Just after 11am, the Opposition, Greens, and the independents, Nick Xenophon and Steve Fielding, voted to defeat the package of 11 bills that sought to establish a scheme from 2011 onwards.

The Greens say the Government's 2020 emissions reduction targets - between an unconditional 5 per cent and a highly-conditional 25 per cent - are too timid.

The Coalition and independent senator Nick Xenophon want the Government to consider an alternative scheme, based on a model they commissioned from Frontier Economics.

Nationals Senator Barnaby Joyce at a Nationals press conference at Parliament House this morning.

Family First's Steve Fielding is yet to be convinced human activity is causing global warming.

In the end the Senate voted 42 to 30 to reject the bills.

The Government must now wait three months before reintroducing the same legislation.

If the bills are rejected a second time, Labor will have a trigger to dissolve both houses of Parliament and call an early election.

Before the vote, Climate Change Minister Penny Wong called it a "day of reckoning" on climate change.

"This is a reform that is long overdue, that is in the national interest, that both major political parties said they would implement when they went to the last election," she said.

In summing up the Government's case before the vote, Senator Wong said: "This bill may be going down today but this is not the end. We will press forward, we will press on with this reform for as long as we have to.

"We will bring this bill back before the end of the year."

Opposition Leader Malcolm Turnbull said he was willing to negotiate amendments to pass a scheme in the event the Government reintroduces the bills.

But his party room is divided and he faces a tough test ahead, even though he has majority support to negotiate.