Other changes may need higher carbon prices, for example some 40 to 50 euros to drive a switch from coal to gas, according to utilities analysts. Carbon capture and storage (CCS) is seen having huge potential to combat climate change by burying heat-trapping carbon dioxide (CO2) underground, and could become economic at a carbon price of US$25-30, says Bert Metz, co-chair of a 2005 UN CCS report.
But one senior oil executive saw a bigger incentive needed. "US$30-50 is the level at which you can see carbon sequestration (storage) going along fairly rapidly," he said.
But carbon prices become ever less sure into the future -- a surplus of emissions permits in 2005 drove carbon prices down, and the European executive wants states to propose tighter permit quotas from 2008-12, the market's second phase. Britain has proposed a cut in its quota, but many other countries have tabled increases.
European carbon prices in phase two could vary anywhere between 10 and 50 euros, depending on gas prices, Ecofin analyst Chris Rowland told the Brussels conference. And an even bigger issue for investors, eyeing energy infrastructure with a lifespan of decades, is the guaranteee carbon prices will still be around after 2012, when legally-binding emissions limits under the international Kyoto Protocol expire.
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http://www.planetark.org/dailynewsstory.cfm/newsid/37199/story.htm