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The vote count had 42 against versus 30 in support of the scheme, with all non-government senators rejecting the proposal.

Nationals Senator Ron Boswell said popular opposition to the government’s flawed emissions trading scheme would continue to grow over the next 90 days before another vote.

“Today we won the battle but not the war on the ETS,” he said.

“As information spreads about the costliness of the Rudd government’s ETS in terms of jobs and increases in power and food costs, there will be more questions and doubts about the appropriateness of this policy.”

He emphasised that the public must be aware Treasury modelling for the scheme was compromised by its assumptions, including that globally coordinated action would take place on reducing carbon emissions.

“In the absence of hard targets for emissions reduction from China and India, there is no global action, there is just a carbon tax on Australian businesses. That puts Australian industry at a cost disadvantage compared with its international competitors.

“Australia’s industry is built on a relatively cheap power base. Rudd’s ETS dismantles that core competitive advantage.”

The Minerals Council of Australia said the Senate’s rejection of the scheme should be the catalyst for the Rudd government to redesign it.

“Australia’s CPRS will have no material impact on the level of global greenhouse gases without a comprehensive global emissions protocol in place,” MCA said.

“It will simply sacrifice Australian jobs and international competitiveness just as there are signs of a global economic recovery underway.”

MCA outlined 10 critical flaws in the scheme, the first being that Australian companies will have to start paying billions in carbon costs from July 2011, unlike any of its competitors.

The mining industry group noted the $30 billion cost burden on Australian business in the first four years would hit investment in low-emission technologies.

Like other critics, MCA said the CPRS was out of step with other international schemes.

“The CPRS will raise $404 for every Australian, the US scheme will raise $A57 per person, while the European Union scheme will raise revenue of less than $1 for every European in its first eight years.”

MCA said it was impossible to explain why the CPRS included plans to auction 70-75% of permits from the outset when the EU’s scheme auctioned less than 5% in its first five years and the proposed US emissions trading scheme will auction only 15-18% of its permits.

Crunching some numbers, MCA said 90% of Australia’s mineral exports would receive no shielding from the full cost of permits under the CPRS.

“Australia’s coal and gold mining sectors– which together produced more than $50 billion in export earnings last year – will face billions in extra costs under the CPRS while their international competitors in the US and EU will face no costs under their respective schemes.

“Even the Treasury’s own modelling shows a reduction in coal mining output by 35 per cent by 2020.”

As expected, the Greens teamed up with Coalition and Independent senators to block the legislation, but for different reasons.

The Greens argued the bill was not strong enough to tackle climate change and contained $A16 billion in handouts for polluters.

Having received $30,000 of support, the party now plans to run a national television advertisement to explain how the CPRS will lock in failure.

The Coalition and Independent Senator Nick Xenophon have recently endorsed a modified CPRS put forward by Frontier Economics, which is projected to have less impact on coal mining communities and result in fewer job losses.

If the Rudd government’s CPRS, in its current form, is blocked one more time in the Senate after a three-month interval, the government will be able to call a double dissolution and therefore call an early federal election.

But an MCA spokesperson told ILN that Rudd had ruled out an early election and his party would modify the CPRS bill, therefore eliminating the potential double dissolution trigger.