Australian households will be handed more than $15 billion in compensation to help offset the impact of the Government's new carbon tax, Prime Minister Julia Gillard has confirmed.

Some 90 per cent of households will get tax cuts and/or extra payments when the $23 per tonne price kicks in on July 1 next year.

The Government says the package's tax reforms and other compensation measures mean the average household will be 20 cents a week better off.

However households can expect to see consumer prices rise by an average of 0.7 per cent due to the effect of the carbon price on large emitters.

There will be extra payments for pensioners and families with children, while the tax reforms come with a guarantee that no-one will pay more income tax.

The Government says 4 million households will be better off after compensation, 6 million will be no worse off, and 8 million will receive partial compensation for the price rises.

Known as the Clean Energy Supplement, the Government says compensation will be equal to a 1.7 per cent increase in pensions, allowances and family payments.

The scheme also includes $9.2 billion over three years for trade-exposed industry, with emissions-intensive industries such as aluminium, zinc and steel manufacturing getting more than 94 per cent of their carbon permits for free.

The scheme is projected to cut 159 million tonnes of carbon pollution from the atmosphere by 2020 - the equivalent of taking 45 million cars off the road.

The assistance measures to households include a rise in the tax-free threshold from $6,000 to $18,000, and up to $338 per year extra for single pensioners.

All taxpayers with incomes below $80,000 will get tax cuts - most about $300 a year.

Treasurer Wayne Swan says average households will pay an extra $9.90 per week while average assistance will be $10.10 per week.

What it means for you:

Up to $338 extra per year for single pensioners and self-funded retirees, and up to $510 per year for pensioner couples combined.

Up to $338 extra per year for single pensioners and self-funded retirees, and up to $510 per year for pensioner couples combined. Up to $110 per child for a family that receives Family Tax Benefit Part A.

Up to $110 per child for a family that receives Family Tax Benefit Part A. Up to $69 extra for families that receive Family Tax Benefit Part B.

Up to $69 extra for families that receive Family Tax Benefit Part B. Up to $218 extra per year for single income support recipients and $390 per year for couples combined for people on allowances.

Up to $218 extra per year for single income support recipients and $390 per year for couples combined for people on allowances. Up to $234 per year for single parents in addition to the increased family payments they receive.

As expected, around 500 highest polluting businessses will pay the carbon price - which will increase by 2.5 per cent above inflation until July 1 2015 when a market-based emissions trading scheme will kick in.

While fuel is exempt for individual motorists and small business, diesel for heavy vehicles like semi-trailers will be paying the carbon price from 2014, after a two-year moratorium.

The scheme will be administered by a new Climate Change Authority (CCA) to be headed up by former Reserve Bank governor and Treasury Secretary, Bernie Fraser.

The CCA will recommend future pollution caps but the final decision will rest with the Government.

The main features of the plan are:

Initial carbon price of $23 per tonne of carbon pollution to be paid by the 500 heaviest emitters and increasing by 2.5 per cent in real terms.

Initial carbon price of $23 per tonne of carbon pollution to be paid by the 500 heaviest emitters and increasing by 2.5 per cent in real terms. A transition to a market-based emissions trading scheme in 2015.

A transition to a market-based emissions trading scheme in 2015. $9.2 billion from the revenue stream to help businesses and workers impacted by the plan.

$9.2 billion from the revenue stream to help businesses and workers impacted by the plan. Tax cuts and pension increases to protect people from higher prices.

Tax cuts and pension increases to protect people from higher prices. A $1.2 billion Clean Technology Program to improve energy efficiency in manufacturing and to support research and development.

A $1.2 billion Clean Technology Program to improve energy efficiency in manufacturing and to support research and development. Australia's most polluting electricity generators will be closed and replaced with gas-fired units by 2020.

Australia's most polluting electricity generators will be closed and replaced with gas-fired units by 2020. A $10 billion Clean Energy Finance Corporation to fund new clean energy technology.

A $10 billion Clean Energy Finance Corporation to fund new clean energy technology. An Australian Renewable Energy Agency to manage a $10 billion Clean Energy Finance Corporation to fund new clean energy technology.

An Australian Renewable Energy Agency to manage a $10 billion Clean Energy Finance Corporation to fund new clean energy technology. An Australian Renewable Energy Agency to manage a $3.2 billion clean energy budget.

An Australian Renewable Energy Agency to manage a $3.2 billion clean energy budget. A target of 20 per cent renewable energy by 2020.

A target of 20 per cent renewable energy by 2020. Agriculture excluded from paying the carbon price.

'National transition'

"The science is in, we know that our climate is changing," Ms Gillard said as she unveiled the plans on Sunday.

"This has been a difficult debate that has brought us to this moment, but we are here now and now is the chance to get this done."

Ms Gillard says nine out of 10 households will receive compensation under the plan, either through tax cuts or extra payments.

"Carbon pricing is the foundation stone for this package... it's got a focus on energy efficiency, it's got a focus on renewable energy, it's got a focus on the land sector," she said.

"This is a big day in Canberra ... as we transition our nation to a clean energy future.

"I want Australian families to understand what it will mean to them. I want them to understand we are seizing a clean energy future.

"Standing here as PM I understand that this has been a long, complicated and at some times very difficult debate for Australians to follow.

"We are now moving from the days of words to deeds.. we are going to get this done. We are going to create a clean energy future.

Mr Swan described the plan as a "fundamental economic reform", saying Australia can't allow itself to become a "technological backwater".

"We've got to price carbon pollution to drive the investment in innovation and to provide the incentive for energy efficiency and to develop renewable energy," he said.

"Failing to do so means that we would be passing on lower living standards to our children and to our grandchildren."

Permits for industry

The assistance for high-polluting industries which rely on exporting their products will be through free permits, and will apply to aluminium smelting, steel manufacturing, flat glass making, zinc smelting and pulp and paper making.

There is a $300 million package to support jobs in steel manufacturing by encouraging innovation and another $1.3 billion towards rewarding coal mines that reduce their emissions.

The Government says the $23 carbon price will add about $1.80 per tonne of coal produced - but "gassy" mines will face "significant" cost pressures.

The companies that do not meet "emissions intensive, trade exposed" criteria will receive $1.2 billion in grants to start investing in low-pollution capital equipment.

Small business - while not considered polluting - will benefit from an extended instant asset write-off threshold to $6,500.

An Energy Security Fund will be established to pay for the closure of Australia's most polluting electricity generators - believed to be Victoria's brown coal generators.

The Government wants to remove 2,000 megawatts of capacity from these generators before 2020 and replace them with cleaner electricity generators - preferably gas.

The Greens were able to negotiate significant support for renewable energy programs including a $10 billion Clean Energy Finance Corporation which will provide loans for innovation when commercial banks are unwilling to fund projects.

Another $3.2 billion in existing funding will be brought under one agency to support new technologies from the research and development to market stages.

There is also a $40 million program for remote Indigenous communities for clean power supplies - like solar panels and wind turbines - so existing diesel generating plants can be replaced.

Nearly $1 billion will go towards a biodiversity fund to help farmers and community groups look after the ecosystem and get rid of invasive species.