The Australian government says it will push back a planned carbon emissions trading scheme (ETS) by a year.
Prime Minister Kevin Rudd said the delay was necessary because of the poor economic climate.
But he also suggested that Australia could pursue tougher emissions reductions targets if an international deal was reached.
The ETS, which has been criticised by both industrial and environment groups, was due to launch in July 2010.
Business say the scheme will delay economic recovery and lead to job losses. The environmental lobby, meanwhile, says that the targets are not tough enough.
Australia has the highest per capita emissions in the developed world and coal is its biggest export.
In a speech in Canberra, Mr Rudd said that the carbon trading scheme - requiring industrial polluters to buy licences to emit carbon - would be pushed back until July 2011.
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