Australia needs to tell the world how it will calculate its medium-term greenhouse target for release early next year and should be looking at a 40% reduction by 2025, the Climate Institute think tank says.

As revealed by Guardian Australia, US and European Union negotiators have also been unsuccessfully lobbying Australia to back a pledge by G20 leaders that their post-2020 greenhouse emission reduction targets will be unveiled early, to improve the chances of a deal at the United Nations meeting in Paris on global greenhouse reductions after 2020.

But Australia has so far said only that it would “consider its post-2020 target as part of the review … in 2015 on Australia’s international targets and settings”, taking into account what trading partners promise, and has been resisting discussion of climate change at the G20 on the grounds that the meeting should focus on its central economic agenda.

The Climate Institute used several methods to calculate a country’s “fair share” of emission reductions to try to contain global warming to 2 degrees Celsius.

It found Australia will need to promise to reduce net emissions by at least 40% of 2000 levels by 2025 and 65% to 75% by 2035.

And as governments around the world prepare to announce their targets in the first few months of next year, the institute is calling on the Australian government to explain how it will undertake its own calculations and when it will unveil its policy.

The government’s “Direct Action” climate policy to reduce emissions with $2.5bn worth of competitive government grants to businesses and organisations is intended to meet the target of cutting Australia’s greenhouse gases by 5% by 2020. The government has not said what longer term target it might adopt, or how it would be reached – except to rule out any form of carbon price or emissions trading.

But according to the Climate Institute, Australia has to start making longer term plans.

“For any policy to remain stable and effective it needs to be relevant not just for the next five years, but for the next 50 years,” its deputy director, Erwin Jackson, said.

“Failure to deliver a proper plan risks institutionalising investment uncertainty, and a much more rapid – and therefore more disruptive – decarbonisation at a later date. It also completely avoids the physical, investment and international realities of climate change and evolving action to address it.”

Europe has already indicated a 2030 target of at least 40% below 1990 levels. China and the US have promised to unveil their pledges early next year.

The calculation of a 40% cut by 2030 is at the lower end of the findings of the independent Climate Change Authority, which recommended Australia reduce emissions by 40% to 60% below 2000 levels in 2030.

Australia is also resisting a last-ditch push by the US, France and other European countries for G20 leaders to back contributions to the Green Climate Fund, also seen as critical to securing developing-nation support for a successful deal on reducing emissions at the United Nations meeting in Paris.

The Green Climate Fund aims to help poorer countries cut their emissions and prepare for the impact of climate change, and the department of foreign affairs is understood to be considering whether Australia should contribute. But the prime minister, Tony Abbott, has previously rejected the fund as a “Bob Brown bank on an international scale”, referring to the former leader of the Australian Greens.

Australia pointedly dissented from support for the fund in a communique from last November’s Commonwealth Heads of Government meeting – a stance backed by Canada.