Ambitious plans to harness the power of the Severn estuary to light up one in 20 of the UK's homes are to be abandoned as a result of the Government's attempt to address the nation's deficit.
Chris Huhne, the Secretary of State for Energy, will tomorrow jettison the world's largest tidal energy project, rather than make the taxpayer foot an estimated bill of £10bn to £30bn for the untested technology.
The move marks a victory for wildlife campaigners who feared a barrage would devastate the area's world-famous wetlands, but the loss of a major injection of renewable energy will test David Cameron's pledge to lead the "greenest government ever".
In a Commons statement, Mr Huhne will outline details of how the government intends to keep electricity flowing in the next four decades while also cutting greenhouse gas emissions by 80 per cent by 2050.
"We need to turn our grid from being one of the dirtiest in Europe to being one of the cleanest," a senior Whitehall source said.
Among the measures to be announced will be a firm commitment to generate at least a third of our electricity from renewables by 2020 and to use carbon capture and storage (CCS) technology to reduce the emissions from fossil fuel power stations by as much as 90 per cent. It will be a radical shift from the UK's historic reliance on fossil fuels, which accounted for more than 80 per cent of all electricity generation until the late 1980s.
Mr Huhne, a Liberal Democrat, will also give the go-ahead in principle to nuclear power stations on eight sites in England and Wales near existing reactors, although the issue remains politically contentious for his party.
He will concede that a 10-mile Severn barrage, stretching from Weston-super-Mare in Somerset to Cardiff in south Wales, is financially unviable. The idea of using the Severn to generate electricity on a massive scale dates back to the 1920s. Successive Labour ministers have argued that the project offered a "huge prize" of generating 5 per cent of Britain's needs.
Mr Huhne will stress the economic case for investing public funds instead in emerging technologies, such as CCS, that have the potential to be developed and exported, particularly to rapidly developing economies such as China. "If we are going to be incentivising things, there is only one Severn tidal stream," a source said. "You can only do it once. There are not the export opportunities there are with carbon capture, solar or wind."
Mr Huhne also believes CCS in particular could be a "huge growth area". UK research, which leads the world, includes a study into using the North Sea to store unwanted carbon emissions for some 200 years. Publishing a series of National Policy Statements on energy, ministers hope to "give industry maximum certainty" and prevent sensible proposals falling "victim to unnecessary hold-ups".
Some public money could be made available for further feasibility studies for a smaller project on the Severn, but industry insiders suggest it will be difficult to raise the necessary private-sector funds for such a scheme.
Wildlife campaigners had claimed the barrage would "cause irreversible impacts" to the estuary's "internationally important habitats", affecting the tens of thousands of wading birds that feed on its mudflats and marshes, and the migratory fish, such as salmon and eels, that come from rivers to spawn.
Some groups remain anxious that the scheme could yet return in some form. Lissa Goodwin, the Wildlife Trusts' living seas officer, said: "If we are ever going to harness tidal energy from the Severn, we have got to do all we can to make sure we do not destroy everything that makes it such an amazing place."
Mark Robbins, from the RSPB, added that it was a "great shame that we have wasted this time" on exploring the Severn project instead of focusing on other renewable energy forms.
Ahead of Mr Huhne's announcement, Greenpeace warned him against using it as "yet another attempt to talk up the prospects of nuclear".
Jim Footner, head of Greenpeace's climate and energy team, said: "The economics just don't add up. Nuclear power is hugely expensive, and there's no way any more reactors will be built in the UK without a taxpayer hand-out. The coalition has very clearly said that there won't be any subsidies for the nuclear industry. Huhne and the rest of the Government need to drop this costly distraction and invest in the real technologies that will tackle climate change and provide tens of thousands of new British jobs."
It is understood that of 10 sites identified as suitable for a nuclear plant, two – at Kirksanton and Braystones in Cumbria – have not made the grade. But Mr Huhne will stand by his commitment that the first new reactors could be operational by 2018, despite his party vowing at the election: "We oppose construction of further nuclear power stations."
Under the coalition agreement Lib Dem MPs could abstain on a vote on the issue. However, Mr Huhne has since said "there is an important place for new nuclear stations in our energy mix as long as there is no public subsidy" and that his role in delivering the policy is part of the "deal" with the Tories, who have given ground on Lib Dem policies.
At present, 10 nuclear power stations in the UK generate around 13 per cent of our electricity. The Lib Dems hope a greater emphasis on renewables, particularly offshore wind, will shift the balance away from nuclear while providing sufficient power at a time when the number of households in the UK is projected to grow by 31 per cent by 2031.
Mr Huhne's energy strategy will also give more detail of his ambitious Green Deal, which he claims will create 250,000 jobs. Companies would pay upfront to insulate homes, with homeowners paying back the loan through savings achieved on their energy bills.
There will also be financial support for the wind industry, particularly offshore, to fulfil his pledge to replicate the giant Thanet wind farm off the east Kent shoreline "right the way around our coasts".
Industry leaders believe wind is on the verge of a major breakthrough in capacity, after figures showed that on 6 September, wind accounted for 10 per cent of the UK's supply. They hope the minister will back a £60m fund to upgrade the UK's ports to support the manufacture of offshore wind turbines – considered a major growth area for the economy.
Expert Reaction: 'We all felt it would have been catastrophic'
"The barrage idea raises its ugly head every few years. I don't know what the answer is but I'm delighted it's not going ahead. Every time I hear about it I groan because I worry someone's going to take it up again."
Chris Witts, Gloucester City Councillor
"It's fantastic news as far as surfing's concerned, but more importantly this is where we live. I've been surfing for 30 years but my family has lived here for four or five hundred years. We all felt it would have been catastrophic."
Steve King, Surfer from Saul near Gloucester
"The way we capture energy is more like a sieve than a bucket. If we want to use the estuary let's look at what we are doing to prevent waste and work on improvements to come up with an effective solution."
Stuart Ballard, Director, Save Our Severn campaign group
"I'm absolutely relieved. Evidence from Canada showed large barrages in high tidal estuaries with lots of silt is risky. The Government should invest in smaller-scale technologies that work with the estuary's natural processes. These are more dynamic and can be replaced as technology evolves."
Natasha Barker, Academic estuaries expert
"This Government just doesn't have a coherent energy policy. Nuclear power can't deliver the necessary short-term emissions reductions. We need far more investment in both conservation and renewables, including supporting infrastructure like the port upgrades the Government is talking about scrapping."
Caroline Lucas, Green Party MP for Brighton
"This is surprising news as it was an important part of the Government's plans to increase the use of renewable energy for 2020. More planning permission should be granted to renewable energy sites because at the moment the number is very low."
Charles Anglin, RenewableUK, trade lobbying body
"We are all for using tidal energy but the project would have damaged the environment. A more environmentally sound option, such as using estuary lagoons, is more viable but the Government would never agree to this because of the costs."
Mike Childs, Head of campaigns at Friends of the Earth
"The barrage would have created calmer waters, so from a sailing point of view it was a really good idea. Yes, there would have been environmental issues with the disappearance of the mud flats, but the benefits would have far outweighed the pitfalls."
Peter Seed, Assistant to Bristol Harbour Master
"If the barrage was built it would have been the end of our fishing club, which is the only one of its kind in Wales. On the other hand, given a choice between nuclear and this project, I'd have to choose the barrage."
Martin Morgan, Secretary of the Black Rock Lave Net Fisheries Association