Australia’s government has proposed a carbon tax on its biggest industrial polluters, arguing Thursday that the country cannot afford to lag behind other nations in reducing its greenhouse gas emissions.

The proposal to introduce a tax from July 1, 2012, has the support of the key Greens party and independent legislators but faces a battle in the Senate, where opposition lawmakers argue polluters should remain free to emit carbon gas.

The most contentious details, such as the what to charge per ton of carbon and how much compensation to provide hard hit industries and householders as they make the transition, have yet to be decided.

“I do not believe that Australia needs to lead the world on climate change, but I also don’t believe that we can afford to be left behind,” Prime Minister Julia Gillard told reporters while announcing the plan.

“I’m determined to price carbon because history teaches us that the countries and the economies who prosper at times of historic change are those who get in and shape and manage the change,” she added, citing the industrial and information technology revolutions as examples.

The European Union, several U.S. states, Norway and New Zealand already make polluters pay for carbon emissions.

Australia’s agricultural industry, a major polluter through methane emitted by sheep and cattle, would be exempt from the tax because of the difficulties in measuring that pollution.

The carbon tax would be levied for between three to five years until Australia adopted an emissions permit trading scheme.

Under the scheme, polluters would buy and sell permits to emit a ton of carbon with the permit price set by market forces. The government would curb the amount of carbon gas that Australia produces by limiting the number of permits available on the market.

Ms. Gillard’s Labor Party government, under her predecessor Prime Minister Kevin Rudd, attempted to introduce such a trading scheme but the legislation was twice rejected by the Senate in 2009.

Ms. Gillard had promised not to introduce a carbon tax before elections last year because she preferred the emissions trading concept.

But the new plan is a compromise with the environmentally focussed Greens and independent lawmakers whose support give Labor a narrow majority in the House of Representatives where parties form government.

Australia is one of the world’s worst greenhouse gas polluters per capita due largely to its heavy energy reliance on coal, its largest export.

The government has pledged to cut Australia’s greenhouse gas emissions by the year 2020 to at least by five percent below 2000 levels. But a government report released this month projects a 24 percent increase in Australian greenhouse gas emissions on 2000 levels by 2020.

Opposition leader Tony Abbott accused Ms. Gillard of betraying Australians who voted for her by proposing a carbon tax that he says would inflate gasoline and electricity prices.

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