Australia carbon laws fail, election possible

By Rob Taylor

CANBERRA (Reuters) - Australia's parliament rejected laws to set up a carbon trading scheme on Wednesday, scuttling a key climate change policy of Prime Minister Kevin Rudd and providing a potential trigger for an early 2010 election.

Acting Prime Minister Julia Gillard said the government would re-introduce the carbon trade bills in February to give the opposition Liberal Party one more chance to support the scheme, adding the government was not looking at an early election.

"Today the climate change extremists and deniers ... have stopped this nation taking action on climate change," Gillard told reporters.

"This nation is one of the hottest and driest continents on Earth. We are going to be hit particularly hard and early by climate change," she said. "We are determined to deliver the Carbon Pollution Reduction Scheme, we are determined to deliver real action on climate change."

The second rejection of the carbon-trade legislation by a hostile Senate on Wednesday gave Rudd a legal trigger to call an election that could come as early as March or April 2010, and to then ram his laws through a special joint sitting of both houses of parliament if he was returned to power.

But Gillard played down early election speculation.

"The prime minister has made it very clear that it is his intention to have the parliament go full term," she said.

The prime minister, who is overseas, had hoped to take his carbon-trade scheme to next week's global talks in Copenhagen, where world leaders will seek a new agreement to curb greenhouse gas emissions.