The Turnbull government’s “Direct Action” policy cannot meet even the “inadequate” emission reductions it will pledge at the UN climate meeting in Paris and in fact will allow Australia’s greenhouse pollution to rise, according to the Climate Institute.



Malcolm Turnbull was forced to promise to keep Tony Abbott’s climate policy as he sought the prime ministership and has repeatedly pointed to a review scheduled for 2017 – after the next election. But institute chief executive John Connor says new policies are needed much sooner.

The institute is among the business, welfare and conservation groups pleading with political parties to unveil workable and clear climate policies.

As revealed by Guardian Australia, the groups commissioned major consultancies to present on six climate policy options at a special closed-door summit this week, on the assumption that Direct Action is not sufficient to reach the 2030 emissions reduction target and will need substantial modification.

In particular, the institute targets Direct Action’s “centre-piece” – the emissions reduction fund – with which the government buys carbon dioxide abatement in periodic auctions. The results of the second auction will be announced on Thursday.

It says the fund might be a good add-on policy, but won’t come close to achieving the greenhouse gas reductions needed to meet Australia’s target, which the institute considers to be too weak.

The $5bn promised for the fund could buy only 14% of the emission reductions needed to achieve the target of a reduction in emissions of between 26% and 28% by 2030.

The environment minister, Greg Hunt, has said another part of the policy – imposing “safeguard” baselines on high polluting electricity generators and industry – will reduce emissions by 200m tonnes by 2030. But as the institute notes, at the moment the baselines are set so leniently that emissions from industry will continue to rise.

And while Hunt repeatedly claims the emissions reduction fund model is being copied around the world, Connor says nowhere else are government funds used to buy emission reduction as a country’s “core policy” or main means of carbon dioxide abatement.

“Taxpayer funds should not be used to assist major polluters reduce emissions unless it can be demonstrated that no other mechanism would be as effective,” the institute said.

The institute says the ERF might continue to be useful to reduce emissions from the land sector, but the government needs additional policies – including to phase out coal-fired electricity generation before 2050.

The government is not expected to announce any policy changes before the Paris summit in December, but is considering options to increase its $200m contribution to the international Green Climate Fund, which will be a crucial issue at the talks.

In what was seen as a shift in its stance on the global talks, Australia announced last week it had successfully sought to once again co-chair the fund, which was originally derided by Abbott before he finally agreed to contribute $200m over four years after strong international pressure.

Among the ideas being discussed at officials level is setting up a Clean Energy Finance Corporation-style financing mechanism to lend money to climate projects in developing countries, supplementing the $200m in grants which was taken from the aid budget.

The option would mean a funding increase would not hit the budget bottom line and is one of a number of ideas for announcements the government could make in Paris, where it will be represented at various times by Turnbull, the foreign minister, Julie Bishop, and Hunt.

The fund is supposed to channel $100bn a year in public and private financing to developing countries by 2020. The OECD has calculated about $62bn a year has been committed, and making up the shortfall is a crucial demand from developing countries in the Paris negotiations.

The former Labor government was an early donor, tipping in $500,000 in 2012 to help get the fund going, as well as almost $600m on a precursor “fast-start” fund.