A new business energy report suggests that the cost of electricity in the next few years will depend on a number of variables including the price of carbon.
The report, compiled by the International Energy Agency and the OECD Nuclear Energy Agency, revealed that the cost of carbon and price of raising financial capital will affect the competitiveness of generating technology.
According to the study, when financing costs are low, nuclear energy followed by coal with carbon capture are the most competitive solutions, while coal-fired generation is among the cheapest sources of electricity when costs are higher.
Nobuo Tanaka, executive director of the International Energy Action, said that in order to bolster competitiveness of low-carbon technologies such as nuclear and renewables, decisive government action is needed to lower costs.
He added that a significant CO2 price signal needs to be "internalised in power markets".
Chancellor Alistair Darling recently announced plans to incentivise cleaner cars in order to promote ultra low-carbon vehicles and reduce dependency on oil.
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