Slasher,
I have seen nothing that indicates that the government wants
to encourage coal to oil processes, indeed the reverse seems likely.
Without very large storage solar power will not be effective for
charging electric cars. Many will be used for commuting so they will
arrive home late afternoon.

The size of the solar bank to charge an electric car would be very large
indeed. The CO2 saved by an electric car is worthwhile simply because
of the efficiency of large coal fired power stations.

Wind farms of course can work all night, but as we all know generally
the wind dies down considerably at night.

Anyway to get back to the thread, I think a simple tax is the way to
go. It can easily be adjusted in the light of changing circumstances.
That is the problem with any trading scheme, people will have funds
tied up in the system and if the government wants to make a significant
change there will be great resistance to change.

However sooner or later the government will be forced to make changes
to the ETS scheme to cope with oil and gas depletion.

bazz, you are correct there is no govt policy to encourage coal to diesel projects, a cap on thermal coal exports with a policy to encourage coal to diesel projects is needed, we need to stop coal being used for electricity generation not only in Australia but worldwide. this is to reduce greenhouse emmissions but secondly we need to recognise that as oil is depleted we need to use coal for transport fuel (diesel) not for creating steam to generate electricity.

Slasher,
Not being an expert in power generation or coal to oil
processes, I suspect that the power station is the most efficient way
to produce energy. By electrifying the railways and forcing freight
off the roads much less coal to diesel will be required.

If an efficient electrical storage system could be built then virtually
all our worries would be over. Sure there are systems available now
but it is the scale of storage that is problem.
Ultra capacitors perhaps ?
The only real hope I see is geothermal. If they can ramp that up we
will be saved as they say.

bazz, the problem with geothermal is transmission. whilst we use copper wires with ac current we will have significant transmission lost, geothermal sources are away from our population centres. unless we reform our infrastructure we lock out these energy resources