Australia could cut emissions four times more than its current target for a fraction of the cost of the government's direct action plan by buying international credits.
But it would need to act quickly to get the low price, buying the first tranche by March 2015, a new report from the Climate Change Authority says.
Australia could buy enough foreign emissions reductions units to meet a 19 per cent reductions target for less than $500 million.
The authority's worst case scenario has Australia paying about $3 billion to meet a 19 per cent target, if prices rose to about $7 per unit.
Currently Australia is aiming for a five per cent cut to its emissions by 2020 and the government has set aside $2.5 billion for its direct action plan to achieve this.
Many experts are unconvinced the five per cent target can be reached this way.
In opposition, the coalition frequently rubbished Labor's plans to allow the purchase of overseas credits, saying Australia should meet its target through action on this continent.
The Climate Change Authority, set up to advise government, has consistently argued international emissions reductions should complement domestic action.
"As long as the underlying emissions reductions are genuine, they have the same effect on global climate outcomes as domestic reductions," it says.
Authority chairman Bernie Fraser says Australia needs to be gearing up now to participate in international markets so its emissions reduction target, whatever level it is, can be met in the most cost-effective way.
The government wants to abolish the Climate Change Authority as part of its repeal of the carbon tax.
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