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With the introduction of an emissions trading scheme, gas and electricity prices will rise, says an Ernst & Young survey of electricity generators.

The European Emissions Trading scheme is due to start next year and is seen as a vital step if Europe is to reach Kyoto targets of cutting carbon emissions by 8%.

A survey of 200 generating companies suggested that gas prices could rise by 20% over the next two years and wholesale electricity prices are expected to rise by 15%.

Michael Cupit, director of emissions at Ernst & Young, said: “Large energy users such as steel mills and paper mills will feel the brunt of these, though consumers may be protected if the worst of the price rises are absorbed by the generators.”

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