Clegg has already broken his promise on nuclear subsidies

Joss Garman reports on the politics behind the future of nuclear subsidies.

Nuclear power plant

The front pages of The Daily Telegraph and The Guardian today report comments from deputy prime minister Nick Clegg that new nuclear power stations may no longer be built in the UK.

Clegg reportedly said:

“We have always said there are two conditions for the next generation of nuclear power stations. Firstly, they must be safe and, secondly, we cannot let the taxpayer be ripped off, which is what has always happened in the past.

“There will be no rowing back from the coalition agreement on this, which means there will be no public subsidy. The coalition agreement was very clear.”

As I’ve previously detailed for Left Foot Forward, there are already a planned series of hidden public subsidies designed to make new nuclear plants in Britain possible so ministers including Clegg are already breaking this promise.

One of these hidden subsidies was announced in last week’s budget, and will see billions in taxpayer cash handed to the nuclear industry, including for their existing nuclear stations. As Channel 4’s Krishnan Guru Murphy put it on his blog:

“Your energy bills are going to rise to pay the French.”

Because one of the main beneficiaries is likely to be the French state-backed utility, EDF. On budget day The Times also reported (£) that the introduction of the new floor price for carbon would lead to “invisible subsidies for offshore wind and nuclear power”.

It has been convenient for all three main parties to operate a cross-party consensus on subsidies for nuclear power – that is, to provide them to the industry on the quiet, whilst opposing them in public. This way, the leadership of each party hasn’t really needed to defend itself against accusations they were giving hand outs, but at the same time, they could be reasonably confident new plants would be built.

However, Clegg’s comments yesterday suggest that all this may be about to change. He appears to be drawing a line in the sand, indicating that no more hand-outs will be allowed, even if these are considered necessary by the pro-nuclear lobby, to offset increases in costs arising from the Japanese disaster.

The Daily Mail quotes a Lib Dem source saying that after the recent accident:

“We could be in a situation now where the potential costs and liabilities are higher – that makes it much harder to get private investment.”

This is simply a statement of the obvious. Costs are undoubtedly going to rise for new nuclear following the accident at Fukushima, and it was already the case that no nuclear station has ever been built anywhere in the world without public subsidy. Even for nuclear supporters, the economics of nuclear following events in Japan look more problematic than ever. As the energy secretary Chris Huhne has said, events at Fukushima have:

“undoubtedly cast a shadow over the renaissance of the nuclear industry.”

Clegg may have calculated that with this in mind, the cross party consensus of denying public subsidies would start to become an untenable line. Either his party would need to accept more nuclear subsidies, or it would need to accept the coalition’s nuclear plans would be scaled back or even stopped altogether. His comments indicate that he would prefer to take a punt on the latter, and not the former – perhaps not sure how his party would accept another broken promise just now.  The real question though, is where does this leave Chris Huhne – who has been able to secure Tory support for his low-carbon transition plans, at least in part because of the security they provided to the allies of the nuclear industry.

The Lib Dems have historically had a strong anti-nuclear position. Before the election they claimed to be committed to opposing a new generation of nuclear plants in the UK, saying they were committed to “100 per cent carbon-free, non-nuclear electricity by 2050”. Before the election Huhne himself called nuclear a “failed technology”.

Ironically since then, he has not only u-turned and allowed hidden nuclear subsidies to slip through – but at the same time, his party has lost a series of key battles for measures which could have secured investment in the viable alternatives to nuclear – energy efficiency, renewable energy, and CCS.  

Some might even argue that it’s a little late for Nick Clegg to remember his party’s principled position on nuclear power, when last week saw him cave in to demands from the treasury, to delay the introduction of borrowing powers for the Green Investment Bank. Delays on the GIB, assaults on the newly introduced feed-in tariff, and a general conviction that the coalition preferred nuclear power and gas to wind, solar and tidal power, has seen the a huge slump in investor confidence in renewables investment in the UK. Yesterday the BBC reported green investment in the UK has fallen by 70 per cent in the last twelve months.  

Clegg and Huhne will need to force a major re-think on green investment inside the government as a whole, and particularly inside HMT, if they want their promises on nuclear power and carbon targets to mean more than they have done on tuition fees.

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