Sydney - Australia said Wednesday the carbon-emissions trading scheme it intends to introduce in 2010 includes cuts in the excise tax on fuel so motorists would not pay more for petrol. 

Climate Minister Penny Wong also told reporters in Canberra that under its proposed cap-and-trade system half the money raised would go towards helping low-income families hit by inevitable rises in fuel and electricity. 

Big polluters that are also export earners, like the aluminium industry and cement manufacturing, would also get compensation, Wong said. Those industries would be protected against competitors from countries that do not have carbon-trading schemes to reduce the output of carbon dioxide and other greenhouse gases. 

"Placing a limit on a price on pollution will change the things we produce, the way we produce them and the things we buy," Wong said. 

The government would set a limit on carbon pollution and companies that are big polluters would buy permits from the government for emissions set at a certain level. 

Firms going above levels set down in their permits would either have to cut back on their pollution or buy new permits from those firms who were better at making reductions. 

Initially about 1,000 firms would be in the scheme. 

The revenue raised from trading the permits would go to the government, but it would return this to the economy by way of compensation for households considered needy, producers in trade-exposed sectors rated worthy of protection and in grants for companies bringing in low-emission technologies. 

Wong said the Labor government under Prime Minister Kevin Rudd, who broke with the policy of his conservative predecessor when he won office in November and signed the Kyoto Protocol, would not shirk its responsibilities to tackle global warming. 

"As one of the hottest and driest continents on earth, Australia's economy and environment will be one of the hardest and fastest hit by climate change if we don't act now," she said. 

Giving money back to motorists goes against the advice of Rudd's handpicked climate adviser, economist Ross Garnaut, who argued that the whole point of carbon-trading schemes was to crimp the use of fuel by making it more expensive. 

Treasurer (finance minister) Wayne Swan defended the decision to blunt the price signal by effectively subsidizing petrol. 

"That relief is being provided because petrol has gone up by 30 cents a litre this year alone," Swan said. "Therefore we will provide relief to those households to protect them from any further increases flowing from the pollution reduction scheme." 

Rudd has taken his lead from the European Union and set a 60-per-cent reduction in emissions by 2050, but has not set an intermediate target. He promised that Australia, the second-highest polluting country per capita after the United States, would help carry its share of the global burden. 

Wong said Australia would calibrate its response to climate change to success in thrashing out an international accord on reducing emissions. The more other countries did, the more Australia would do, she said. 

"It doesn't take close study of these negotiations to know that if we are going to get the global action we need, we will have to act at home," she said. 

"The government will take careful account of the evolving state of international negotiations in determining the path we set to meet our target of reducing Australia's carbon pollution by 60 per cent below 2000 levels by 2050." (dpa)