In a torturous press conference, Prime Minister Malcolm Turnbull confirmed that the government had been forced into a U-turn on climate-change policy less than 48 hours after releasing details for a policy review next year.

After two days of vocal criticism from several Coalition backbenchers, the government dropped plans for the review to consider an emissions intensity scheme for the electricity sector - a form of carbon pricing - to help it meet its climate targets.

Mr Turnbull denied such a scheme had ever been part of the review. "We will not be imposing a carbon tax and we will not be imposing an emissions trading scheme, however it is called," he said.

It came as EnergyAustralia – the country's second biggest greenhouse gas emitter – announced on Wednesday plans to spend $1.5 billion on solar and wind projects.

Asked whether Environment and Energy Minister Josh Frydenberg had the imprimatur of the Prime Minister's Office when he told journalists it would be considered, Mr Turnbull said: "If you want to ask questions about what another minister said, you should address them to him."

Mr Frydenberg subsequently also denied an emissions intensity scheme had ever been on the table, despite having told Fairfax Media and the ABC that the review would look at it.

Mr Turnbull said the government would never increase the cost of energy for Australian families and businesses.

But Frontier Economics chief Danny Price, who advised Mr Turnbull on an emissions intensity scheme as far back as 2009 and who the government last year appointed to the Climate Change Authority board, said the government had turned its back on an option that would have reduced prices.

He said an emissions intensity scheme would improve reliability by helping the electricity industry plan for the closure of existing ageing coal plants by investing in cleaner stations.

"This shows a lack of spine. The policy vacuum that it leaves will be filled by policies that will do exactly what they are trying to avoid," Mr Price said.

"By doing this, it means they are the party of increasing electricity prices and reduced energy security."

Grattan Institute energy program director Tony Wood said an emissions intensity scheme should not be called a carbon tax because it did not raise revenue. He said any policy to cut emissions would have a cost, but those opposing such a scheme were creating more uncertainty and higher prices.

An emissions intensity scheme would set a baseline figure for how much carbon dioxide a power station could emit for every unit of power generated, penalising those who breached their limit and rewarding cleaner models that emitted less with free credits.

Bodies to have recommended an emissions intensity scheme on cost grounds include Energy Networks Australia and the CSIRO.

Energy and business leaders who have called for a bipartisan plan for the future of the electricity system as it shifts to cleaner forms of generation.

Australia Energy Council chief Matthew Warren, representing most electricity generators, declined to comment directly on the about-face, but reiterated substantial policy change was needed.

"The electricity system is visibly deteriorating. It is a system that requires multi-billion-dollar investments and is paralysed because of uncertainty, and until that is resolved, it will continue to deteriorate," Mr Warren said.

Outspoken Liberal backbencher Cory Bernardi welcomed the government backdown. "It was a clear attempt to reintroduce a price on hot air to satisfy the extreme greens and others seduced by the socialist alarmism of anthropogenic climate change," he said.

Opposition leader Bill Shorten said Mr Turnbull was a "weak fellow" who had cave into internal from the Coalition right-wing. "He doesn't believe in anything except saving his job," he said.

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