CANBERRA - After months of stalemate, Australia's government could finally seal an agreement for its sweeping carbon trade scheme by early next week after the opposition said on Tuesday they were confident of a deal.

The government wants carbon trading to start in July 2011, covering 75 percent of emissions in what could become the second domestic trading platform outside of Europe.

But laws governing the scheme have been stalled for months, unable to win parliamentary approval because of intense opposition from rival lawmakers.

The government, short of a majority in the Senate, has been negotiating changes with the main opposition bloc to secure extra votes needed to pass the carbon laws.

Opposition negotiator Ian Macfarlane is confident his side would now support a deal.

I remain confident that we'll get an outcome that I can take to the party room, and that the party room can consider. On that basis, I'd be optimistic that the party room would support it, Macfarlane told reporters.

He said negotiations on the laws, which were introduced into the Senate on Tuesday, would continue all week and into the coming weekend. The opposition would then vote early next week on whether to support or reject the laws.

The government has already bowed to a key opposition demand to permanently exclude agriculture, which accounts for around 16 percent of Australian emissions, but the opposition also wants more concessions for coal miners.

The carbon trade bills were defeated in the Senate a first time in August, and could provide a trigger for an early election if they are rejected a second time this month.

Prime Minister Kevin Rudd wants the package of 11 bills passed before he attends December's global climate talks in Copenhagen. The Senate is due to adjourn for the year on November 26, although Rudd has offered to extend the sitting if needed.

The opposition Liberal and National party coalition is deeply divided over climate policy, and opposition leader Malcolm Turnbull has promised his lawmakers they would have a chance to approve or reject any deal with the government.

The divisions resurfaced at a closed-door opposition party room meeting on Tuesday, when 10 opposition lawmakers said the party should vote against the scheme no matter what amendments were negotiated.

However, a party spokesman said more than 10 lawmakers spoke in favor of Turnbull's policy to negotiate changes. Turnbull, well behind in opinion polls, wants a deal to head off the threat of an early election.

The government is seven seats short of a majority in the Senate.

Junior Climate Minister Greg Combet on Tuesday said opposition divisions were the greatest threat to the carbon trade scheme, which is the centerpiece of Rudd's policy to fight global warming.

The coalition is clearly split, with the Nationals gone off on their own course of action, and the Liberal and National parties fundamentally divided over the issue of climate change, Combet told parliament.

Australia's carbon debate is being closely watched overseas, particularly in the United States where lawmakers are debating their own proposals. Neighboring New Zealand is also trying to pass revised emissions trading laws.

To read in-depth articles on Australasian carbon risks and opportunities, visit Carbon Central -- Australia's Climate Change Hub (here), which brings together several of Australia's leading climate-change advisers and solution-providers in one place.

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(Editing by David Fogarty)

Australia