With the barest hint of triumphalism, Greg Hunt announced there had been strong interest in what is known as the emissions reduction fund – a scheme that allows companies to bid for cash to cut their greenhouse pollution.

Most of the interest was from people who want to plant or protect native trees that soak up carbon dioxide, and companies running landfill sites promising to cut emissions from decomposing rubbish. Money will also go to piggery owners and projects to store carbon in soil.​ Coal-fired power plants and other industrial big polluters have not bid, at least not at this stage. They don't have to – they can keep emitting without penalty.

All up, contracts were signed for 144 projects that Mr Hunt says will cut Australia's emissions by 47 million tonnes. The projects in this first round will cost taxpayers $660 million.

That sounds significant. What does that actually mean, in relative terms?

Mr Hunt said the tender process was "a stunning success", and interest did exceed what some critics had expected. It follows his successful repeal of carbon pricing – another step some doubted would be possible. In political terms, Mr Hunt is delivering what he said he would.

Environment Minister Greg Hunt.

The numbers being bandied about, though, warrant closer examination.

For starters, the cut in emissions is not as big as it sounds. On average, the contracts signed by the government last for seven years. Broken down, that means a cut of just 6-7 million tonnes a year.

To put that into perspective using the most recent available data, Australia will need a cut of more than 40 million tonnes each year to reach the national target of a 5 per cent cut in emissions below 2000 levels by 2020.

In other words, roughly what was announced for the next decade needs to be delivered annually just to meet Australia's minimum target.

Another way to look at it is that the government has spent 26 per cent of the $2.55 billion allocated to the emissions reduction fund to make what the Climate Institute has calculated is only 15 per cent of the cut needed by 2020. It suggests the government could come up short.

That said, Mr Hunt's claim that the Coalition will not only meet, but exceed, Australia's 5 per cent target is not unreasonable. Not all analysts agree with him, but he may be right.

Why?

The amount that emissions need to be cut to hit the target is getting smaller all the time – Australia's emissions are not growing as expected. Manufacturing is declining and people are embracing solar panels and new, efficient technology at an unprecedented rate.

It gives the government room to accept credit for falling emissions without doing much to make it happen.

If it is easy for the government to reach the 5 per cent target and it considers climate change a threat, isn't the obvious question: why isn't it committing to a much deeper cut in emissions by 2020?

Yes, and it has been asked. Ministers tend to avoid answering it.

The Climate Change Authority, chaired by former Reserve Bank chief Bernie Fraser, looked at what other countries are doing and what was needed to meet the goal of keeping global warming to 2 degrees, and found Australia's fair share was actually a 19 per cent cut by 2020. But the government would have abolished the authority if it had the numbers in the Senate, and has ignored its advice.

Climate Change Authority chairman Bernie Fraser.

It is not the only question the government hasn't answered. Here's another: how much of the cut paid for under direct action would have been made anyway, even if taxpayers were not paying the companies? At least some of the projects were already in the works and are now getting a taxpayer handout.

Does that call into doubt the claim that this is the largest emissions reduction in Australian history?

That's a stretch anyway.

Putting aside that the cut has not yet been delivered, measures introduced by the states to stop land clearing – cutting down to make room for farming or other development – have led to greater cuts more quickly.

And the Climate Change Authority last year found the renewable energy target would deliver more – a cut of 58 million tonnes – over the rest of this decade (though the final figure may now be less – the government is attempting to strike a deal with Labor that would see the scheme wound back).

A wind farm at Codrington, near Port Fairy, Victoria.

What about the cost? Is the emissions reduction fund really cheaper than the carbon tax?

No – or at least, it wouldn't have been after July 1 this year.

The cost per tonne of emissions "bought" by the government was $13.95. Taxpayers will pay companies that amount for every tonne of carbon dioxide they remove from Australia's annual emissions.

As this is the first round of the Coalition's policy, some analysts believe it is likely to have soaked up the cheapest cuts available. It's logical to assume that as we get into later rounds, cuts will be harder to come by and more expensive. Mr Hunt disagrees, and says new cheap ways to cut emissions will be found. Time will tell.

By contrast, the defunct carbon pricing scheme introduced by Labor in partnership with the Greens and country independents was about to get much cheaper. Had it not been repealed, big polluting companies would have been paying $25.40 per tonne of pollution they emitted this financial year. But from July it would have tumbled to about $10.

Hang on: why would the carbon price have fallen so sharply this year? And the Minister mentioned another figure of the cost under the carbon price – $1300 per tonne – in making the case the direct action was 93 times cheaper than the carbon tax. What gives?

The hatred of the carbon tax was, in part, a case of mistaken identity. It wasn't actually a carbon tax. It was an emissions trading scheme with a three-year trial period, but didn't survive beyond the trial.

A bit of background is necessary here: the trial period – a result of Labor and the Greens not being able to agree on greenhouse targets – worked like a carbon tax that increased steadily each year. The initial price of $23 was arguably not above international prices when announced in 2011, but by the time the scheme started in 2012 the price in the embattled European carbon market had crashed.

It left the scheme in the flawed position of having a trial-period price more than double what it would have been once it moved to emissions trading and linked with the EU system. Then, carbon permits could have been traded between the two jurisdictions, and the Australian price would have fallen roughly into line with that in Brussels – currently about $10.

There are arguments over the extent to which trading schemes should be linked. There is plenty of evidence it is the way to go if you want the cheapest cuts possible, but critics say it would fail to encourage local investment in clean technology as a fair whack of the cuts paid for by Australian companies would actually be made in other countries.

The $1300 per tonne figure raised by Mr Hunt, and repeated by some commentators, is a complete furphy. It takes the amount of revenue raised from companies paying for carbon permits – about $15 billion – and treats this as the cost. It's a bit like adding up the revenue from the GST and saying that is what the GST costs, without looking at what other costs have been reduced, or how the money is used.

To talk about what a scheme costs, you have to look at who is paying. In the case of the carbon price scheme, the cost to the budget was going to be more or less zero – it was designed to be revenue neutral.

The cost to polluters was north of $20 a tonne emitted. It was cheaper than this for largely exempted export businesses and, crucially, for those who found they would be better off if they invested in ways to cut their emissions instead.

The cost to households depended on personal circumstances, with those on lower and middle incomes receiving compensation through tax cuts and welfare payments.

High cost or not, the carbon price involved a big churn of money. Did it do anything beyond penalising polluters and redistributing cash?

Mr Hunt said emissions fell by less than 12 million tonnes during the time of the carbon price – a fraction of what direct action was delivering.

It is an accurate description of what happened to national emissions over those two years, but not an accurate measure of what the carbon price did. Working that out is slightly more complicated.

For a start, national emissions data includes pollution from parts of the economy not covered by the carbon price. They have to be taken out of the calculation.

Just as importantly, a simple read of how far emissions fell when the scheme was in place doesn't tell you anything about what they would have done had there been no carbon price.

Given working out the cut in emissions that can be attributed to the scheme is a thorny business, let's defer to the government experts. The federal environment department found the carbon tax and related carbon farming initiative would have reduced emissions to 39 million tonnes below what they would have otherwise been over the two years. The key table is reproduced here:

In other words: a cut of nearly 20 million tonnes a year.

Researchers at the Crawford School of Public Policy estimated the tax cut emissions from the electricity sector alone by between 5 and 9 million tonnes a year while it existed – roughly the same as the promised cut from the first round of direct action.

Analysts have noted emissions from electricity generation have started rising again since the scheme was repealed.

But while all of this analysis is valid, focusing on it obscures a more important point made above – that the carbon scheme was still in trial stage. However much it reduced emissions in the first two years, it was too early to assess whether it had succeeded or failed. The period in which the cuts were promised to come hadn't started.

Once it became a fully-fledged emissions trading scheme, pollution under the scheme would have been capped – businesses would have needed a permit for every tonne of pollution, and the number of permits released would have been set by the government's Clean Energy Regulator. By definition, if the scheme was properly policed, emissions would be cut by whatever amount was centrally determined. Labor had a target of an 80 per cent cut by 2050.

This is the major difference between the repealed trading scheme and direct action – the former would have put a limit on emissions and could be scaled up over time, while the latter buys some cuts without yet guaranteeing that those cuts won't just be immediately wiped out by other companies increasing pollution.

Didn't the Coalition promise that polluters won't be allowed to increase their emissions?

It did. Under what it calls a "safeguard mechanism", companies theoretically would be penalised if they increased emissions beyond historic levels.

But critics have argued that the safeguard, which is not yet finalised, does not look that safe.

Under the current proposal, it applies to only about 140 industrial facilities, which leaves about half of Australia's emissions unchecked. The facilities covered would be allowed to keep emitting up to whatever was their highest level of pollution in the financial years between 2009 and 2014.

If they failed that test, they can apply for an exemption or an "expansion" of their baseline to avoid a penalty, which has been interpreted as a potential get-out-of-jail-free card. Polluters can start operating or expand their business with a new baseline as long as they are meeting "best practice".

The wriggle room prompted independent Senator Nick Xenophon, who voted for the direct action scheme last year, to accuse the government of breaking a promise to him by neutering the safeguard.

According to Mr Hunt, the mechanism is designed to be in place for the next half-century, and to allow the government to work with industry to cut emissions. But the list of sceptics is long. A sample: investment bank Citigroup found it wouldn't cut pollution in its current form; think tank the Grattan Institute says it is highly unlikely the safeguard will do what it is supposed to; the Australian Industry Group says it will need to be substantially changed if it is to help meet climate targets.

Turning the focus to the international climate negotiations, the government says it has a good track record, having met its targets under the existing Kyoto Protocol, where most others haven't. Is this true?

The government is correct to say Australia met its initial Kyoto target. What it doesn't often say is that the target was an 8 per cent increase in emissions between 1990 and the years 2008-2012.

What it also doesn't say is that it largely met the target by reducing land-clearing. Australia's industrial emissions – the main game in tackling climate change – rose about 30 per cent over that period.

The Kyoto treaty covers developed countries only, and most had emissions targets that required a cut, not an increase. Canada pulled out and the US Congress never ratified the treaty, but the countries that remained in the first phase of the protocol – those in Europe, New Zealand and Japan – hit their targets, some by buying international carbon credits.

Australia is now expected to join other countries in announcing a new target for after 2020 ahead of a major summit in Paris in December. Could direct action be used to meet a more ambitious target?

Australia's target is due to be announced mid-year, after cabinet receives advice from a taskforce in the Prime Minister's department. As Fairfax Media reported, other countries are watching closely and asking questions.

The government has already rejected a separate recommendation by the Climate Change Authority, which looked at what others were doing and called for a 30 per cent cut by 2025 and a cut of between 40 and 60 per cent cut by 2030.

According to its data, Australia is the world's biggest emitter per person and 13th biggest in absolute terms, as shown here:

The authority also set out what other countries are promising ahead of the Paris summit in this table:

Mr Hunt dismissed the authority's recommendation of a 30 per cent target, saying it would be too onerous on the economy. And the government appears to have stopped talking about considering what is necessary to limit warming to 2 degrees in setting its target.

The one clear signal the government has sent is that it will change how it expresses its target. It has started describing its 5 per cent cut as a 13 per cent cut – which it is, if you compare it to 2005 emissions levels. Expect the new target to be compared to 2005 as well. There is some justification for this baseline – the US uses it – but experts have warned it could be used to make a weak target appear more ambitious than it is.

Wherever the government lands, Mr Hunt has said the new target could be met through direct action, describing it as a "plan for the next half-century".

Given what others have estimated this would cost, this may come as a surprise to Treasurer Joe Hockey. The Australian Industry Group, for example, estimated that just buying enough cuts to keep emissions at 5 per cent below 2000 by 2025 would cost the budget $19 billion. Aim for deeper cuts and the billions keep adding up.

This contrasts with an emissions trading scheme, which analyses have found could be used to reach deeper targets without dramatically inflating the carbon price by allowing companies to buy some carbon credits from overseas.

A simple way for the Coalition to get around the unpalatable cost of direct action without starting again would be to borrow from the emissions trading model, and allow some verified international carbon credits into its scheme.

Though cheap, these credits equate to real cuts, and supporters argue it is global emissions that ultimately matter. Business wants this, economists recommend it and some environmentalists back it. It is understood significant players in the government support it. Tony Abbott, however, does not. In 2011, he said money "shouldn't be going offshore into dodgy carbon farms in Equatorial Guinea and Kazakhstan". There is no sign he has changed his position.

Where does Labor stand?

Having been badly bruised by the climate policy debate while in government, the ALP now says its supports emissions trading, but not a carbon tax. What this means in practice hasn't yet been explained.

Despite its sharp criticism of the Coalition as not being serious about climate change, Labor has not committed to cutting emissions more rapidly – it has the same 2020 target. Spokesman Mark Butler has compared the government's stance unfavourably with what the Climate Change Authority has recommended, but the party has not adopted the authority's targets for itself.

Incidentally, neither have the Greens. Leader Christine Milne says the authority does not go far enough, and wants a 40-50 per cent cut by 2025 and "net zero" emissions by 2040.

Once the Coalition reveals its new target and attention turns to the Paris meeting, among the questions being asked will be what Labor would do differently.

Adam Morton has reported on climate change since 2007.

Here's what he wrote about direct action on the day it was announced in 2010. And what he wrote in 2014, on the day the direct action white paper was released.

You can follow him on Twitter.