There is news from the United Kingdom today of a so-called ‘secret plan’ by the British government to tax electricity consumption from carbon-burning power generation plants. This tax is meant to fund the construction of the United Kingdom’s first new nuclear reactors in more than twenty years. This tax is expected to increase an annual household’s energy bill by about £44 per year. Many people are upset since the government ministers have made repeated promises that the nuclear industry would no longer benefit from public subsidies.
The new construction of nuclear power plants and this tax are being carried out because there are growing concerns about the UK’s aging nuclear infrastructure. There is a growing peak energy gap caused by the retirement of old nuclear plants and the long lead time to opening new ones. Adding to this energy gap is public enmity towards plans for the construction of new coal plants. Power companies such as E.ON and EDF Energy are hesitant to build new nuclear power plants because of rising construction costs and falling energy prices. The cost to construct new nuclear plants is in the multi-billions of pounds.
A European energy executive has told the Guardian,
New nuclear will not happen without sorting out the carbon price,which is bad news for consumers and government ministers, alike. According to the government, the only way to bridge the energy gap and commence swift construction of new nuclear plants is by artificially raising the price of electricity with a carbon tax. The Office of Nuclear Development, a new government unit created to facilitate building new nuclear plants, has promised nuclear companies that the price of carbon under the European Union emissions trading scheme will be disallowed to fall below €30 to €40 per ton. Currently, the price is €13 per ton. Consumers have made clear their desire for cheap, clean energy. Unfortunately, the only way for the government oftentimes to push through such measures is by raising taxes. As the old saying goes, “Cheap, good, and fast: pick two.” The rest of the world should be chastened by these developments in the UK. The power-generation infrastructure of many leading nations is aging at what seems a fast pace. As new, cleaner power generation technologies are created and their costs become reasonable, consumers are going to want to take advantage. However, lower prices means less incentive for energy companies to deliver on substantial improvements to the power grid. The only way to bridge the enthusiasm gap between consumers and power generation companies may be government intervention in the form of higher taxes or incentives.
