AUSTRALIA is likely to have an emissions trading scheme locked in by the end of next week, with the Government caving in to a key Coalition demand to permanently exclude the farming sector.
In a significant concession, and a huge win for the powerful farming lobby, a senior Government source revealed Labor will this week agree to exclude agriculture from the scheme ''indefinitely'' - knocking out a key sticking point in negotiations with the Opposition.
In a further concession, the Government will also examine giving farmers the opportunity to earn cash by selling carbon offsetting credits on the open market, including Opposition Leader Malcolm Turnbull's favoured ''biochar'' method of storing carbon in soil.
''This is all about us showing how serious we are in getting the Carbon Pollution Reduction Scheme through the Parliament this fortnight and is obviously the biggest move we have made in the negotiations,'' the source said.
Labor had previously signalled the farm sector would likely be included in the scheme in 2015, after a review in 2013.
The backdown has significantly increased the odds that amended legislation will be stamped into law before Parliament winds up for the year at the end of next week. Even if a majority of Coalition senators opposes the bill as expected, the scheme will still pass with Labor only needing an extra seven votes.
This would allow Prime Minister Kevin Rudd to present Australia's plan to the Copenhagen climate summit, which begins on December 7.
The scheme, which will require businesses to hold saleable permits for the emissions they produce, would begin in July 2011, lifting prices for energy and most consumer products.
Critics, including Coalition MPs, say it will hurt the economy by lifting costs for consumers and businesses, while doing nothing to halt climate change.
But international research, to be released today, shows Australians are more likely to support paying for the cost of climate change through higher petrol and electricity prices than almost any other developed country.
The World Wide Views on Global Warming project, which surveyed 4000 people in 38 countries over one weekend in September, found Australians wanted the Federal Government to take tougher action on climate change at home and a strong position at the international negotiations next month.
But critics of the Government's scheme who already believe it does not go far enough and has been overly diluted by huge concessions to incumbent power producers, exporters and mining companies, will be dismayed at the farming exemption.
A deal would represent a significant victory for Mr Turnbull, who has staked his leadership on the issue by declaring he is not prepared to lead a party not as committed to climate change as he is.
But in an ongoing political nightmare for Mr Turnbull, the Coalition remains hopelessly divided on the issue, with dissenters such as Opposition Senate leader Nick Minchin and Nationals Senate leader Barnaby Joyce openly hostile to his efforts.
A recent analysis of likely Senate voting intensions showed an agreement would severely test this authority, with 23 out of 37 Coalition senators deemed likely to either vote against amended legislation or fail to vote.
Government leader in the Senate Chris Evans has written to the Opposition, the Greens and the minor players informing them that the next two weeks will be almost entirely dedicated to the bill.
The letter warns the Government will ''seek to extend the sitting hours and days if required'', with debate on the legislation set to begin on Tuesday.
''The Government is committed to ensuring the CPRS is debated by the Senate in a thorough and comprehensive way, and voted on this year to provide Australian business with much needed certainty,'' the letter says.
It follows the release of a report by the Government yesterday warning rising sea levels triggered by climate change could damage or destroy 247,600 buildings valued at $63 billion.