The Federal Government has secured the numbers in both houses of parliament to pass legislation for the introduction of an Emissions Reduction Fund (ERF).
The ERF is a key plank of the government's Direct Action policy and involves the establishment of a $2.55 billion fund that pays major polluters to reduce their emissions.
In a deal struck with the Palmer United Party the government has agreed to no longer abolish the Climate Change Authority.
Instead the Authority will undertake an 18 month inquiry into the effectiveness of emissions trading programs around the world.
Palmer United Party leader Clive Palmer is keen to see an ETS introduced in Australia.
Palmer said this deal has "kept alive the emissions trading scheme" through an 18 month-long inquiry led by the authority.
An initial report will be given to parliament next month, which will be followed by a more detailed update in June 2015 and a final report in June 2016.
"From our perspective once our trading partners have an ETS it is fundamental that we have one," Palmer said.
Despite the deal Environment Minister Greg Hunt made it clear yesterday the government is still opposed to an ETS and there will no policy shift by this government.
Australian Chamber of Commerce and Industry director of economics, John Osborn, welcomed the deal claiming the ERF is the best short term option to reduce emissions.
"The business community has long argued that in the absence of a global model for an emissions trading scheme the
focus should remain on providing incentives to undertake development of new technologies and processes to reduce
and abate emissions," he said.
"Emission trading is a viable long-term option for abating greenhouse gases but more work needs to be done to
develop a model that includes Australia’s major global competitors and takes into account the effects on trade
impacted industries and sectors."
