Climate Change Minister Chris Bowen says the Greens will need to decide whether they want to be a roadblock for reducing emissions, with the party threatening to derail a key Labor policy.
The Greens have agreed to support a safeguard mechanism, which is proposed by the government, in exchange for stopping new coal and gas projects from opening.
The mechanism aims to cap the emissions of Australia's 215 biggest-polluting companies.
If parliament passes the measure, companies that breach the emissions limit would be forced to buy carbon offset credits or trade their emissions with other companies.
Despite having reservations with other aspects of the scheme, Greens leader Adam Bandt said the party would put them aside as long as the government agreed no more new coal and gas projects would be approved.
"Coal and gas are driving the climate crisis, but Labor wants more," he said.
"The Greens have huge concerns with other parts of the scheme, such as the rampant use of offsets and the low emissions reduction targets.
"But we're prepared to put those concerns aside and give Labor's scheme a chance if Labor agrees to stop opening new coal and gas projects."
Mr Bowen said the government wanted to work with the cross bench in good faith.
"The Greens will ultimately have to decide if they want to vote for or against it," he told reporters in Canberra.
"For or against 200 million tonnes of emissions reduction."
Mr Bowen said Opposition Leader Peter Dutton and the rest of the coalition had made themselves "irrelevant" despite calls for bipartisan support from industry.
Australian Workers' Union national secretary Daniel Walton said "pound for pound" the Greens had done more to worsen climate change than any other party or entity in the country.
"The Greens aren't actually interested in the long-term future of the planet, they're interested in grandstanding for their out of touch followers today," he said.
"I don't think they even care about the climate change big picture, just vacuous moral purity in the moment."
With the coalition opposing the measure, the government will need the support of the Greens and at least two crossbenchers in order to pass it through the Senate.
Assistant Treasurer Stephen Jones warned the Greens against allowing the perfect to become the enemy of the good, saying he didn't want to see climate policy set back a decade.
"We want to work co-operatively with the Greens, with the cross bench ... making demands that can't be met simply is not going to help anybody who is committed to reducing carbon pollution in this country," he told Sky News.
Deputy Liberal leader Sussan Ley said the coalition didn't support the policy, describing it as a "tax on business".
Independent senator David Pocock has already flagged his concerns with the scheme, and said he needed further convincing the mechanism would make big polluters more efficient.
The government has previously resisted calls to stop new coal and gas projects.
Resources Minister Madeleine King told parliament on Tuesday the coal and gas industry would underpin Australia's economy as the nation transitioned to renewable energy.
"The truth of the matter is, for a number of years we will still need to use some fossil fuels," she said.
"We want to increase activity in renewables, we have a commitment to net zero emissions by 2050 ... (but) we will need to keep using products such as gas."
