The UK spring budget announced investment of £20bn spread over the next two decades in carbon capture and support for nuclear, with a commitment to ‘spades in the ground on these projects from next year’ as energy security secretary, Grant Shapps, put it. He added ‘already a global leader in offshore wind power, we now want to do the same for the UK’s nuclear and carbon capture industries, which in turn will help cut the wholesale electricity prices to among the lowest in Europe.’
The plan is seen as part of the government’s wider strategy to address high energy costs in the future. And also as part of its Net Zero policy. Trade group Energy UK said: ‘High energy bills in the UK have been driven by international gas prices, so boosting our own sources of clean generation is a must to shield us from future price shocks’. But it’s hard to see how investing in CCS will help- that is fossil based. And, like nuclear, it's expensive. Energy UK does say that the new government programme will also support ‘the substantial rollout of cheap renewables needed to bring down bills in the long-term.’ Though it said that, short term, ‘the introduction of the Electricity Generator Levy (EGL) has added uncertainty to future investment in low carbon infrastructure. Unless the government takes urgent action, the UK risks losing its position as an attractive place to invest on the global market & is facing a potential £62 bn shortfall over the next decade.’
There was very little to comfort them on that in the Budget Red Book, even in the ‘Green Industries’ section (p.64-65). That focussed on CCS/CCUS and nuclear, with SMRs an initial target for the new Great British Nuclear programme, and nuclear ‘to be included in the green taxonomy, subject to consultation, encouraging private investment’. No mention of the negative impact of the windfall tax (EGL) on renewables. Indeed there is no direct mention of renewables anywhere in the text, and no mention of energy saving, apart from indirectly via 2 year extension of the Climate Change Agreement scheme.
Unsurprisingly, although the extension of the energy bill support scheme was generally welcomed, there were some negative reactions on green energy. Trade lobby RenewableUK (RUK) criticised the budget for not doing enough to encourage green growth, while Greenpeace said: ‘This misguided Budget shows the stranglehold fossil fuel and nuclear lobbies have on this government’.
Although the budget has no new announcements on renewables, to be fair, they have not been forgotten. In parallel, the government has confirmed its commitment to boosting the sector with £205m for the latest round of the Contracts for Difference (CfD) scheme. The CfD has already supported almost 27GW of low carbon generation projects and the fifth allocation round is expected to further encourage green industries and jobs, including £170m set aside for established technologies such as offshore wind, as well as a £10m allocation for tidal stream technologies However, RenewableUK said: ‘Unfortunately, in the light of global inflationary pressures, the budget and parameters set for this year’s CfD auction are currently too low and too tight to unlock all the potential investment in wind, solar and tidal stream projects which the industry could deliver’.
That’s still a possibility, and hopefully the revised version of the government Net zero plan, expected soon, will also be a bit better, with at least more detail. Last year, in a ruling by the High Court, the plan for achieving net zero had been deemed unlawful. According to the court, the emissions reduction plan was inadequate in its assessment of contributions at levels beyond national and sectoral, necessitating a revision to incorporate quantifiable measures and a more realistic evaluation. But it seems inevitable that CCS and nuclear will play a major part. That may also be the case for Labour, although the details may differ. We shall see- probably in a year or so.
For the moment, since the chancellor said in his budget speech that nuclear was ‘vital to meet our net-zero obligations', he will be launching ‘the first’ competition for small modular reactors, to be run by Great British Nuclear and ‘completed by the end of this year’. Though Carbon Brief noted that, actually, ‘the government previously launched a £250m competition for small nuclear in 2015, but no winners were announced. Since then, it has offered various pots of money, including “up to” £210m for Rolls Royce to develop its reactor design and “up to” £170m for “advanced” modular reactors.’
In parallel, the Government will be looking to the inclusion nuclear power in the UK ‘Green Taxonomy’. But this isn’t a done deal yet, there will be consultation, and, as was pointed out in an answer to a Parliamentary Question from Carolyn Lucas, ‘with the support of the independent Green Technical Advisory Group and stakeholder engagement, we will take the time to get the taxonomy right to ensure it is usable and effective’. That may lead to quite a debate, as has happened in the EU where the inclusion of nuclear (and gas) in its green taxonomy has been very contentious.
In the UK context, would inclusion actually help? Not everyone thought so- from an investment perspective, the problems were economic not environmental. But, quite apart from being expensive, there were, actually, some environmental issues. Nuclear is low carbon, but not zero carbon. It leads to dangerous waste residues. The pro-nuclear lobby these days sets that against its assumed role in support of variable renewables, but that may not be realistic: nuclear plants are inflexible and get in the way- see my earlier post.
And so the somewhat tired old nuclear debate goes on. With though a new extension- a military and civil nuclear interaction. In the recent Defence Review, the government said that ‘we will proactively look for opportunities to align delivery of the civil and defence nuclear enterprises, seeking synergies where appropriate to ensure a coherent demand signal to our industry and academic partners.’ For University of Sussex Prof. Andy Stirling, that confirmed his view that ‘nuclear submarines would be too costly to build and maintain without an “industrial base” largely funded by elevated consumer electricity bills’. It certainly does provide more evidence for co-dependence, with ‘joint expansion’ also possibly in mind. Well, whatever the intent, it’s arguably good that the military-civil link is now overt rather than hidden. But it does open up all sorts of strategic issues.
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