Labor has labelled its changes to the safeguard mechanism as the best chance in a decade to cut emissions from big polluters as the government continues on a collision course with the Greens over new fossil fuel projects.

Federal energy minister Chris Bowen said the parliament had a rare opportunity to lower the cap on emissions from big polluters by supporting the revamped safeguard mechanism.

"This is the biggest chance the parliament has had in more than a decade to actually get a sensible framework to reduce emissions from all our big emitters," he told ABC's Insiders program.

The proposed mechanism, which needs the support of the Greens and two other crossbenchers to pass through parliament, would cap the emissions of Australia's 215 biggest polluters.

Companies that breach the limit would be forced to buy carbon offset credits or trade their emissions with other firms.

The Greens have indicated their support for the scheme on the condition of a ban on new coal and gas projects.

But Mr Bowen said bans on new coal and gas developments were not on Labor's agenda.

He said fossil fuels - particularly gas - would play a key bridging role in keeping the lights on during the "biggest economic transformation since the industrial revolution".

Mr Bowen added Labor wasn't proposing any new coal mines, although he said he wouldn't commit to a ban on new coal mines to appease the Greens.

"Because we believe in insisting that the regime is improved, so that emissions come down from everyone, all big emitters," he said.

Greens leader Adam Bandt said Labor's explanation for opening coal and gas mines in the middle of a climate crisis was not convincing.

"You can't put the fire out while you're pouring petrol on it," he told reporters on Sunday.

Mr Bandt said the party was prepared to put aside their concerns with the safeguard mechanism changes if the government committed to the "bare minimum" of banning new coal and gas developments.

He has previously described the ability of large polluters to offset their excess emissions as a "Ponzi scheme".

"We'll put all of those concerns aside and get some progress happening, which is asking Labor to stop making the problem worse."

Mr Bowen said the government was updating the 2019 green hydrogen strategy in light of global developments.

"Australia has massive opportunities when it comes to green hydrogen exports," he said.

Mr Bowen said the fledgling industry faced its challenges but he was already working with the German government on exporting green hydrogen to the European nation.

"You've got an Australian government and a German government working closely together to develop Australian green hydrogen projects, employing Australians, because Germany knows and other European countries know they can't provide enough green hydrogen for themselves and Australia is a partner of choice," he said.

State and territory energy ministers will contribute to the update to the national green hydrogen strategy.