Clive Palmer does not believe the Coalition’s $2.5bn Direct Action plan can deliver Australia’s minimum 5% greenhouse gas reduction target but says his senators voted for it last week because it was “better than having nothing”.

“It’s clear Direct Action won’t give us the 5% reductions,” Palmer told Guardian Australia. “We’re going to need another policy pretty soon. But in the short-term it’s better to have something reducing emissions than having nothing.”



Palmer, whose senators also voted to repeal the former government’s emissions trading scheme – which is how Australia was left without a climate policy – said he believed Australia would eventually have to move to such a scheme.



As part of a deal to secure PUP’s votes in the Direct Action vote last week, the government has agreed to commission the Climate Change Authority to inquire into an emissions trading scheme – something Palmer says will “keep the debate alive until the next election”.



The government insists its new scheme might even exceed its 5% target.

The environment minister, Greg Hunt, confirmed he would begin doling out the money – allocated via competitive “auctions” – early next year and said there was strong interest from businesses and other groups that wanted to participate.

“The level of interest and pipeline of projects have been greater than expected,” he said, insisting the government would achieve the 5% target within its budget. The prime minister, Tony Abbott, has made it clear no more money will be allocated.

Elisa de Wit, a climate change lawyer and partner at Norton Rose Fulbright, said the early recipients of Direct Action money were likely to be in areas that were already developing a set of rules under the existing carbon farming scheme – including projects to capture and either flare or use gas from landfill and waste plants, projects to avoid deforestation, and projects to capture gas from coal mines.

Hunt said the government was “developing methodologies which will be released shortly. There are 26 out there, another more than 20 under development for things such as aggregated household energy efficiency, for cleaning up power stations, for cleaning up waste coal mine gas, for cleaning up emissions from waste water and sewerage farms.”

Labor’s environment spokesman, Mark Butler, predicted Direct Action would be a waste of money. “Tony Abbott and Greg Hunt stand up, put their hands on their hearts and say `We are going to achieve the 5% reduction’,” he told the ABC’s Insiders.

“No one else believes it. No one else has said we have a chance under this policy to achieve a 5% reduction, let alone the more ambitious discussions that will be the subject at international negotiations next year.”

But the government’s chances of meeting the target are bolstered by the big reduction in Australia’s emissions before Direct Action has even started, in part due to the decline in manufacturing.

In 2012 the Coalition’s promise to reduce emissions by 5% of 2000 levels by 2020 was calculated to require the cumulative reduction of 755m tonnes of carbon dioxide from the atmosphere. Last year new government calculations reduced that figure to 431m tonnes.

Further calculations by Frontier Economics say the figure could be as low as 225m tonnes if the renewable energy target (RET) stays in place to drive investment into clean generation, or somewhere around 300m tonnes if the government succeeds in paring back the RET. Official figures are soon likely to confirm this drop.