Australia Approves Energy Pact

By RACHEL PANNETT and JEFFREY BALL
CANBERRA -- Australia approved a mandate to use more renewable energy but set aside a debate over capping its greenhouse-gas emissions, signaling the tensions that face governments around the world in tackling climate change.
Lawmakers Thursday approved legislation that would require 20% of Australia's electricity generation to come from renewable sources by 2020.
The passage follows a move by the government to separate its renewable-energy program from a plan to place a mandatory cap on greenhouse-gas emissions, which was rejected by the Senate last week.
The wrangling Down Under mirrors divisions in the U.S. and around the world over how to move to cleaner energy systems.
Fossil-fuel use and greenhouse-gas emissions are growing world-wide. Yet many scientists say deep emissions cuts will be necessary by midcentury to prevent the most dangerous consequences of global warming. Getting from here to there would require a massive economic shift.
In Australia, both major parties claimed victory for the success of the renewable program, which fulfills part of Prime Minister Kevin Rudd's 2007 election pledge to make the economy greener. A tougher task lies ahead: The Rudd administration has vowed to reintroduce its greenhouse-gas plan this year.
The main opposition Liberal-National coalition remains divided over that plan, which would see Australia introduce a cap-and-trade system similar to one operating in Europe since 2005. The system would cap Australia's carbon-dioxide emissions, forcing heavy polluters, such as power generators and aluminum and cement makers, to buy so-called carbon permits to account for their emissions.
Significantly curbing emissions would require either shifting to other energy sources or figuring out how to burn coal more cleanly. Mandatory cap-and-trade programs would force companies to pay for the right to emit greenhouse gases. Proponents say the programs, by raising the cost of burning fossil fuel, would encourage cleaner alternatives. Opponents say they would cost too much.
Write to Rachel Pannett at rachel.pannett@dowjones.com and Jeffrey Ball at jeffrey.ball@wsj.com