The Greens hope a deal struck with the federal government on debt will expose the true cost of paying for the coalition’s direct action plan on climate change.

As part of the deal secured with the minor party to scrap the national debt ceiling, the government has agreed to report on the impact of climate change policy in future budgets.

Greens leader Christine Milne said this would highlight the cost of tackling climate change without a market mechanism like an emissions trading scheme (ETS).

“That is a good improvement, too, so people can clearly see what not going to a market mechanism is going to cost in terms of the budget,” Senator Milne told reporters in Canberra on Wednesday.

Labor and the Greens joined forces in the Senate last month to limit the debt ceiling increase to $400 billion, arguing the Coalition should bring forward its Mid-Year Economic and Fiscal Outlook (MYEFO) if it wanted to borrow more.

Treasurer Joe Hockey, who previously has been highly critical of the Greens’ economic policies, has acceded to their requests to increase transparency and even continue the impact of climate change in future Intergenerational Reports.

“The Greens have engaged in honest discussion with us about dealing with the debt limit that was put into place by the Labor Party in 2008,” he told Parliament.

“There are no side deals, there are no winks and nods about any other issues and the agreement comes down to greater transparency about the debt and how it is used by the Government.

“Now, I have no problems with that at all.”

The government’s direct action plan will directly fund activities that reduce carbon dioxide emissions, whereas an ETS requires businesses to pay for the greenhouse gases they release.

The Greens have fiercely opposed direct action and vowed to block the repeal of Labor’s carbon pricing mechanism in the Senate.

In his letter to Senator Milne, Mr Hockey said a debt statement with details regarding government spending on climate change would be included in future budgets and key economic reports.

“I will consult with the Australian Greens on the scope of what could be included within the section,” Mr Hockey wrote.