Utilities to issue warning on carbon price
By Sylvia Pfeifer, Energy Editor
Britains big six energy companies will this week warn Chris Huhne,
secretary of state for energy, that the governments proposed floor price
for carbon emission permits is not enough of an incentive for them to
invest in new nuclear power stations.
Executives from the companies, including Centrica, EDF Energy and
Scottish Power, now owned by Iberdrola, are due to make their views
clear at a dinner with Mr Huhne on Wednesday.
The industry has reached a consensus position with all companies
agreeing that some form of additional incentive is required. Options
range from a feed-in tariff to guarantee the price for low-carbon
electricity to payments to companies as reward for having available
generation capacity. The government has already said it is seeking to put a floor under
the price of carbon dioxide permits under the European Unions emissions
trading s cheme. But executives believe if that were to be the only
incentive the floor would have to be set at a pretty high level, with
estimates ranging between 80 and 90 a tonne of carbon. The companies
argue any floor price should start at a relatively low level and then
gradually step up towards a level of about 35 a tonne of carbon. Prices
are currently hovering at around 15 a tonne.
Volker Beckers, the chief executive of RWE npower, the German-owned
energy supplier that has teamed up with fellow German Eon to build new
reactors, told the Financial Times last week that the government should
not discriminate different technologies against each other but should
ensure there is a level playing field for all. He wants the renewables
obligation, which supports wind power, to be expanded to a low-carbon
obligation that would include nuclear. Mr Huhne last week gave the green light for the development of new
nuclear reactors but vowed there would be no public subsidy. Mr Be ckers
said he did not think of the renewables obligation as a subsidy.
It is an obligation to a supplier to comply with environmental
legislation . . . in other words, you either invest or you pay, he said.
Two consultations one on the carbon price floor and another on
electricity market reform are expected later this autumn. Mr Beckers
said that RWE npower would make its supplier decision in the first
quarter of next year and if there was uncertainty still it would be very
difficult.
His comments echo those of Vincent de Rivaz, chief executive of EDF
Energy, which owns 80 per cent of British Energy, who called last week
for a timely consultation on how the government will implement its
stated policy to provide a carbon price floor. We also need progress on
reform of the electricity market where EDF Energy has proposed low
carbon capacity payments to support security of supply.
Mr Huhne will meet other industry stakeholders when he chairs the
next meeting of the Nuclear Development Forum, which advises the
governments Office of Nuclear Development, on Thursday.
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