Fighting a fourth carbon tax

Part of the reason Gillard's carbon tax proposal is facing such strong opposition is that we have already confronted three discrete carbon taxes, and they may prove more painful than the 'official' one.

After the KGB interview with Origin chief Grant King, I suddenly realised that the Gillard government's official carbon tax proposal is really our fourth carbon tax. It's no wonder it's generating so much community opposition. If you want to understand the forces that are going to shape large slabs of Australia's future energy policy, the interview with Grant King is a wonderful starting point. Australia is going to move from a low cost source of power to one where power is a much higher cost, at a time when local groups are being hit by the high dollar.

In terms of the three earlier 'carbon taxes', the first one – renewables – is incredibly expensive. Renewables, which are to be mandated at 20 per cent of power generation, are costly because not only do you need to set-up vast wind farms, but you must also duplicate much of this extra power capacity with gas stations that can be turned on when the wind does not blow and off when it does.

In effect, you have two power generation systems and, effectively, a carbon tax.

And of course, all the people who build these systems want a return on their investment.

Grant makes the point that half the costs of electricity are in transmission. While most of the big investments in this sector have been made and power prices boosted, wind farms are often in remote areas, which means further outlays. Investment in transmission has been our second 'carbon tax'.

The cost of generation is set to rise even further with a third carbon tax, because we are gradually moving gas and coal to export parity. And then of course we have the official carbon tax. What the Gillard government has not grasped is that the carbon taxes before the 'official' one have hit Australians probably harder than the official carbon tax.

Meanwhile, Grant isolates two clear mistakes by the coal seam gas developers: the haste to get into production caused problems with farmer negotiation, while the efforts to develop coal seam gas in the Sydney basin on or near expensive land were ill-conceived. Origin, which is based in NSW, went nowhere near the Sydney basin.

These mistakes may carry a long-term price for the industry (Who'll take the CSG blame?, August 18; and Beware the CSG enfants terribles, August 17).