The Federal Government has announced a number of changes to carbon pricing in last night's Federal Budget.
The carbon price is now expected to be less than half of previous predictions when it moves to a floating price in July 2015.
Budget papers predict the carbon price in 2015/16 will be just $12.10.
As a result of the revised pricing, the carbon tax will only raise $20.7 billion in revenue over the next four years.
This is $3.7 billion lower than estimated in the mid-year budget review last October.
Tax cuts planned to start in July 2015 will now be deferred until the carbon price hits $25.40.
This will generate about $1.5 billion in savings.
The carbon price isn't likely to recover until the 2018/19 financial year.
The drop in revenue also means funding has been reduced for some clean energy programs.
Despite the changes, Climate Change Minister Greg Combet said carbon pricing is working with renewable energy generation up almost 30 per cent in the financial year to date.
There are now 370 renewable energy power stations across the country and emissions from electricity generation dropped 7.7 per cent in the first nine months of the tax.
Australia's emissions trading scheme will link to the European Union’s scheme from July 1, 2015.
Opposition Leader Tony Abbott said the plan to link Australia's carbon price to the European market-based emissions trading scheme in 2015 has made economic policy hostage to politics in Europe.
"They subcontracted out to the Europeans important economic decision-making here in Australia - a bizarre decision,’ he said.
