Prime minister is warned by host of experts that Coalition's policy is not enough to meet 5% emissions reduction target

Tony Abbott is under pressure from business, environment groups and climate policy experts to bolster his Direct Action climate policy with a new carbon pricing policy or tough regulations to give Australia some chance of meeting its 5% emissions reduction target in an affordable way.

But the legislation implementing Direct Action may not pass the Senate, and the Coalition is vowing not to have any form of carbon price and is promising to run another anti-carbon tax campaign against Labor after the opposition leader, Bill Shorten, locked in his party to taking a new policy for an emissions trading scheme to the next election.



After the Senate finally made good on Abbott’s promise to “axe the tax” on Thursday, the prime minister hailed the demise of the “useless, destructive [carbon] tax” and promised the Coalition would “never do anything that damages the economy”.



“The trouble with an emissions trading scheme is it is just another form of tax … we are not going to have a carbon tax, the only person who will take a carbon tax to the next election is Bill Shorten.”



Shorten said the Labor party would not support Direct Action, which was a “boondoggle” constructed for “internet trolls … and right-wing shock jocks”.



The leader of government business in the house, Christopher Pyne, vowed the Coalition would “hang this around [Shorten’s] neck until election day … he has given the Coalition a whole new lease of life”.

But the demise of the tax focused attention on the Coalition’s alternative Direct Action policy.

While welcoming the repeal of the existing tax, Australian Industry Group's chief executive, Innes Willox, said Australia in the end “has to find a market-based mechanism for action on climate change to work properly”.

“We’ll see how far Direct Action gets us and how it looks in its final form, but we think the government is going to have to look at a range of other policies, including purchasing international carbon permits, and some kind of market mechanism to reach our target,” Willox said.

The Business Council of Australia's chief executive, Jennifer Westacott, said: “Our preference is for a properly designed price on carbon and a market mechanism, but we have to go back to basics.”

John Connor, the chief executive of the Climate Institute thinktank, said Direct Action would need “massive strengthening” and Australia would also need “a host of other regulations to get within even cooee of our minimum emission reduction target” and eventually a carbon price would have to be implemented.

And professor Ross Garnaut, the climate expert who advised Labor governments, said Direct Action was “not up to the job”.

“Any real action will now have to wait for a change in political circumstances. In the meantime, Australia has a become a problem for international efforts on climate change,” he said.

The future of legislation setting up Direct Action is unclear. Labor and the Greens will oppose the bills, which the Senate will vote on when it returns in August, and it is also opposed by the Liberal Democrat senator David Leyonhjelm and the Family First senator Bob Day. Clive Palmer had declared it a “waste of money”, then he linked his support to the government backing his “dormant” emissions trading scheme, and on Thursday when asked by Guardian Australia he said: “I don’t know, I’ll make up my mind later.”

Direct Action involves a $2.5bn fund to provide grants to companies and organisations bidding for money to reduce their emissions, but crucial parts of the plan have been delayed until next year, including the “baselines” to ensure polluting industries don’t “go rogue” and increase their emissions and undo (in terms of national emission reductions) the reductions made by the projects paid for from the emissions reduction fund.

Emissions from new state-of-the-art plants or mines or land clearing are not considered “rogue” under the plan, and industry has argued for loose baselines against which any “rogue” behaviour by existing operations may be measured.

The Minerals Council says that as ore grades decline it will take more energy for existing mines to produce and process the same amount, and “gassier” coal deposits will have to be accessed, and therefore the existing baseline might be too tough and the government might have to allow it to be varied upwards.

The liquefied natural gas industry points out that production is set to treble over the next six years and baselines will need to take account of that.

According to the available modelling, even if Australia spent $88bn from 2014 to 2050 on Direct Action-type policies, emissions would still rise by about 45%.

The former Liberal leader Malcolm Turnbull said in 2011 that continuing to use a big government taxpayer-funded scheme to reduce emissions in the long term would "become a very expensive charge on the budget in the years ahead".

Abbott dismissed the need for modelling of Direct Action during the election campaign, saying the Coalition intended to “have a crack” at implementing the policy, rather than commission alternative modelling, and that even if it didn’t meet the 5% target, no more money would be allocated.