The Carbon Pollution Reduction Scheme aims to cut Australia's emissions by between 5 percent and 15 percent from their 2000 levels within 10 years.
The deal follows five weeks of intense bargaining in which the government met opposition demands for increased compensation for coal miners, electricity generators and other large polluters. The Senate had rejected a similar bill in August.
Under the concessions, the coal industry will receive $1.5 billion over the next five years, double the previous level of assistance. Electricity generators will get $7.3 billion in assistance over 10 years, up from $3.9 billion. The cost for producing carbon dioxide will begin at $9.24 per metric ton until July 2012. Thereafter, the market will determine the cost.
Under the revised plan, the government will increase the assistance available to the electricity sector from 130.7 million permits to 228.7 million permits, an increase of 75 percent. It will also increase the period over which the permits are available from five years to 10.
Australia's carbon trading scheme could serve as a model for other countries, including the United States, during next month's climate-change talks in Copenhagen, Robert Stavins, director of Harvard University's environmental economics program, told Bloomberg.
Australia, the world's largest exporter of coal, is also the biggest per-capita producer of greenhouse gases, with an average output of 20.5 tons of carbon dioxide per person each year.
"It is significant that Australia -- a country with significant coal resources, dependence on coal for electricity generation, and great sensitivity of its energy-intensive industries to international competition with Asian countries -- would move forward with a climate policy," Stavins said. "Prime Minister Rudd has already been a leader internationally in climate-change policy, and this development in Parliament can only strengthen that," he said.
Stavins noted that Australia's policy could also represent "a meaningful signal" for the United States.
The government hopes to pass the bill before the upcoming climate talks in Copenhagen.
The Climate Institute of Australia Wednesday said although it opposes "extra assistance for big polluters," it urged "immediate passage" of the carbon emissions trading scheme.
"Now is the time to move on and ensure this legislation is a springboard for ambitious global action and improved Australian carbon competitiveness, not a gangplank to drown global action or leave Australia in the backwaters of the growing global low-carbon economy," said John Connor, chief of The Climate Institute.