Labor's climate safeguard laws clear Senate

A new carbon pollution cap on big emitters will apply from July 1 after laws cleared the Senate.

Changes to the safeguard mechanism, which was initially brought in by the coalition government, will force the nation's 215 biggest emitters to reduce their emissions by 4.9 per cent each year.

This is expected to reduce emissions by 205 million tonnes by 2030.

The legislation passed the Senate on Thursday and will be rubber-stamped in the government-controlled lower house.

Assistant Climate Change and Energy Minister Jenny McAllister said it will make an important change to reducing emissions and boost investment during the transition to renewables. 

"We have received stark warnings from scientists, and they tell us this is the critical decade," she told parliament.

"We have a chance to do something serious to contribute to the global effort to tackle climate change and we intend to do so. This is an important reform."

Senator McAllister said it would provide new job opportunities, especially in rural and regional Australia, adding that businesses would be punished by the market for not acting to reduce emissions. 

"Our trading partners increasingly expect us to act and investors expect businesses to act," she said. 

Prime Minister Anthony Albanese says the bill is pivotal to the government achieving its 43 per cent emissions cut by the end of the decade.

The government this week reached a deal with the Greens and crossbenchers to deliver the votes needed to pass the bill.

The Greens deal puts a ceiling on gross greenhouse gas emissions, which won't be able to exceed current pollution levels of 140 million tonnes a year, and there will be a decreasing cap over time.

The bill will include a "pollution trigger" that will require the climate change minister to test a new or expanded project's impact on the hard cap and net carbon budgets.

If the assessment finds the project would contribute to exceeding the cap or budget, the minister must consult and recalibrate the rules or impose conditions on new entrants.

Nationals Senate leader Bridget McKenzie said the laws would send energy prices up, with large companies passing on the price increases resulting from reducing emissions.

"They cannot tell us how many jobs will be impacted. They cannot tell what the business cost and impact will be," she said. 

Senator McKenzie said two large rail businesses would be impacted, which would push cargo onto more emissions intense trucks. 

"It just beggars belief they haven't gone through the unintended and quite perverse consequences of this legislation."

Senator McAllister said a fund under the government's energy transition plan would also ensure businesses aren't left high and dry.