The energy industry has warned that an effective emissions trading scheme could drive up the price of energy by almost a quarter in inflation-adjusted dollars by 2020. Higher retail prices would be driven by changes to the energy sector. Cutting carbon emissions 10% by 2020 would push up the cost of emissions permits to $45 per tonne of carbon dioxide, adjusted for inflation, according to a report commissioned by the Energy Supply Association of Australia. Cutting emissions by 20% could drive up the cost of carbon dioxide emissions to $55 per tonne over the same period. New investments in green power would add another 5% to retail energy prices the report said. "Implementing an effective national ETS will be a major economic adjustment for the Australian economy, and in particular for the energy supply industry," according to the report, which estimates investments in energy generation would need to triple to achieve the government stated goal of 20% renewable energy by 2020. The report also endorses the Government's emissions trading scheme as "achievable". "However, these changes come at a real cost and present both challenges and opportunities for the industry and community on a number of fronts," ESAA chief executive Brad Page said in a statement. For the plan to work, higher electricity prices would slow demand by 30,000 gigawatt hours, slowing demand increases to rates 12%-14% lower than if no trading scheme was enacted, according to the report, prepared by economic forecasting group ACIL Tasman. Several large coal-fired power stations would have to be closed, with others remaining open by reducing their output.