What about the economics of Rudd and Wong's ETS?

Comments on Glenn Milne “Wong's ETS unites foes on Left, Right”, 19/10/2009, http://www.theaustralian.news.com.au/story/0,25197,26226982-33435,00.html

Milne’s article quotes the executive director Richard Denniss of the Australian Institute saying that Treasury modelling buttressing the CPRS shows it will in fact have little or no impact on one of the key offenders -- the coal-fired electricity generation industry -- in our lifetime.

More specifically, Denniss states: "What she (Wong) doesn't tell us is that her CPRS, complex and impenetrable as it is, does not actually result in the reduction of greenhouse gas emissions from our coal-fired power stations."

While I am not questioning Denniss' findings from Treasury modelling, I am curious to know where the reduction in emissions will come from, say 5-25% by 2020?

If the total emissions are to be reduced and the coal power stations will contribute to the reduction, then a big reduction must come from somewhere else.

Why will that be cheaper to reduce emissions from other areas than the coal fired power stations?

Or is the whole ETS design very bad in economic terms, because it avoids to reduce emissions in areas where the costs of doing so are low?