When Do Greens NOT Want A Carbon Floor Price? When Nuclear Gets The Benefits

Posted on 16. May, 2011 by Ross in Energy Prices, Government Policy, United Kingdom

The initial headlines were all about political wranglings and conflicts, but the latest UK agreement to reduce carbon emissions has exposed just how fragmented the environmental movement has become.

The Liberal Democrats saw less discord amongst party members for forming a coalition with the hated Conservatives than would have been expected last year. Even the diabolical showing at the local elections failed to cause any truly damaging internal strife amongst Liberal Democrats MPs. But the row that erupted in the cabinet between Chris Huhne and Vince Cable, backed on both sides by different Conservative allies, was the first true test of the cohesion of Liberal policy in the face of the reality of government.

The row revolved around the act of accepting the recommendations of the chief climate change advisor to adopt a new tough carbon emissions target for 2027 which would have put the UK ahead of every other developed nation in reducing carbon. The UK has historically always followed this independent scientific advice when concocting climate change policy, and by doing so has always been able to speak from a moral high ground in international climate change negotiations.

However a break from the science was exactly what Liberal Democrat Business Secretary Vince Cable was advocating, taking a rather protectionist “can’t damage the economy for climate change” stance which Americans would be all too familiar with, and he managed to rally Chancellor George Osbourne and Transport Secretary Philip Hammond to the defence of energy-intensive industries. Cable advocated a lower set of targets which he claimed “keeps us on course to meet our 2050 target and entails a steeper reduction in emissions than the previous government set for carbon budgets, which easily justifies our position as greenest government ever”. Political carbon targets then, rather than practical targets.

The alignment of his cabinet colleague against their party’s generally strong environmental stance was anathema to Department of Energy and Climate Change (DECC) secretary Chris Huhne, who soon had the unlikely figure of Foreign Secretary William Hague rushing to his defence. Eventually, David Cameron was forced to broker a deal between the two camps which saw the DECC victorious at the cost of an opt-out from the new targets should the European Union fail to agree to stronger targets itself.

So with damage done to the Liberals’ environmental credentials and some points-scoring by David Cameron over his coalition partners complete, all that should have been left was an announcement of the new proposals and targets before going to the pub, right? Conservative chairman of the Energy Select Committee Tim Yeo had other ideas, stepping forward to be the first to blast the new agreement for creating hidden subsidies for nuclear power despite the coalition agreement to prevent taxpayers from paying a penny towards any new nuclear power stations.

But how? The stealth subsidy in question would be generated from the setting of a floor price for carbon, something agreed upon in the 2011 Budget but which has received very little fanfare until now. What makes the attack on the floor price so controversial is that it was a deliberate attempt to skew market conditions towards better viability of low-carbon energy generation.

The real complaint therefore is that the government was unable to find a mechanism to promote low-carbon power sources by selectively promoting renewables at the expense of nuclear power.

This argument goes to the heart of the division of the environmental movement. The use of nuclear power as a low-carbon energy source is the biggest source of discord, with former anti-nuclear activists breaking ranks with their green colleagues by seeing climate change as a greater threat to humanity than the proliferation of toxic and indestructible nuclear waste.

All environmental campaigners realise that a floor price for carbon is necessary to level the business cases between traditional cheap fossil fuel power sources on the one hand such as coal, oil and gas, and more expensive renewable energy sources such as wind, wave, tidal, geothermal, hydroelectric and nuclear. The floor price could better reflect the environmental legacy costs inherent with fossil fuels rather than just the cost of extraction and exploitation.

The concept of a carbon floor price comes largely from the comparison of decarbonising technologies on a global or national scale through a MACC or Marginal Abatement Cost Chart. These charts show the effectiveness of every low-carbon technology against their cost to implement. High-yield options such as energy-efficient lighting systems have a negative cost per tonne of carbon dioxide saved, but most power-generating technologies have a higher cost than the baseline of inaction (i.e. the continuation of fossil fuels). A floor price for carbon lifts the inaction baseline cost, thereby enabling more low-carbon technologies to compete with “business as usual” as the floor price rises.

The fact that nuclear benefits from a simple floor price for carbon may rankle pro-renewable environmentalists, but it points to the inescapable truth that nuclear is a low-carbon energy source. The fact that there are huge environmental costs associated with the extraction of radioactive ores and the disposal of waste, as well as high damage-low probability risks associated with the reactors themselves as evidenced recently at Fukashima, has little impact on assessments made which prioritise carbon costs above all else.

The anti-nuclear environmentalists have to tread very carefully though. In decrying the benefits to the nuclear industry of the floor price of carbon they risk depriving renewable sources the benefits too which would prolong our dirty fossil dependency even longer. Nuclear power won’t benefit from the floor price for carbon any more than renewable energy sources, whereas historically nuclear subsidies have far outweighed those given to emerging wind and wave power. Restricting nuclear “subsidy” to just a floor price for carbon might be the best chance for many renewable technologies to ever get sufficiently competitive enough to start reaching the sort of economies of scale that mass roll-outs could produce.