PM Julia Gillard
Prime Minister Julia Gillard struggles to prop up herself and the Australia labor party in surveys

Prime Minister Julia Gillard's Labour government introduced a controversial law to tax industries on the basis of the amount of carbon emissions they produce.

With the Clean Energy Act, the government plans to reduce carbon emissions by 159 million tonnes a year by 2020, which would be comparable to taking 45 million cars off the road.

It also plans to slap a fine of Aus$23 (£15) for every tonne of carbon emissions produced by the country's biggest polluters, which it is estimated will affect 300 companies.

"As a Labour government, we haven't done all of this for no reason, we've done it because we believe it's pivotal to Australia's future," Gillard told the Australian Broadcasting Corporation, adding that she envisioned it to be "a clean energy future".

Mining companies, airlines, steel makers and energy firms will bear the brunt of the Clean Energy Act.

Australia, which accounts for nearly 1.5 percent of global emissions, is the worst polluter in the developed world and the new move by Gillard's government is intended to meet its climate-change obligations.

The country is the largest per-head emitter because of its comparatively lower population.

The new law was introduced against opposition warnings that it would amount to smothering industries. The Conservative opposition called it a "toxic tax" that will result in price rises and higher costs of living for consumers.

Opposition leader Tony Abbott pledged to repeal the tax if the coalition wins power at the next election in 2013.

He tweeted: "If elected we will immediately legislate to scrap the carbon tax to help families."