A new carbon pollution cap will be imposed on big emitters in a bid to tackle rising global temperatures.
The reformed safeguard mechanism means the nation's 215 biggest emitters will need to reduce their emissions by 4.9 per cent each year.
This is expected to reduce emissions by 205 million tonnes by 2030.
Climate Change and Energy Minister Chris Bowen said the laws set Australia on the pathway to achieving emissions reduction targets and would boost investment in renewables.
"To achieve net zero we can't start in 2044 or 2045, we must start today," he told parliament.
"The best time (to start) would have been 10 or 15 years ago - the second best time is today."
Mr Bowen thanked cross bench MPs for working constructively with the government on the mechanism to get it passed by parliament.
"What the parliament has done today is safeguard our climate, safeguard our economy and safeguard our future," he said.
Independent MPs Zali Steggall and Allegra Spender urged the coalition to support the bill if they wanted a chance at winning back the seats taken by the teals at the last federal election.
Rebel Liberal MP Bridget Archer, who previously indicated she could cross the floor in support of climate action, abstained from voting.
Prime Minister Anthony Albanese said Australians had voted for action on climate change and now the parliament was taking it.
Assistant Climate Change and Energy Minister Jenny McAllister said businesses would be punished by the market for not acting to reduce emissions, adding that 80 per cent of the companies covered by the cap already had net-zero emissions targets.
The government this week reached a deal with the Greens and crossbenchers to deliver the votes needed to pass the bill.
The Greens deal puts a ceiling on gross greenhouse gas emissions, which won't be able to exceed current pollution levels of 140 million tonnes a year, and there will be a decreasing cap over time.
Greens leader Adam Bandt said the changes to the bill secured by his party were an important victory for the climate.
"For the first time ever, in law, pollution from coal and gas and other corporations that are covered by the safeguard will not be allowed to rise and must go down," he said.
He said the Greens would continue to fight to stop new coal and gas projects from opening up.
The bill will include a "pollution trigger" that will require the climate change minister to consider whether a coal and gas project should go ahead if it's at risk of an emissions blowout.
The project could then be restricted or stopped.
Nationals Senate leader Bridget McKenzie said the laws would send energy prices up, with large companies passing on the price increases resulting from reducing emissions.
"They cannot tell us how many jobs will be impacted. They cannot tell what the business cost and impact will be," she said.
Senator McKenzie said two large rail businesses would be impacted, which would push cargo onto more emissions-intense trucks.
"It just beggars belief they haven't gone through the unintended and quite perverse consequences of this legislation."
Senator McAllister said a fund under the government's energy transition plan would also ensure businesses were not left high and dry.
