CANBERRA - Australia's parliament votes next week on Prime Minister Kevin Rudd's plan for a sweeping carbon trade scheme with hopes it will finally win approval after two years of divisive debate.

Rudd wants the scheme passed in the last four parliamentary sitting days of the year to help generate momentum for global climate talks next month in Copenhagen, which are now unlikely to set legally-binding global greenhouse targets.

The 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.

This time next week I could be sitting here ... and we could have for the first time legislation which starts to reduce Australia's contribution to climate change, Climate Change Minister Penny Wong told Australian radio on Friday.

The government and opposition are expected to announce agreed changes to the scheme early next week. That deal should guarantee the extra seven votes the government needs to push the package through a hostile Senate upper house.

Agreement on the carbon laws would strengthen Rudd's standing as he heads into an election year in 2010, and divide a dispirited opposition struggling for support in the polls. Elections are due late next year.

A defeat would give Rudd the consolation prize of destroying his rival's standing, after opposition leader Malcolm Turnbull put his leadership on the line over his wish to cut a deal with the government on carbon trading.

The scheme, due to start in July 2011 and cover 75 percent of emissions, was a key promise from Rudd's first election victory in November 2007. Laws to set it up were rejected by the Senate a first time in August.

If the laws are defeated a second time next week, Rudd will have a legal trigger to call a snap election, with opinion polls showing he would win with an increased majority. Rudd has regularly played down the possibility of an early election.

But Turnbull's party is deeply divided on the issue, and up to 30 of his 87 lawmakers are threatening to defy their leader and vote against any deal, prompting speculation he may soon face a leadership challenge.

(Editing by Michael Perry and Ron Popeski)

Australia