The Australian Senate voted on Thursday to scrap the country's carbon tax and plans for emissions trading, a major victory for conservative Prime Minister Tony Abbott that leaves uncertainty about how the country will meet its carbon reduction goals.
Australia is one of the world's biggest carbon emitters on a per capita basis and abandoning plans for the world's third largest emissions trading scheme (ETS) after Europe and Guangdong, set to begin from 2015, is a major setback for global CO2 trading.
Abolition of the carbon tax was a centerpiece policy of Abbott's 2013 election, but his Liberal-National coalition struggled to repeal the legislation without control of the upper house Senate.
On Thursday, the Senate voted 39 to 32 to dump the carbon tax and planned ETS with the support of mining magnate Clive Palmer, whose Palmer United Party (PUP) holds the balance of power in the chamber.
The repeal was fiercely opposed by the opposition Labor and Greens Party, who portrayed the vote as a stain on the country's international reputation.
"This is an appalling day for Australia when a government, rather than lead in the face of what the world is facing up to ... is determined to stick with the past," Greens leader Senator Christine Milne said before the vote.
Abbott, once a climate-change sceptic, has long argued that the carbon tax is a burden on industry and consumers in a country reliant on coal-fired power and does little to cut emissions. The tax saw 348 of Australia's biggest companies pay A$25.40 for each tonne of CO2 they emit.
But Abbott's plan to replace the carbon tax with an A$2.55 billion Emissions Reduction Fund that would see big emitters paid to cut carbon levels is opposed by Palmer, leaving it unclear how Australia will meet it emissions reduction goals.
Australia's Renewable Energy Target scheme, which Palmer insisted not be repealed, is designed to ensure that 20 per cent of Australia's electricity comes from renewables by 2020.