In its submission to the Government's green paper, the Business Council of Australia said it supported the scheme but that greater compensation was needed to prevent some companies from relocating overseas.

"If global greenhouse gas emissions are to be reduced over the long term the world will need examples of how this can be done effectively but also with minimal economic disruption," the council's president, Greig Gailey, said.

Modelling commissioned by the council looked at the effect of the emissions trading scheme on 14 companies in areas such as minerals processing, manufacturing, oil refining, coalmining and sugar milling. It found three of the 14 business would shut, a further four would have to restructure their operations and the remaining seven would need to cut costs. In all cases profits before tax would fall by 22 per cent.

To stop this happening the council wants greater compensation from the Government and a low cap on the amount of greenhouse pollution companies can emit. It also wants the start of the scheme delayed until the rest of the world agrees to participate and a set price for the permits the Government will create to allow companies to release carbon emissions.

But the more compensation the Government hands out to business the less money it will have to help households adjust to the price rises for things such as energy that will result from the scheme.

Environment groups were quick to criticise the submission, saying its modelling was based on the European price for carbon - $40 a tonne - which is double the price many analysts are expecting the Australian price to be.

"Overzealous protection of big polluters will just increase the cost of meeting carbon reduction targets on average households and the broader economy," the chief executive of the Climate Institute, John Connor, said.

"Polluting industries that have spent the last decade doing little or nothing to prepare for a carbon-constrained economy should not get a free kick," the executive director of the Australian Conservation Foundation, Don Henry, said. "The Business Council's proposal is totally irresponsible and would produce a complicated, weak scheme full of exemptions and loopholes."

The emissions trading scheme is due to begin in 2010 and is the Federal Government's big hope for driving down Australia's greenhouse pollution levels. It is designed to limit the amount of greenhouse gases by setting a cap on the amount of greenhouse pollution Australia can release. Companies producing greenhouse gases will need permits to release them and will have to buy those permits from the Government.

A Government advertising campaign about climate change began last month and will run until November. The Minister for Climate Change, Penny Wong, yesterday confirmed the campaign had cost the Government $14 million.

"The purpose of the campaign is to help the Australian community understand how climate change will affect them," Senator Wong said. "The Auditor-General has advised that it complies with the Government's new advertising standards."