Treasury officials estimate a key change to the emissions trading scheme will greatly increase Government debt by 2050.
Advice in Cabinet papers says support given to certain industries at risk from the scheme dulls the incentive for reducing emissions.
Treasury estimates that the phase-out rate of help given to trade-exposed industries will increase Government debt by 6% to 8% of GDP in the next 40 years.
Climate Change Minister Nick Smith says the figures are based on the existing scheme, which would have provided billion-dollar benefits to the Crown.
He says what officials call debt is simply foregone income, now that the scheme is being changed.
