Plans for new nuclear power stations could split the government

Tuesday, June 8, 2010

IT IS hard to escape from history. Just as Britain is about to embark on an ambitious programme to build a new generation of nuclear power stations, an old atomic relic offers a timely reminder of the risks. On June 1st Chris Huhne, the newly installed Liberal Democrat energy secretary, revealed that the Nuclear Decommissioning Authority, the publicly funded outfit charged with cleaning up Britain’s old nuclear power stations, is facing a £4 billion funding shortfall over the coming four years. For a department with an annual budget of just £3 billion, that is, as Mr Huhne puts it, an “existential” problem.

He blamed the “short-termism” of his predecessors for not grappling earlier with the problem of nuclear decommissioning. In a neat bit of symmetry, it is Mr Huhne who must now make some long-term decisions of his own. Britain faces three big challenges: it is running short of power stations, it is emitting too much carbon and it is becoming increasingly dependent on a single fuel source—natural gas—that, as its own reserves run down, comes increasingly from abroad.

In 2008 the previous Labour government approved the building of a new generation of nuclear reactors. But it is the new Conservative-Liberal Democrat coalition that must put the finishing touches on the project. The trouble is that, although the Conservatives are in favour, the Lib Dems have traditionally been hostile to nuclear power. Their election manifesto promised to abandon plans for new reactors. And Mr Huhne himself is particularly sceptical. No sooner had the new government taken office than nuclear lobbyists from companies such as France’s EDF Energy and Germany’s RWE were hammering on Mr Huhne’s door, desperate to know what the new policy was.

Some impressive political contortions have reassured the atom-splitters, for now. When a parliamentary vote on the measures arrives, a Lib Dem spokesman (presumably Mr Huhne) will be allowed to speak against nuclear energy, but his fellow Lib Dem MPs may abstain from voting. Tory MPs, meanwhile, will be whipped to vote in favour. The government describes it as one example on a lengthening list of the inevitable compromises that define coalition politics. But a gibe from Ed Miliband, a prospective Labour leader, is likely to stick in the mind: he accused the two parties of having three separate policies between them.

In a country unused to government by coalition, it is tempting to see every crack of daylight between the governing parties as a potentially dangerous split. But hostility to nuclear power runs deep among the Liberal Democrats, and it resonates with both wings of the party. Leftish Lib Dems worry about safety and dislike the association with nuclear weapons; the liberal wing worries about the industry’s history of cost inflation and subsidy. Whatever the formal agreement with the Conservatives, a backbench rebellion would be damaging for the government, as well as for investors’ confidence.

Such political tensions only compound the difficulties facing those who want to build more nuclear power stations. Officials are already concerned that a lack of engineers could delay the whole project, while cheap natural gas and a weak pound make the economics tricky. The coalition has made clear that new plants will not receive any public subsidy, although Tory plans to set a minimum price for the greenhouse-gas permits currently traded in the European Emissions Trading Scheme ought to help nuclear power stations compete with fossil-fired ones. But, as Mr Huhne reminds us, promises about the economic viability of nuclear power have a history of being broken.

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