I reckon it's this: A promise of special direct assistance to existing coal-fired power stations on the grounds that it will encourage companies to invest in Australia.
The existing generators have already invested. And quite a long time ago. Anyone who built a coal-fired power station recently would have known what was coming.
(In any event, the emissions trading scheme will hardly hurt the existing coal-fired generators. They are encouraged to pass on their higher costs. When they can't, it will be because competitors such as wind-power are taking their market, which is some time off, but what we want.)
Wong's paper justifies the handout this way:
"If the change in regulatory arrangements was unanticipated and implemented without compensation, and investors viewed this as evidence that the Government was likely to change the regulatory regime in future in an unpredictable way, then investors might regard Australia's electricity market as a riskier investment proposition.
An increased perception of risk would increase the expected returns required by investors before they would invest, potentially delaying new investments in the generation sector.
The extent of this risk is unquantifiable as it is based on the subjective views that investors may have held in the past and the view that they may take of the stability of the new investment environment in electricity."
Pardon me while I laugh.
Come to think of it, it these sentences fail to pass Professor Garnaut's "laugh test". Can you read them out loud without laughing?
As Garnaut has reminded us, when tariffs were cut Australia didn't compensate existing manufacturers, because it wouldn't cop crappy arguments like this one.
This is a handout resulting from lobbying. Nothing more.
Much of it will go to the beleaguered NSW government which owns coal-fired generators.