Australia held its first carbon auction last week with bidders securing $660 million worth of contracts.
Environment Minister Greg Hunt said the $660 million worth of contracts would buy 47 million tonnes of carbon dioxide abatement which is a good start towards the 230 million tonnes of abatement needed to meet Australia's pledge to cut emissions to five per cent below 2000 levels by 2020.
He said the $13 a tonne paid for emissions under the Direct Action plan was 93 times cheaper than the carbon tax of $23 a tonne.
Members of the Carbon Markets Institute won 80 per cent of the contracts to cut greenhouse gas emissions with the total number of bids covering 265 projects.
"In just the first auction alone, the Emissions Reduction Fund (ERF) has contracted approximately four-times the amount of abatement than the emissions reductions achieved during the entire two-year lifespan of the carbon tax," Hunt said.
"At most, the carbon tax helped reduce emissions by less than 12 million tonnes. The first ERF auction will deliver 47 million tonnes of abatement.
"And this has been achieved at a fraction of the cost."
Meanwhile, the Climate Change Authority (CCA) last week recommended Australia cut its greenhouse gas emissions by 30 per cent by 2025, a significant increase on the current five per cent by the end of the decade.
The CCA said it was necessary for Australia to keep pace with other industrialised nations. The recommendation was made to aDepartment of Prime Minister and Cabinet taskforce which was established to set Australia's post 2020 target for greenhouse gas emissions.
The taskforce will make an announcement ahead of international climate change talks in Paris later this year.