In contrast to the Government's carbon price and market-based emissions trading scheme proposal, the Opposition's 'direct action' plan does not charge industries for pollution.

Instead, it would establish an emissions reduction fund (ERF) paid for from the budget, which would buy emission reductions from industry and agriculture.

The purchases would be through a competitive tendering process to try to reduce emissions at least cost to the taxpayer.

Large emitters - the same ones which will pay the Government's carbon price - could sell abatement if below their agreed pollution baseline, but would incur penalties if above.

As well as the ERF, the Opposition wants to continue support for small-scale rooftop solar panels and a tree-planting program.

The cost is estimated at $1 billion a year by 2020, by which time the Opposition estimates it will be buying 140 million tonnes of carbon pollution annually to meet the target of a 5 per cent reduction of greenhouse gas from 2000 levels.

The Opposition expects 60 per cent of abatement will come from 'soil carbon' - changed land management practices that take carbon out of the air and incorporate it into soil.

In a study for the Australian Industry Group, consultants Ernst and Young were critical of direct action.

"The ERF seems unlikely to help prepare industry for future challenges or encourage widespread innovation," the report says.

"Little would have been done to reduce industry's exposure to future carbon constraints - or to energy prices that are already rising and have much further to run."

Neither was direct action helped by former Opposition leader Malcolm Turnbull, who said the chief advantage of it was that it could be quickly dumped if a future government changed its mind on tackling climate change.

He also said it would be a significant drain on the budget and could cost $18 billion a year by 2050.

But recent reports that the Government is negotiating to pay brown coal electricity generators to switch to gas was seized upon by Opposition environment spokesman Greg Hunt.

"After months of denying it, the government leaked that it had been secretly negotiating with the brown coal power generators to pay for a switch from coal to gas," Mr Hunt said.

"The reason of course is that the carbon tax will fail to achieve this objective.

"In short, the ALP's decision to use direct action incentives to address the power sector was complete capitulation on two fronts.

"Not only will a carbon tax fail to clean up any power stations, but the direct action approach of targeted incentives will work to convert coal to gas."