One of Australia's largest steelmakers says jobs will be lost if the industry is not fully compensated for a carbon tax.

Yesterday, Australian Workers Union national secretary Paul Howes said the steel industry was facing unique challenges and should be exempt from the carbon tax or fully compensated for it.

Mr Howes warned the Government would lose his union's support if there was just one job lost as a result of the tax.

OneSteel has now joined in on the criticism, saying competition in the steel industry is very fierce and it does not have the protection of trade barriers.

Its chief, Geoff Plummer, says he is not confident the Federal Government understands how a carbon tax would affect the industry.

"If we have a tax impost our competitors don't, then it's going to damage our industry and will lead to loss of jobs," he said.

"The [Climate Change] Minister's ruled out any sort of border taxes or border measures, so what you're really saying is, 'we'll tax Australian production, we won't tax offshore production'. It has to be detrimental to jobs and the Australian industry."

Climate Change Minister Greg Combet is promising generous compensation for the steel industry and says the impact of a carbon tax will be very small.

But Mr Plummer says the comments are misleading.

"If that's what the Government thinks, then I don't think they understand the position," he said.

Council of Trade Unions president Ged Kearney says the Government needs to do more to explain how business will be affected, including "how jobs are going to be protected and what the future of those industries are in Australia in a low carbon economy."

"Give those industries some assurances that they have a plan," he added.

Earlier in the week, the head of BlueScope Steel voiced his concerns over the carbon tax. CEO Paul O'Malley told New South Wales Premier Barry O'Farrell that thousands of jobs would go if the tax was introduced.

The Opposition says jobs will move offshore under a carbon tax and that the Government should ask the Treasury to model how the carbon tax will affect Australian jobs.

Liberal Senator Mathias Cormann says there needs to be a proper analysis.

"If Paul Howes is serious about protecting jobs, the first thing he's got to do is to insist that the Government this time around conducts some proper and credible modelling of the impacts of its carbon tax on jobs," he said.