The federal government has raised concerns about its commitment to tackling climate change, with the revelation that companies who fail to meet their emissions reduction targets under its Direct Action plan will not be penalised. The Climate Institute says Direct Action will struggle under this essentially voluntary approach, as Matt O'Neil writes.

The Abbott government’s credibility on tackling climate change is ‘hanging by a thread’, according to the CEO of the Australian Climate Institute John Connor, after recent revelations that its Direct Action plan will not penalise companies that fail to meet their emissions reduction targets.

Mr Connor says the government’s new approach does not ‘intend to make companies take responsibility for the emissions, [and] carbon pollution that they create’.

‘It will effectively just continue a very voluntary approach,’ he said.

The problem is that these are companies that don’t normally like to do things they don’t have to do...most of these guys are very keen to maximise their profits and aren’t that keen to make the involuntary contributions.

The no-penalty proposal is included in a government Green Paper, which is now open for comment.

Under Direct Action, companies would receive individual baseline emission reduction targets, with the federal government purchasing the lowest cost carbon abatement to meet its target of a five percent reduction in national emissions by 2020.

Direct Action is intended to incentivise companies to produce abatement mechanisms for tackling emissions, but Mr Connor believes the scheme will struggle to achieve this goal if participation is rendered voluntary by the new changes.

‘The problem is that these are companies that don’t normally like to do things they don’t have to do,' he said.

‘It’s only because we’ve had quite an effective regulatory mechanism and a clean energy regulator that everyone, apart from I think Clive Palmer's nickel operations, has actually been operating under the clean energy laws and the carbon requirements.’

'Most of these guys are very keen to maximise their profits and aren’t that keen to make the involuntary contributions.'

The previous government's carbon laws saw almost 400 of the highest carbon emitting companies reporting their emissions, and limiting pollution.

‘[The previous system] had a long life, and so it was clear to those companies that these sorts of restrictions were going to be there for many, many years... it then made sense over the life of their investment to build in cleaner technologies and cleaner alternatives,' said Mr Connor.

The Abbott government says it is convinced of the human causes of climate change, and the need for action, but says it will not allocate more money from the budget if its Direct Action plan fails to meet the five percent target.

Mr Connor says that even the target of five percent is insufficient, and criticised the government for eschewing its international commitments of cutting emissions by up to 25 per cent by 2020.

‘They are the only serious targets,’ he said.

‘The five per cent were reductions [that] if everybody else did would have us heading towards four degrees warming, which would definitely be against Australia’s national interest, massively increasing our costs for business, as well as for agriculture and for our cities and our country towns in terms of the extremes that we would face.’

‘It’s about risk management, and a voluntary approach to risk management is no approach at all.’

Environment Minister Greg Hunt was invited to discuss his government's Direct Action plan, but was unable to join Breakfast.