The Abbott government’s $2.5 billion climate change policy passed the senate in the early hours of Friday morning with the support of the Palmer United Party and cross benchers.

The Direct Action policy provides financial incentives to businesses who volunteer to reduce their carbon emissions.

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Despite fierce opposition from the Greens and Labor, the policy passed with support from the Palmer United Party and independent senators Nick Xenophon and John Madigan, 31 votes to 29.

Senator Lisa Singh, Labor’s environment spokeswoman in the Senate, told politicians they should be ashamed of the bill.

“You’ve not just sold out yourselves, you’ve sold out the children of this country,” Ms Singh said.

“It addresses the problem of climate change with all the sincerity you’d expect of someone who once declared it was crap.”

Finance Minister Mathias Cormann argued the bill had been extensively scrutinised.

“In fact, the Coalition has taken our direct action policy to two elections now,” he said.

Environment Minister Greg Hunt said he was confident the Direct Action policy could meet Australia’s carbon emissions reduction target of five per cent by 2020.

Greens leader Christine Milne dismissed it as an expensive “sham” that would do nothing to address global warming.

“The big polluters can now put out their hand for taxpayers dollars in order to be paid to do something they should have been doing anyway,” Ms Milne said.