The Abbott government has bowed to international pressure and will commit to a global fund to help developing nations deal with climate change.
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The government has also revealed the first detail of how it will review Australia's post-2020 emissions reduction targets, with a taskforce to be established in the Department of Prime Minister and Cabinet.
In a statement on Wednesday, Prime Minister Tony Abbott and Foreign Minister Julie Bishop said the government would take $200 million from Australia's foreign aid budget over four years to put into the Green Climate Fund.
It follows weeks of criticism after the government tried to resist the fund's inclusion on a G20 communique and refused to join other world leaders at a conference in Berlin that aimed to raise an initial $10 billion for the measure.
The government released the statement to say it will announce its change of heart in Peru on Wednesday, with Ms Bishop in Lima for climate talks.
Environment groups attending the Lima summit told Fairfax Media on Tuesday that there had been criticism of Australia during the early days of the conference for its refusal to join other countries and commit to the fund.
"It's a mix of disbelief to outrage," the Climate Institute's Erwin Jackson told Fairfax on Tuesday.
"Particularly amongst the poorer countries it's a level of outrage."
Environment groups welcomed the government's backdown on Wednesday but said any funds should be additional money, rather than drawn from the existing foreign aid budget.
In an interview with the ABC in 2012 while in opposition, Ms Bishop said climate change funding should not be "disguised as foreign aid funding".
"We would certainly not spend our foreign aid budget on climate change programs," she said.
The Australian Conservation Foundation said the United States had pledged $3 billion for the fund and Japan $1.5 billion.
"The Prime Minister's announcement is welcome recognition that Australia needs to be part of the global effort on climate change, but the contribution should not be taken from the existing aid budget," climate change program manager Victoria McKenzie-McHarg said.
"Climate change is presenting new problems for developing nations, so our contribution to the Green Climate Fund should be new money."
In an interview with the Australian in November last year, Mr Abbott compared UN climate funds to "a Bob Brown bank on an international scale".
"We are committed to dismantling the Bob Brown bank [the Clean Energy Finance Corporation] at home so it would be impossible for us to support a Bob Brown bank on an international scale," he said at the time.
Greens leader Christine Milne said the about-turn was evidence of the intense international pressure Australia had been under to commit to the fund.
"There is no way Australia could have continued with its stand against global finance and be viewed as negotiating in good faith here in Lima," Senator Milne said.
"$50 million a year is nowhere near enough, when the global target for finance is $100 billion a year by 2020.
"Because the Coalition has left it to the last minute, Australia's contribution to the GCF looks begrudging."
At a press conference later Wednesday, Mr Abbott dismissed suggestions that he had backflipped on the fund, given his previous refusals to provide money.
"I've made various comments some time ago but, as we have seen things develop over the last few months, I think it's now fair and reasonable for the government to make a modest, prudent and proportionate commitment to this climate mitigation fund," he said.
He said the $200 million would be "strictly" invested in "practical" projects in the Asia Pacific region.
The government said that Australia's contribution would take the total international contributions to the fund above the target of $10 billion.
"The pledge to the Green Climate Fund will facilitate private sector-led economic growth in the Indo-Pacific region with a particular focus on investment in infrastructure, energy, forestry and emissions reduction programmes," Mr Abbott and Ms Bishop said in their joint statement.
They also revealed a taskforce would be established within the Department of Prime Minister and Cabinet to review Australia's emissions reduction targets ahead of a global climate summit in Paris next year.
The United Nations has set a deadline of April for countries to announce their ambitions in the lead up to the December conference.
Any new post 2020 targets for Australia would not be announced until mid-2015.
"This review will take into consideration action taken by the major economies and our major trading partners," the statement said.
"Any new post-2020 target would be announced in mid-2015 after the taskforce has completed its work."
with Judith Ireland
