According to The Australian newspaper, the three companies - which together account for about 85% of the eastern states' gas market - told the Department of Climate Change that supply would be disrupted if they are forced to meet the deadline.

The report, published on Saturday, quoted an unnamed company executive as saying: "Even if we had begun putting in this equipment four years ago, we could not meet the 2010 carbon trading deadline."

"If you added all the work together and did it all at once, it would have a similar impact on production as Longford," he also reportedly said, in reference to the 1998 plant explosion and fire that slashed household gas supplies in Victoria for two weeks.