Australia is mulling over the introduction of a price on carbon to avert shrinking power supplies, declining industry investment and surging electricity costs.
Australian Prime Minister Julia Gillard told The Sydney Morning Herald that the country's heavy reliance on coal had to be addressed while business needed certainty about future costs.
"Continued lack of certainty will see vital investment decisions delayed and money ploughed into costly and wasteful stop-gap options," Gillard said.
Although the coal industry will continue to exist, Australia needs action on climate change, which requires cutting carbon emissions from fossil fuels, according to Gillard.
With extensive coal reserves, Australia uses coal to meet more than 80% of its power needs, thus making the country the world's biggest per capita polluter.