What if ?

On Sunday we will supposedly get all the details of the new carbon tax scheme.  The price of carbon will finally be revealed and we will learn what will be exempt - and how it will impact on our way of life.

There is a wide gap between what is  planned - and what actually happens with this sort of thing.   The theory is great - but somewhere down the track a different result could eventuate.  Let us look at one of the possibilities that may occur.

All the state governments went into panic mode when they considered applying a carbon price to electricity generation.   They owned each state's electricity industry and therefore the cost of changing to renewables would be their cost.  Their answer was to sell this industry to private enterprise to shift the blame for cost rises elsewhere.

Now the theory of what is to happen is very reasonable.  As the carbon tax increases electricity generation costs because plants are coal fired - it provides a cost incentive for the owners to invest in renewables.  What is not explained  is where the finance to achieve this is supposed to come from ?

Suppose the commercial people who now own the electricity supply simply consider the cost of converting plants from coal to natural gas as a partial remedy is too high - and that renewables such as wind or solar are out of the cost question anyway - what happens then ?

They are the only suppliers of electricity - and that is a product we can not do without because if it ceases - so does our way of life.    They simply hike the price to recover their costs and make a profit margin to placate their shareholders.     The end product becomes out of reach of low income people and the high cost makes whatever industry is left uncompetitive.

It is a scenario that could happen because neither the Federal  or state governments have control of the electrical generational industry any more.  It is in private hands, and the decisions on how it will react to a carbon tax - or a " emissions trading scheme " - is up to the board of management.

The details to be released on Sunday give the nuts and bolts of a scheme with a theoretical outcome.  What happens in the real world will be something else again !