Australia's top climate adviser has unveiled the likely costs of an emissions trading program.  Professor Ross Garnaut has proposed cautious targets for reducing greenhouse gas emissions and recommends that Australia's total emissions should to be cut by between 10 and 25 percent by 2020. From Sydney, Phil Mercer reports.

The Australian government commissioned economist Ross Garnaut to look at ways to address climate change and to ensure that Australia does its fair share to support international efforts to tackle pollution.

The government has promised to introduce a carbon trading program within two years.  It would be designed to give a financial incentive to reduce emissions of greenhouse gases such as carbon dioxide, which many scientists believe contribute to a warming climate.

Garnaut has put a price on pollution.  He suggests that companies be charged $16 for producing a ton of carbon dioxide.  He estimates that would be close to the international price if a global free market in carbon-trading emerges from a United Nations climate conference in Denmark next year.

Delegates at the Copenhagen summit will look to set new international greenhouse gas targets after the Kyoto Protocol ends in 2012.

Garnaut says that striking a comprehensive global deal will not be easy.

"The process of international cooperation is perhaps the most formidable of international relations challenges, more formidable that the multilateral trade negotiations which have recently fallen onto hard times," he said.  "The development of domestic policies consistent with ultimate international agreement is immensely difficult in every country."

Garnaut recommends that Australia cuts its overall emissions by between 10 and 25 percent by 2020.  Doing so, however, could reduce Australia's gross domestic product of more than one percent by 2020.

The government has yet to respond to Garnaut's report. Some environmentalists think the proposed emissions cuts are too low, while business groups have broadly welcome the recommendations.

Prime Minister Kevin Rudd hopes to unveil his government's final blueprint for a domestic carbon trading program in December and introduce legislation early next year.

Australia is one of the world's worst carbon dioxide polluters per capita because of its heavy reliance on its abundant reserves of coal.

This arid continent is also considered by many experts to be particularly vulnerable to the effects of climate change.