(Reuters) - Australia's fragile government is under increasing pressure to deepen its target to cut carbon emissions after U.N. climate talks in Mexico ended with an agreement to step up the fight against global warming.
Failure to harden the target would anger the Greens, whose support is vital to Australia's ruling Labor Party, but risks enraging the powerful mining sector and conservative opposition.
The Greens have piled on the pressure since the end of the talks in Cancun at the weekend, saying Labor's target to cut emissions by 5 percent from 2000 levels by 2020 is far too weak.
"Mexico put the mojo back into the U.N. climate talks," said John Connor, CEO of the Climate Institute think tank. "What came out of Cancun made it quite clear that we're talking about beyond 5 percent because we are talking about a world taking action."
Australia is the world's top coal exporter, generates more than 80 percent of its electricity from coal and its per-capita emissions are among the highest in the developed world.
The government has said putting a price on carbon is the only way to cut carbon emissions growth from the A$1.2 trillion economy. But it has struggled to win backing from powerful industry lobbies and the issue has proven politically poisonous.
Prime Minister Julia Gillard has pledged to speed up a decision on how to price carbon, either by a tax, emissions trading scheme or a combination, by next year and the Greens are demanding tougher action to match Europe's 20 percent cut and Japan's pledged 25 percent reduction.
"The Cancun agreement keeps the global negotiations alive on the understanding that everybody needs to lift their sights to stronger action if we are to deliver a safe climate," Greens deputy leader, Senator Christine Milne, said in a statement.
She called for Australia to deepen the cut to 25 to 40 percent by 2020. The government in the past pledged to cut by up 25 percent if other big emitters such as China and the United States signed up to a tough climate pact.
FIRST CUT NOT THE DEEPEST
The mining industry, however, said Australia's reliance on resource exports exposed the country to higher costs than other developed countries when it comes to curbing emissions.
"Even a 5 percent cut for Australia costs us much more in lost gross domestic product than a bigger cut in Europe," Minerals Council of Australia deputy chief executive Brendan Pearson told Reuters.
He said government modeling found a 5 percent cut would cut economic growth by more than 1 percent, and would be double the impact of a cut of up to 20 percent in Europe.
But analysts say the government faces pressure to act.
"We can no longer assume the government will simply be able to proceed on its own terms, especially if that is a minus-5 percent target," said Martijn Wilder, global head of Baker & McKenzie's climate change practice in Sydney.