A carbon price for power companies is set to be considered as part of a climate change review, but the Government has ruled out a return to Labor's carbon tax.

Key points: Government says the scheme is not a return to the carbon tax

Government says the scheme is not a return to the carbon tax Environment Minister said the Government will take a sector-by-sector approach

Environment Minister said the Government will take a sector-by-sector approach Electricity sector produces the most emissions in Australia

The Department of the Environment and Energy will undertake an internal review next year to examine the best ways to meet Australia's climate commitments.

Environment Minister Josh Frydenberg said the review would consider an emissions intensity scheme for electricity generators, but said the Government would take a sector-by-sector approach.

"We reject an economy-wide approach," he told the ABC.

"What this review has indicated is we will look at a sector-by-sector approach. The electricity sector is the one which produces the most emissions — around a third of Australia's emissions come from that sector.

"We know that there's been a large number of bodies that have recommended an emissions intensity scheme."

Mr Frydenberg said there had been recommendations for a "baseline and credit scheme", which could be similar to an emissions trading scheme where emissions are capped by the Government.

Mr Frydenberg said a discussion paper would be released in early 2017.

Prime Minister Malcolm Turnbull today described the review as "nothing remarkable".

In 2014, the Abbott government passed legislation to repeal the clean energy package — or so called carbon tax - put in place by Labor.

It followed a lengthy campaign on the issue, which Tony Abbott described as a "historic betrayal" when it was unveiled by then prime minister Julia Gillard in 2011.

The legislation took effect on July 1 the following year and raised $3.8 billion in its first six months, according to a budget update in February 2013.

Opposition Leader Bill Shorten today labelled Direct Action a "flop" and called for further investment in renewable energy.