SYDNEY—Australia's Senate on Wednesday defeated the government's plan to implement a carbon pollution trading system to fight global warming, dashing hopes of setting an example for other nations at U.N. climate change talks next week.
The scuttled proposal would have placed Australia alongside the European Union and a handful of other places that have or are considering "cap-and-trade" systems to cut greenhouse gas emissions, and burnished Prime Minister Kevin Rudd's international reputation as a leader on the issue.
Instead, Rudd, a man who basked in a burst of applause from delegates at a U.N. conference two years ago for ending Australia's holdout status on the Kyoto Protocol, will attend the next one—in Copenhagen starting Monday—with a big setback on his hands.
The defeat does not have a direct bearing on the meetings in the Danish capital. But as a wealthy country with among the world's highest greenhouse pollution rates per person, Australia was being looked to for signs of how committed developed nations are to cutting emissions.
"It's not like the talks will stall because of the lack of an Australian emissions trading scheme," said Frank Jotzo, an Australian National University expert on international climate change negotiations. "But if the legislation had been passed, that would have sent a very positive signal internationally and, in particular, to developing countries."
The Senate, where Rudd's center-left government does not have a majority, voted 41-33 against a bill to install a system that would limit the amount of heat-trapping gases companies can pump into the air, and create pollution permits that could be bought and sold. The aim: Incentives for companies to lower emissions because they could sell excess permits for profit.
Wednesday's vote followed a tumultuous two-week debate, during which the main opposition party, the conservative Liberals, at first agreed to support a version of the government's bill, then on Tuesday dramatically dumped its leader and switched sides after bitter divisions erupted within the party.
"Today the climate change extremists and deniers in the Liberal party have stopped this nation from taking decisive action on climate change," acting Prime Minister Julia Gillard told reporters in the capital, Canberra.
Rudd was on his way home from a White House visit at the time of the vote, and did not immediately comment. Before he met President Barack Obama, Rudd said he expected their talks would focus on efforts to get a "robust Copenhagen agreement." He did not elaborate after the meeting.
About 100 world leaders will gather in Copenhagen during the 12-day conference to try to hammer out a framework to replace the Kyoto Protocol, which sets targets for industrialized countries to reduce carbon dioxide and other gases blamed for warming the atmosphere. That treaty expires in 2012.
Scientists warn of potentially catastrophic climate change if average global temperatures rise more than 3.6 Fahrenheit (2 degrees Celsius) from preindustrial levels. To prevent that, greenhouse gas emissions should peak within the next few years and then rapidly decline by mid-century, they say.
In Tokyo, Japan's Environment Minister Sakihito Ozawa said Wednesday that recent emission reduction targets announced by the U.S. and China, the two biggest polluters, would add momentum to the negotiations because, "any framework that the U.S. and China won't join is meaningless."
Speaking at the Foreign Correspondents' Club of Japan, Ozawa also said Japan's Cabinet is discussing a proposal to impose a "green tax" on fossil fuels to combat global warming, but he did not give details.
In Canberra, the conservatives' 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.
Because the bill's defeat reflects a deadlock between Australia's two chambers of parliament, the constitution allows Rudd to call general elections on the issue at any time from Wednesday. But he has consistently said he does not want early elections, and opinion polls suggest his government is under no threat if it waits until later in the year when elections are due.