Australian government hopes for deal on carbon trade

CANBERRA (Reuters) - Australia's government returned stalled emissions trading laws to parliament's lower house on Thursday, hoping for an approval that would avert the threat of a snap election fought on climate change.

The package of 11 bills was rejected in August, and a second rebuff in an upper house vote set for late November would give Prime Minister Kevin Rudd a trigger for a snap election as his government needs opposition support.

The opposition has outlined amendments it wants to the scheme, and Climate Change Minister Penny Wong on Thursday said initial negotiations had been constructive, adding she hoped the government and opposition could strike agreement.

"We look forward to working through the things that are on the table. Obviously there's a lot of work to do, but we are prepared to engage in this in good faith, as I understand the opposition is too," Wong told reporters.

The debate is being closely watched overseas, particularly in the United States where lawmakers are debating their own proposals, ahead of December global climate talks in Copenhagen.

The Australian scheme will cover 75 percent of Australian emissions from 1,000 of the biggest companies and be the second domestic trading platform outside of Europe.

Under the scheme, carbon trading would start in July 2011, putting a price on greenhouse gas and giving business a financial incentive to curb emissions. Companies will need a permit for every tonne of carbon they emit.

The opposition wants the government to exclude agriculture from the plan, and to extend the number of free permits allocated to emissions-intensive trade exposed industries, such as cement and aluminium producers.

Australia is the world's biggest coal exporter and accounts for 1.5 percent of global emissions, but is one of the biggest per capita emitters due to a reliance on coal for 80 percent of electricity generation.

The opposition also wants more protection for coal companies. It wants the scheme to exclude fugitive emissions, or the gas produced naturally when coal is mined. The head of the world's biggest miner BHP Billiton, which will face significant new costs under the carbon trade regime, on Thursday urged lawmakers to give industry certainty over the future cost of carbon emissions.

"As I focus on the real objective -- and this is to decrease the amount of CO2 going into the atmosphere -- certainty of carbon pricing is extremely important," outgoing Chairman Don Argus said in a speech in Melbourne.

The Australian Greens, who control five crucial Senate swing votes, condemned the political negotiations, saying conservative opposition proposals would make a bad emissions scheme worse.

(Editing by Miral Fahmy)