* Palmer United Party to hold balance of power in new Senate
* Palmer says senators will vote in support of govt plan to scrap carbon tax
* Wants Australia in global ETS, renewal energy targets kept
* Maverick mining magnate turned politician appears with former US VP Gore (Adds government reactions, background on Palmer)
By Matt Siegel
SYDNEY, June 25 Key Australian lawmaker Clive Palmer said on Wednesday he would support a government plan to scrap a controversial carbon tax, while seeking to impose a range of conditions, including Australian participation in a global emissions trading scheme.
Palmer, who made the announcement at a joint news conference with last-minute guest, environmentalist and former U.S. Vice President Al Gore, is head of a political party that will hold the balance of power in the incoming senate.
But the number of conditions on Palmer's support, and the complexity of his proposed amendments to the repeal legislation, have cast a shadow over the government's plan.
"True to our promises to the Australian people at the last election, Palmer United Party senators will vote in the Senate to abolish the carbon tax," said Palmer, a colourful and controversial mining magnate.
Conservative Prime Minister Tony Abbott made the abolition of the carbon tax a centrepiece of his election campaign last year, but lacks the votes in the upper house of the current Parliament to have it repealed.
The Palmer United Party (PUP) will hold the balance of power when the new senate is sworn in on July 1, however, and its support removes a roadblock to the repeal.
Environment Minister Greg Hunt was quick to cast the announcement in a favourable light, calling it a vindication of government policy. The government was open to discussing any potential amendments with Palmer, he added.
"What we have seen today is vindication for the government, because our plan to deliver families genuine savings by abolishing a policy which is fundamentally failing is set to be passed by the Senate," Hunt told reporters.
The opposition Labor Party, which enacted the taxes with the help of the Greens Party at the height of Australia's mining boom, has said it expected the taxes would be repealed.
Opponents of the carbon tax say it has swelled costs facing industry and the public and done little to cut emissions, a position disputed by its supporters, but long backed by Palmer.
The government plans to replace the carbon tax with a A$2.55 billion ($2.40 billion) Emissions Reduction Fund that will pay big emitters to cut carbon levels, but Palmer blasted the plan and his conditions may make it tough to pass.
Palmer has a long history of shocking behaviour, including accusing news magnate Rupert Murdoch's wife of being a Chinese spy, claiming that the CIA had plotted for decades to bring down the Australian economy and he now plans to build a scale replica of the ill-fated liner, the Titanic.
He announced a number of complex and thorny conditions in exchange for his support of the repeal, which could cause a showdown between the two houses of Parliament that might even set the stage for an early election.
Chief among his demands was the creation of an emissions trading scheme "designed to establish and encourage a fair global scheme quickly", but that would only take effect once implemented by Australia's global trading partners.
"The government and the parliament of the day have the ability to set the financial parameters of the scheme, based on the action of our leading trading partners such as China, the United States, the European Union, Japan and Korea," he said. (Editing by Clarence Fernandez)