Former prime minister Tony Abbott is unhappy about plans to allow Australian companies to buy overseas carbon trading credits.
Federal Labor says Tony Abbott is on the warpath, and might sink the Turnbull government's proposed national energy guarantee policy.
Prime Minister Malcolm Turnbull is reportedly facing a backlash in government ranks from conservative MPs including the man he replaced in the top job, over his energy policy.
Mr Abbott has declared he doesn't support granting Australian businesses access to overseas carbon credits, describing it as a carbon tax under a different name.
Acting opposition leader Tanya Plibersek said it's only three days into the new year and the Liberal Party was at war with itself over climate change action.
"Who knows what the future of the national energy guarantee is If Tony Abbott is on the warpath again?" she told reporters.
"There's one thing you can guarantee for sure is Malcolm Turnbull going underwater."
The national energy guarantee would involve energy retailers delivering a set level of ready-to-use power in each state to shore up reliability, while also being compelled to meet a lower emissions target.
Australian Industry Group chief executive Innes Willox said business had been advocating for access to international credits as a cost-effective way to achieve Australia's commitments under the Paris climate change agreement.
"It makes absolutely no sense to rule out this option by insisting that our commitments can only be fulfilled within our borders," Mr Willox said in a statement.
The Mineral Council of Australia also echoed the same view.
Australia's target under the Paris agreement is to reduce emissions to 26-28 per cent on 2005 levels by 2030 across the entire economy.