Energy Companies Say Falling Carbon Prices Could Result in Bigger Energy Bills

It now appears that electricity bills could go up as a result of the weekend’s feeble agreement on climate change at Copenhagen. Energy suppliers warn that the price of carbon, paid by heavy polluters such as power plant operators, plummeted yesterday by almost 10 percent on Europe’s emissions trading market. This was all apparently in response to the European Union scrapping its planned commitment to cut emissions by 30 percent by 2020. The European Union says that they were cutting this plan because all countries failed to show similar ambitions.

E.ON and Centrica went on to warn that they would not invest the tens of billions of pounds to build the expensive new nuclear reactors and clean coal plants at the current carbon price, which was suppose to be used to penalize dirty coal and gas plants. Spot prices are now around €12 a tonne, close to a six month low. Experts say that, to support building a new nuclear reactor, or in other words to make it financially viable, prices would have to be closer to €40 a ton.

An E.ON spokeswoman went on to say that without the government’s action to tighten carbon markets, companies would wait until aging reactor and coal plants die over the next decade before they make their investment. He went on to say that it’s taking a lot of risk of the lights going out. Power prices would go through the roof, and they would have to get at a level where they think there’s money to be made.

Other companies, including Centrica, have asked the UK government to intervene and put a floor on the higher minimum prices on carbon to guarantee them a profit on building the expensive low carbon power plants. Centraica also pointed out that the failure by the European Union to increase its commitment from a 20 percent reduction in carbon emission to a 30 percent cut by 2020 left the UK at a distinct disadvantage.