Cap on big polluters heats up as Greens say they're willing to negotiate

The government is locked in negotiations with the Greens and cross bench as it attempts to pass new climate legislation that some argue doesn't go far enough.

Greens leader Adam Bandt said while royalties for new fossil fuel projects could give the government hundreds of millions of dollars, not acting to prevent climate-related disasters would be much more costly. Source: AAP / LUKAS COCH/AAPIMAGE

Key points

• The Greens say they're willing to support the government's safeguard mechanism.
• In exchange they want no new coal or gas projects.
• Greens leader Adam Bandt says refusing these new projects would actually benefit the economy.

The Greens have signalled they're willing to compromise to pass the government's safeguard mechanism, which would lower the emissions cap for big polluters.

Leader Adam Bandt says he wants no new coal and gas projects in exchange for the minor party's support to pass the laws in the Senate, arguing any gains made by the cap would be wiped out by new fossil fuel projects.

"It's an offer that says, we will put aside our very real concerns with the Ponzi scheme elements of this plan where everything gets offset," he told the ABC's Insiders program on Sunday.

"We will vote for it in full if you do one thing: Stop making the problem worse. Stop opening new coal and gas projects."

Mr Bandt floated legislating a climate trigger, where the environmental impact will have to be taken into account when assessing new projects.

"That's a solution. That's a suggestion that's worth having a look at," he said.

He also denied the Greens were being obstructionist, saying he understood Australia was going through an energy transition towards renewables and his argument only stood against new coal and gas projects.

"We're not talking about existing projects. There's enough in the system at the moment for us to go through the transition," he said.

Mr Bandt said while royalties for new fossil fuel projects could be in the order of hundreds of millions of dollars for the government's coffers, not acting to prevent climate-related disasters would be much worse.

"Look at the damage caused by the floods, fires and droughts if the climate crisis gets worse and how much is being spent by communities at the moment just dealing with all of that," he said.

"It's a net benefit to the economy."

Key crossbencher David Pocock will continue consulting with stakeholders on Monday, saying any reforms needed to be effective.

"I'm focused on ensuring the safeguard mechanism actually reduces emissions," he told AAP.

The Greens also want to block the government's signature $15 billion manufacturing fund from propping up fossil fuel projects.

Health Minister Mark Butler said fights over climate policy have been "holding emissions up and keeping jobs down".

"That's why business across the board, every business group, has said that they want to see this safeguards mechanism passed," he said.

"Our plan will reduce emissions by about 200 million tonnes, that's equivalent to taking two-thirds of all Australia's cars off the road over the course of this decade.

"It's good for the climate, but importantly, it's also good for the economy."

Senator Pocock also remains locked in negotiations about the reconstruction fund and the housing fund, saying he's in talks with both the government and other members of the crossbench.

"I want to help ensure our community gets the best outcome from each of these key policies," he said.