Raising the price of carbon: a back-door subsidy for nuclear power?

There is a clear need for a cap on emissions of CO2 that decreases year-by-year at levels that will minimise the risk of dangerous climate change. Such a cap will certainly raise the price of emissions well above the levels currently resulting from such cap-and-trade schemes as the EU Emissions Trading System.

Raising the price of CO2 emissions in that way is in accordance with the principle that the polluter should pay and it should not be considered to be a subsidy for renewable sources of power or nuclear power, provided that due account is taken of emissions from those sources, including emissions arising from the large amounts of concrete used in the construction of nuclear power stations, emissions from the mining and processing of uranium ore, and emissions from the processing of nuclear waste and the decommissioning of nuclear plants.

But, while there is some evidence that the Government is considering schemes of that sort, it appears that they are also considering other kinds of scheme, at least some of which may be regarded as back-door subsidies for nuclear power:
  • One option is reform of the Climate Change Levy (see Budget promises wave of green policy announcements in autumn, BusinessGreen.com, 2010-06-22). The details are due in the Autumn of 2010. It is not yet clear whether the reform would create a subsidy for nuclear power.
  • Apparently, DECC is looking at mechanisms that "would not penalise existing fossil fuel plants or give a financial boost to nuclear power plants near the end of their lives" (see Hendry promises carbon floor price "when new nuclear plant comes on line", Utility Week, 2010-06-17). Any scheme that does not penalise existing fossil fuel plants is clearly not a straightforward raising of the price of CO2 emissions and is very likely to be a form of subsidy for nuclear power.
  • Another possibility is some kind of 'low carbon obligation' instead of a 'renewables obligation' (see EDF approves nuclear build policy, The Engineer, 2010-06-17. See also Nuclear targets 'at risk', Sunday Telegraph, 2010-07-10; Nuclear energy companies want Huhne to push for new plants, New Statesman, 2010-07-12; Centrica wants guarantee for new plants, Financial Times, 2010-07-29, "Mr Beckers [chief executive of RWE npower] has called for the renewables obligation subsidy, which supports wind power and other renewable electricity, to be extended to nuclear."). Any such scheme would almost certainly be a form of subsidy for nuclear power. The renewables obligation may be justified on the grounds that renewables need that kind of support until they are well established. Extending the scheme to include nuclear power is certainly not justified because nuclear power has been established for many years and should be commercially viable without that kind of support.