A report released today by the Rudd-aligned Grattan Institute strongly supports the Greens' position that the Carbon Pollution Reduction Scheme will delay action on climate change.

The report should give Prime Minister Rudd and Minister Wong an extra reason to negotiate in good faith towards the Greens' compromise carbon levy proposal, which follows Professor Garnaut's recommendations for strictly limited compensation to polluters.

"Anyone who still thinks the CPRS as it stands is a step in the right direction should read this report which concludes it will actually delay the transformation of the economy," Australian Greens Acting Leader, Senator Christine Milne, said.

"As the Grattan Institute concludes, a carbon price is essential to drive the transformation to a low carbon economy, but excessive handouts to polluters actively holds it back.

"The Greens' carbon levy proposal is an ideal way to get Australia moving with action on climate change without locking in this kind of waste."

The report concludes that "Much of the protection proposed ... is unnecessary or poorly targeted... It would delay the structural adjustment required to move to a lower carbon economy."

Grattan Institute CEO, John Daley told ABC radio this morning that "actually the worst thing that we could do is to implement a carbon pricing scheme that played off those fears to provide a large quantity of industry assistance that is not necessary, that's going to cost the rest of the Australian taxpayers a lot of money and which, worst of all, is probably going to slow adjustment of the economy towards lower carbon emissions."

Senator Milne said "This is another way of saying what the Greens have said for so long: that the CPRS as it stands locks in failure and pays polluters to keep polluting. We cannot afford to delay action on the climate crisis with poorly designed policies.

"The report comes to the eye-opening conclusion that the CPRS handouts would be equivalent to Australian taxpayers paying $161,000 every year for each job saved in aluminium smelting.

"As the Grattan Institute says, there is no such thing as a free permit. It simply passes the cost to taxpayers for no real benefit.

"This report confirms the assessment made by Professor Garnaut and the Greens that the claims made by many energy intensive trade exposed industry representatives were ambit claims and a blatant cash grab.

"The hand-outs have nothing to do with good economics and everything to do with cynical electoral politics at the expense of the climate and the taxpayer.

"I look forward to talking to the Grattan Institute about their findings and talking to the government again about our compromise proposal."