 The Australian government put back its much-vaunted carbon-emissions trading scheme by a year on Monday, giving in to industry demands for more relief amid a recession while opening the door to an even deeper long-term reduction. Attempting to strike a balance that will help win the political support he needs to pass the world's most sweeping cap-and-trade scheme outside of Europe, Prime Minister Kevin Rudd said the start of trading would be delayed until mid-2011 but that he still aimed to push laws through parliament this year. But it became immediately clear that Rudd's political battles were far from over as both the opposition and a key independent senator rejected the new approach as "flawed," making its eventual success still far from assured. "Starting slower because of the global economic recession and finishing stronger, with the prospect of a bigger outcome for greenhouse gas reductions... we believe (this) gets the balance right," Rudd told reporters. The set back was not unexpected after months of hardening resistance to Rudd's plan, one of the cornerstones of his election platform, and some in the carbon industry welcomed a delay they hoped would help clear away the uncertainty that had stymied early trade and clouded the outlook for corporate costs. The new draft included several short-term concessions to big industry in Australia, one of the world's biggest emitters per capita: a low fixed carbon price capped for a year at A$10 ($7.36), with a transition to full market trading in July 2012; increased eligibility for free emissions permits, including a 95 percent for the heaviest export-oriented polluters. But Rudd also opened the possibility of deeper reductions. While maintaining his interim 2020 emissions reduction target at 5 to 15 percent below 2000 levels, he said the government could increase the cut to 25 percent if other rich nations agreed to similar reductions at Copenhagen -- a measure aimed at appeasing Green party legislators who wanted tougher targets. But even their support may now be insufficient after both the head of the major opposition and kingmaker senator Nick Xenophon, one of two swing independent votes necessary to win passage, rejected it. "If you give a lame duck a hair-cut, it is still a lame duck," said Xenophon. "The government's (scheme) is fundamentally flawed. Their model is unfixable and the changes announced today are simply window dressing." COPENHAGEN, ELECTIONS LOOM Rudd is walking a thin line ahead of elections next year, with business and conservatives pulling his center-left Labor party toward a softer carbon regime, and key Greens demanding he not undermine global climate talks in Copenhagen in December, when world governments will seek a successor to the Kyoto Protocal. The delay enables Australia to await the outcome of those talks before deciding whether to match tough world targets or opt for a softer target in the event of a global impasse. Greens Leader Bob Brown had written to Rudd with an offer to break the Senate deadlock and support the legislation if amendments made it environmentally effective. But the new plan still falls short of Green demands for an unconditional emissions cut of 25 percent below 1990 levels by 2020, with a commitment to move to a 40 percent cut if climate talks in Copenhagen forged a new global climate pact. Major emissions industries and conservatives had complained the original regime start date on July 1 next year would hamper an economic recovery from a recession tipped to see 1 million unemployed by next year. The changes will help placate companies most exposed, like flag carrier Qantas Airlines, OneSteel and top steelmaker Bluescope, whose chairman last week attacked the emissions plan as an economic "de-stimulus." Australian electricity futures for later in 2010 fell 12 percent as the expected price of carbon was removed. Some participants in the nescient carbon market said the delay was welcome relief after months of deepening uncertainty. "I'm a little surprised but I suppose the good thing is at least it gets resolved... The worst outcome is continued uncertainty about what is going to happen," said Gary Cox, vice president of commodities and energy at global brokers Newedge.