The first companies to be handed taxpayer funding to cut their carbon emissions under the government's Direct Action plan will be known within months.
The Abbott government replaced Labor's carbon tax with its $2.55 billion emissions reduction fund in the early hours of Friday after striking a deal with the Palmer United Party and independents Nick Xenophon and John Madigan.
Direct Action provides financial incentives for big polluters to volunteer to reduce emissions.
Companies opting into the scheme will compete for government money by devising projects that can reduce emissions cheaply.
Clean Energy Regulator chief Chloe Munro on Friday announced the agency would hold competitive auctions to buy the lowest-cost abatement in early 2015.
Successful bidders will contract with the regulator to be paid for delivered abatement in the form of carbon credit units, generally over a seven-year period, she said.
Environment Minister Greg Hunt said he was confident the new scheme would achieve at least the bipartisan target of cutting emissions by five per cent on 2000 levels by 2020, if not more.
Updated figures would be released in coming months.
"All the early advice I have is there are very positive signs," Mr Hunt said.
Independent analysts have raised doubts whether the target can be achieved under the Direct Action plan.
Opposition Leader Bill Shorten said Labor remained committed to an emissions trading scheme with international links.
"Even if you want to go down the path of this billion-dollar boondoggle ... we know it won't reduce the emissions targets to the point that the government has committed to," he told reporters.
Cabinet minister Malcolm Turnbull, who has previously criticised Direct Action, said of the scheme's ability to reach the target: "We will now find out."
"Greg Hunt has done an enormous amount of work getting Direct Action policy into its full final form and it's certainly capable of achieving those reductions," he said.
Australian Competition and Consumer Commission chairman Rod Sims told a Senate hearing in Canberra his agency would continue to keep tabs on price cuts, including those driven by the axing of the carbon tax.
