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Hidden Subsidies for Nuclear Power

The Government's  go-ahead for a new generation of nuclear power stations has sparked a fierce row over financial sweeteners to private sector operators. John Hutton, the Business Secretary, insisted there were no subsidies but the small print of the White Paper showed concessions had been given away.

Private companies who wanted to build new stations would have to pay for the entire cost while "meeting the full costs of decommissioning and their full share of waste management costs", argued Hutton who said atomic power was needed to reduce carbon and the growing reliance on energy imports.

But a campaign by French nuclear operator, EDF, and others to win Government help for an attractive financial framework which would make nuclear cost-effective against other forms of power appeared to have borne fruit.

· The Government is effectively making electricity generated by coal or gas more expensive by promising "greater certainty for investors" through unilateral action to underpin the price of carbon. Coal and gas power stations emit relatively large quantities of CO2 for which they will need costly permits.

The Government's  go-ahead for a new generation of nuclear power stations has sparked a fierce row over financial sweeteners to private sector operators. John Hutton, the Business Secretary, insisted there were no subsidies but the small print of the White Paper showed concessions had been given away.

Private companies who wanted to build new stations would have to pay for the entire cost while "meeting the full costs of decommissioning and their full share of waste management costs", argued Hutton who said atomic power was needed to reduce carbon and the growing reliance on energy imports.

But a campaign by French nuclear operator, EDF, and others to win Government help for an attractive financial framework which would make nuclear cost-effective against other forms of power appeared to have borne fruit.

· The Government is effectively making electricity generated by coal or gas more expensive by promising "greater certainty for investors" through unilateral action to underpin the price of carbon. Coal and gas power stations emit relatively large quantities of CO2 for which they will need costly permits.

· The public purse could ultimately be used for all decommissioning of new plants and waste disposal. The current bill for dismantling existing plants is estimated at over £70bn with an additional £20bn for the disposal of waste.

· Ministers are also looking at putting a ceiling on the price private firms will have to pay for dismantling reactors at the end of their life, reducing companies' risks and making it cheaper for them to borrow.

Greenpeace accused the Government of providing covert subsidies to give the industry the support it needed. "Nuclear companies will be able to cap their liabilities, leaving the taxpayer exposed if estimates for dealing with waste change. The Government admits that the public will pick up the liabilities," said director John Sauven.

The New Economics Foundation accused the government of "fixing the market". Its policy director Andrew Simms said: "Nuclear power will not survive on its own in the market place. The Government will have to use voodoo economics to underwrite capacity.The only beneficiaries are the big energy companies.".

The specific references to some kind of financial incentives comes in Section 32 of the White Paper which says companies would be able to rely on the EU emissions trading scheme to build investor confidence but it also goes further. "We will also keep open the option of further measures to reinforce the operation of the EU ETS in the UK should this be necessary to provide greater certainty for investors," it says.

There are also commitments on waste and decommissioning in section, 3.52. Operators are responsible for decommissioning and waste management costs but "if the protections we are putting in place prove insufficient, in extreme circumstances the Government may be called upon to meet the costs of ensuring the protection of the public and environment."