANBERRA and Jonathan Lynn in GENEVA)

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