Gasoline prices may rise by 12 cents and diesel by 14.5 cents with the implementation of the European Union's new emissions trading scheme, the head of Estonia's Oil Association said on Monday.
The member states reached provision agreements on the EU emissions trading system (ETS2) and the Social Climate Fund over the weekend. The ETS2 includes a new carbon quota trading system for motor fuels.
If the price of carbon rises above €45 per ton, additional units will be introduced to the market to mitigate rising prices.
Oil Association head Mart Raamat said every liter of gasoline used by a vehicle creates approximately 2.2 kilograms of CO2 emissions.
"If we take the maximum quota price of €45, this would increase the price of fuel by 12 cents including VAT. And a bit more for diesel because it is more energy intensive, the increase in the price per liter of diesel would be somewhere around 14.5 cents if the maximum quota price were applied," he said.
The exact details of the system are not yet known, but the association has concerns about additional excise duties introduced by the Estonian government.
"If we put these two things together, in five years' time diesel will be almost 30 cents more expensive, said Raamat.
"Considering that diesel fuel strongly affects inflation, because it is an input for absolutely every product and service consumed, today's high prices do not create a rosy view of the future," said Raamat.
The EU scheme will be introduced in 2027, but if energy prices are unusually high it can be postponed for a year.
Editor: Barbara Oja, Helen Wright