It is understood the revenue source will be discussed at today's meeting of the shadow cabinet which will have its first look at the policy the Opposition climate change spokesman, Greg Hunt, developed over the summer.

Under the leadership of Tony Abbott, the Coalition abandoned support for a market-based mechanism such as a carbon tax or an emissions trading scheme to reduce emissions.

These schemes are self-funding, using the revenue made by taxing polluters, whereas the ''direct action'' measures the Coalition will unveil - including tree planting and soil management - will require extraneous funds.

The tobacco tax increase will be put on the table today as one way of raising the money needed without damaging the budget bottom line or imposing an unpopular tax.

Senior sources told the Herald that no final decision had been made and other funding options would also be explored.

The shadow cabinet will not sign off on the final policy until Tuesday morning. It will then be presented to the party room for approval and then released.

The Coalition last suggested a tobacco price rise after last year's budget as a way to make up for the $1.9 billion in revenue caused by its decision to block in the Senate the means-testing of the 30 per cent private health insurance rebate.

The Government will reintroduce the legislation for the budget measure next week and the Coalition intends to block it again.

Yesterday the Climate Change Minister, Penny Wong, again challenged Mr Abbott to say how he would fund his policy.

''Mr Abbott must explain what spending measures he will cut or what the impact will be on the debt and deficit,'' she said.

Mr Hunt said the Coalition's scheme would be cheaper than the Government's and still achieve the Government's unconditional target of reducing greenhouse gases by 5 per cent by 2020.

The Government will reintroduce its emissions trading scheme legislation on Tuesday. To pass the Senate, it must be backed by the five Greens and at least two Liberals. Senator Wong will meet the Greens on Monday but there was little hope on either side yesterday of a compromise being reached.

The Greens Senator Christine Milne said the Government's scheme was friendless. The Greens want a far more ambitious scheme with higher reduction targets.

''We cannot and will not support a scheme which, as it stands, is nothing more than multi-billion dollar smoke and mirrors,'' Senator Milne said.