Greens Deputy Leader Christine Milne said she feared the scheme outlined in draft laws this month could see Australia achieve deep emissions cuts by buying carbon abatement credits offshore.

"It would be immoral if there was not a cap on the amount of offsets that developed economies could buy to try to meet their own domestic targets," Milne told Reuters.

"It is a carbon imperialism which says we will take from you your cheapest carbon mitigation measures, as in buying the offsets from protecting forests, and we will use those to offset our emissions," she said.

Support from Milne's party will be crucial in passing the emissions trading scheme (ETS) laws in the upper house Senate, which is dominated by government opponents and swing voters.

The draft laws unveiled last week by Climate Change Minister Penny Wong target cuts between five and 15 percent of 2000 levels by 2020, with the higher amount dependent upon a broader and tougher global U.N. climate pact being agreed in December.

Australia, though, is not limited by the ETS to make deep cuts if needed.

A policy position paper says the government could go outside the ETS to "make up any shortfall in internationally agreed targets by purchasing eligible international units".

This could occur, for example, if rich nations collectively agreed to cuts deeper than 15 percent at December's U.N. climate talks in Copenhagen to expand and replace the Kyoto Protocol climate pact, whose first commitment period ends in 2012.

Kyoto allows rich countries to invest in carbon projects aimed at cutting planet-warming emissions in developing nations to assist them with sustainable development, while receiving a tradeable emission credit in return.

Each offset, called a certified emissions reduction, or CER, represents a tonne of CO2-equivalent saved from being emitted and Australia's emissions scheme allows 100 percent of compliance needs to be met through the purchase of CERs from overseas.

Kyoto countries can also buy sovereign offsets called Assigned Amount Units, or AAUs, from other industrialised states that are committed under the pact to meet emissions targets during 2008-12. Many former Soviet bloc nations have an excess of AAUs.

Both types of offsets could help the government cut deeper than 15 percent from 2000 levels.

"You are going to probably reduce via your trading scheme by about 15 percent at a maximum. By going out there and buying AAUs from other other countries, you're essentially funding abatement in those countries, but you're meeting your international obligations," Tim Hanlin, managing director of the Australian Climate Exchange, told Reuters.

Milne said a so-called "carbon offset" strategy would not drive emissions cuts at home.

"It's just a direct signal to (developing countries) that Australia is not acting in good faith. Already Treasury is saying that 10 percent of the 5 percent reduction is going to come from buying cheap offsets from developing countries," she said.

Wong said the government's scheme and offset strategy would allow international trade, while the majority of emission reductions would still occur in Australia.

"Is it really such a bad thing to have Australian companies with the incentive to invest in projects in developing countries, in poorer nations, which enable them to reduce their emissions?" she told state radio on Tuesday.

"The more we can encourage reduction in emissions wherever they occur, whether they are in Australia or in the forests of some of our poorer, developing country neighbours, we think that is a positive outcome."

Milne urged caution. "If the US takes that view and Europe takes that view, where does that leave us? Certainly, I would like to see stringent caps," she said.