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Australian federal government's announcement on Tuesday to introduce a carbon price in July 2012 has received mixed reaction from the political leaders, industries, and communities.
Gillard's multi-party climate change committee on Thursday announced a two-stage approach to tackling greenhouse gas emissions.
If Labor gets the carbon price legislation passed this year, a fixed carbon price will be charged for three to five years from July 2012.
The price per tonne of greenhouse gas emissions is yet to be determined, but some economists are modeling a $25 a tonne levy.
After that, an emissions trading scheme (ETS) will take over.
One year before the end of the fixed price period, a review will assess the state of international carbon trading and how Australia's trading partners are cutting emissions, and consider if there were any reasons to delay moving to an ETS.
The carbon price will apply to the energy sector, transport, industrial emissions and waste. Agricultural emissions will not be included in the carbon pricing system.
According to Australian Chamber of Commerce and Industry (ACCI) director of economics Greg Evans, the announcement took a big stick to Australian business, the economy and households.
He said consumers will face higher bills as the energy, transport, manufacturing and mining sectors encounter higher costs under the new carbon price regime.
"We are particularly concerned because the government is acting unilaterally and that is going to deal a competitive blow to Australian business, especially to trade-exposed small businesses, " Evans said in a statement released on Thursday.
He said Australia should not be acting ahead of any international action by countries such as the U.S., China and Japan. And by doing that, he said, the nation is "actually putting our head above the trenches and waiting for our competitors to shoot us".
The Business Council of Australia chief executive Maria Tarrant said it was concerned at the lack of support for industries that compete with imports as they adjust to a fixed carbon price.
Australian Council of Social Service (ACOSS) CEO Dr Cassandra Goldie welcomed moves to put a price on carbon emissions from mid next year but warned that low-income households will be affected by climate change first and worst.
Queensland Premier Anna Bligh supported the announcement and said the move would provide coal miners, who make up a substantial part of Queensland's economy, with certainty and allow them to plan for the future.
She said it was important Australia was "in the game" when it came to tackling climate change.
Meanwhile, World Wild Fund Australia CEO Dermot O'Gorman said Australia is already lagging behind many other countries in terms of action on climate.
"If we act, other countries are likely to do more, which is in our best interests," he told ABC News on Thursday.
He said the decision would provide Australia with the opportunity to protect important icons like the Great Barrier Reef, as well as create new jobs and protect existing ones and showcase its ingenuity, and many Australians "who want to see us unlock our clean energy potential and protect our environment" would also welcome the decision.
However, Opposition Leader Tony Abbott said Gillard's announcement on a carbon price is a "betrayal of the Australian people" and he predicted a "people's revolt" in response.
Abbott said the plan is an assault on the Australian people's standard of living and he vowed to fight the government's carbon price scheme "every second of every minute of every day of every week of every month" because it will push up petrol and power prices.
Abbott said the carbon price, which has yet to be set, would push up the average family's power bill by $300 a year and fuel prices by 6.5 US cents a liter.
He also said the Prime Minister has broken her election promise not to implement a carbon tax.
Climate Institute chief executive John Connor said he had concerns about the interim period before an emissions trading scheme began.
West Australian Premier Colin Barnett said using natural gas to generate power and fuel buses is a better way to reduce carbon emissions than falsely assuming a carbon tax will cut energy use.
