The Australia Institute report argues the scheme will significantly reduce the value of coal-fired power stations and new owners would demand indemnities against any future carbon liabilities.

Its author, Dr Clive Hamilton, says those could amount to up to $15 billion - the same amount the Government expects to make from the privatisation.

"I've taken a conservative set of assumptions, assuming that the cost of a permit starts at about $15 a tonne of carbon dioxide," he said. "It's likely to be higher than that.

"On that basis, you can estimate the net present value of the expected costs of those emissions permits over the next 20 years."

But a spokesman for NSW Premier Morris Iemma says no indemnity will be offered to companies buying publicly-owned electricity assets, and there will therefore be no cost to taxpayers.- Source: By Australian Broadcasting Corporation