Tony Abbott's plan for a $2.5 billion Direct Action emissions reduction fund is set to pass the Senate after the Government made several concessions to win over the support of Palmer United Party and other crossbench senators.

PUP leader Clive Palmer won a Government commitment to salvage the Climate Change Authority and to ask it to conduct an 18-month review of the PUP plan to legislate an emissions trading scheme (ETS) at a zero rate.

"The authority will conduct a review examining whether there are emissions trading arrangements in other countries and what form they take," Environment Minister Greg Hunt said.

Victorian senators Ricky Muir and John Madigan and South Australian senator Nick Xenophon have also given their vote to the Government after negotiations.

Mr Hunt made the announcement, flanked by Mr Palmer and authority chairman Bernie Fraser on Wednesday.

"This is a tremendous outcome for the Government - one of our signature policies is being achieved," Mr Hunt said.

Mr Hunt told the ABC's 7.30 the Government would save taxpayers from a $36 billion carbon tax bill.

"We are making a massive saving for Australia, implementing our emissions reduction policies, getting rid of a carbon tax which was having an impact on every family and we're doing it in the only way that was possible and this is a very, very good outcome for the government and for the people," he said.

Mr Palmer said his party had "kept alive" the prospect of an emissions trading scheme.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 16 minutes 19 seconds 16 m Direct action plan has been amended ( Tony Jones )

"I think from our perspective, once our trading partners all have an ETS, it's fundamental that Australia has one," he said.

"Because if we don't, we'll be saddled with a tariff effectively for the export of our products to those markets.

"So both from an environmental and a commercial point of view we think this must happen."

Senator Xenophon has also been granted some of the amendments he had been calling for.

Under the Direct Action plan, polluters would be paid to reduce emissions, in a scheme which has been estimated to cost more than $2.5 billion over four years.

In June Mr Palmer described the policy as a "waste of money" and said his party would instead support an emissions trading scheme, which would only come into effect when Australia's major trading partners also adopted such a scheme.

However, because the Government has dumped its plans to scrap the Climate Change Authority, PUP has agreed not to proceed with plans to legislate the "ghost" ETS.

The Climate Change Authority is a Federal Government body set up by the then-Labor government in 2011 to provide independent advice on the carbon price, emission reduction targets, caps and initiatives.

Labor leader Bill Shorten, whose party has committed to fight for an ETS, said "Prime Minister Palmer" was "calling the shots".

"Tony Abbott has once again sold his soul to Clive Palmer and Australia will pay the price," he said.

"This is a dirty deal that will send our country backwards."

Greens leader Christine Milne has slammed the direct action policy as "embarrassing".

"What we have here is no contribution to bringing down emissions, no modelling to backing up the claims, a government and Clive Palmer which tore down an emissions trading scheme which was bringing down emissions," she said.

In July, the Coalition succeeded in scrapping the carbon tax with PUP support.

The Coalition insists the Direct Action policy is enough to achieve its target of a 5 per cent cut in carbon dioxide emissions by 2020.