Despite intense lobbying by the coal sector against the carbon tax, Sharon Grierson said that the coal sector would not be harmed as claimed, and Newcastle's fledgling clean-energy industry would stall if the carbon policy foundered.

Ms Grierson said that while it was important to protect trade-exposed industries such as steel, Newcastle had bounced back from the closure of the BHP steelworks in 1999, despite forecasts the city would be ruined.

Newcastle had transformed itself from a ''one-company steel town'' into ''a leading centre of knowledge and innovation … enjoying near-full employment''.

''The [closure] had a tragic impact on many Newcastle workers and their families but there's a much bigger story to tell about the Cinderella city,'' Ms Grierson told the Herald.

Rather than fall into decline, Newcastle embraced clean energy and is home to the CSIRO's Australian Solar Institute, the national Clean Energy Innovation Centre, the Smart Grid Smart City trial program and the Clean 21 Technology Innovation Network.

''Without a price on carbon, our ability to turn these opportunities into clean-energy industries and jobs will be compromised.''

Ms Grierson said the closure of the Newcastle steelworks had been anticipated and as a result, the unions, government and industry had thus worked together to minimise the impact.

''The lessons of Newcastle's experiences are clear. In preparing for a price on carbon all parties - business, government and unions - need to refrain from making idle threats or inciting fear,'' she said.

''Instead, they should focus on working with the federal government … to ensure that the transitional assistance helps maintain the competitiveness of … industry and preserve jobs.''

The national secretary of the Australian Workers Union, Paul Howes, and the steel industry are demanding that steel manufacturing be exempted from the carbon price plans.

Ms Grierson does not believe the steel sector will be shut down by having the carbon price applied to it, and was critical of Mr Howes's decision to oppose the government.

''The best way to protect people's jobs is to be … part of the planning and be sure they are protected,'' she said. ''By co-operating with government, you can achieve the outcomes you want that the reforms intend to bring about.''

Ms Grierson said that in the decade since the steelworks closed, 88,000 jobs had been created in the Hunter, and skilled and white-collar jobs make up 70 per cent of the workforce. ''The people of Newcastle know that change isn't always easy. But we know from experience that we have to make the difficult decisions to ensure our future success and sustain our prosperity.''

Contrary to industry claims, Ms Grierson said there was not a lot of fear locally about the carbon tax and the impact on coal. The region's coal exports were still forecast to increase from 100 million tonnes to 300 million tonnes.

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