European Commission leader Jose Manuel Barroso on Monday praised Australia's controversial plans to introduce a carbon price to combat climate change, saying it was an "important step".

At a joint press conference with Prime Minister Julia Gillard in Canberra, Barroso welcomed the divisive levy, which has driven thousands to attend anti-carbon tax rallies and call for new general elections.

"Australia's decision to put a price on carbon emissions is in our view an important step both environmentally and economically," he said.

"Because it is in our European experience the most cost efficient way to reduce emissions and also a great green business opportunity."

Barroso said Australia and Europe could now work together for a global climate regime.

Ahead of her election, Gillard said there would be no carbon tax under a government she led but she later backtracked, saying a fixed levy was needed before the scheme moved to a market-based emissions trading model.

The policy about-face has prompted calls for the Labor leader's resignation, and seen thousands take to public rallies to denounce the tax set to be levied on major polluters from mid-2012.

Canberra argues the tax will reduce harmful emissions, help slow global warming and save natural treasures such as the Great Barrier Reef, but critics believe it will not make an impact globally and cut jobs at home.

Gillard said Australia and Europe, which has already established an emissions trading scheme, would work on linking their mechanisms in the future.

"Both Australia and the EU recognise that carbon markets are the most cost-effective way of reducing greenhouse gases and creating clean energy jobs," Gillard said.

"The president and I have agreed today to establish senior officials talks to discuss economy-to-economy measures we can jointly undertake to link our emissions trading schemes at the appropriate time in the future."

Barroso's visit to Australia, one of the world's worst per capita polluters due to its reliance on mining exports and coal-fired power, is the first by a European Commission chief in some three decades.

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