Government proposals to introduce a carbon floor price as part of the Electricity Market Reform (EMR) consultation could end up benefiting existing nuclear generators to the tune of £3.43bn between 2013 and 2026 by doing nothing.
Energy bills will rise because Government proposals will handover this sum of money to nuclear generators for doing absolutely nothing different to what they currently do. Because existing nuclear power stations do not burn fossil fuels, they will not have to account for the carbon floor price (or tax) but will benefit from increased electricity prices and therefore increased profits.
The carbon floor price will operate as a tax on power companies that use 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.
This 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 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.
Read press statement here.
