In a sign of another protracted battle between the mining industry and the government, the chief executive of the Minerals Council of Australia, Mitch Hooke, said he was increasingly concerned industry compensation for Labor's proposed carbon tax would be based on the package of the dumped emissions trading scheme. But the Climate Change Minister, Greg Combet, hit back at suggestions from Mr Hooke yesterday that European trade-exposed industries would be better protected under its trading scheme than Australian companies, adding the government would not walk away from the ''good work'' it had done on industry compensation under the now dumped trading scheme.

The Minerals Council represents mining giants BHP and Rio, among others. Mr Combet will come face-to-face with representatives of BHP and Rio tomorrow at a meeting with the government's business consultation group on carbon pricing.

''The Rudd government's carbon pollution reduction scheme did not adequately protect Australia's export sectors and should not be the template for the new carbon pricing scheme,'' Mr Hooke said in a statement yesterday. ''The Minerals Council of Australia will not support a carbon pricing system that fails to maintain the international competitiveness of Australia's export industries.''

The council also released an analysis it commissioned from SFS Economics finding compensation for heavy industry under the European Union's emissions trading scheme covered more industrial sectors than Australia's plans.

Under the now abandoned Australian emissions trading scheme, an industry receives compensation based on the amount of greenhouse gases emitted to revenue generated. Mr Hooke said the European scheme also assessed an industry's trade exposure to countries with no carbon price in place.

The SFS report says the difference in criteria meant the EU's compensation covered more than 164 industry sectors as opposed to the 31 industrial activities covered by Australia's compensation plans.

Mr Combet yesterday rejected suggestions the EU's scheme was better for industry, saying the Australian compensation package had significant advantages for emissions intensive trade-exposed industries such as aluminum smelting.

Mr Combet said unlike the Australian compensation package, the EU imposed a hard cap on free permits for industry reducing every year and would not cover the cost of electricity price rises post 2013.

Mr Combet said the EU scheme also set the baseline for assistance to all companies based on the top 10 emissions efficient firms in the sector.

Under Labor's now abandoned scheme, industries determined to be ''emissions intensive trade exposed'' would have received for free 66 or 94.5 per cent of the carbon permits they would have had to buy on the carbon market. Coal miners also received a package worth $1.5 billion over five years, while coal-electricity generators got $7.3 billion over 10 years.

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