The author of the landmark Garnaut Climate Change Review Professor Ross Garnaut insists petrol must be included in Australia's proposed emissions trading scheme.

Australians would have to pay higher petrol prices under the plan to have broad-based emissions trading with very few exclusions. Professor Garnaut wants petrol included with no compensatory cut to fuel excise.

Outlining a grim future in which irrigated agriculture all but vanishes from the Murray Darling Basin and in which an extra 4000 Australians die each year from heat, Professor Garnaut told the National Press Club yesterday that most of it could be avoided if greenhouse gas concentrations could be stabilised at 450 to 550 parts per million. The survival of wonders like the Great Barrier Reef and Kakadu also depended on the decisions Australians made on confronting climate change.

Prime Minister Kevin Rudd, who commissioned the Garnaut report while in opposition, refused yesterday to endorse any of its suggestions, saying that it would merely be ''one of a number of inputs into the Government's overall decision-making process''.

The Government will issue its own green paper on emissions trading on July 16.

Issuing a blunt warning yesterday, Professor Garnaut said Australians should have emissions trading in place in 2010 or face a climate disaster.

Australia could best contribute to meeting the greenhouse gas target by adopting an emissions trading system that included petrol and charged for permits rather than gave them away.

If the Government were to cut petrol excise at the same time to offset the scheme it would be sending ''some funny sort of signal''.

''It would also contradict some of the messages that Australia and the International Monetary Fund and many other countries are trying to send to developing countries such as Indonesia and China, with traditions in all of them of controlling petroleum prices,'' Professor Garnaut said. ''We're saying to them, rightly, you will be better off and the world would be better off if you let prices rise by the full extent of the global price rise, but we would blunting the effect on ourselves. Would a few cents cut off the price of petrol destroy this scheme? No. But I don't see any good reason to do it and you could give back that revenue even to motorists in other ways.''

The draft report suggests that half the proceeds from the sale of pollution permits be handed to low-income households, with the exact mechanism to be considered by the Taxation Review being conducted by the head of the Treasury, Ken Henry.

The rest of the proceeds would be spent on encouraging the development of low-emission technologies and compensating a limited number of emissions-intensive trade-exposed firms whose exports would be hurt by the scheme.

''We're suggesting that there should be a lot of discipline in the application of that money. We have found that almost every company in Australia claims to be trade-exposed and emissions-intensive,'' he said.

The draft Garnaut report included no specific emission reduction targets or estimated increases in the prices of petrol or electricity. Those numbers will be included in a supplementary report to be issued after the receipt of Treasury modelling next month.

Professor Garnaut told the Press Club that the modelling would show that the extra increase in petrol prices that would flow from the scheme would be tiny compared to the recent market-based increase.

''Think of the highest number that's been part of the Australian emissions trading discussion as applying over the next decade. Multiply that by a large number and you don't get anywhere near what the markets have done to the petrol price anyway,'' he said.