U.S. vote boosts hopes for Australia carbon laws

By David Fogarty and James Grubel - Analysis

SINGAPORE/CANBERRA (Reuters) - Australia's emissions trading laws look more likely to pass a hostile Senate after U.S. Congressional support for a similar climate bill eroded political opposition in Australia to carbon trading.

Analysts said the passing of the Clean Energy and Security Act by the U.S. lower house on Friday has forced Australia's Liberal/National opposition coalition to rethink its policy of stalling the passage of emissions trading laws.

Carbon trading is a top focus of the government of Kevin Rudd but the opposition says the scheme is flawed and it was foolish to pass it until it was clear how major trading competitors planned to tackle carbon pollution.

They also wanted to see the outcome of major climate talks at the end of the year in Copenhagen.

Those views have lost some validity now, analysts say.

"They are not on a political winner by continuing to oppose it. I think they understand that now," said Rupert Posner, Australian director for The Climate Group, an NGO that advises governments and companies on how to move to a low-carbon future.

"What we're starting to see are some very clear signs the Opposition is thinking of considering supporting the government's legislation on emissions trading," he said.

He said recent polls showing the majority of Australians wanted tougher action on fighting climate change also dented efforts to stall the legislation until next year. About 65 percent of Australians back Rudd's emissions trading scheme.

A botched bid to discredit Rudd and Treasurer Wayne Swan has also weakened the opposition. The document on which the accusations were based turned out to be a fake.

Then on Friday the U.S. House of Representatives passed the climate change bill, which would require large companies, including utilities and manufacturers, to reduce emissions of carbon dioxide and other gases associated with global warming by 17 percent by 2020 and 83 percent by 2050, from 2005 levels.

RACE TO BE FIRST?

The U.S. legislation faces more changes and must still pass the Senate, where it will likely face greater opposition, but its rapid progress since President Barack Obama took office in January has signaled a dramatic turnaround in policy.

Strengthening Obama's hand was a court decision on Tuesday to hand a Senate seat to Democrat Al Franken, giving the party the critical 60-seat majority needed to pass legislation.

"What we see here, under the new president Obama coming in, is the drive to move forward to leave behind the legacy of the previous regime and to really tackle climate change," said Greg Bourne, CEO of WWF Australia.

"So there's almost now the beginnings of a race to the top of who can get one's bill through first," he told Reuters.