The federal opposition will seek to stop one of the government's key policies to drive down carbon emissions and meet the "net zero by 2050" target.
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The coalition party room on Tuesday voted to oppose safeguard mechanism amendments that Labor is seeking to get through parliament in coming months.
More than 200 of Australia's largest industrial facilities are already covered by a mechanism, put in place by the former coalition government, that sets an emissions limit.
But changes to the mechanism set to take effect from July 1 aim to force industrial emissions down more quickly.
The coalition party room heard of three concerns with the bill.
The first is that it would cause some companies to go offshore to countries where there are lower emissions standards.
As well, some foreign companies considering investing in Australia could be deterred by the policy.
There were also concerns that many of the extra costs imposed on companies would be passed on to consumers in the form of higher prices.
The government could face a political battle to get its bill through parliament, with the Greens arguing the mechanism could encourage more coal and gas development.
However, the Greens say they are open to discussions with Labor on the details of the bill.
The government will need the backing of the Greens and two independents to get its bill through the Senate.
Climate Change Minister Chris Bowen issued a one-line statement following the coalition's decision.
"Hypocrites," he said.
Mr Bowen told parliament the government's ambition was to drive "emissions down and jobs up" through a number of policies, including upgrading the transmission grid and investing in renewable energy and battery storage.
Australian Associated Press
