The Australian Industry Group has warned that Tony Abbott’s call to rule out the use of international carbon credits will push up the cost of meeting emissions targets.

The Turnbull government’s review of its climate policies, released before Christmas, flagged the Coalition’s intention to allow use of international permits to help Australia meet its international emissions reductions commitments.

Carbon credit schemes would allow Australian energy companies to buy credits for abatement projects, such as tree-planting in developing countries, to meet restrictions on emissions in the proposed national energy guarantee.

On Wednesday Abbott said he did not support overseas carbon credits being available to Australian businesses because it was a form of “carbon trading, which is a carbon tax under a different name”.



“That just means that Aussie consumers end up shovell­ing our money to foreign carbon traders and we all know the ­potential for rorts there,” he told the Australian.



The Australian Industry Group chief executive, Innes Willox, said industry had advocated for international credits for many years “as a cost effective means of achieving our obligations”.

“The sensible approach is to meet our obligations in the least costly ways possible,” Willox said. “And in some cases it will be less expensive to meet these obligations by reducing emissions [or sequestering carbon dioxide] in other countries.

“It makes absolutely no sense to rule out this option by insisting that our commitments can only be fulfilled within our borders.

“This can only increase the costs of meeting our international obligations.”

Willox said Australians would need to be “totally satisfied” commitments were met with genuine reductions with “strict methodologies and transparent measurement”, but that was true wherever abatement was achieved.

He said meeting Australia’s commitment in the Paris climate agreement would “inevitably” involve some cost.

A spokesman for the Business Council of Australia said it also supported the use of “credible international permits as a practical measure to reduce emissions”.

He said support for international permits was a practical measure that would “help provide the flexibility and capacity for Australian businesses to participate in what is fundamentally a global issue”.

The energy and environment minister, Josh Frydenberg, has stood by the in-principle support for international credits but said a final decision on the quantity and quality limits would be made by 2020.

He hit back at Abbott’s comments, arguing that international credits have been on the table since the Abbott government signed up to the 2015 Paris climate agreement.

Frydenberg said the climate review showed that the Business Council of Australia, Australian Industry Group and the Minerals Council all strongly support international permits.

“It is worth noting that Mr ­Abbott’s position on international permits is closer to the Greens than that of Australia’s big employers,” he told the Australian.

The Liberal MP Craig Kelly, the chairman of the government’s backbench committee on climate and energy, has backed Abbott’s call to rule out the use of international permits.

Kelly has advocated that Australia backload its emissions reduction target, opting to make less abatement in the short term and achieve higher emissions reductions closer to the 2030 deadline when renewable energy technology advances may make it cheaper to do so.

“I am still relatively confident that under the Neg our Paris commitment can be achieved, taking advantage of technology, at virtually zero cost, if the trajectory is done in a sensible manner,” he told Guardian Australia.

Kelly said if Australia could not meet its targets in that way “you’ve got to ask yourself if we have set that target too stringently” and there would be a debate about what price the community is prepared to pay to meet the targets.