Howard said he had established a panel of public servants and business leaders to examine the issue, including Qantas chairwoman Margaret Jackson, BHP Billiton executive director Chris Lynch and National Australia Bank chief John Steward.

Howard, who has faced international criticism for his refusal to sign the Kyoto Protocol on greenhouse gas emissions, said he wanted the panel to devise a system that would not harm the Australian economy.

"Its sole remit will be to tell us what the shape of a global emissions trading system might take, and it will be looked at against the background of preserving the natural advantages Australia has in areas like fossil fuels and uranium," Howard told ABC television.

"We don't intend to do things, that are going to hurt this country's economy. It's possible to make changes that reduce greenhouse gas emissions that preserve our comparative advantage.

"The trick, of course, is to make sure that the adjustments are worldwide, so that the relative advantage is not destroyed."

Earlier this year, Howard's conservative government refused to back a carbon trading system because it said it could force up petrol and electricity prices.

But Howard has softened his stance after opinion polls found voters did not believe he was doing enough to address climate change.

Howard did not say when the panel would report back to him.

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