NEW CARBON emission limits coming into force within five years could add eight per cent onto the average household electricity bill in Portugal.
The increased cost of emissions licenses in Europe, agreed by the European Union, means that the cost to industry of producing and using cleaner carbon-based fuels more efficiently could also be passed on to manufacturing costs to the tune of at least three per cent.
However, countries like Portugal, which invest in renewable and sustainable energy sources, could find price hikes counterbalanced, bringing the overall electricity consumption figures down to around six per cent.
The stark warning that the days of cheap power could soon be numbered was made by consultants A.T. Kearney, who said that the Portuguese electrical generation sector would have to reduce its emissions by 21 per cent, at a cost of between 4.7 and 6.6 billion euros between 2013 and 2020.
The figures have been worked out on the principle that a tonne of carbon traded on the emissions market will be sold for 38 euros to the present 24 euros.
In other words, countries that fail to meet their carbon limit targets can, to avoid stiff fines, sell the right to pollute (licenses) to countries that fall well below their given targets for pollution.
For those industrial sectors within the European Commercial Emissions Licenses, the bill will be between 2.4 and 3.5 billion euros for the same period.
Licences
But Portugal may well have to pay up to three per cent more for products like cement, glass and fuel.
In total for all sectors, the EU’s Energy and Climate Package, approved in January by Brussels, could cost the country 10 billion euros.
From 2013 until 2020 the free distribution of emissions licences will be significantly reduced until they will be completely abolished by the end of that period for the vast majority of industrial sectors, except the electrical energy sector, which will retain the right to ‘pay to pollute’.
João Pena, Vice-President of A.T. Kearney (Portugal), says that there are lots of variables that could change these scenarios.
One of them concerns the 21 per cent emissions reduction target which has been agreed by the vast majority of Europe.
Another variable is the possibility that some sectors could be exempt from obeying this 21 per cent limit, a hypothesis that Europe will evaluate between now and 2010.
The object of such exemptions would be to protect more vulnerable industries from moving to countries where no carbon emissions are in force.
This would be counterproductive since Europe would escape pollution while other parts of the planet would be doubly polluted.
Finally, there are negotiations underway between World Trade Organisations on eventual restrictions on importing products from polluting industries in such countries where restrictions are not in force.
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