"Our projections suggest electricity prices will double by 2010 unless action is taken," de Thibault said.

"At present conditions up to half of the EU's primary aluminium capacity is in danger of closure in the next few years. This will inevitably have a serious effect on downstream industry, where the greatest added value is," he added.

Last week the United Nations Kyoto Protocol on curbing emissions of heat-trapping gases blamed for disrupting the climate took effect. Under Kyoto, developed nations will have to cut emissions of greenhouse gases by 5.2 percent below 1990 levels by 2008-12. Those exceeding the 2012 goals will be penalized with bigger cuts than the average targets from 2012.

HIGH ENERGY PRICES

"The high price of energy is not justified by Kyoto alone," de Thibault said.

"There is a lack of cross-network infrastructure. There are five separate markets in Europe which do not compete with each other," he said.

Thomas Knutzen, information manager at Hydro Aluminium, part of Norwegian energy and metals group, Norsk Hydro, said EU regulations to reach Kyoto targets were a significant cost.

"The impact remains to be seen, but for the EU aluminium industry there are estimates that it will cost 500 million euro ($653.1 million). That is not far from our wage costs," he said.

Aluminium smelting, which produces carbon dioxide, does not fall under Kyoto, however the energy required to reduce alumina, or aluminium oxide into metal, does.

"Europe is already importing more than half its primary aluminium needs. There will be no new capacity and some existing capacity will disappear and all (additional) future needs will have to be covered by imports," Knutzen said. "There will be relocation of primary aluminium. How much and how fast are the big questions."

Supporters of the 141-nation climate pact, which does not include the United States, or developing economies such as China and India, say it is a tiny first step to slow global warming by imposing legally binding caps on greenhouse-gas emissions -- mainly from burning fossil fuels in power plants, factories and cars -- in 35 developed nations.