According to the paper, the government wants to see industries reduce carbon dioxide emissions by up to 6% a year, in line with its 43% national emissions reduction target by 2030.
The consultation paper sets out how the safeguard mechanism policy introduced under the Abbott government could be reformed to have a more meaning impact on reducing Australia's emissions.
Labor hopes to introduce reforms from July next year. It would require all major emitters to reduce their emissions and or buy carbon credits.
Gas producers, heavy industry such as aluminium smelters, coal mines and even airlines will be targeted.
Each project will have a benchmark or "baseline" of how many emissions it can emit. The focus now is inserting into the safeguard mechanism a carbon trading scheme or sorts.
This would allow companies which reduce their emissions below their baselines to be issued carbon credits. These credits could be sold to other companies.
Industry has now been invited to respond to the consultation paper.
It is seeking input on how to reset and reduce baselines for companies and projects, how baselines are defined, and how to approve emission-heavy projects while also bringing down national emissions.
The peak body representing Australia's oil and gas industry - the Australian Petroleum Production & Exploration Association - welcomed the opportunity to provide feedback.
"The oil and gas industry is already spending billions of dollars on decarbonisation and renewable energy initiatives and is strongly committed to reducing greenhouse gas emissions economy-wide to net zero by 2050," APPEA chief executive Samantha McCulloch said.
"Gas will be central to a cleaner energy future given its role stabilising renewables, replacing coal, supporting manufacturing, making everyday products and as feedstock for hydrogen."
McCulloch went on to commend the government for its commitment to provide "tailored treatment" for the energy industry.
"Australia's LNG industry is one of the country's most trade-exposed and operates in a highly competitive global market in which it's one of the global leaders," she said.
"The federal government's commitment to provide tailored treatment to ensure that export focused businesses are not competitively disadvantaged is important to help ensure the national decarbonises while keeping our economy strong and resilient."
