Sept. 1 (Bloomberg) -- BHP Billiton Ltd. chairman Don Argus wants the Australian government to reconsider its plan to set up an emissions-trading system.

Argus said the government should consider a carbon tax instead of a cap-and-trade system, similar to that used in the European Union.

``Australia should consider and debate all the alternatives to a cap-and-trade system,'' Argus told a business summit in Canberra today. ``I would not leave out the carbon tax initiatives. That's mine, it's not the company's view.''

Prime Minister Kevin Rudd, who ratified the Kyoto Treaty on his first day in office after winning an election in November, plans to introduce the trading system as part of cutting greenhouse emissions by 60 percent by 2050. Government climate change adviser Ross Garnaut is due to release targets and trajectories on Sept. 5 for the government to consider.

Companies may leave Australia because of increased costs if the carbon plan goes ahead, the nation's Business Council said on Aug. 21.

``We've heard from many in the business community that they would prefer a different measure for assessing the cost impact,'' Climate Change Minister Penny Wong told reporters in Canberra today. ``The government is willing to consider alternative approaches.''

The government plans to issue free permits or give a one- off cash bonus to coal-powered electricity generators. It will increase welfare payments and reduce taxes to help households, particularly those with low incomes, cope with the system.

Treasury in October will release economic modeling on the emissions trading system and the government will release its final report by the end of the year.

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

Last Updated: September 1, 2008 00:42 EDT