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Australian carbon plan divides opposition parties

AUSTRALIAN plans for a sweeping carbon trade scheme opened new divisions within the opposition parties today, boosting hopes Prime Minister Kevin Rudd will win approval for his plan and avoid a possible snap election.

Rudd, who remains well ahead in the polls, could have the option of an early election if laws to set up carbon trading remain stalled in parliament's upper house Senate, which is poised to reject the plan in a scheduled vote on Aug. 13.

But senior Liberal opposition lawmaker Tony Abbott today called for his conservative party to change policy and pass the carbon trade bills to avoid an early election it could not win.

"As a general rule, oppositions should welcome elections, but this would make it even harder to keep the focus on the Rudd government's addition to borrowing and spending," Abbott wrote in the Australian newspaper.

Rudd is due to face the voters in late 2010 or early 2011, but could call a snap poll early next year if the Senate rejects the carbon trade plan twice. Rudd's Labor needs seven extra votes to pass laws through the obstructive Senate.

The opposition, which controls the largest Senate voting bloc, is struggling for support in polls and would prefer a late 2010 election on the issue of government debt and economic management, rather than fight early on climate change.

Based on current opinion polls, Rudd would easily win a second term in office with an increased majority, while the Liberal and National Parties would lose up to 20 seats..

Opposition leader Malcolm Turnbull has raised the possibility of amending and passing the carbon trade laws, although he still wants a final vote postponed until early 2010 and after December's global climate change talks in Copenhagen.

The suggestion has angered many of Turnbull's Liberal colleagues, who want the government plan to be defeated, and the junior opposition National Party, which is implacably opposed to the carbon trade scheme.


Rudd wants the laws passed before the Copenhagen summit, so Australia can go to the global talks with a commitment to cut Greenhouse gas emissions by up to 25 percent by 2020, based on 2000 levels, if the rest of the world takes similar action.

Gary Cox, vice president of commodities at Newedge Australia, said interest was returning to Australia's fledgling carbon trading market on raised hopes the parliament would pass the carbon trade legislation.

"We've had some Europeans and local people get involved in the CER (Kyoto-backed Certified Emission Reductions) market again for the first time since the scheme was delayed," said Cox. CERs are traded carbon credits for emission reductions.

The market went dead in May after the government postponed the scheme's introduction until mid-2011, Cox said, but a fresh trade happened this week when an Australian electricity generator unwound previously purchased December 2010 CERs.

CERs trade on the European Climate Exchange and imports will be permitted to offset carbon emissions once the Australian scheme is up in running.

Interest was also returning in moribund Australian Emission Units, which are the basic unit of compliance and trade in the planned regime, Cox said. Each unit represents one metric tonne of carbon dioxide equivalent of greenhouse gas emissions.

Finance Minister Lindsay Tanner on Friday talked up the option of an early election on climate change, saying a poll could be inevitable if the Senate was too obstructionist.

"Well if enough things are getting blocked in the Senate that is effectively making it impossible for the Government to get its programme through, or to govern," Tanner told Australian radio.

The carbon trade scheme will cover 1,000 of Australia's biggest companies and will put a price on carbon pollution, giving business a financial incentive to curb emissions.


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