U.K. to Remove Barriers to Nuclear Power, Set Carbon Price, Minister Says

Nuclear power can play a key role in the U.K.’s future energy mix, Minister Charles Hendry told executives from Electricite de France SA, Centrica Plc and other utilities.

While the new coalition government won’t subsidize the industry, it will remove regulatory barriers and encourage nuclear power by establishing a minimum price for carbon, the energy minister said at the Nuclear Industry Forum in London.

Britain, needing 200 billion pounds ($300 billion) to renew aging power plants in the next two decades, will have to tap international investors for the first time, according to the Department of Energy and Climate Change.

“It is for private-sector energy companies to construct, operate and decommission new nuclear plants,” Hendry, a Conservative Party lawmaker, said today. “It will be for us to ensure the appropriate levels of safety, security and environmental regulation.”

Nuclear power was the main dividing line on energy policy between the two parties that make up the coalition government. The junior party, the Liberal Democrats, say atomic energy is too expensive. Chris Huhne, a Liberal Democrat, is the Cabinet minister leading Hendry’s department.

It was the minister’s first speech on nuclear power since the coalition came to power last month. The government is seeking to make the U.K. “one of the most attractive places in Europe for investment in new nuclear,” Hendry said.

EDF’s Planned Investment

EDF’s unit in the U.K., which along with Centrica plans to invest 20 billion pounds in building four new reactors in Britain, said in May that it’s “reassured” by the agreement struck by the coalition parties allowing Liberal Democrat lawmakers to abstain from votes on nuclear issues. The Conservative-led government will still push the technology.

“The coalition agreement clearly sees a role for new nuclear, provided that there is no public subsidy,” Hendry said. “From the commitment I’ve seen from the nuclear industry, I have no doubt that you can rise to the challenge.”

The newly-elected coalition government, led by Prime Minister David Cameron, will make a decision on the level and timeframe for creating a floor price on carbon dioxide “as soon as we can,” Hendry said.

Guaranteeing a price for European Union greenhouse-gas permits may help curb emissions in the U.K., which has a domestic target to cut carbon-dioxide output by 34 percent from 1990 levels by 2020. The country is part of the European Trading Scheme, the world’s largest emissions market, which is mandatory for heavy industry and power plants.

Not Penalizing

“The view is that we can have a carbon floor price so then if the European Union trading scheme price is below that, then a supplementary charge will bring it up to that floor,” Hendry said. “We’re looking to put in place a structure that will drive new investment,” he said. “This should not be seen as something that penalizes old plants.”

Investors need to know what the cost of emissions is going to be by 2018 to 2020, the minister said, adding that the government is consulting a range of stakeholders about what level the floor should be set at.

“If it is set too high, it ends up penalizing consumers,” he said. “If it is too low, people won’t invest.”

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net; Alex Morales in London at amorales2@bloomberg.net

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