The Australian economy will remain internationally competitive under an emissions trading scheme, Treasury modelling to be published today says.
But the mining industry has questioned the assumptions that underpin the report.
Climate Change Minister Penny Wong said yesterday the much-anticipated Treasury analysis backed the Government's approach to reducing emissions.
''What the modelling shows is that Australian industries will remain competitive, and there are significant opportunities in us taking action on climate change, doing the economically responsible thing,'' she said.
The modelling shows a modest overall long-term cost to the economy, and assumes many carbon permits will be bought in developing countries, where it is cheaper to reduce carbon emissions.
The Government has set a target of reducing greenhouse gas emissions to 60 per cent of 2000 levels by 2050.
The Treasury analysis also shows the positive effects and economic opportunities in greener industries created by shifting to a low-carbon economy.
The Government's Garnaut review, which used Treasury modelling in its analysis, predicted that cutting Australia's emissions by 10per cent by 2020 would cut economic growth by 1.1 per cent.
But an analysis of the Treasury assumptions, conducted by Concept Economics for the Minerals Council of Australia, found the Treasury model produced ''unrealistically low carbon prices'', and significantly underestimated the capital cost of new stationary energy plants.
A number of business groups, including the Business Council of Australia and the Australian Industry Group, have warned that an emissions trading scheme could seriously impact on economic growth and job creation.
Treasury officials in Senate estimates admitted last week that the modelling to be issued today did not take into account the current global financial crisis.
Treasurer Wayne Swan said yesterday that the modelling showed the Australian economy continuing to grow under a carbon trading scheme.
The Opposition has declined to state a position before the release of the Treasury modelling, saying that the Government must not act ahead of the international conference in Copenhagen next year.