Australia may be left without a climate change policy following mining magnate Clive Palmer's decision to direct his United Party senators to block the Government's direct action plan.

The plan, which has been criticised by environmentalists and economists, is intended to replace the former Labor Administration's carbon tax and its stillborn greenhouse emissions trading scheme.

Prime Minister Tony Abbott's Coalition Government has been progressively dismantling Labor's climate change and other environmental policies and bodies since it won power last September.

Its latest target is the National Water Commission, which provides the Government with independent scientific advice on water policy, including the management of the ailing Murray Darling Basin.


Abbott's election pledge to abolish the carbon tax has been thwarted in the Senate, where Labor and the Greens have blocked repeal legislation.

Palmer appears likely to use his bloc of four senators - three PUP (Palmer United Party) and Motoring Enthusiasts ally Ricky Muir - to support the Government and ensure the dumping of the tax after the new Senate sits in July.

The bloc will hold the balance of power in the Upper House. But Palmer, a climate change sceptic who rejected the findings of the latest report of the Intergovernmental Panel on Climate Change, will also vote against the Government's direct action plan.

The A$3.2 billion plan is aimed at reaching Australia's target of a 5 per cent reduction in greenhouse emissions below 2000 levels by 2020 by abolishing the carbon tax and other mechanisms introduced by Labor and replacing them with a A$3 billion emissions reduction fund and a 15,000-strong "green army".

The fund would pay businesses to develop emission reduction projects won by tender, such as capturing landfill gases, reafforestation of marginal lands and cleaning up power stations.

The "green army" would enlist 17-24 year-olds paid a training allowance to clear riverbanks and water courses of weeds, revegetate sand dunes and regenerate parks. The plan will be detailed in a white paper expected to be released next week.

Palmer described the plan as a waste of money and "a token gesture to addressing carbon issues" which PUP would not support under any circumstances.

He told Fairfax Media: "It's goodbye direct action. It's gone ...

"The money that is budgeted for direct action should be allocated for more important things like pensions. Supporting aged pensions is more important than implementing token campaigns."

Environment Minister Greg Hunt told ABC Television he remained confident the carbon tax would go and direct action would be implemented despite Palmer's opposition.

"The funds will be part of the budget papers and I doubt the budget will be blocked, unless we're going to be forced into a constitutional issue," he said.