CBI sends stark warning over nuclear future

Financial support for a new generation of nuclear power stations could be undermined unless the Government clearly sets out a long-term framework for supporting low-carbon sources of energy, the CBI warns today.

In its response to the Government's energy review, the business organisation says that ministers must give more detail on how carbon emissions will be restricted in future if low carbon energy sources, including nuclear, are to play a proper role in Britain's future power generation.

The CBI says that the current lack of clarity about how electricity producers will be made to pay for carbon emissions after 2012 is holding back investors from committing the £50bn needed to construct new nuclear stations and other low-carbon generating capacity.

The submission also argues that fears over the feasibility of new nuclear plants and how to deal with the waste they will produce has also been overstated. "Instead of irresponsible scaremongering by anti-nuclear lobby groups, what the country badly needs is a mature, factually-based debate," said Sir Digby Jones, the CBI's director general.

"We urgently need new investment in a whole range of low carbon energy sources, alongside improved energy efficiency, to help safeguard security of supply and cut emissions," he added. "Renewables are part of the answer but technologies such as nuclear and clean coal need to be able to compete on their own low- carbon merits."

He said that any meaningful announcement on energy policy had to have at its core clarity as to how carbon would be priced, otherwise investment in green sources of power would not be unlocked.

"If the Government delivers, among other things, greater clarity about carbon in the summer, we could well see the power industry commit major sums to new nuclear build.

"This will not detract from investment in sustainable energy sources; both nuclear and renewable energy can have a place in solving Britain's energy needs in the 21st century."

Separately, the engineering lobby group, the EEF, also called on the Government to commit to a new nuclear programme. But it also urged ministers to tackle the "woeful" level of research into energy as part of its submission to the review. It claimed that the UK spent just 0.02 per cent of national output on energy R&D - the lowest amount of any EU member apart from Portugal and a tenth of what was spent in the US.

Martin Temple, the EEF's director general, said that these figures suggested the Government's actions were at odds with the Chancellor Gordon Brown's claims that Britain was taking the lead in tackling climate change.

The CBI also lambasted the UK's "laborious" planning system, blaming it for blocking the building of crucial new gas-storage facilities. Mr Jones, who last autumn warned that the UK had only 11 days of energy supply set aside, claiming 80 per cent of the UK's new gas storage was ensnared in the planning process.

"We got away with it this winter but may not be so lucky next time. An energy policy based on crossing fingers and the use of a prayer mat is not acceptable for the fifth-biggest economy on Earth," he said.

The Government has three months to report back on the main points made in the 2,000-plus responses it received during the consultation period. It will make a statement on energy policy in early summer.