Summary and implications

In the current energy climate that is preoccupied with energy security and efficiency, there has been much debate surrounding whether the nuclear sector could provide sustainable, safe and low carbon energy. Examples of notable nuclear-themed discussions held in recent months include:  

  • Proposals to increase the financial liabilities of nuclear operators;
  • The rights and wrongs of Green Investment Bank funds being used to support nuclear projects; and  
  • Plans to construct a new nuclear fuel plant at Sellafield during 2011.

Increase in nuclear site operators' liabilities  

Nuclear operators' financial liabilities in relation to their facilities could be dramatically increased if proposals put forward by the Energy and Climate Change Secretary to bring the UK into line with the Paris and Brussels Conventions on nuclear third party liability are accepted. In an announcement on 24 January 2011, Chris Huhne outlined plans to oblige nuclear site operators to take on €1.2bn for each of their sites, a sum equating to a seven-fold increase on the current liability level of £140m (and well above the €700m minimum required under the amended Conventions).

Moreover, the Secretary of State also wishes to increase the categories of damage for which site operators could be liable to include among them environmental damage, while simultaneously increasing the geographical scope of those eligible to claim compensation. In setting out his reasoning for putting forward such tough proposals, Mr Huhne stressed tha,t while the Coalition accepts that nuclear energy has a part to play in meeting the UK's future energy needs, “it will not receive any public subsidy” to do so.

The consultation on these measures opened in January for responses from interested parties and is scheduled to close on 28 April 2011. Full details of the consultation can be found by clicking here  

Should the Green Investment Bank support nuclear?

Work on finalising the plans to create a UK Green Investment Bank has been hit by fierce debate in recent weeks regarding the possibility of its funds being used to support nuclear energy projects.  

While recent statements from the Department for Energy and Climate Change have repeatedly stressed that the Coalition will not subsidise nuclear projects with public funds, reports that suggest a contrary position have surfaced within the past month within different departments. Specifically, concern has been voiced over leaked documents issued last year by the Department for Business, Innovation and Skills (BIS) in which nuclear reactors are named as potential energy projects that the new bank could focus on.

The suggestion has prompted indignant reaction from green campaigners and commentators. The Green Party MP, Caroline Lucas, has been quoted as rubbishing the plans for “making a mockery of the whole idea of a Green Investment Bank” and reneging on the Coalition's election pledge to use the bank to specifically fund “new green technology start-ups”.

The plans for the Green Investment Bank are expected to be finalised in May this year, prior to it becoming operational in 2012. According to a BIS spokesman, no decision has yet been made as to the exact remit of the bank's funding strategy, and whether this could include nuclear projects.

Decision expected on a new nuclear plant at Sellafield

The Department of Energy and Climate Change is set to decide this year whether a new nuclear fuel plant will be built at Sellafield.

At a debate held by the House of Lords Grand Committee, in January, regarding the UK's national policy statement on nuclear power, the Department's Undersecretary of State, Lord Jonathan Marland, confirmed that an extensive review has been commissioned to assess the viability of constructing a mixed-oxide fuel plant at the site. These plants recycle materials such as plutonium as part of a “closed fuel strategy” that cuts down on waste and extends fuel supplies.

While the undersecretary stressed that the project assessment is still at a preliminary stage, he indicated general enthusiasm for it when he stated that “if we have the biggest plutonium stock in the world, we must turn that liability into an asset”. The reviews of the site's suitability and the project's financial viability are expected to be completed by the spring.