I agree that fuel must be included in the ETS. Otherwise we could have perverse anomalies like liquid fuel from coal displacing oil based fuel despite double the well-to-wheel emissions. Under a comprehensive carbon cap a litre of coal based fuel would tend to lock out two litres of petro fuel. I presume biofuels that were near sustainable would escape most of the carbon cap. However increasing carbon charges on natural gas derived fertiliser and tractor diesel should force even these fossil inputs to shrink to a minimum. Carbon charges on fuel could improve the economics of buses and trucks (perhaps some private cars)switching to compressed natural gas which should be available a lot longer than oil.

Because different forms of fossil carbon are to some extent exchangeable I wonder if compensation need not be directed only to transport. If the CO2 permits are auctioned off as Garnaut recommends that should raise billions in revenue. A lot of that should go on bus services to commuters in outer suburbs but there could also be help for home insulation, smart meters and removing the means test on solar hot water rebates. If carbon charges work out at say 5-10c a litre on petrol and you don't have the option of public transport you could get some of that money back on electricity savings.

I agree, if we have to have a carbon tax it must be on everything.
However it does not really matter as the purpose of the tax is to
reduce consumption and that will be done as soon as the government has to
introduce petrol and diesel rationing in the longer term, say 3 to 8 years.

With Australian oil production falling at something like 4% a year or
possibly greater, and the price of the imported oil to make up the
difference rising so quickly it will overwhelm the foreign exchange
trade balance. That alone will force the government to look seriously
at rationing.

What this means is that the excise tax should not be reduced in step
with the carbon tax but be used to enforce demand destruction.

Shocked at the very thought of rationing ?
Well start getting used to the unthinkable !

For people who believe that reducing carbon emissions is going to make much difference to the natural phenomena of climate change, then transport (fuel) has to be taxed and motorists have to pay more. If not, the CO2 hysterics are going to start looking sillier now; not just when their ratty carbon trading schemes are proven to make no difference to climate change.

An industry cannot reduce its emissions. It pays up to the government, adds the cost to its product and goes on emitting.

How stupid.

The reality is that unless we find another source of power to substitute known tested ones, we are stuck to coal or whatever power sources are providing us with energy.Green power is good, but not strong enough to power an economy, but its good for household use, like solar panels to generate electricity for homes.The problem is that green power is expensive for normal people, as installing one of these solar power kits at home is expensive.

Climate change is also exerting pressure on coal power, and the carbon trading scheme suggested by professor garnaut will make electricity costs go higher even if its not the fault of normal ordinary people.The problem is that we need to find another power source, strong enough yet not expensive.We need to spend more money on research to develop new technologies in the energy sector which would solve the 'climate' change problems we are facing instead of taxing petrol and coal powered stations and unnecessarily burdening costs of ordinary people already suffering from high prices on all fronts.

See below for an interesting read on an alternative view of garnaut's climate change report and make up your own mind.

http://209.85.175.104/search?q=cache:PT5Ne23HQrgJ:www.lavoisier.com.au/papers/articles/EvansQuadrantMarch2008.pdf+fraud+Garnaut&hl=en&ct=clnk&cd=21&gl=au

What worries me about Prof Garnaut is that he seems to have prepared
his report with a business as usual environment in mind.
You have probably heard him say that if we do not control carbon we
will lose such assets as the barrier reef and Kakadu.
This would he says decimate the tourist industry.

This means he considers that there will still be a tourist industry.
There won't, by that time the airlines will no longer be carrying
tourists anywhere. We have seen the escalation of airline fuel levies
and this is only the early effects of peak oil.
Airlines next year, world wide will start going broke faster than they
did this year. This year so far 24 significant IARTA airlines have
gone down the gurgler.

Therefore he does not understand the conditions under which his
recommendations would be implemented.
For someone in his position to not understand the supply vs demand
position of oil is disastrous.
This is a significant worry, surely the level of energy available
should have been one of his major inputs, especially considering the
costs that his proposals will cost us all.