Treasury fail to stop rising energy bills as WWF and Greenpeace call for windfall tax on nuclear generators
Energy bills will rise because Government proposals will handover £3.43bn to nuclear generators for doing absolutely nothing different. The proposals to introduce a carbon floor price as part of the ongoing Electricity Market Reform (EMR) consultation could end up benefiting existing nuclear generators to the tune of £3.43bn between 2013 and 2026.
The windfall follows years of financial subsidies for nuclear energy (including a £10bn public bailout of British Energy in 2002) and makes a mockery of the Coalition government’s stated opposition to any form of public subsidy for nuclear.
WWF and Greenpeace are urging the government to introduce a windfall tax on existing nuclear generators alongside the carbon floor price mechanism, that would be used to support energy efficiency and emerging renewable technologies through the Green Investment Bank.
The carbon floor price will operate as a tax on power companies with coal and gas-fired plants. As coal and gas are the dominant forms of power generation in the UK, the carbon floor price will have the effect of increasing the wholesale electricity price as a consequence of increasing the costs incurred by coal and gas-fired power stations.
Because existing nuclear power stations do not burn fossil fuels, they will not have to account for the carbon floor tax but will benefit from increased electricity prices and therefore increased profits. WWF and Greenpeace have obtained the data on potential windfall profits from the modelling work used to underpin the Treasury's consultation on the carbon floor price.
A carbon floor price reaching £40t/CO2 in 2020 (one of 3 options put forward in the carbon price support consultation) could result in windfall profits of £3.43bn over the 2013-2026 period, and £3bn until 2022. This is based on the average number of hours that the UK’s existing nuclear power stations are expected to operate at for the remainder of their operational life.
WWF and Greenpeace are calling for a windfall tax to be introduced to claw back these additional revenues. They also are arguing for a significant proportion of the revenues to be used to help consumers reduce their overall energy consumption and R&D investment in emerging renewable technologies possibly by channelling these funds to properly capitalise the Green Investment Bank.
Commenting on the proposals, Nick Molho, Head of Energy Policy, WWF-UK, said:
“At a time of fiscal austerity and rising energy bills, it seems crazy to be introducing a policy that gives huge windfall profits to the existing nuclear generators - especially when this sector has been bailed out by the taxpayer on several occasions in the past. The Government should find ways to prevent these windfall profits, and use the revenue to help householders reduce their energy needs.”
Dr Douglas Parr, Chief Scientific Adviser and Policy Director, Greenpeace UK said:
“This is yet another taxpayer handout to a failing nuclear industry. The economics of nuclear power have never added up and it has been continually propped up with money from hard-working families.
“The continued kowtowing of the Government to the nuclear industry beggars belief. Government policy should be backing the building of globally competitive industries based on clean, cutting-edge forms of energy and green growth, not an outdated industry that has never been able to stand on its own two feet.”
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1. On nuclear, the Coalition Agreement states: “Lib Dems 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. We will implement a process allowing the Lib Dems to maintain their opposition to nuclear power while permitting the Government to bring forward the NPS etc.”
2. Nuclear: A history of financial subsidies: The latest potential windfalls for existing nuclear generators are a reminder of how dependent this industry has always been on subsidies paid for by UK tax payers and electricity consumers. Billions of pounds of taxpayers money has already gone into supporting nuclear power. The idea that nuclear is a cheap energy source is wholly inaccurate.
· 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 these eight 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 latest nuclear projects being built in Finland (currently 55% over budget and running 3 years late) and in France (€1bn over budget and running at least 2 years late) are the latest reminders that the costs of nuclear power stations remain extremely uncertain and very risky for consumers and tax payers.
3. The Offshore Valuation Report recently prepared by government and major energy companies showed that by using just 29% of the UK’s offshore resource, the offshore renewables industry could allow the UK to become a next exporter of electricity by 2050, creating 145,000 jobs and £62bn of annual revenues in the process for the UK economy. This does not take into account other jobs that could be created through export opportunities.
4. If everyone used natural resources and generated carbon emissions at the rate we do in the UK we would need three planets to support us. The way we live is leading to environmental threats such as climate change, species extinction, deforestation, water shortages and the collapse of fisheries. WWF’s One Planet Future Campaign is working to help people live a good quality of life within the earth’s capacity. For more information visit www.wwf.org.uk/oneplanet
For further information, please contact:
George Smeeton
Graham Thompson
