The government had planned to introduce the scheme in July 2010, despite strong opposition from green groups and businesses, including BlueScope Steel.

BlueScope chief executive Noel Cornish last month warned that a catastrophic economic downturn awaited the Illawarra if the Federal Government ploughed ahead with its Carbon Pollution Reduction Scheme (CPRS).

He said the viability of the Port Kembla steelworks - along with the 12,000 jobs it supports - would be under threat if the CPRS took effect in its present form.

"If our business becomes unviable in the global marketplace then the whole Port Kembla steelworks is threatened," he said.

Legislation setting up the scheme was due to be introduced to parliament next month.

The announcement follows a decision by the Australian Greens to compromise and lower their demand for a 40 per cut in carbon emissions to 25 per cent.

Mr Rudd said the changes to the scheme were made because of the impact of the global financial crisis on the Australian economy; the need "to continue to provide maximum impetus for a strong outcome at the Copenhagen (climate) meeting due at the end of the year''; and because it was in Australia's fundamental national interest to provide business certainty and investment certainty for the future.

For full coverage see Tuesday's Mercury.