Prime Minister Julia Gillard has challenged Tony Abbott to explain why he described his own party's emissions reduction target as "crazy".

The Opposition Leader told a public forum of retirees on the Gold Coast yesterday that the "crazy thing" about the target of 5 per cent below 2000 levels by 2020 was that China would be pumping out far more pollution.

However, both the Government and the Opposition support the 5 per cent target, and Ms Gillard says the Opposition Leader needs to explain why he has done a "backflip" on the reduction target.

"He now appears to be saying ... he doesn't want to be doing anything at all, and he needs to answer for all of that," she told ABC Local Radio in Newcastle.

Ms Gillard used a visit to a coal mine near Newcastle to slam claims by Mr Abbott about the effects of the carbon price.

The Prime Minister told miners there is a lot of "crazy talk" around and there is no need to worry about their jobs.

She blamed the fear of losing jobs on "the very false and misleading claims that Mr Abbott has made".

Mr Abbott has warned the carbon price program will destroy the coal industry, but his prediction has been blunted by a record bid for an Australian coal mining company by mining giant Peabody.

"Clearly a lot of nonsense has been spoken about the future of coal mining as we price carbon," Ms Gillard told journalists outside the mine.

"There's a lot of fear around because people have been told that coal mining won't have a future if we move to price carbon.

"Mr Abbott has been out there saying there is no future for coal in this country. He did that wearing a Peabody mining jacket and Peabody, a huge company, since we've announced our plans to price carbon pollution, it is interested in the biggest ever takeover of an Australian coal company, because it knows there is a great future in coal mining.

"Mr Abbott was out telling Australians they would be paying 6.5 cents more for a litre of petrol - completely wrong.

"Then he was out telling Australians we wouldn't be making steel in this country any more. That Whyalla and Port Pirie [in South Australia] would be wiped off the map. Once again, completely wrong."

'Less than $2'

Ms Gillard said when the carbon price is introduced it would add "less than $2" to the cost of a tonne of coal.

"This is against a backdrop where coal prices have doubled from $150 a tonne to $300 a tonne," she said.

"This is an industry where businesses are making profits in the order of $1 million per worker."

Ms Gillard said the coal mine she and Climate Change Minister Greg Combet visited - Centennial coal - is a "gassy" polluting mine, and will be supported by the $1.3 billion coal industry package.

The Government was thrown a lifeline on steel yesterday when the secretary of the powerful Australian Workers Union, Paul Howes, threw his support behind the carbon plan - despite earlier saying he would walk away from it if "one job" was lost.

Ms Gillard also criticised promises by the Greens that coal mining would eventually be phased out and replaced by renewable energy.

"Coal has got a great future in this country," she said.

She said clean energy sources would be developed at the same time coal mining continues.