Australia's government has agreed to exclude agriculture from its emissions trading scheme, a minister said on Sunday.

The scheme has been delayed in the Senate and the move triggered speculation of an impending deal a day before parliament reopens and in the run-up to major U.N. climate talks in Copenhagen next month.

Prime Minister Kevin Rudd's Labor Party does not have a majority in the Senate and needs the votes of seven other lawmakers to pass the carbon trade bills. A vote is expected during the week of Nov. 23.

His government leads opinion polls, but ministers are seeking passage of the legislation to guard against an early election.

Both sides on Sunday said talks were proceeding.

Climate Change Minister Penny Wong announced the concession and called for quick approval by parliament.

"We've got the opportunity to pass for the first time legislation that actually reduces Australia's contribution to climate change," Wong told the Australian Broadcasting Corporation.

"That is why we will continue to move forward in those negotiations because this is in Australia's national interest. We need to get this reform through."

The government had planned to include agriculture in the scheme from 2015. Under the revision, agriculture will be excluded, but farmers will still be able to claim carbon credits.

Opposition leader Malcolm Turnbull welcomed the move, which will please rural voters, a key support base for his conservatives.

"It's certainly a key part of our set of amendments that we've put to the government," Turnbull told Channel Nine television.

The carbon-trade laws were defeated a first time in August in the Senate, but Rudd wants the plan passed before the Copenhagen talks that aim to yield a broader agreement on how to expand the global fight against climate change.

Rudd has been given a key role by Denmark to try to guide the talks and passing the carbon trade laws this month would boost his climate credentials, analysts say.

New vote expected

A new vote is expected in the lower house in coming days, after which the bill goes to the Senate.

Passing the laws would give industry, such as power generators, more certainly on investment plans and financing.

The opposition, however, is deeply split over emissions trading. Many conservatives deny that there is even proof that human activity is causing climate change.

The opposition has also demanded more compensation for emissions-intensive export industries, such as aluminium smelting, cement making and coal mining. Some climate change experts have suggested such concessions could seriously undermine the scheme's effectiveness.

Under the proposed scheme, trading at a fixed price of A$10 a tonne of carbon dioxide would start in July 2011, requiring businesses to secure a permit for every tonne of CO2 they emit, providing an incentive to curb carbon pollution.

The scheme aims to cut emissions by 5 percent from 2000 levels by 2020, or up to 25 percent if a tough international climate agreement is reached. Full market trading would begin from July 2012.

Australian Greens leader Bob Brown, whose party holds several key Senate seats, said the concession would mean the scheme presented at Copenhagen would be a "prescription for failure".

The government on Saturday presented a report saying that nearly a quarter of a million homes along Australia's coastline could be submerged by 2100 unless action were taken to stop sea levels rising.

Australia, the world's biggest coal exporter, produces about 1.5 percent of global emissions and is one of the world's highest per-capita emitters of greenhouse gases.

Rudd came to power in 2007 on a pledge to ratify the Kyoto Protocol on climate change and introduce a sweeping carbon-trade system to help curb carbon emissions.


Reuters