CANBERRA, Dec. 1 (Reuters) - Australia's plans to cut carbon emissions were set for defeat in a hostile Senate after the election of a new opposition leader opposed to carbon-trade laws, setting the stage for a possible early 2010 election.
New Liberal opposition leader Tony Abbott, elected Tuesday, said conservative Senators, many climate change skeptics, would reject the government's carbon emissions trading laws if they are not deferred until early 2010.
Mr. Abbott said he believed in climate change, but told reporters he was opposed to the government's emissions trading scheme model, and was not afraid of fighting an election on the issue.
"As leader, I am not frightened of an election on this issue. This is going to be a tough fight. But it will be a fight. You cannot win an election without a fight," said Mr. Abbott, a boxer in his university days who once studied for the priesthood.
Greg Combet, assistant climate change minister, said the government would still push for its carbon trade laws to be passed this week. He hoped some opposition lawmakers would side with the government and defy Mr. Abbott.
"The extremists have gained control of the Liberal Party. They are opposed to taking action on climate change, they dispute the science," Mr. Combet told reporters.
Prime Minister Kevin Rudd has struggled to have his climate change legislation passed in the Senate before parliament adjourns until February.
Mr. Rudd, who was in Washington on Monday meeting President Barack Obama, was keen to take a lead role at next week's Copenhagen summit on climate change by enacting a "cap-and-trade" scheme requiring polluters to buy permits for their emissions.
Mr. Rudd 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.
If the Senate ends up rejecting the carbon scheme for a second time, Rudd will have a trigger to call an early 2010 election on climate change, most likely for March of April, with polls suggesting his government would win an increased majority.
Business, election uncertainty
Mr. Abbott said while the opposition rejected the emissions trading scheme, it still backed the government's emissions reduction target of at least 5 percent from 2000 levels by 2020, with a 25 percent target if nations agree on an ambitious climate pact in Copenhagen.
The prolonged political debate has caused some dismay among companies, coal and power firms in particular, who see some sort of scheme as inevitable and are looking for pricing certainty.
Banks and fund managers see the emissions trading scheme, the biggest economic policy change in modern Australian history, as a boon for traders, investors and new green technologies, while major polluters generally oppose it as a tax on heavy industry.
International Power Australia, a unit of International Power and Australia's largest private-sector generator, says the uncertainty has impinged on talks with its lenders.
Major miners such as BHP Billiton and oil and gas firms such as Woodside Petroleum have criticized the scheme, though have been mollified somewhat by government pledges last month to raise state compensation.
"This is the worst possible outcome for us, as this guy (Mr. Abbott) is the figurehead for the climate change skeptics within the conservative party," said Tim Hanlin, managing director Australian Climate Exchange Limited.
"Australian industry is now thrown into total uncertainty regarding a price on carbon and therefore cannot make any informed investment decisions," said Mr. Hanlin.
"This is going to put Kevin Rudd under enormous pressure to call an election on this issue."
But Monash University analyst Nick Economou said Rudd would now miss his Copenhagen deadline and be in no rush for an election, putting the chances of an early poll at 20 percent.
"They may as well play the long game, the patient game," Mr. Economou said, saying Mr. Rudd would prefer a normal election later in 2010, giving him time to build up an attack against Mr. Abbott's Liberals, with the carbon laws waiting to be passed.
Mr. Rudd has repeatedly said he does not want an early poll and would prefer elections to be held on time in late 2010.
If Mr. Rudd wins a double dissolution election of both houses of parliament, he can then push his climate policy through a special joint sitting of the houses.
Australia carbon laws in doubt
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