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Former Reserve Bank governor Bernie Fraser will report to Government on the potential benefits of an emission trading scheme as a condition for securing Palmer United Party's support for the coalition's Direct Action climate policy.
But as Clive Palmer lauded Mr Fraser's 18-month enquiry as a reason for believing in the eventual reinstatement of an Australian ETS, Environment Minister Greg Hunt said it would never happen.
"This is not and will not be a carbon tax or an ETS," Mr Hunt said. "There is zero revenue in our scheme. We have no plans, no intention and no belief that that will change."
PUP has proposed an ETS being established when Australia's major partners take similar action.
Mr Fraser will initially report back to Parliament in June next year and again in November, shortly before the UN climate change talks in Paris. His final report must be completed by the end of June, 2016.
To secure passage of Direct Action through the Senate, Mr Hunt has also agreed to amendments from independent Nick Xenophon to establish a "safeguard mechanism" which would set baseline emissions for the 130 biggest polluters.
But Senator Xenophon's demand for Direct Action to give polluters access to international credits has been refused because of Tony Abbott's strident and oft-quoted opposition to the idea.
Under the $2.55 billion Emissions Reduction Fund, polluters will be paid to reduce their emissions. It will also fund carbon farming.
Labor leader Bill Shorten accused the Prime Minister of selling his soul to Clive Palmer to get his vote.
"This is a dirty deal that will send our country backwards," he said.
"Direct Action is a stupid and reckless policy that will achieve less but cost Australians more. It's clear that it's Prime Minister Palmer calling the shots in this government."
The Climate Institute's Erwin Jackson said Direct Action was not credible without polluters being able to buy international permits.
"Without access to international markets, meeting ambitious targets becomes a problem without strong regulation on major emitters," he said
Greens leader Christine Milne said a climate change denying government and coal miner baron in Mr Palmer had combined to produce a climate change policy that was a "complete sham".
She said Mr Palmer's press conference with former US president Al Gore where he had committed his party to an ETS had proven to be full of "huff and puff".
Meanwhile, the consumer watchdog says businesses have acted quickly to cut prices following the axing of the carbon tax.
The Australian Competition and Consumer Commission said it had it had received 367 complaints and inquiries about prices in the three months following the carbon tax's abolition in July - less than 15 per cent of the total received when the tax was introduced in 2012.
"The ACCC has observed businesses acting quickly to remove carbon tax cost components from prices, with widespread adherence to the reporting and information requirements of the new carbon tax price reduction obligation laws," chairman Rod Sims said.
"Should a supplier fail to pass through all direct and indirect cost savings from the carbon tax repeal, fail to provide the ACCC with all the information they are required to provide, or make false or misleading representations, the ACCC will take action."