SYDNEY: Australia's plans for an emissions trading system to combat global warming were scuttled yesterday in Parliament, handing a defeat to a government that had hoped to set an example at international climate change talks next week.

The Senate, where Prime Minister Kevin Rudd's government does not hold a majority, rejected his administration's proposal for Australia to become one of the first countries to install a so-called cap-and-trade system to slash the amount of heat-trapping pollution that industries pump into the air.

The 41-33 vote followed a tumultuous debate in which the conservative main opposition party at first agreed to support a version of the government's bill, then dramatically dumped its leader and switched sides after bitter divisions erupted within the party.