The Australian government’s plan for a carbon trading scheme has been rejected by an alliance of opposition greens and pro-business senators in the parliament’s upper house.

The government-backed plan for a carbon trading scheme was designed to cut the Australia’s greenhouse gas emissions by 5% over the next 10 years. Under the plan the country’s 1000 worst polluters would be required to purchase carbon permits. These polluters generate over 75% of national emissions.

The cap-and-trade plan would have required polluters to buy permits at £5 per tonne

The plans were defeated because business groups were concerned that the plans were too costly and would damage the economy and delay economic recovery. Meanwhile, environmentalists said the plans were not tough enough and the government needed to make a stronger commitment to the environment and backed renewable energy.

Australia relies on coal for 80% of its electricity generation making it the highest per capita carbon emitter in the developed world.

The government can try to reintroduce the plans after three months.