Business groups are urging the federal government to broker a deal and get its key climate policy through parliament, while warning it not to concede too much to the Greens in the process.
The government has been locked in negotiations with the Greens and key crossbenchers for weeks over its proposed changes to the so-called safeguard mechanism, with the Coalition remaining steadfastly opposed.
It's a key tool the government will rely on to meet its climate ambitions, capping and slowly reducing emissions from roughly 215 of Australia's heaviest-polluting companies.
Emissions from the companies covered under the mechanism would fall by roughly 30 per cent by 2030.
Federal parliament resumes on Monday for its final two weeks before the May budget, and the government needs the legislation passed well before July 1 when the changes are due to take effect.
The Greens have called on the government to ban new coal and gas projects in exchange for their support, and have also raised concerns about the unlimited use of carbon credits.
But business groups are broadly supportive of the changes, primarily arguing for the need for certainty in climate and energy policy.
CEO of the Australian Chamber of Commerce and Industry, Andrew McKellar, said it was vital the government could find a path forward for the bill.
"The safeguard mechanism is not perfect, it's not without cost, but it is the best option that's on the table," he said.
"And business certainly believes that it's necessary, that we have to take that step, and we have to take it now."
The safeguard mechanism was designed and introduced under the former Coalition government, and the government wants to adapt that existing framework.
The bill before parliament would primarily create a "cap and trade" system, where companies that do not reach their emissions cap can sell leftover emissions to other companies as "safeguard mechanism credits".
Both the government and Greens say the negotiations have been run in good faith, and the Greens have expressed hope a recent deal to pass the National Reconstruction Fund could provide a path forward.
But some in the government are willing to pile on the pressure, including Resources Minister Madeleine King.
"This government is committed to taking action on climate change, and the Greens can either get on board with that, or they can not," she said.
"It's as simple as that."
Business fears what deal might deliver
While ACCI is urging the government to find a path forward on the safeguard mechanism changes, Andrew McKellar is also wary of where that path might lead.
He said the government should not concede too much to the Greens in negotiations.
"The government cannot afford to give the game away to the Greens," he said.
"What we've heard of what they're demanding would be completely unacceptable.
"It would be an ideological wrecking ball, it would impose very significant costs on the economy, it would represent a risk of much higher energy prices."
Many in the Greens have raised concerns about perceived loopholes in the policy, particularly that carbon credits from outside the scheme can be bought to permit effectively unlimited emissions.
Conservation groups, many of whom are keen to see the policy pass with changes, have suggested options like limiting the use of carbon credits, requiring companies to exhaust other options to reduce emissions first, and legislating caps on emissions to provide certainty.
Greens Senator Peter Whish-Wilson said the party would need to be convinced the safeguard mechanism would do the job it was promising.
"Unless it works, unless it actually reduces emissions, I don't think anybody's going to support it," he said.
And Greens MP Stephen Bates said carbon credits was a clear issue that needed to be resolved.
"We want to see a piece of legislation where pollution goes down," he said.
"And that's not guaranteed under the safeguard mechanism as it stands at the moment.
"Companies in this legislation as it currently stands can just offset their way out of the climate crisis without really reducing the emissions."
Madeleine King said the Greens need to consider the consequence of voting against the bill.
"It really is up to the Greens as to whether they want to support action on climate change," she said.
"I would have thought given their record, they might want to reconsider their position this time around."
