Coal Miners Cold on Australia Carbon Tax

Australia's powerful coal industry on Wednesday urged Canberra to "go back to the drawing board" on its proposed carbon tax, warning it would hurt the economy for no environmental benefit.

Prime Minister Julia Gillard has proposed putting a price on emissions of carbon, a key element of gases blamed for global warming, from July 2012, in a scheme that will effectively initially operate like a tax.

Under the proposal, a fixed price would be placed on carbon emissions for the first three to five years before moving to a full cap and trade scheme under which the price would be linked to international carbon markets.

Gillard's ruling Labor party twice failed to implement an emissions trading scheme due to stiff opposition from conservative lawmakers and big business in a damaging episode seen as costing her predecessor, Kevin Rudd, his job.

Similar opposition is mounting to her carbon tax plan, with the heavyweight Australian Coal Association (ACA) warning it would cost jobs and send investment overseas unless coal miners were exempt or heavily compensated.

The scheme would tax emissions from the coal mining process, rather than the product itself.

But ACA chief Ralph Hillman said of industry negotiations with the government: "The European Union's managed to do this in a way which does not negatively impact the competitiveness of its trade exposed sectors, why can't we do that too?"

Australia is the world's worst per capita polluter, largely because it relies heavily on coal-fired power, and also exports millions of tons of the fuel every year to Asian electricity companies and steelmakers.

It is home to the world's largest coal export port, with total 2010 shipments worth Aus$43 billion (US$45 billion).