The veteran economist is advising the Government agree to cut its greenhouse emissions by 5pc by 2020 based on 2000 levels if the international community fails to agree to a stronger global deal than the Kyoto Protocol.

A realistic new global deal would involve Australia promising to cut its emissions by 10pc by 2020.

A more ambitious global deal that Professor Garnaut says would be in Australia's interests but believes is unlikely in the short-term would require a 25pc cut.

Green groups are expected to react angrily to the recommendations.

The realistic global deal Professor Garnaut proposes aims to stabilise atmospheric levels of carbon dioxide at 550 parts per million - a level scientists warn would not prevent a temperature rise greater than 2 degrees, the threshold said to trigger the worst effects of climate change.

It would require China - the world's biggest carbon polluter - but not other developing countries to agree to a binding target to cut its emissions.

Professor Garnaut emphasises that climate change is a "diabolical global problem", and can only be solved through a global solution.

He recommends that the Government start emissions trading in 2010 and set a fixed carbon price of $20 a tonne, rising with inflation, until 2012.

Business is likely to be less critical of the target than environmentalists.

Australian Industry Group chief executive Heather Ridout this morning said she would be comfortable with a target of 10pc or 15pc.

Modelling in the latest Garnaut report estimates a 10pc emissions cut by 2020 would reduce Australia's GDP by 1.1pc and lead to a carbon price of $34.50 a tonne.