The government has secured its climate change plan in return for funding an investigation into an emissions trading policy it is unlikely to adopt.
Environment Minister Greg Hunt on Wednesday announced the coalition had struck a deal with the Palmer United Party to secure crucial Senate votes for the $2.55 billion direct action plan.
In return, the government reneged on its election commitment to scrap the Climate Change Authority, instead having it look into an emissions trading scheme.
PUP leader Clive Palmer - who said in the past he wouldn't support direct action unless an international ETS was put in place - claims it is a win and keeps the hope of an ETS alive.
But the government is holding firm on its opposition to the policy and Mr Hunt reaffirmed there were no plans to implement an ETS in the future.
He says the deal is a win for the government and has reiterated the coalition's opposition to an ETS.
The minister was asked on the ABC on Wednesday night why the government would spend taxpayer dollars on reviewing the ETS when it would never happen.
"If it is continuing to exist we might as well make use of it unless you would want people to be employed sitting there, paid but not doing any work," he said.
Mr Hunt said the government would achieve its emission reduction target of five per cent by 2020.
But Labor believes the government's "dirty" climate policy deal with Mr Palmer will cost Australians and have little effect on emissions.
"Tony Abbott has once again sold his soul to Clive Palmer and Australia will pay the price," Opposition Leader Bill Shorten said on Wednesday.
Labor's climate spokesman Mark Butler says Mr Hunt must have played "Jedi mind tricks" on Mr Palmer to win his support.
The Greens said the policy, which involves big polluters voluntarily opting in, is a joke and will not reduce pollution.
Climate groups are sceptical about the effectiveness of direct action, and its $2.55 emissions reduction fund centrepiece.
"No independent modelling has shown that the government's policy can achieve our targets," Climate Institute deputy chief executive Erwin Jackson told AAP.
The Australian Conservation Foundation says the policy is "handing taxpayer money to big polluters" and a smokescreen for inaction.
But business welcomes the move.
"The emissions reduction fund is the best short term option to reduce emissions," Australian Chamber of Commerce spokesman John Osborn.
"We don't want to rush into an Emissions Trading Scheme and impose unnecessary costs on Australian businesses."
PUP leader Clive Palmer says he believes it is possible to use the direct action policy to cut emissions by more than five per cent.
"Of course it's possible, depending on what resources you put out and what things you do," Mr Palmer told ABC's Lateline program.
"They'll be things that (Climate Change Authority chairman) Mr Fraser will have a look at."
Mr Palmer also believed there was a future for coal exporters in Australia to export cleaner coal.
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