Rudd announced about $1 billion will be returned to the budget from a number of climate change and environmental programs.

"You don't protect the environment by cutting environment programs," Milne said.

“They are going to cut a billion dollars from programs that actually help to protect the environment, build resilience in the landscape and help farmers and help people in manufacturing to be able to transform to clean energy programs," she said.

Australian Chamber of Commerce and Industry economics and industry policy director Greg Evans replied swiftly after the carbon price announcement.

"An earlier shift to an emissions trading scheme announced today provides no policy solution, no added certainty nor guarantee of sustainable lower costs," he said.

"An ETS will still be a multi-billion dollar unilateral cost most of our competitors don’t have to pay and this will be negative for the economy and jobs.

"The government has recognised the economic dislocation caused by a unilateral carbon price but this is a short-term fix whereas it’s clear the carbon price impost should not have been introduced and should now be eliminated in full.

"We reiterate our view that a lower starting price under an ETS could quickly rise to near the current price of $24.

“If we are linked to the European Union ETS scheme and they have recently voted to restrict the allocation of permits to help lift prices, those advocating for an ETS should recall the European price was above $40 in 2008.

"We need to examine the savings measures in more detail but note that $3.8 billion of savings have been found when just months ago the then federal Treasurer said that further savings would send a wrecking ball through the economy."

Interestingly, environmental group Greenpeace welcomed the cuts, which it says will see less public money being spent on "propping up" the coal industry.

The government will roll back some support measures for major emitters designed to soften the blow when the carbon tax was introduced last year.

Climate Institute chief executive officer John Connor said changes to the energy security fund, which are forecast to save $770 million over the budget forward estimates, looked reasonable.

"They're reducing the payments to those (brown coal generators) because of the lower price they'll be facing," he told ABC.

But Connor said there were "some pretty disappointing cuts", including the deferral of $200 million from the carbon capture and storage program.

He was also critical of cuts to the biodiversity fund, which was designed to use carbon tax revenue to fund environmental projects.

Federal government's carbon price cuts at a glance:

• Abolishing statutory formula for fringe benefits tax on cars – $1.8 billion over forward estimates
• Energy security fund: bringing forward free permits then discontinuing program – $770 million over forward estimates
• Changes to coal sector jobs package to adjust value to new carbon price – $186 million
• Changes to clean technology program and carbon capture and storage program – $586 million over forward estimates
• Return unallocated funds from biodiversity fund to budget – $213 million over forward estimates
• Cuts to funding for carbon farming futures program – $143 million over forward estimates
• Changes to public service including 1% cut in executive staff numbers – $248 million.