The long-awaited draft report on climate change will be handed down on Friday, with the introduction of an ETS a major focus.

There has been heated debate on whether the ETS should include petrol and whether it should be compensated for higher prices.

"On emissions trading, we've been absolutely clear cut. This will be a tough decision, we recognize that, and we won't be walking away from it," Rudd told ABC Television.

"Because we believe that we've got to act for the nation's long-term economic interests and environmental interests," he said.

Rudd said the economic cost of failing to act was clear, as was the impact on agriculture, tourism and water.

"And therefore I believe that the nation, through a properly informed debate, can embrace the changes which are necessary, but it's going to be tough," he said.(Xinhua)