The Australian Senate's rejection of the emission trading scheme (ETS) is yet another blow to environmentalists in the run up to the Copenhagen summit.
Despite the last minute attempts by the US and China to infuse some life into the summit, observers remain skeptical of anything concrete emerging from the Danish capital. None seems willing to bite the bullet on the development front and agree to any binding emission cuts.
To add to the despondency, comes the news of the rejection of the Australian government's emission trading scheme by the Senate.
Under the 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.
Firms will be enabled to trade emissions permits among themselves, so that a firm which does not hold sufficient emissions permits to enable it to emit the quantity of GHGs that it needs to emit may buy emissions permits from another firm which holds more emissions permits than it needs (because, for instance, it has managed to reduce its own GHG emissions). In theory, such an arrangement will mean that the market will ensure that the required emissions reductions are achieved at the lowest possible marginal cost.
Australia, the developed world's worst per capita polluter, is responsible for about 1.5 percent of global emissions .
But it is also held out as the worst sufferer of the global warming phenomenon. But then immediate profits matter more than the future for some sections.
Prime Minister Kevin 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.
In fact the ETS itself was considered rather weak given the magnitude of the problem confronting Australia. The bill was considered a kind of turning back by the ruling Labour party which had waxed eloquent on the environment during the election campaign. Even that could not pass.
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 among the Liberals.
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. But then the US senate is in no hurry to pass the legislation.
Opponents of the Australian legislation say it amounts to a huge new tax on polluting industries such as power generators, which would put hobble the economy and lead to higher prices for consumers.
Nationals leader Warren Truss said they were ready to fight an election on climate change.
"If the Rudd Government wants to fight an early election on this issue and try to breathe life into this dead dog of a scheme, then the Nationals stand ready to fight," Mr Truss said.
Mr Rudd could dissolve both the Senate and the House of Representatives and call snap elections at any time under constitutional rules meant to resolve deadlocks between the two chambers, correspondents say.
Opinion polls suggest Labor would win and could then pass its carbon trading legislation in a joint sitting of parliament.
But the Labourites are not talking of going to polls straightaway. They could have another go at the legislation. Acting Prime Minister Julia Gillard said on Wednesday the government would reintroduce its emissions trading scheme legislation on Feb. 2.
Gillard said the bill would include the amendments negotiated with the Liberal party. "We are doing this to give the Liberal Party one chance to work through and deal with this legislation in the national interest," she told reporters in Canberra.