Energy prices must rise if companies are to make the investments needed to cut carbon dioxide emissions, the head of Spanish power group Iberdrola told Britain’s Financial Times newspaper.

In an interview published today, the company chief executive Ignacio Galan said consumers should “pay more (but) consume less,” arguing energy bills were still a very small proportion of household costs.

Galan said the industry would have to make huge investments to deliver the changes wanted by politicians, including the development of low-carbon generation such as wind and nuclear power.

He also said invesetment would be needed into equipment to raise energy efficiency using “smart” grids and meters.

Galan said Iberdrola plans capital spending of about 4.5 to €5bn next year, in line with this year’s level but below last year’s €6.7bn.