Left Foot Forward understands that via complicated, structural measures, the government is planning on green-lighting a multi-billion pound taxpayer giveaway to the nuclear industry.
“Liberal Democrats have long opposed any new nuclear construction. Conservatives, by contrast, are committed to allowing the replacement of existing nuclear power stations provided that they are subject to the normal planning process for major projects…
“And also provided that they receive no public subsidy.”
That’s the Coalition Agreement on nuclear power. It’s pretty clear – no taxpayers’ money for new nuclear power.
Energy secretary Chris Huhne – who in opposition called nuclear power a “failed technology” – elaborated on this shortly after taking the job, telling The Times (£):
“I have explained my position to the industry and said public subsidies include contingent liabilities.”
But Left Foot Forward understands that via complicated, structural measures, the government is planning on green-lighting a multi-billion pound taxpayer giveaway to the nuclear industry.
Here’s how:
Firstly, Chris Huhne has:
“…agreed to reduce the risk to industry of building nuclear plants by setting a fixed price for disposal of waste.”
This transfers the huge risks associated with nuclear power to taxpayers. As the Oxford Professor of Energy Policy, Dieter Helm, explained back in 2008:
“It’s a fixed-price contract for the government to take the waste. The government absorbs the final-end risk.”
Helm has said recently Mr Huhne’s pledge not to subsidise nuclear plants is “more rhetoric than substance”; he told (£) The Times:
“There has never been a nuclear programme which is entirely funded by the private sector.”
Secondly, as The Sunday Times explained (£) back in May:
“The government is planning to rig the carbon trading market in a move that will encourage the creation of nuclear power plants.”
Peter Atherton, head of European utilities at Citigroup, said:
“Putting a floor under the power price would effectively transfer risk from the nuclear developer to the electricity consumer.”
That sounds a lot like a subsidy. Today the Financial Times published new findings showing the nuclear industry could receive a £3.43 billion windfall this way between 2013 and 2026 via a plan outlined in Mr Huhne’s new energy market reform proposals.
There is nothing intrinsically wrong with introducing a floor price for carbon. It could even be a good idea – offering greater support for clean energy projects and improved energy efficiency. But it should not be used as a backdoor way of giving taxpayer support to a nuclear industry that has already benefited from more than £10 billion in public support in the last decade and that has proven that it can’t stand on its own two feet.
For example, in 1995 the Sizewell B nuclear power plant was completed at a cost to electricity consumers of more than £3bn, yet a year later when the newer nuclear plants were privatised as British Energy, it and seven other nuclear power plants of about the same size were sold for only about half this cost.
In 2002, despite acquiring eight nuclear plants for a fraction of their construction cost, British Energy went bankrupt and was saved only by the government committing £10bn of taxpayers’ money.
The government should find ways to avoid channelling our money into the black hole that is the failing nuclear industry, especially at a time when Ministers say there is such need for cut backs. Green campaigners including WWF point out windfalls for nuclear utilities could be avoided via a windfall tax on those companies to claw back these revenues.
30 Responses to “Ministers are breaking their promise on subsidies for nuclear power”
Pete Rowberry
Nuclear power has never been cheap (is spite of claims that it would prodcue power too cheap to meter) it has never been safe (studies clearly show that living near a nuclear power station can damage your health) and produces a waste stream which needs to be managed for ten thousand years. It is not even necessary as studies have shown that realistic energy conservation measures and renewable sources could meet all of our energy needs.
If Minsiters wish to “come clean” and stop supporting out of date polluting technologies, then coal and oil are not the only targets. Nuclear must also go.
Mr. Sensible
Joss, I think nuclear can play its role in working towards a more sustainable economy, but this looks like another broken promice by the Lib Dems.
ynniadnewydd
RT @leftfootfwd: Ministers are breaking their promise on subsidies for nuclear power http://bit.ly/dWnw82
Peter Wood
A carbon price floor is a highly cost-effective to reduce the UK’s greenhouse gas emissions. As well as increasing the carbon price (and therefore driving down emissions), in will increase certainty about the level of the carbon price, which will drive investment in low-emissions technology – such as renewable energy.
Generators of low- or zero-emissions electricity will profit from a price floor – just like they will from any carbon price. But this includes renewables just as much as nuclear power. For environmental groups to oppose climate policy because it might affect the profits of nuclear generators is ridiculous. If there are safety or proliferation concerns with nuclear power, then by all means apply scrutiny there – but don’t oppose good climate policy because it rewards them for generating low-emission electricity. I am very disappointed by the stance taken by WWF and Greenpeace.
John Busby
An explanation as to how a carbon “floor” will work is overdue. Is this how it works?
Emitters of carbon dioxide are given a progressively reducing package of allowances, so that to continue without modification of their plant they have to buy progressively more allowances from carbon exchanges set up in Europe. The lower emitters of carbon dioxide have spare allowances which they can sell. These are then traded in the exchanges.
The price is currently viewed as being too low, especially to give a comparative advantage to nuclear power, which otherwise can’t compete with its fossil fuel competitors, hence the idea of an auction “floor” price. If the “floor” or “reserve” price is not reached in a UK auction, then there is “no sale”.
Do the emitters then go to another European exchange where they can purchse their allowances at a lower price? A “floor” price can only work if it is universally set in the European ETS or if the trading is exclusively worked in the UK. Presumably it would then be possible to top up the sale price with a government levy so that the penalties for the emitters would be enhanced. This would have the effect of raising the price of the emitters production – in the case of electricity the tariffs would rise – or putting them out of business. Would the “floor” price would be set to raise the price of the tariffs to a level able to make unconomic nuclear economic?
The effect on all this in the ten years while nuclear plants are undergoing their construction, would reduce demand because of rising prices, compounded by rising fuel costs, so that the market for new nuclear when it is available would be down.
Can the advocates of a carbon “floor” price explain how it would work? It seems an unlikely pursuit, just to make nuclear appear to be viable, when everyone knows it isn’t, especially as in the leading nuclear country, France, the sector is in financial disorder.