(AP) -- Australia's plans for an emissions trading system to combat global warming were scuttled Wednesday in Parliament, handing a defeat to a government that had hoped to set an example at international climate change talks next week.
The Senate, where Prime Minister Kevin Rudd's government does not hold a majority, rejected his administration's proposal for Australia to become one of the first countries to install a so-called cap-and-trade system to slash the amount of heat-trapping pollution that industries pump into the air.
The 41-33 vote followed a tumultuous debate in which the conservative main opposition party at first agreed to support a version of the government's bill, then dramatically dumped its leader and switched sides after bitter divisions erupted within the party.
The new leader, Tony Abbott, said Australia should not adopt an emissions trading system before the rest of the world.
"The right time, if ever, to have an ETS is if and when it becomes part of the international trading system and that is not going to happen prior to its adoption in America," he told reporters after the vote.
Rudd had wanted the legislation passed before he attends next week's U.N. summit on climate change in Copenhagen so he could portray Australia as a world leader on the issue. He discussed the issue with President Barack Obama this week during a visit to the White House from which he was still returning Wednesday.
The defeat of the Australian plan could influence the views of some delegates to the Copenhagen meetings, adding weight to the argument that developed nations should curb their emissions before poorer nations are required to tackle theirs, said Frank Jotzo, an Australian National University expert on international climate change negotiations.
"It's not like the talks will stall because of the lack of an Australian emissions trading scheme in place," he said. "But if the legislation had been passed that would have sent a very positive signal internationally and in particular to developing countries."
Acting Prime Minister Julia Gillard said the government would reintroduce the bill in February to give the opposition a last chance to overcome its divisions and support the plan.
If the bill is defeated again, Rudd could use that as a reason to call early elections. Elections are due by late 2010 anyway.
Australia is a small greenhouse gas polluter in global terms, but one of the worst per capita because it relies heavily for its electricity on its abundant reserves of coal. As the driest continent after Antarctica, it is also considered one of the most vulnerable countries to climate change.
The European Union has a carbon trading system, as do some U.S. states. Canada and New Zealand are among countries considering or in the process of implementing them.
Under the government's plan, an annual limit would be placed on the amount of greenhouse gases allowed to be pumped into the atmosphere and permits would be issued to regulate that ceiling. The permits could be bought and sold, setting up a market system that would make reducing emissions potentially profitable for polluting companies.
Opponents of the legislation say it amounts to a huge new tax on polluting industries such as power generators, which would put a crimp on the economy and lead to higher prices for consumers.
Climate Change Minister Sen. Penny Wong accused the opposition members who voted the bill down of being climate change deniers out of step with the world.
"This is about doing our bit as part of a global agreement, this is about responding to what is a global challenge," Wong said.
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