The LNG industry says federal Labor's proposed pollution reduction policy should be targeting heavy emitting coal-fired plants rather than gas, which it argues is a much cleaner fuel source.

Labor's newly proposed emissions reduction plan aims to lower the minimum annual emissions levels that companies have to meet without using offsets.

The gas industry said big emitting power companies should carry more of the carbon pollution reduction burden. Credit:Bloomberg

The emissions safeguard mechanism will drop the baseline level from 100,000 tonnes of carbon equivalent a year down to 25,000 tonnes.

Gas producers like Santos and Woodside would be affected under these new guidelines but power companies that make electricity, like AGL and EnergyAustralia, would not have to follow these rules.