JULIA Gillard is to create a Citizens Assembly to forge a national consensus on action on climate change and a commission of experts to help inform its deliberations. 

The Prime Minister will also today recommit Labor to carbon trading, but pledge that it will be introduced only when "the Australian economy is ready and when the Australian people are ready".

Her speech, to be given at the University of Queensland, is a sharp repudiation of dumped prime minister Kevin Rudd's do-as-I-say approach and an attempt by Ms Gillard to neutralise the political risks of the climate issue.

News of her plans emerged last night amid speculation the government would also reveal how it would spend $652 million freed up by the dumping in April of Mr Rudd's proposed Carbon Pollution Reduction Scheme as well as a major push to boost energy efficiency among electricity users.

The Australian understands the government has been examining an energy efficiency program under which certificates would be issued for energy consumption reductions, which would be bought by power generators.

Mr Rudd made action on climate change a signature promise during the 2007 election. After describing climate change as the key moral challenge of his generation, he shelved action after failing to win Senate approval for his proposed CPRS -- a decision that triggered the slide in public approval that led to his downfall. The complexity of the issue also cost former opposition leader Malcolm Turnbull his job when his support for Labor's CPRS provoked a revolt and a switch to Tony Abbott last December.

Ms Gillard, who said after ousting Mr Rudd last month a national consensus on climate was needed before action could be taken, will today concede Labor failed to explain its position to Australians.

According to part of Ms Gillard's speech, obtained by The Australian, she will reaffirm her support for emissions trading, promising to spark a national debate she hopes will lead Australians to back Labor's position.

"If we are going to meet this pollution challenge, we need the consensus on a market-based solution to reducing carbon emissions to be like the kind of consensus we have about Medicare," Ms Gillard will say. "Our challenge is to answer the community's questions and develop the community's commitment to taking the right action."

She will argue that climate change action will transform the nation so profoundly that it is too important to be left only to politicians, with changes "made and unmade on the oscillations of the political pendulum".

Although she will not outline fine details about the Citizens' Assembly, including its cost or when and how it would meet, the concept appears similar to Mr Rudd's 2020 summit talkfest, where he invited movers and shakers from across the nation to discuss ideas for the future.

Critics of that process said it produced little beyond opportunities for Mr Rudd to be photographed with invited celebrities and business leaders.

However, the Prime Minister's speech says to be truly representative, the commission's members will be chosen by "an independent authority" using census data or the electoral roll.

"This should not just be a debate between experts," the speech says. "It must be a real debate involving many real Australians.

"It will not convince everybody, and I will not allow our country to be held to ransom by a few people with extreme views that will never be changed.

"But I want to see a process that directly involves a representative range of ordinary Australians.

"And if I am wrong, and that group of Australians is not persuaded of the case for change, then that should be a clear warning bell that our community has not been persuaded as deeply as required about the need for transformational change."

The Citizens' Assembly will be able to reference the work of an independent panel of experts -- the climate change commission -- which will explain climate change science and report on progress in international action.

The Australian understands Ms Gillard's policy move is backed by Labor Party research that shows most Australians did not understand Mr Rudd's CPRS.

Sources said last night the research indicated Labor needed to neutralise the issue as a negative, delaying action by making clear it would take genuine steps to better explain to voters the science about climate change and possible responses to its effects.

Labor sources said last night the move was also evidence that Ms Gillard wanted to adopt former Labor prime minister Bob Hawke's consensus-based leadership style -- a sharp contrast to Mr Rudd's one-man-band approach.

"Julia is a leader who wants to take people with her," said one senior source.

"She believes it is this sort of leadership that produces durability of the outcomes."

Ms Gillard will also use the speech to recommit to Mr Rudd's promise to reconsider Australia's position on carbon trading at the end of 2012 -- in the hope that the considerations would be underpinned by a consensus.

While effectively putting action on ice for two years, Ms Gillard will offer to reward businesses that seek to reduce their carbon emissions during the next year by ensuring that emission baselines for industry assistance in the future will be the same as they were for the CPRS.

"Retaining these baselines will ensure that any efforts undertaken by a business now to cut pollution will be rewarded," she will say.

"Retaining these baselines will encourage action early rather than causing businesses to delay action until a market mechanism is introduced."

Last night, there was growing speculation about other aspects of Labor's plan, including the expectation it could include a major boost to solar power and "hot rocks" geothermal energy.

The policy is understood to funnel more money to solar panels and geothermal energy -- sending water deep underground to where there are "hot rocks", then returning it to the surface to generate electricity.

Geothermal energy is baseload energy and it is emissions-free; it is also expensive.

It is expected the government could set a target to drive up energy efficiency, expected to be about 1.5 per cent a year.

Part of the $652m is likely to be spent on energy efficiency incentives, but the government is expected to announce increased assistance for the renewable energy sector. It could also be used to match Coalition incentives, including a $100m commitment to help one million homes go solar by 2020 and a $100m commitment to help towns and schools go solar by 2020.

Additional reporting: AAP