Joss Garman reports on the politics behind the future of nuclear subsidies.
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.
42 Responses to “Clegg has already broken his promise on nuclear subsidies”
Chris Jenkinson
Joss, I am sorry to have to disagree with you once again because I think we are generally on the same side in the fight against climate change. However we can only win if we are intellectually honest.
A carbon floor price gives a financial penalty (hopefully a significant one) to carbon-intensive forms of energy. It does not give a financial benefit to the nuclear industry or particularly to renewables, as Rich points out, as they would remain as costly as they are at the moment. I’m failing to see how nuclear benefits from this any more than renewables.
Please stop using words and phrases like subsidy to describe financial penalties. It’s inaccurate.
Joss Garman
Well Chris, we may have to agree to disagree on the word ‘subsidy.’
But I’m not the only one who considers this floor price a subsidy for nuclear. Here are a few others.
Professor Tom Burke CBE – an adviser to Rio Tinto and Professor of energy at Imperial who refers to the carbon floor price as one of the subsidies for nuclear in a speech here: http://www.nomoney4nuclear.org.uk/Remarks%20by%20Tom%20Burke.pdf
Peter Atherton too, head of European utilities at Citigroup, told the Sunday Times here: http://www.thesundaytimes.co.uk/sto/business/energy_and_environment/article290274.ece
“Putting a floor under the power price would effectively transfer risk from the nuclear developer to the electricity consumer.”
Here’s the energy spokesman for the SNP, Mike Weir, quoting figures from Redpoint energy consultancy and also referring to the measure as a subsidy for nuclear: http://www.angussnp.org/24_03_11.htm
Anon E Mouse
EyeSeeSound – Actually I’m being generous. To date Mr Garman hasn’t provided any solution to any problem he has illustrated (besides agreeing with advice to starve people in Africa rather than give them perfectly safe GM food under the lie that it was some American conspiracy against them) and all he does is spend his days on his self promotion.
Mentioning one hospital and a windmill was to make my point clear that renewable energy is simply not sufficient enough to power a modern Western democracy and that the pathetic rantings of a posh boy eco toff, like himself, are fine if you can afford this nonsense. The majority of people in this country cannot.
For the rest of us in the real world we simply do not have the luxury of living out of our parents pockets and people struggle to fill a car with petrol to get to work. We do not have the time to swan around lecturing to others about how to live their lives.
And the truth is not “slagging” someone off as you put it. It’s just the truth….
simon clydesdale
RT @wdjstraw: Brilliant blog by @JossGarman on Clegg's broken promise on nuclear and the Coalition politics of energy: http://bit.ly/gU1esm
Joss Garman
@ Jamie Reed MP: The debate over nuclear vs. renewables is not “over” though given you worked in PR for the nuclear industry for a number of years, and given the nuclear industry is one of the biggest employers in your constituency, perhaps ‘you would say that wouldn’t you.’
That aside though, surely even you would have to concede that when those brave engineers are battling to prevent meltdown at Fukushima, and when the UK’s Energy Secretary admits there is a “shadow” hanging over the nuclear renaissance, and as Germany and China suspend their nuclear programs, the debate is very much alive is it not?
Nuclear technology is a mature technology, and subsidies exist for renewables because they’re not mature technologies. That is a major difference. The nuclear industry has proven it cannot stand on it’s own two feet. Renewables in the UK haven’t had the opportunity to prove anything one way or the other. However, where renewables have been rolled out at scale – with state support – they have proven to be a major success. For example, in Spain where wind power has produced more than 50% of the country’s electricity.