Abbott's plans don't stack up as power prices set to rise  

The SMH has a look at the Federal opposition's bizarre subsidy based approach to (slightly) reducing carbon emissions - so much for the party of the free market ("no carbon price") - Abbott's plans don't stack up as prices set to rise .

A Coalition government could spend about $300 million a year for the next decade subsidising the overhaul of a single electricity generator in a bid to reduce greenhouse emissions without raising power prices.

But the electricity industry says prices could still rise because the plan offers no investment signal to any other power generators.

The Coalition's climate spokesman, Greg Hunt, told the Herald he expected big-emitting brown coal-fired power stations such as Hazelwood or Yallourn, both in Victoria, to lodge competing tenders for the Coalition's $3.2 billion emissions reduction fund, which was likely to pay for the gradual replacement of one of the generators with cleaner gas.

The chief executive of the Energy Supply Association, Brad Page, said the Coalition plan could start to get rid of the highest-emitting of Australia's 33 coal-fired power plants - but it had to be followed by a carbon price to prevent investments in inefficient and more expensive stop-gap technologies.

''Without a long-term carbon price the problem of inefficient investment has still not been addressed and electricity prices will still go up,'' Mr Page said.

The Opposition Leader, Tony Abbott, has vowed there would be no carbon price for a long time under his government, if ever, and the Liberals are running advertisements warning of drastic price rises under Labor's emissions trading scheme. Mr Hunt said a Coalition government was prepared to pay about $25 for every tonne of carbon dioxide taken out of the atmosphere under the scheme, which would be legislated early next year.

About half the amount would be paid to the operator of the new gas-fired station for ''at least a decade'' so the more expensive power could be sold into the market for the same price as power generated by black coal. This would make good Mr Abbott's pledge that his climate policy would directly result in ''no loss of jobs, no increased price to consumers''.

''You would agree with the operator they would sell the [gas-fired] power at the black coal dispatch price so there would be no impact on the overall electricity pricing … we would only be paying for one station but if we didn't do that, it would affect the overall price,'' Mr Hunt said.

Labor continues to support an emissions trading scheme in theory, but has been widely attacked for delaying its introduction until a ''citizens' assembly'' gauges public sentiment.

The chief executive of The Climate Institute, John Connor, said the Coalition policy to subsidise one or two power stations was ''just another type of carbon tax''.

''It is still taxpayers' money buying emission reductions. It's just instead of businesses taking responsibility for their own pollution, the taxpayer takes responsibility for it directly,'' he said. ''Without a price on carbon, it won't do anything to shift the rest of the economy.''

Australia's highest-emitting station, Hazelwood, run by International Power, puts out about 16 million tonnes of CO2 annually, at least 12 million tonnes more than a gas-fired replacement. At $25 a tonne, that abatement could cost about $300 million a year.

The emissions reduction fund - designed to buy emission reductions from farmers, forestry and buildings as well as power stations - has $3.2 billion to spend by 2014-15. More than 60 per cent of the abatement it will buy is supposed to come from soil carbon.