Prime Minister Julia Gillard has promised a $2,000 rebate for people who update their old motor vehicles.

Campaigning south of Brisbane, Ms Gillard said that if Labor is re-elected, owners of pre-1995 cars who buy a new car after January 1 next year would be eligible for the rebate.

Ms Gillard says motorists will be eligible for the Cleaner Car Rebate when they purchase a new, lower-emission, fuel-efficient vehicle, should Labor be returned to Government.

"People will go to their car dealership they will negotiate, get the price that they can get for their new car, their rebate will be paid when their old car is scrapped," she said.

"The dealer will be responsible for doing that. We will have Aus Industry oversighting this."

She says the $400 million policy pledge - part of its climate change policy - is expected to get 200,000 old cars off the road.

"I want to help Australians to update their motor vehicles," she said.

"Australians own a lot of old motor cars, and those old cars guzzle a lot of petrol and they spew out a lot of pollution."

Ms Gillard told a gathering in the marginal Labor-held electorate of Forde that old cars would be turned into scrap metal.

But Federal Opposition Leader Tony Abbott says Labor already rejected a similar scheme in 2009.

"Just last year the Industry Minister, Senator Kim Carr, dismissed these programs as wasteful, complicated and an unnecessary use of finite resources," he said.

"So certainly in bringing this in the Government seems to have humiliated the Industry Minister."

Cutting emissions

Ms Gillard's climate change policy also includes a $1 billion investment to reduce carbon output in the electricity grid as well as clamping down on dirty power plants.

The car rebate plan aims to reduce carbon dioxide emissions by 1 million tonnes and save motorists $344 million in fuel costs over a decade.

The Federal Government says the program is designed for the transition period ahead of an introduction of mandatory emission standards for all new cars from 2015.

Labor says new legislation will require all car companies to reduce emission levels from vehicles they sell in Australia by introducing better technology.

It says overall its plans to tighten emissions standards will cut carbon dioxide emissions by 2.6 million tonnes and save $1.8 billion in fuel costs annually by 2024.

It says the policy is consistent with developments in Europe and the United States, who have introduced mandatory carbon dixoide emission standards for all motor vehicles.

The money will be redirected from several existing climate change programs.

But the Greens say the Federal Government is planning to steal money from renewable energy programs to pay for its cash for clunkers scheme.

Senator Christine Milne says the Greens support the idea, but not the way it will be funded.

"This money should be coming out of the polluting sector, [it] should be coming out of fossil fuel subsidies or the fuel excise," she said.

"What we do not want is Australia's renewable energy future compromised by actually attacking the solar sector."

Meanwhile, a Labor frontbencher has defended Labor's plan for a people's assembly of 150 randomly chosen people to consider climate change, after the idea was dismissed by Opposition Leader Tony Abbott.

Housing Minister Tanya Plibersek says it can be an effective way of dealing with contentious issues.

"Labor has taken climate change legislation, the CPRS, to the House of Representatives," he said.

"So if he really believes the House of Representatives should be the decision-making body on the CPRS perhaps he should have supported it."