Coal will fuel human progress for many decades to come, Australian Prime Minister Tony Abbott has told business leaders at the Asia Society Texas Centre in Houston, adding that that had contributed to the Government's decision to scrap the carbon tax.

Mr Abbott says the Government will take action on climate change without ostracising any particular energy resource.

"Discussion about developing our natural resources often goes hand in hand with conversation about climate change and impacts on the environment," Mr Abbott told the audience.

"It is prudent to do what we reasonably can to reduce carbon emissions. But we don't believe in ostracising any particular fuel and we don't believe in harming economic growth.

"For many decades at least, coal will continue to fuel human progress as an affordable energy source for wealthy and developing countries alike."

Mr Abbott went on to say his Government is abolishing the carbon tax "because it has damaged our economy and increased energy costs for businesses and families".

"We're replacing [the carbon tax] with a $2.55 billion fund that will prioritise cost-effective, targeted means to reduce emissions such as afforestation, soil carbon and cleaner power stations," he said.

"It's an incentive-based approach which will support Australian businesses and households to lower their energy costs at the same time as reducing Australia's emissions."

Mr Abbott also spoke about the close relationship Australia shared with the United States and his desire to follow the country's lead as a successful oil and gas producer.

"Australians have followed closely the success of America's shale energy revolution that has led to the United States once again becoming one of the world's largest producers of oil and gas," he said.

"From the other side of the ocean, Australia shares with you a common interest in powering that future with abundant and reliable energy.

"Australia should be an affordable energy superpower, using nature's gifts to the benefit of our own people and the wider world."

Mr Abbott was given a large Stetson cowboy hat after delivering his speech which he placed on his head and said "Yee-ha".

Mr Abbott also toured a Texas cancer centre to promote his Government's proposed medical research future fund and will next visit Pearl Harbour in Hawaii on the last stop of his 11-day, round-the-world tour.