The Australian Parliament would likely change its tact on carbon emissions in the next three years.

Citigroup said in a Bloomberg report that the likely scenario for the Australian government is to price carbon emissions in the near term instead of a previous plan to tax or create a trading system.

An analyst at Citigroup in Sydney said Prime Minister Julia Gillard would have to deal with similar issues of compensation and allocation of free permits."

As a form of pledge to tackle climate change Prime Minister Gillard said earlier this month that she would set up a committee that would be in-charge of the carbon plan.

It was cited in the report that if such a policy would be implemented, energy companies Origin Energy Ltd., AGL Energy Ltd. and Infigen Energy.

Because a carbon regulation policy will greatly depend on electricity generation, this would prime up electricity prices, but at the same time, set a better economics for renewable forms of energy.

In a statement last week, BHP Billiton Ltd. Chief Executive Officer Marius Kloppers has urged lawmakers to combine a carbon tax, regulation and a market-based trading system restricted to power generation.