Australia will introduce a carbon emissions trading system by 2012 and will next year set a greenhouse gas target to combat climate change, Prime Minister John Howard said.

A national trading system and its prices will be established by the market, Howard told the three-day Liberal Party conference in Sydney today. It will mean higher electricity costs for businesses and households, he said.

``Australia will move toward a domestic carbon trading system beginning no later than 2012,'' Howard, 67, said. ``We will set a long term goal for reducing carbon emissions and that will be set in 2008.''

Howard, like U.S. President George W. Bush, has eased his opposition to setting emission targets in the face of increasing community concern over global warming. The main opposition Labor Party, leading in opinion polls before an election expected this year, backs stronger environmental policies than Howard's Liberal-National coalition.

``Howard is under the thumb of the coal industry,'' Greens Party leader Bob Brown told the Nine Network television's Sunday program. ``He has waited so long to do something about climate change and because of that, it will cost the economy, it will cost jobs and power prices will rise.''

`Policy Certainty'

Howard on June 1 received a report on emissions trading by a group including Xstrata Plc's Peter Coates, Treasury Secretary Ken Henry and BHP Billiton Ltd.'s Chris Lynch. Mining makes up 10 percent of Australia's A$934 billion ($773.5 billion) economy, which has grown for the past 16 years, fueled by China's demand for resources.

``Today's announcement means we have policy certainty and it reassures industry in terms of investment.'' said David Parker, director of the Perth-based Chamber of Minerals and Energy Western Australia. ``This presents a measured and balanced approach going forward.''

Western Australia accounts for 50 percent of the nation's resources industry.

The Business Council of Australia welcomed the decision, saying it provided ``certainty'' for industries to invest.

Australia is the world's biggest coal exporter and the industry employs about 20,000 people. Thermal coal exports may rise 3.4 percent this fiscal year to 114.6 million tons, valued at A$7.3 billion, the Australian Bureau of Agricultural and Resource Economics said March 6.

Refused Kyoto

Australia, like the U.S., has refused to ratify the Kyoto Protocol that sets a timetable for cutting greenhouse gas emissions, arguing it would harm economic growth. President Bush on May 31 proposed convening a new round of talks with the world's biggest economies to set emission targets.

The government will take a ``meticulous and careful'' approach to a carbon trading system, Industry Minister Ian Macfarlane said. He said nuclear power would be part of the strategy to reduce greenhouse gases.

``It is clear we won't have an international trading system in the foreseeable future,'' Macfarlane told Channel Ten's Meet The Press program today. ``We have to take a careful approach on how we can introduce a carbon trading system.''

The conference yesterday called for a nuclear industry to be set up and said that remote areas in Australia could be used to dispose of nuclear waste. A report in December supported enrichment of uranium in reactors and the construction of as many as 25 atomic plants.

``The market will sort out the most efficient means of lowering emissions, with all lowering emissions technologies on the table and that must include nuclear power,'' Howard said today.

Labor leader Kevin Rudd supports Kyoto, a national trading system and a target of reducing Australia's emissions 60 percent by 2050. Seventy-nine percent of Australian voters want the government to commit to reducing greenhouse gas emissions under the Kyoto Protocol, according to a Newspoll published Nov. 2.