Per capita, Australia currently is one of the highest greenhouse gas producers in the world. About 90 per cent of Australia's energy is currently generated from non-renewable coal in power stations.

Food processors are major users of energy and producers of emissions, including carbon dioxide.

Howard, seen by many as an environmental laggard, announced last week that Australia would start a domestic carbon emissions trading system (ETS) by 2012. He said that targets for greenhouse gas emissions would be set in 2008.

ETS, which is an integral part of the Kyoto agreement, attempts to assist countries in complying with the protocol by allowing them to trade excess pollution for emissions credits earned by nations that remain under their pollution caps.

The announcement is a shift in position for Australia, which had refused to ratify the Kyoto unless the US and developing countries agreed to its terms also.

In advance of the ETS being created, the Australian Securities Exchange, owned by ASX, said it expects to start a futures market for carbon emission permits.

Once environmental targets are set, the exchange will allow companies to trade their future pollution, essentially allowing industry to trade the "cost" of emissions.

Australia's change in position comes as China also announced plans to cut its greenhouse gas emissions.

Although refusing to commit to quantified reductions, China said it would share the responsibility of mitigating the effects of global warming with developed countries.

China has a historical emissions per capita level lower than most developed counties.

Australia's opposition Labour party, which is currently leading the polls, has proposed even stricter emissions targets than that proposed by Howard, possibly leading to an even larger increase in production costs.