THE ACTU is challenging plans to compensate coal-fired power stations under emissions trading and urging a "tough love" approach to industries that say they will move offshore.
It says while some help is justified for businesses that cannot pass on higher costs, the assistance must depend on them taking steps to cut emissions and protect jobs.
The ACTU stance on electricity generators puts it in line with the nation's biggest investment funds, which this week damned the Government's compensation plans because coal-fired power operators have had plenty of time to adapt - they knew a carbon price was likely since global climate talks began in the early 1990s.
The ACTU supports the Federal Government's carbon trading blueprint for its plan to cut greenhouse pollution, but wants some changes.
These include only compensating businesses that say the higher price of electricity might force them offshore - a phenomena known as "carbon leakage" - if they boost efficiency to world's best standards. ACTU president Sharan Burrow called for an end to the "special pleading" that has dominated the emissions trading debate.
"What is required for business with a genuine case is tough love," Ms Burrow said. "Everybody must do their bit … We want to hear more voices from responsible businesses who know they will reap huge returns from growth in a green economy."
This position - and a call for Australia to set world-leading greenhouse targets before the end of the year - is shared by think tank the Climate Institute, which will today release modelling that has found the cost of emissions trading for the wider community will blow out if the Government yields to business demands.
An analysis by consultants McLennan Magasanik and Associates found hand-outs proposed under the Government's model would cost $3 billion a year if carbon permits cost $20 a tonne - the starting price proposed by climate adviser Ross Garnaut.
The new modelling is a response to an alarming report on behalf of the Business Council of Australia, which found emissions trading in its current form would devastate the economy and force some industries to shut down.
It also follows a warning from Woodside Petroleum that emissions trading would threaten Australia's multibillion-dollar liquefied natural gas industry, with profits expected to fall by 30%.
The Climate Institute modelling found claims that the natural gas industry would flee offshore were wildly exaggerated, given the lack of opportunities to develop the industry elsewhere.
Climate Institute chief executive John Connor called for a broader study into the likelihood of carbon leakage before compensation was handed out. "If limited one-off assistance is given to selected generators, it should be on the condition of achieving clean energy outcomes," he said.
Mr Connor called for some emissions trading revenue to be spent helping developing countries become cleaner and adapt to climate change.
Climate Change Minister Penny Wong is due to release the Government's final emissions trading model in December.