Australia's economy will continue to grow strongly if a carbon price is introduced, Treasurer Wayne Swan said Tuesday and warned of a possible backlash over coal exports if Canberra failed to act.

Making deep cuts in carbon pollution would not cripple the economy, with modelling showing growth in real national income rising at an average annual rate of 1.1 percent per person until 2050 with a carbon tax, he said.

This compares with growth of 1.2 percent without a levy on pollution.

"Don't believe the vested interests who argue Australia must choose between a stronger economy and decent environmental outcomes," Swan told the National Press Club.

"Jobs will still be created, industries will prosper, and our economy will continue to grow strongly with a carbon price."

Swan said employment would also continue to grow if the government proceeded with its plans to place a pricing mechanism on pollution, with modelling showing no significant difference if a carbon tax was introduced.

"By 2020, national employment is projected to increase by 1.6 million jobs, while at the same time growth in domestically-produced pollution slows," he said.

The treasurer said Australia was the world's worst per capita carbon emitter and could not afford to be left behind as other countries transformed their economies to reduce emissions blamed for global warming.

"No first-rate, first-world economy will be anything other than a clean-energy economy into the future," he said.

While the world would continue to burn Australian coal, a major export for the economy, the nation also needed to export technology that would make the fossil fuel more viable in the future, he added.

"Today Australia has a relatively low-emission coal sector, and we expect it to continue to grow as the world moves to cut its emissions," he said.

"But if we don't innovate further, we run the risk that the rest of world will impose a penalty on our exports in the future."

The centre-left Labor government of Prime Minister Julia Gillard wants to introduce a tax on 1,000 major industrial carbon polluters by mid-2012, with this giving way to a market-based mechanism within 3-5 years.

But the plan has been attacked by the conservative opposition, which claims it will send jobs offshore, hurt industry and raise the cost of living for Australians who will face higher energy costs.

Swan said a report by the Productivity Commission to be released Thursday would show that seven of Australia's top 10 trading partners have already adopted policies to reduce pollution and support clean energy.

"The approaches vary from country to country, but the report will make it clear that market mechanisms are a far more cost-effective way than other approaches like regulation and subsidies," he said.

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