European consumers likely to suffer from pollution permits

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The price of pollution permits, which have faired badly for investors over the first half of this year, could be set to rebound - adding around ten per cent onto electricity costs for consumers across most of Europe - according to the latest reports.

Pollution permits give factories the right to produce pollutants from their operations. The price of the certificates is expected to rise by 20 per cent in the next 12 months, say analysts, as governments lower the number they give out.

Governments across the continent are trying to reduce emissions, and electricity prices will undoubtedly rise as a result. This is because the cost of producing clean energy is much higher than the cost of producing energy through carbon-emitting processes.

This means that consumers will be asked to foot the bill for cleaner energy.

Trading for 2008 permits ended last week at €22.78 per tonne - after reaching a high of €26 on May 30th. Analysts quoted by the Bloomberg news agency say that prices could reach €30 by May 2009.

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