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Lib Dem MPs Set To Rebel Against Nuclear Power ‘Subsidy’

A group of Liberal Democrat MPs are gearing up to rebel next week against a section of the government’s finance bill which they believe gives a subsidy to the nuclear power industry.

The coalition agreement rules out any new subsidy for nuclear power, and backbenchers in the party believe such a measure would represent as great a breach of trust with voters as breaking their promise on tuition fees.

A large group of Lib Dems are concerned about clause 78 of the bill, which MPs will consider on Monday or Tuesday, that asks them to support a carbon floor price. This mechanism penalises fossil fuels but not low-carbon energy sources, such as nuclear and renewables, and the MPs believe it hands a large financial windfall to nuclear power – effectively a subsidy.

The government has admitted that because of the size of the nuclear industry, it stands to gain up to twice as much as renewables from the proposed carbon floor price. In a written reply, the Treasury economic secretary, Justine Greening, said: “The existing nuclear sector is likely to benefit by an average of £50m per annum to 2030 due to higher wholesale electricity prices. Similarly, the renewable energy sector is expected to benefit by an average of at least £25m a year to 2030.”

In a letter to the Guardian, one Lib Dem MP and three members of the federal policy committee – the party’s ruling body that approves policy – warned: “Support for a Conservative party-inspired policy on nuclear power must not become another tuition fee debacle for our party. We need to make a stand and ensure that the nuclear industry does not benefit from being an unintended beneficiary of tackling carbon emissions.”

The Guardian has also been told that the president of the Liberal Democrats, Tim Farron, is so concerned about the legislation he has asked Danny Alexander, the chief secretary to the Treasury, to withdraw the clause. However, it is thought the bill is too complicated to allow for one element to be unpicked. Instead Lib Dems would like to propose a “windfall tax” to claw back some of the financial gains they think the nuclear industry stands to make.

A group of 21 Lib Dem MPs have signed anti-nuclear parliamentary motions since the formation of the coalition – over a third of the parliamentary party.

The coalition agreement pledged that any new nuclear plants would be built without subsidy – the nuclear industry has long needed financial support to make it commercially viable, which its opponents believe skews the energy market in favour of nuclear and against renewables and other less-developed technologies.

A report from the energy and climate change committee concluded: “Government proposals will effectively provide subsidies to nuclear generators through new long-term contracts and a carbon price floor that could hand them windfall profits.”

Despite saying in 2007 that nuclear was “tried, tested and failed” technology, the energy secretary, Chris Huhne, appeared to give tacit support this week to new nuclear plants.

In a document, Chris Huhne praised France’s energy market, which gets 77% of its electricity from nuclear power as against 18% in the UK.

“Some countries already have a head start,” he said. “Electricity prices in France are set to rise by about 3% this year; compare and contrast with Britain, where prices are rising by three times as much.

“It is no surprise France is the European country with the least reliance on fossil fuels, and enjoys some of the lowest prices – 9.4% below ours.”

In the Daily Mail on Friday, backbencher Martin Horwood called for a windfall tax on the nuclear industry. Horwood said: “There are going to be some pretty frank discussions about nuclear. There is growing unhappiness at the level of subsidies creeping in for the nuclear industry – they are being given millions of pounds for no change in behaviour whatsoever.”

Huhne under fire over Fukushima emails

A prominent Liberal Democrat has called for Chris Huhne to resign immediately as energy and climate change secretary after emails were released detailing his officials’ efforts to co-ordinate a PR response to the Fukushima disaster with the nuclear industry. Civil servants in the energy and business departments were apparently trying to minimise the impact of the disaster on public support for nuclear power.

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