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Climate Deal to Increase Domestic Energy Prices?

By David Holmes on December 22, 2009

Cop 15As the finer points of the Copenhagen climate talks are analysed in detail, it has become clear that at least two of the decisions made at the summit are unlikely to benefit either the planet or its peoples. Unfortunately, the EU’s green political posturing of late has amounted to very little in the way of definitive action.

In particular, the EU has decided to scrap its plans to cut carbon emissions across its member states by 30% by 2020. Disappointingly, the EU chose not to pursue a 30% reduction in carbon emissions over the next ten years because other countries failed to follow suit.

Amid various political debates, economic deals, side interests, subplots and counter strategies, it would appear that the main point of the Copenhagen talks took a back seat to less relevant issues. Although the main details of the summit are still being picked apart, it would appear that the Copenhagen talks ended in abject failure in terms of countries uniting with the aim of reversing climate change – a result that may have sealed the fate of future generations.

More relevant to domestic energy consumers of this day and age, the talks have also led to the possibility, if not probability, that energy prices will soar even higher than previously predicted.

Two major energy suppliers in the UK, E.ON and Centrica, have warned that the fallout from the EU’s decision to scrap its ambitious carbon emission targets will likely result in higher domestic energy bills. Following the EU’s limp response to the narrow-minded and short-sighted policies of other countries, the cost of carbon, which is paid by heavy polluters, was cut by almost 10% on Sunday on Europe’s emissions trading market. The current carbon price of €12 per tonne of carbon is far from the €40 per tonne required to make building new nuclear reactors financially viable. As stressed by E.ON and Centrica, unless action is taken to raise carbon prices, the cost of going green will be pushed even further onto consumers.