Federal Government climate change adviser Ross Garnaut says the carbon tax should be set at between $20 and $30 a tonne when it is introduced next year.

In his latest climate change review, Professor Garnaut says the price should then rise at 4 per cent per annum before being replaced by a floating price in an emissions trading scheme in 2015.

And, in an apparent reference to senior Liberal Senator Nick Minchin, who said last week he believes the earth is cooling, Professor Garnaut said such comments are ignorant.

"Statistical evidence of a warming trend is clear," he said.

"But the Australian airwaves still resounded late last week with talk of the earth cooling. There is no point covering up the truth. We are living through an awful contest between knowledge and ignorance."

Speaking at the National Press Club, Professor Garnaut said low and middle income Australians would be made better off under a carbon tax by the tax breaks they would be given.

He says petrol should be part of the scheme, with petrol excise duty cut to offset the rise. In turn, reforms of fringe benefits tax would fund the excise cut.

Professor Garnaut says initially polluting but trade-exposed businesses which face overseas competition should be compensated - such as the steel or aluminium industries.

But he conceded the high-polluting electricity generators of the La Trobe Valley would be hit hard by the tax - but should seize other opportunities and move to gas-fired generation.

"Those regions happen to be very good regions for building the lower emissions generation capacity," he said.

"As the relative importance of coal declines, the relative importance of gas will rise.

"If you're going to put in a new gas-fired power station somewhere that has all the infrastructure of the La Trobe Valley is a very good place for that."

Climate Change Minister Greg Combet welcomed the report, saying the mechanism would provide generous assistance to low and middle-income households.

Mr Combet stopped short of endorsing the $20 to $30 initial tax on each tonne of carbon pollution.

"The Government has not made any decision on that at this stage," he said.

He says business, environment groups and the multi-party climate change committee also need to be consulted.

But Opposition Leader Tony Abbott says the report does nothing to change his view that the carbon tax will hit people in the hip pocket.

"The important thing about Professor Garnaut's talk today is that at last he's started to give us some hard detail behind the Government's scheme," he said.

"What that detail means is that every Australian's cost of living is under threat from this Government's carbon tax.

"A $25 a tonne carbon price means $300 a year on your electricity bill, it means 6.5 cents a litre on your petrol bill, and that's just for starters."

Senator Minchin told ABC News Online that he did not want to get into a "slanging match" with Professor Garnaut.

"But the records do clearly demonstrate that global temperatures have been stable since 1998. I'm surprised Professor Garnaut does not acknowledge that," he said.

"I postulated that the Earth may actually be cooling."