The future of one of the government's signature emission reduction measures remains up in the air, with key crossbench senators indicating concerns with the scheme.
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Independent senator David Pocock said further integrity measures were needed to ensure the success of the safeguard mechanism, which would aim to cap the emissions of the country's 215 biggest-polluting companies.
Companies that breach the emissions limit would be forced to buy carbon credits to offset the amount, or trade their emissions with other companies.
The government will need the support of all of the Greens and at least two crossbenchers to ensure it passes the Senate.
Senator Pocock said the government needed to do further convincing that the mechanism would make big polluters more efficient.
"The biggest concern is that the government is opening the door to our biggest emitters paying to pollute rather than becoming more efficient and decarbonising," he told ABC Radio on Monday.
"As it stands, the only other jurisdiction in the world that allows full open access to offset emissions is Kazakhstan."
Senator Pocock said he was having constructive talks with the government, but that he was also speaking to industry groups about their concerns.
"We know that there are concerns around the integrity of some of the carbon methodologies," he said.
"So, for me, integrity has to be at the heart of this policy. We have to be certain that this will drive the sorts of changes that we desperately need."
Liberal senator Hollie Hughes has also taken aim at whether the scheme would lead to an increase in household power bills.
During an estimates hearing, Senator Hughes asked whether modelling had been carried out on the impact of the safeguard on power bills.
Assistant Climate Change Minister Jenny McAllister deferred questions on the issue, saying Treasury was responsible for the modelling.
The Greens have called on Labor to return almost $900,000 in donations from corporations covered by the safeguard mechanism.
Greens leader Adam Bandt said he is open to good faith negotiations with the government, but the sticking point will be new coal and gas mines.
Australian Conservation Foundation climate program manager Gavan McFadzean said the safeguard mechanism would see Australia remaining on par with climate change laggards if unlimited offsets were used to meet emission targets.
He said carbon offsets should only be used as a last resort and should be off-limits to coal and gas companies.
"The Albanese government has spent the last nine months working hard to improve our climate credentials and reputation on a global level - and it could very easily unravel," he said.
"We urge the government to revise its design so the scheme can actually become an effective tool to cut emissions from Australia's major polluters - we can't offset our way to net zero."
Australian Associated Press
