Hill+Knowlton Strategies

One area where the Coalition government has stuck to its guns has been the issue of public subsidy for a new-generation of nuclear power stations – there will be no money.

The cost of decommissioning nuclear plants, and disposing of nuclear waste, has become a huge financal millstone around the neck of the government, as Chris Huhne made clear in his speech to the Liberal Democrat conference this year.

The Government’s mantra was continued in the consultation launched this week by DECC. In it, DECC sets out detailed proposals aimed at ensuring that the taxpayer is not on the hook for the cost of decomissioning or waste disposal in the future. In a nutshell, nuclear plant operators will be expected to make sufficient financial provision for decommissioning and disposal of waste from day one.

The question remains whether any potential operator has deep enough pockets to go ahead on this basis or whether, with energy security concerns becoming ever more pressing, the Government will fudge the issue by e.g. setting a minimum price for carbon. DECC is expected to launch a wide-ranging consultation on electricity market reform next week, which is likely to address a floor price for carbon among other issues; the small print will be keenly scrutinised…