Australia's top climate adviser has recommended cutting greenhouse gas emissions by 10% by 2020.
In an updated report on targets for a trading scheme, Professor Ross Garnaut says a 25% cut would be more effective, but unlikely to attract a global agreement.
He recommended on Friday that carbon should be sold for an initial $A20 a tonne from 2010, with only marginal increases for the first two years, to help business adjust to carbon trading in Australia.
Environment groups condemned the new targets as too low to help stop global warming, but business groups said the targets were too tough and would be difficult to achieve without major breakthroughs in clean energy technology.
"A 10% national emissions reduction target by 2020 will be extremely difficult to achieve," said Mitch Hooke, from the Minerals Council of Australia, which represents Australia's major resource industries.
"Meeting this target without significant technological breakthroughs is akin to moving Australia to a candles economy."
Many developed countries including New Zealand are talking about 25% to 40% cuts, though agreement is still a long way off.
Professor Garnaut said the government should sell carbon permits at $A20 a tonne initially, with the price rising each year by four percent on top of inflation, until an open market would set the price of pollution from 2013.
Analysts said the recommended price was at the centre of current market prices for trades and would represent the penalty price for companies for exceeding their emissions limits, giving business some certainty in the early years of trading.
Australia's embryonic over-the-counter carbon market saw its first trade in May when energy group AGL Energy Ltd sold 10,000 Australian emission units to Westpac Banking Corp Ltd at $A19 a tonne.
Since then about eight more trades have occurred at prices ranging from $A18 to $A21.50 a tonne.
Australia's Labor government has promised to introduce carbon trading from July 2010 to help the country cut its carbon emissions.
The carbon trading system will cover 75% of the economy, and 1,000 of Australia's biggest companies, with hefty initial subsidies for big polluting firms to help them adapt.
The Australian Greens, who share the balance of power with two independents in the upper house Senate, said the government needed stronger targets than Garnaut recommended.
"The weak targets ... released today are based on outdated science, risk catastrophic climate change and will undermine global negotiations towards an effective climate treaty," Greens leader Bob Brown said.