Climate Change Minister Penny Wong says Australia is on track to meet its Kyoto targets for greenhouse gas emissions, but the nation has a lot more work to do.
Ms Wong released a government report which found Australia's emissions in 2007 were 585 million tonnes, or 106 per cent of 1990 levels.
This meant the country was on track to meet its Kyoto commitments, she said.
But she noted emissions were continuing to rise, saying this was a concern.
Emissions were 1.6 per cent higher than the previous year, according to the National Greenhouse Gas Inventory 2006 report, issued by the Department of Climate Change.
"What (the report) shows is that Australia, while still on track to meet our Kyoto target, it's clear we have a lot of work to do when it comes to reducing our greenhouse-gas emissions," Senator Wong told reporters.
She reiterated the government's commitment to an emissions trading scheme.
"What we know is climate change is happening. The economically responsible thing to deal with it is to introduce an emissions trading scheme," she said.
"We have to tackle it."
Senator Wong would not be drawn on whether petrol and agriculture would be covered by the scheme, which is to start operating in 2010.
But she did take aim at the opposition for "scare-mongering" over the impact of the ETS on petrol prices.
The opposition raised concerns on Monday that petrol could rise by as much as 25 cents a litre in the short-term, and questioned whether a new tax on petrol was the best way to go.
The report showed Australia was only on track to meet its Kyoto targets because of "land-use changes", which outweighed significant increases in emissions in almost all other sectors.
Emissions from transport and energy soared 40 per cent between 1990 and 2006.
Electricity was the worst offender with emissions jumping 47 per cent since 1990.
Transport was next in line, with emissions rising 27 per cent in that time.
The report found Australia generated 1.5 per cent of global emissions.
Meanwhile, The federal coalition says it is committed to an emissions trading scheme but remains concerned about the Rudd government's ability to implement it without "crashing the economy".
The government's response to climate change was based on ideology and spin, it said.
The coalition wanted an environmentally and economically responsible approach to dealing with climate change, treasury spokesman Malcolm Turnbull said.
"The emissions trading scheme was part of our policy last year and remains our policy today," he told Sky News.
"The implementation of it is something that has to be fine-tuned to ensure that you get the right result for the environment, but you don't crash the economy.
"The concern that I have is that the Rudd government's response to climate change is essentially ideological, it's based on ideology and it's based on spin."
Mr Turnbull said two things had changed since the previous Howard government proposed am emissions trading scheme last year: petrol prices had gone through the roof and experts, such as the International Energy Agency, argue that carbon prices should be considerably higher.
To deal with that, Australia could copy the Europeans and a number of other countries that intend to leave liquid fuels out of the scheme, or keep carbon price across the board and include liquid fuels but reduce the excise as the carbon price is imposed.
"This is something we are looking at as a party, all the possible policy responses," Mr Turnbull said.
"You have got to make sure that you get the right result for the environment and the right result for the economy."
If the carbon price was set too high, Australian exporters - such as the steel and aluminium industries - would shut down and move to China or Indonesia.
"The same tonnes of CO2 will go into the atmosphere, but we'll lose the jobs in Australia.
"So you'll lose out environmentally and you'll lose out economically."
Mr Turnbull said the issue was a very tough problem that had to be managed carefully, and needed to be reassessed as circumstances changed.
"The critical thing that concerns us about the Rudd government is the incapacity to deal with these complex issues.
"They come out with Fuelwatch, their expert departments say don't do it - it's going to put the price of petrol up, it's going to reduce competition - they ignore all the expert evidence and go ahead with it because they want to get a media grab.
"You cannot run climate change policy based on media grabs and spin, and that is what (Prime Minister) Kevin Rudd is doing.
"My concern is about his managerial capacity to handle this very difficult transition, both locally and globally, from a high-carbon intensive economy to a low-carbon intensive economy."
