And the energy subsidies go NUCLEAR

Whenever there is a debate about energy someone usually pipes up with a comment about how important it is to have a spread of energy sources. That’s the tell. They don’t mean spread. They mean nuclear. The next statement is how renewables are simply uneconomic; they depend on huge government subsidies and so have an unfair advantage over other forms of energy such as nuclear which has to stand on its own. As if nuclear power isn’t subsidised. In fact is so subsidised even the government is embarrassed to reveal the extent of its support for this controversial industry. The UK government plans to build 8 new reactors over the next 10 years to help meet its climate change and energy security goals and is turning to nuclear to achieve these targets. Just how far is it prepared to go to ensure it can get new nuclear plants onboard? Are there differences between what the government says publicly about new nuclear and what is being written into contracts between the two? What do people mean when they report that the nuclear industry is being subsidised by taxpayers? Last year the UK government was telling us that nuclear power was and will continue to be the cheapest means of producing low-carbon energy for at least a decade. At the same time the Energy and Climate Change Select Committee (DECC) was producing a report urging government ministers to admit the extent of subsidies going towards nuclear energy producers when the official line was that new nuclear power stations would receive no public subsidy. The nuclear industry wouldn’t play. It demanded inducements to build new plant and the government responded with offering a guaranteed price for nuclear power- a floor price with any shortfall being paid by public funds..The Carbon Floor price set to start in April 2013 is designed to ensure electricity producers will pay around £15.70/tonne CO2e in 2013 rising to £70/tonne CO2e by 2030. .According to Caroline Lucas of the Green Party this will result in ‘handouts of around £50m a year to existing nuclear generators’. The government aims to support nuclear as a low carbon source of energy and as the initial costs of nuclear power stations are huge, the nuclear industry wants to be certain of a rate of return. Caught in a bind over its promises not to subsidies nuclear, the government has tried to disguise its support under a cover-all system to low carbon energy producers. Placing a cap on the nuclear industry’s responsibilities in the event of an accident is important because should that occur the implications are huge – think of Fukushimo for a moment. How many billions have been spent post-Tsunami clean up? It is not a case of repairing and getting back into operation, the nuclear industry in Japan is struggling to get back to producing some energy with two of the 50 or so reactors being restarted in August 2012 despite immense opposition from the Japanese people. Understandably they are afraid of further devastating nuclear accidents and then there is the question of who is ultimately responsible for cleaning up following the unexpected. No industry could afford to take on the real costs they are so massive and therefore the burden falls on taxpayers. In the light of Japan, the UK and other governments have been pushed into taking on responsibility for underwriting the nuclear industry. The proposal is that nuclear operators will only pay the first £1billion of any accident – an amount well below the real cost of tackling a major disaster. In fact £1bn is even well below the cost of cleaning up one plant in Japan. Energy Fair is a campaign organisation which can throw light on the secretive relationship between government and the nuclear industry. It calls for a level playing field in the energy sector so that renewables are not left to struggle against the protected nuclear sector. Dr Dörte Fouquet is a senior partner of the law firm Becker Büttner Held (BBH) and a Director of the European renewable Energies Federation. Antony Froggatt is an energy policy consultant and senior research fellow at Chatham House. Dr David Lowry is a research policy consultant and specialist in nuclear issues. Pete Roche is an energy consultant and policy adviser to the Scottish Nuclear Free Local Authorities and the National Steering Committee of United Kingdom Nuclear Free Local Authorities. Professor Stephen Thomas is an energy policy researcher at University of Greenwich Business School. Dr Gerry Wolff is a co-ordinator with Desertec-UK and the Kyoto2 Support Group. Energy Fair has identified 7 main subsidies provided to the UK nuclear industry. ‘Limitations on liabilities: The operators of nuclear plants pay much less than the full cost of insuring against a Chernobyl-style accident or worse.  • Underwriting of commercial risks: The Government necessarily underwrites the commercial risks of nuclear power because, for political reasons, the operators of nuclear plants cannot be allowed to fail.  • Subsidies in protection against terrorist attacks: Because protection against terrorist attacks can only ever be partial, the Government and the public are exposed to risk and corresponding costs.  • Subsidies for the short-to-medium-term cost of disposing of nuclear waste: In UK government proposals, the Government is likely to bear much the risk of the risk of cost overruns in the disposal of nuclear waste.  • Subsidies in the long-term cost of disposing of nuclear waste: With categories of nuclear waste that will remain dangerous for thousands of years, there will be costs arising from the dangers of the waste and the need to manage it. These costs will be borne by future generations, but they will receive no compensating benefit.  • Underwriting the cost of decommissioning nuclear plants: In UK government proposals, the Government is likely to bear much the risk of cost overruns in decommissioning nuclear plants.  • Institutional support for nuclear power: the UK government is providing various forms of institutional support for the nuclear industry.’   ‘With regard to proposed new nuclear power stations in the UK, they may receive support via loan guarantees, tax breaks, or other financial instruments and there is concern that, directly or indirectly, such support may be provided for the building of nuclear power stations in the UK. Several of these subsidies are so large that withdrawal of just one of them would make nuclear power entirely uncompetitive. For example, full insurance against nuclear disasters would increase the price of nuclear electricity by a range of values—€ 0.14 per kWh up to € 2.36 per kWh—depending on assumptions made.’ it is now well established that nuclear power is one of the most expensive ways of generating electricity.2 Bearing in mind that there are now several reports showing how to decarbonise the world’s economies without nuclear power,3 that nuclear power is far from being zero carbon,4 that there are more than enough alternatives,5 and that those alternatives are quicker to build and have none of the headaches of nuclear power,6 there is absolutely no case for new nuclear power plants anywhere in the world. In terms of the fight against climate change, money spent on nuclear power is a mis-allocation of resources. The alternatives are quicker and cheaper. 2 Information on that point, with links to relevant sources, may be seen at 3 See Section 0 and 4 See 5 See Section 0 and 6 See The UK government plans to increase the cap on liabilities to $1.7billiion from the current £140million. Fukushima’s clean up could cost as much as $250billion.  BP set aside £41billion to cover claims from its Gulf of Mexico disaster. The nuclear industry is paying well below the true cost of insurance against nuclear disaster. If they were forced to pay the full costs they would simply not be viable. The nuclear industry depends on government support. Without this help it would be incapable of funding itself. However, profits remain private. And note there is nothing equivalent for renewables. “… a fully commercial price would make disposal far too expensive, killing the prospects of any new nuclear build programme in Britain …. The bottom line is that nuclear energy utilities probably need fixed waste disposal ‘prices’ for repository disposal capped somewhere in the range from £12,200 to £24,400/m3, but the NDA’s [Nuclear Decommissioning Authority’s] true marginal ‘cost’ is nearer to £67,000/m3, and the commercial ‘value’ of the repository asset could approach £201,000/m3 if operated as a fully private sector venture.”

Ian Jackson: Nuclear Engineering International April 2008

“The government must undercharge the industry for disposing of its waste in order that the industry can establish itself and it is the government which ‘absorbs the final-end risk.’

Dieter Helm, Professor of Energy Policy, New College, Oxford from Energy Fair Report 2012

As well as advantageous deals set up between government and the nuclear industry there is the grim reality that this industry is fraught with dangers: leaks of radioactive material; the ever-present fear of terrorist attacks; the inherent dangers when nuclear fuel and waste is being shipped overland in trains and on the seas. Nuclear power is not as economically efficient as its supporters would have us believe. Its dependency upon subsidies surprises us because we are forever being told that it is other forms of energy which are the recipients of public money. The truth is a little more complex. The dangers inherent in nuclear power are very different from other energy producers. The potential damage on the population, and not only in the immediate area of any nuclear station, are scary not only in terms of fatalities but health issues which can affect generations. For nuclear companies to take out adequate insurance cover to meet every eventuality would make the industry uneconomic. The cost of producing electricity in such circumstances would push up the price greatly to the consumer by at least 12 pence per kilowatt and possibly as much as 240pence. What this comes down to is we would be paying twice as much for nuclear energy if we paid its real cost. Currently we don’t because the nuclear industry is being shored up by the government. This is not what the Department of Energy and Climate Change (DECC)at Westminster tells us however. New nuclear operators will be required by law to put money aside from day one to pay for the eventual decommissioning costs and their full share of waste disposal. This is in line with the coalition commitment that new nuclear can proceed provided there is no specific subsidy


and also: We are confident that our proposals to reform the electricity market to incentivise all low carbon generation are entirely consistent with that policy of no subsidy The nuclear industry is paranoid. The French energy giant, EDF which produces much of its electricity through nuclear, was recently fined for spying on Greenpeace campaigners and two of those charged with spying – including hacking computers-  were jailed. EDF runs 8 nuclear stations in the UK and plans to build 4 more nuclear reactors here for the government. “Tom Burke, formerly head of Friends of the Earth UK and a visiting professor at Imperial and University Colleges in London, said the spying case showed EDF was desperate to negate criticism of nuclear power. “What this judgement reveals is that EDF, and the French government which owns it, are prepared to go to any lengths, including breaking the law, in order to defeat opposition to more nuclear power,” he told BBC News. “The whole future of the French plan to sell more nuclear power to the world depends on getting the British consumer to pay to build new nuclear reactors in Britain. “I would advise every critic of the French drive to expand nuclear power in Britain to be very vigilant in ensuring they are not themselves victims of EDF dirty tricks.” Greenpeace has said in the past that it suspected EDF of using “dirty tricks” against it in the UK as well as in France – a charge that the company has denied.”


There are echoes here of the sinking of the Greenpeace ship the Rainbow Warrior (formerly the Aberdeen vessel Sir William Hardy) in 1985 when the French government acted to prevent Greenpeace interfering with its nuclear testing in the Pacific. In France the two big electricity producers are mainly state owned. Nuclear fission accounts for around 80% of French electricity. Germany’s plan to have 35% of power produced by renewables by 2020 has its supporters among the French but there are inevitably others who believe that Germany will be forced to resort to nuclear at some point in the future- still pushing the myth that nuclear is the cheaper option. While the French meanwhile continue down the road of nuclear energy, Germany’s plan to phase it out has left some unhappy about French plants close to their borders. Commenting on the safety record of the nuclear industry in France, Axel Mayer, of the environmental group Bund in Freiburg, responds: “Fukushima also worked safely for 30 years but now, after Fukushima, we see things differently; and if we have an accident in Fessenheim, the radioactive water won’t go into the ocean, it’ll go into the Rhine, and then it’s not a problem of the area, it’s a problem of Europe.”


In the UK the government cannot imagine being able to keep the lights on in the future without nuclear. Craig Bennett, director of policy and campaigns with Friends of the Earth disagrees. But nuclear power can’t be part of the answer – our analysis shows it will divert vital money and effort away from developing renewable energy, and the jobs and industries it could bring to the UK. We’ve had 50 years of successive governments pandering to the nuclear lobby. If their promises of cheap, low-carbon energy were true, they would have been delivered by now. On decommissioning nuclear power stations, the Energy Act of 2008 insisted that the nuclear industry should provide for their own decommissioning but the timescales involved are vast – centuries. Realistically no industry can be committed to this timescale. The Government’s proposals for electricity market reform have effectively introduced new subsidies for nuclear power. Uranium will be exempt from new taxes on fuels used in the generation of electricity thereby creating a subsidy for nuclear power which, by the Government’s own admission, will result in windfall profits for the nuclear industry. Feed-in tariffs with contracts for difference are a direct subsidy for the nuclear industry. These subsidies for nuclear power are harmful in the fight against climate change by diverting resources away from alternatives that are cheaper, quicker to build, more effective in cutting emissions, and with none of the many problems with nuclear power. There are simpler and more effective ways of decarbonising the economy, ensuring the security of energy supplies, and holding costs down.

Energy Fair May 2012 The World Nuclear Industry Status Report Nuclear power in the United Kingdom Anti-nuclear movement in the United Kingdom Energy subsidies Nuclear or Not?

  1. ^ Energy Fair – Who we are, Energy Fair, accessed 2012-01-20
  2. ^ Legal bid to halt nuclear construction, Energy Fair, published 2011-11-07, accessed 2012-01-20
  3. ^ UK ‘subsidising nuclear power unlawfully’ BBC, published 2012-01-20, accessed 2012-01-20
  4. ^ “Complaint about nuclear subsidies may prevent new reactor builds”. Energy and Environmental Management. 24 January 2012.

The nuclear industry’s secret subsidies

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