12 July 2006

A world of smoke and mirrors

So, yesterday's announcement on energy policy cleared the air. Or did it? The Guardian reports here:
"The nuclear power industry dealt a blow to the government's hopes of seeing a new generation of plants when leaders warned that the energy review published yesterday did not go far enough or offer suitable incentives.
Politicians must get away from the "froth" of words and come up with something more concrete before winning support for new stations, said the Association of Electricity Producers (AEP)."

And what would that 'something more concrete' have to be? The Guardian supplies a clue here:
"In fact, the energy document is light on detail but clearly welcoming to nuclear. A similar review in 2003 left the door slightly ajar but insisted the economics looked unpromising. Yesterday the door was quietly but surely yanked open to atomic power with the government promising to come up with a framework for action to be contained in a white paper around the year's end.
It will be up to the private sector to fully finance any new stations. There would be no subsidies, direct or indirect, Mr Darling insisted repeatedly to a barrage of sceptical questions from his own backbenchers and the other side of the Commons."

This means that, if Mr Darling will not supply subsidies, either up front or more likely through rigging the electricity market to ensure a decent rate of return, the private sector will not invest in new nuclear power stations. In the circumstances - and despite Mr Darling's assurances about the absence of subsidies - I leave you to guess what the future white paper's 'framework for action' will contain.

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