The door remains open for the Abbott government to ask treasury for more money if its climate change policy can't meet its emissions targets within budget.
The government has allocated $2.55 billion over four years for its emissions reduction fund, which which will provide cash incentives to companies that find ways to reduce their carbon footprint.
The government had indicated the fund was capped and it would meet its emissions reduction goals on time and with the money available.
But Parliamentary Secretary Simon Birmingham has confirmed the government could seek more money for its policy if it can't meet its five per cent emissions reduction target by 2020.
"We're confident the task can be done, but the government will be considering future appropriations beyond the $2.55 billion in future budgets," he told a Senate estimates hearing on Monday.
The inquiry was also told the department overseeing the fund wasn't sure how much it would contribute to the five per cent target, because key functions of the policy were still being finalised.
Deputy secretary to the environment department Steven Kennedy said until the scheme was up and running in July it would be impossible to know how well it would work.
"As soon as auctions are running, there will quickly be a stream of information about successful the emissions reduction fund is in achieving abatement," he said.
Dr Kennedy also forecast that Australia's emissions output would decline this year in line with recent trends, with the high dollar and the closure of several power plants impacting on pollution levels.
It comes as the Climate Institute released new modelling suggesting that "massive additional spending" would be required towards the end of the decade if the five per cent target was to be met.
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