While the usual suspects are wetting themselves over the “threat” of nuclear power in Australia, they’re missing the big surrender that’s inherent in the Ziggy report – much higher electricity prices are on the way either through a carbon tax or carbon credits.

There’s more sense debating the number of angels that can tap dance on the head of a pin than nuclear power in Oz unless you first acknowledge greenhouse and large penalties of one kind or another for emitting carbon dioxide. That’s just been done by just about everyone except Nick Minchin.

If it wasn’t for the dangerous political implications of the “T” word, we’d preferably have a carbon tax rather than the carbon trading regime pushed by those looking to make money out of it, but the end results are similar.

Plenty of implications flow from that. For a start, much higher electricity prices mean people really do start conserving energy – you can’t beat good ol’ market forces for delivering a message. That in turn means electricity generators don’t have as easy a ride in looking for growth.

Much higher electricity prices mean the industries that really on cheap electricity – aluminium and cement come quickly to mind – are in trouble to the extent that the manufacture of aluminium and cement can move to countries with cheaper power, countries that might not play the greenhouse game. A cynical soul might form the opinion that that was why Alcoa pushed the WA government into its M. Mouse “gas security” policy, to ensure the availability of cheap gas and therefore cheap electricity.

What you can watch for now is high-speed lobbying by the big power consumers for “special circumstances” handouts from vulnerable state governments. NSW, for example, can’t afford to lose jobs and thus could be successfully blackmailed by, say, an aluminium smelter into cutting a nice security of electricity deal in the near future to protect it a little further out.

Such deals are far from new – check the price of electricity Victorians have been charging for aluminium smelting – but the pace will pick up.

A carbon tax could do more than carbon credits to reduce the inevitable horse-trading with weak state governments (and aren’t they all), but there are many more vested interests pushing the credits story. They’re much easier to rort, for a start.

Peter Fray

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