Slashing carbon pollution by 26 per cent by 2030 is economically and environmentally responsible, the federal government says, and it will not drive up power prices.
The emissions reduction target announced by the government on Tuesday will cost Australia $4 billion a year, or 0.2 to 0.3 per cent in lost GDP, based on foreign affairs department modelling.
Prime Minister Tony Abbott believes that cost is manageable and will not jeopardise Australian jobs.
"The last thing we want to do is strengthen the environment and at the same time damage the economy," Mr Abbott told reporters in Canberra on Tuesday.
The target, which could be scaled up to 28 per cent depending on market factors, will be put on the table when Foreign Minister Julie Bishop attends the United Nations climate summit this year.
Environment groups were quick to slam the goal as weak and accused the government of ducking its fair share in limiting global warming to the internationally agreed level of two degrees.
"If you're fair dinkum about avoiding two degrees (warming), we're going to have to lift our effort," Climate Institute chief executive John Connor told AAP.
But Mr Abbott and Ms Bishop maintained Australia is doing its bit when compared with like-economies and trading partners.
"We're not leading but we're certainly not lagging," Mr Abbott said.
Environment groups and the federal opposition say the target puts Australia well at the back of the pack.
Australia falls slightly behind New Zealand and Canada, which have pledged two of the lower targets among developed countries, and well behind the United States and Europe.
Mr Abbott used the pollution goals of South Korea, Japan and China as evidence Australia is not a laggard and is placed "fairly and squarely" in the middle of comparable economies.
He said the 26 to 28 per cent target will result in a halving of emissions per person, the best result in the developed world of those countries that have submitted targets.
However, Australia will still record the highest per capita emissions and will remain the most emissions-intensive economy in the developed world.
Department modelling shows a 40 per cent target - the 2030 minimum recommended by the government-funded Climate Change Authority - would cost the nation $40 billion a year.
Climate sceptics within the coalition earlier told a joint party room meeting they could "live with" the decision, despite their opposition to climate action.
The government's direct action policy - a large component of the reductions - has been costed at $200 million a year, though independent modelling suggests it could hit tens of billions by 2030.
Carbon market analyst Reputex believes the policy's $2.55 billion emissions reduction kitty will run out late next year.
The government listed plans for energy and vehicle efficiencies, new technologies and carry-over abatements from previous agreements to reach the target.
While international emissions permits will not be used, Environment Minister Greg Hunt and Ms Bishop said their use in the future will remain "on the table" to be available to business as early as 2017.
The Australian Chamber of Commerce and Industry says the target is a reasonable one that balances the need for action on emissions with the need to minimise damage to jobs and economic growth.
