Opposition from both climate sceptics and the Green Party has seen Australia's parliament vote against plans to set up a national carbon trading scheme.
The emissions trading scheme (ETS) would have seen carbon emissions cuts of up to 25 per cent on 2000 levels by 2020 although these would not necessarily have been domestic cuts, as industry would have been allowed to buy carbon credits from overseas to offset their emissions.
The ruling party led by Prime Minister Kevin Rudd said they would try for a second vote next February.
Australia has some of the world's highest per capita carbon emissions after the oil-rich middle east and is heavily dependent on coal.
Friends of the Earth said the trading plan would not have delivered the cuts needed.
'The targets were too low, the compensation for the big polluters too high and the loopholes too large to allow the bill to pass,' said national climate justice coordinator Damien Lawson.
'Allowing polluters unlimited access to international carbon credits – many of which are clearly flawed and have well documented negative environmental and human rights impacts – is the biggest loophole in the scheme.'
Lawson said Treasury modelling showed that Australian emissions would not begin to decline under the proposed scheme until well past 2030.
'The Coalition’s motivation for blocking the legislation is wrong but the result is an opportunity for the government to implement real action to cut carbon pollution.
'The government can increase public-led investment in renewable energy, it can redirect the multi-billion dollar subsidies to the fossil fuel industry to energy efficiency and public transport,' he said.
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