Oct. 31 (Bloomberg) -- Australian Industry Minister Ian Macfarlane said the nation wouldn't sign the Kyoto Protocol, following a report from U.K. Treasury economist Nicholas Stern about emissions-trading.

Emission-trading systems from around the world could be linked using a pool of credits created under the 1997 Kyoto Protocol, creating a global carbon price, the report said.

``Kyoto is a scheme that will fail dismally to reach the targets,'' Macfarlane told Nine Network television today. ``Australia will be the only country in the world without nuclear energy that will reach the Kyoto target.''

The Kyoto Protocol is based on a system of credits known as assigned amount units and measured in metric tons of carbon dioxide equivalent. Importing a credit directly from a non-Kyoto nation would increase the volume of units, undermining the Kyoto limits.

The EU, U.S., Japan and Australia each might link with Kyoto credits, providing an indirect mechanism among their systems regimes and a more global emissions-permit price, Stern said.

Treasurer Peter Costello said there was ``no point'' in Australia, which accounts for one percent of global emissions, signing an agreement that did not include ``major emitters'', like India and China.

``The biggest issue here is to get countries like China and India and other countries, which have huge impacts on the globe, into these international arrangements,'' Costello told Australian Broadcasting Corp. radio. ``The most significant thing internationally which I think we have to do is we have to bring all of the countries into emissions targeting.''

AP6

The U.S. and five other nations in July 2005 formed the Asia-Pacific Partnership on Clean Development and Climate. The group includes Australia, China, India, Japan and South Korea.

The U.S. and Australia favor the alliance, also known as AP6, over the Kyoto Protocol because it seeks to reduce pollution without harming economic growth. AP6 accounts for 48 percent of global energy use and half of the world's greenhouse gas emissions.

Prime Minister John Howard said he would not ``betray'' the nation's resource industry by signing the Kyoto Protocol. Australia is the world's biggest shipper of coal and iron ore.

``I'm not going to betray the natural advantage this country has, I'm not going to betray those associated with the resource industry,'' Howard told parliament in Canberra. ``I'm going to say to them that the path ahead is to develop alternatives to fossil fuels.''

The government on Oct. 25 granted A$205 million ($158 million) to new power projects to reduce greenhouse gas emissions from electricity generation. It is relying on technology developments to help meet commitments to reduce emissions, blamed for global warming.

The federal and state governments in Australia have a potential A$1 billion of funding available for low-emission projects.

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net

Last Updated: October 30, 2006 22:44 EST