The conservative leader is set to meet with APEC leaders including his key ally US President George W. Bush at the Asia Pacific Economic Cooperation Forum summit in Hanoi as harsh weather turns up the temperature on climate change.

"APEC is ideally suited to examine climate change as it includes energy-rich countries like Australia and Canada as well as large energy-consuming nations like China and Japan," Howard said in a statement.

He will propose a carbon trading system that takes into account the "legitimate interests" of energy-rich countries like Australia as well as the needs of resource-hungry nations and also talk about cleaner energy options.

"There are ways in which we can enlist the support and the co-operation of other countries," he told reporters ahead of the meeting of 20 leaders, including Howard and Bush who have both steadfastly refused to ratify the Kyoto Protocol on climate change.

"We have a contribution to make and the forum in Hanoi later this week is an excellent forum," he said as the environment becomes a red-hot political issue in Australia which is suffering its worst drought in living memory.

Howard has rejected the Kyoto pact and the carbon trading scheme it proposes on the grounds that limiting the greenhouse emissions that cause global warming would diminish Australia's trade and investment competitiveness unless its booming Asian neighbours such as China and India also sign up.

Carbon trading is the centrepiece of the Kyoto pact, which proposes a system under which rich countries are allotted caps for their pollution but which only Europe has begun embracing.

If countries come in under target they can sell any surplus to partners who are above their emissions goal.

Howard on Monday dramatically softened his previous stance, announcing his government was setting up a task force to examine starting its own carbon trade scheme and saying it would not hurt Australia's booming economy.

"I think the weight of scientific evidence suggests that there are significant and damaging growths in the levels of greenhouse gas emissions," he said, denying he was a climate change sceptic.

"And unless we lay the foundation over the years immediately ahead of us to deal with the problem, future generations will face significant penalties and will have cause to criticise our failure to do something substantial in response."

He acknowledged that countries such as India and China, which depend on Australia's vast fossil-based natural resources such as coal, would never agree to environmental controls that would hinder their "energy security".

Their economic growth was "very largely fuelled and supported and facilitated by cheap supplies of energy from countries such as Australia, but also from their own and from other sources," he said.

Howard said the trading scheme would not hold back Australia's booming resource export market and would benefit future Australian generations.

As pressure mounts on the prime minister to tackle climate change, Canberra has begun proposing a "new" Kyoto agreement, saying the previous version was already outmoded.

A poll by the respected Lowy Institute last month said 68 percent of Australians believed global warming was a "critical threat" needing immediate government action, even if it involved huge costs.

At this week's UN climate change conference in Kenya, Australian Environment Minister Ian Campbell will push for a new global agreement.

The plan would involve "all major emitters, that will deliver real benefits for the environment, and that fits the national circumstances and economic aspirations of all countries," he said.

earlier related report
Australian PM backs off opposition to carbon trading
Sydney (AFP) Nov 14 - Australian Prime Minister John Howard has thrown his weight behind a global carbon trading scheme to reduce greenhouse gases as he scrambles to counter criticism of Canberra's environmental policy.

But the conservative prime minister, who is set to meet with his ally US President George W. Bush at the weekend to discuss issues including climate change, insisted that any such system should not hurt Australia's economy.

Howard signalled a major policy shift on carbon emissions trading in a speech late Monday, announcing his government, which was until very recently sceptical that climate change was a problem, is setting up a taskforce to find ways of reducing greenhouse gases that cause the phenomenon.

"The government will establish a joint government-business task group to examine in some detail the form that an emissions trading system here in Australia and globally might take in the years ahead," he told a Business Council of Australia dinner.

"I think the weight of scientific evidence suggests that there are significant and damaging growths in the levels of greenhouse gas emissions," he said, denying he was a climate change sceptic.

"And unless we lay the foundation over the years immediately ahead of us to deal with the problem, future generations will face significant penalties and will have cause to criticise our failure to do something substantial in response."

Howard's government, which has refused to sign the Kyoto Protocol on climate change on the grounds that the cost of limiting greenhouse gas emissions could damage Australia's booming economy, has in recent weeks begun pushing for a new Kyoto agreement.

Howard has repeatedly said that carbon trading is no silver bullet solution to reducing greenhouse gas emissions and has insisted that Australia would not join any such scheme unless Asia's booming economies also signed up.

But on Monday he acknowledged that countries such as India and China, which depend on Australia's vast fossil-based natural resources, would never agree to environmental controls that would hinder their "energy security".

Their economic growth was "very largely fuelled and supported and facilitated by cheap supplies of energy from countries such as Australia, but also from their own and from other sources," he said.

Carbon trading is the centrepiece of the United Nations' Kyoto pact, which Australia and the United States have refused to ratify, on curbing the greenhouse gases that are dangerously changing the world's climate system.

Under the system, rich countries are allotted caps for their pollution and if they come in under target they can sell any surplus to partners who are above their emissions goal.

earlier related report
Australian drought threatens rural 'depression': Treasurer
Sydney (AFP) Nov 14 - Australia's worst drought in a century could cut farm production by 20 percent and push the rural economy into a "depression", Treasurer Peter Costello has warned. "We're in the worst drought in a hundred years -- that's going to make next year's budget very difficult," he told reporters late Monday.

"We are facing a recession, possibly depression, in rural production."

The central bank, the Reserve Bank of Australia, said in a quarterly monetary policy statement Monday the drought would directly reduce economic growth by about half a percentage point in the year ahead.

But Costello's comments, in which he repeated the bank's prediction that farm production could fall by 20 percent, drew criticism from some economists and farmers.

"These words recession and depression don't have official meaning, they're all economic euphemisms," Credit Suisse Australia economist Barry Hughes told ABC radio.

Hughes said Costello's comments may be just an attempt to soften people up for a tougher budget next year.

"I have no firm idea of what the treasurer has in mind but it is very common for treasurers of all political persuasions to try to position themselves ahead of the ... budget," he said.

The Western Australian Farmers Federation said predictions of a downturn in farm production next year could lead to a loss of confidence in rural industries.

"Comments from the Treasurer saying there's going to be a depression next year certainly will impact upon financiers and government in the city," said federation president Trevor De Landgrafft.

"Quite clearly no-one can see what next year's production's going to be like; we are certainly hoping for a good season next year but clearly there will be a downturn.

"I think the comments saying there's actually going to be a depression or a depression in production, I think is really going a bit too far," he said.

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