Australia's planned introduction of an emissions trading plan may encourage developing nations such as China and India to implement their own, BP Plc's chief economist Christof Ruehl said.

``The only way to affect any change is to set an example, and find systems that allow for trading with those countries which can allow for transfers of technology and incentives to industries in those countries,'' said Ruehl, speaking after a presentation in Perth. ``It won't solve climate change overnight, but it's a start.''

Australia's government on July 16 outlined a trading system to start in mid-2010 that will set a medium-term cap for emissions late this year and will issue permits to meet that limit, with the market then deciding the price of carbon. Business groups are concerned higher energy costs may cut earnings at the resource companies driving Australia's growth.

Carbon emissions worldwide grew 2.8 percent last year, according to Ruehl. The volume of traded carbon went up last year by 70 percent and the value of the trade doubled, with the global turnover of such trades reaching $64 billion.

``As long as we only have national systems, the impact will be very limited because most new emissions are coming from countries like China,'' Ruehl said. ``Australia's plan will trigger public discussion and changes in behavior, to the extent that people will change products because carbon becomes priced.''

Developing nations such as China and India will continue to baulk at creating carbon-trading programs because developed countries had caused most of the environmental problems associated with carbon emissions, he said.

Chevron, Woodside

Chevron Corp., the largest holder of natural gas resources in Australia, said July 18 the government's plan threatens to stall development of liquefied natural gas projects needed to meet rising world energy demand. Woodside Petroleum Ltd. Chief Executive Officer Don Voelte told the Australian the system may shelve A$60 billion ($58 billion) of LNG projects by penalizing clean gas exports.

``There are clearly some industries that would have a harder time coping with carbon trading,'' Reuhl said. ``Those are the types of industries which really compete in a globalized market. It's the same effect as if you put an extra tax on them.''

New York oil futures have gained 35 percent this year as Israel's dispute with Iran added to concerns about supplies from the world's largest producing region. Still, crude oil prices dropped 11 percent last week, the most in more than three years, on signs of slowing global economic growth and faltering U.S. fuel demand.

``When people expect the economy to suffer, we may indeed see a correction'' in global energy prices, Ruehl said. ``It still looks like global growth is holding up, especially in non- Organization for Economic Cooperation and Development countries. If that holds, we cannot expect prices to come back to levels we saw five six years ago.''