Australia's Carbon-Emissions Plan Faces Derailment

By RACHEL PANNETT and IAIN MCDONALD
CANBERRA -- The Australian government's closely watched plan to reduce carbon emissions is likely to be stalled until February, and possibly beyond, after the opposition's newly elected leader vowed to block it in the Australian Senate this week.
The almost certain defeat or delay of the plan in Australia's upper house means Prime Minister Kevin Rudd will be without a long-coveted domestic emissions-trading program ahead of global climate talks in Copenhagen this month.
The failure would also provide further evidence of the difficulty in achieving consensus on addressing climate change, even in countries like Australia where steps to reduce emissions have broad popular support.

Mr. Rudd appeared to have the votes locked up to secure his program's approval, after reaching a deal with then-opposition leader Malcolm Turnbull a week ago that provided billions of dollars of compensation to affected industries in return for conservatives' support.
But the deal fell apart on Tuesday when the opposition Liberal Party voted 42 to 41 to oust Mr. Turnbull in favor of conservative faction leader Tony Abbott.
Mr. Abbott said he believes climate change "is real" and that humans do make a contribution. But he described Mr. Rudd's carbon plan, which by 2020 aims to reduce Australia's emissions by at least 5% from turn-of-the-century levels as a "great big tax," especially on industries such as the power sector, which relies heavily on coal.
Mr. Abbott has said he will seek to refer the climate package to a Senate committee, delaying its passage until at least February, when Parliament resumes after a long summer recess, and possibly much later. If that motion is unsuccessful, he would push the party to vote down the proposal this week, forcing the government to start over again next year.
Mr. Rudd still has several options, and it is still possible Australia will approve a climate-change plan eventually.
If a vote is held this week and the climate package fails, Australian law would allow Mr. Rudd to call an early election, which analysts believe he would easily win. That might give him a bigger mandate to pass a carbon plan later.
Another option would be to simply wait out the rest of his term, which would mean an election would be held any time between August 2010 and early 2011. In that scenario, Mr. Rudd could keep pushing for some form of climate-change compromise with the current opposition, though Mr. Abbott appears likely to keep fighting a deal.
It is also technically possible Mr. Rudd could muster enough support to pass the climate-change package this week, though analysts now view that as unlikely given the change in Liberal Party leadership.
Either way, Mr. Rudd hasn't indicated any plans to call an early election yet.
"I would urge all parliamentarians today in Australia -- whatever their political party -- to vote in the national interest, and to vote for action on climate change," Mr. Rudd told reporters while traveling in Washington.

Despite his success on Tuesday, Mr. Abbott has his work cut out for him. Polls show that most Australians support some form of climate-change plan, and he assumes leadership of a deeply divided opposition party that could fare poorly if another election is held.
"I am not frightened of an early election," Mr. Abbott said, noting that Australia shouldn't be legislating a domestic carbon program in advance of the Copenhagen talks or before the U.S., which is also debating a plan, has set its position.
If Mr. Abbott isn't able to unify the party or improve the party's standing in opinion polls, history indicates he may not last long in the position. He is the third leader to be elected since Australia's Liberal-National coalition's government was defeated in 2007. When the Liberals were last in opposition, from 1983 to 1996, they changed leaders many times.
Mr. Abbott has made a number of missteps through the years, including a gaffe just before the 2007 election in which he had to apologize to a terminally ill anti-asbestos campaigner for comments perceived as insensitive. The 52-year-old has also often courted controversy with his conservative views and blunt talk on issues ranging from same-sex marriage to stem-cell research.
He could be helped by his 15 years in Parliament and many years of experience in government. A Rhodes Scholar at Oxford who briefly attended a Catholic seminary, he has also worked as a journalist and as a press secretary and adviser to a former opposition leader. Mr. Abbott was also close to former conservative Prime Minister John Howard and was a government minister from 1998 until Mr. Howard's defeat in 2007.
Mr. Abbott's supporters say he is a man of principle and insight who can be effective in debate with the government. He is also a magnet for conservative elements in the Liberal Party.
Write to Rachel Pannett at rachel.pannett@dowjones.com and Iain McDonald at iain.mcdonald@dowjones.com