UK government plans to sneak a new nuclear subsidy through the backdoor have been exposed in a report published today (16 May 2011) by the influential Energy and Climate Change Committee.

The Coalition Agreement pledged to allow new nuclear power stations to be built ‘provided that they receive no public subsidy’. But MPs believe that government proposals will effectively provide subsidies to nuclear generators through new long term contracts and a carbon price floor that would hand them windfall profits.

MPs on the Committee warn that the coalition is distorting its electricity market reforms in an effort to save political face over subsidies for nuclear power.

Beth Stratford, Energy and Finance Campaigner, Friends of the Earth Scotland, said:

“Today the coalition’s plans to sneak a new nuclear subsidy through the backdoor have been exposed once again.

“Restructuring the market to be hopelessly loaded in favour of nuclear will suck investment away from safer and more economic options. No wonder the government is reluctant to come clean about this thinly-veiled subsidy.

“Government proposals for Electricity Market Reform should focus on supporting new and emerging clean technologies and innovations in demand management, not propping up this expensive and dangerous industry, which has had five decades to stand on its own two feet.”

The report concludes that:

The wholesale market should be fundamentally reformed to break up the dominance of the Big Six energy companies, in order to allow new entrants to invest in the UK and improve the liquidity of the market.The long term contracts designed to encourage low carbon energy sources—known as Feed-in-Tariffs with Contracts for Difference—will work for nuclear, but different types of contract are needed for renewables and other clean technologies.It is too early for the Government to design a capacity mechanism given the rapid development of smart meters, interconnectors and storage systems that could remove the need for “peaking plant”.The Carbon Price Support is a necessary short term solution to weaknesses in the EU Emission Trading System, but will increase costs for consumers and could provide a windfall profits to existing nuclear generators.

Tim Yeo MP, Chair of the Energy and Climate Change Committee, said as the report was launched:

“Ministers believe that new nuclear could play a key role in keep the lights on and meeting our climate change targets—but they don’t want to own up to supporting it. This is understandable given the promise they made not to subsidise nuclear, but it would be deeply irresponsible to skew the whole process of electricity market reform simply to save face. The Government must go back to the drawing board and come up with a more straightforward and coherent set of plans to reform the electricity market.”

ENDS

For media enquiries and an embargoed copy of the report, please contact:

Per Fischer, Press Office, Friends of the Earth Scotland
t: 0131 243 2719

Notes to Editors

Friends of the Earth Scotland is

Scotland’s leading environmental campaigning organisationAn independent Scottish charity with a network of thousands of supporters and active local groups across ScotlandPart of the largest grassroots environmental network in the world, uniting over 2 million supporters, 77 national member groups, and some 5,000 local activist groups – covering every continent. www.foe-scotland.org.uk