The UK is still figuring out its energy priorities UPDATED

As reported in the FT on Monday, green campaigners in the UK have stepped up their attack on the carbon floor price, calling it a “windfall” for the nuclear industry.

They first made this warning in the immediate aftermath of the electricity market reform announcement, but now Greenpeace and WWF have put some numbers to their arguments.

They say the move could benefit the nuclear industry by up to £3.4bn, which would effectively be a subsidy, and so breach the coalition agreement.

It should be noted, however, that this represents the potential windfall over 13 years, which equates to around £260m a year – still sizeable, but not quite so eye-watering given the size of the industry.

It also represents the best case scenario as far as nuclear generators are concerned, by taking the most expensive carbon floor price mooted by the government – £40 per tonne of CO2. The cheapest suggestion is £20 per tonne, which would presumably cut the figure in half. As the government has not yet decided at which level it will underpin the carbon price, it remains uncertain how significant a windfall this would be.

This is all part of the process of figuring out what will be the net effect of Huhne’s sweeping reforms. The government recently announced it was bringing forward a review of feed-in tariffs to make sure they weren’t benefiting major solar operators to the detriment of smaller, independent players.

But there is a problem with all this potential tinkering, in that it scares investors off, as seen clearly by the reaction to the Spanish government’s interference in solar subsidies.

But the greens’ objections highlight the confusion over government energy priorities in general. Is the central aim to decarbonise the energy market, or to push for as close to 100 per cent renewables as possible? The two are not necessarily the same, and until the energy department makes its position a bit clearer, campaigners on all sides of the energy debate are likely to be left feeling disappointed.

UPDATE – I should point out that WWF and Greenpeace have only included in their figures the benefit that would be derived given current capacity. These figures do not take into account any new nuclear capacity, which would of course increase the amount of benefit received from the carbon floor price.

And as for the quick decarbonisation vs renewables argument, WWF is clear which side it believes the government should come down on. In a report released earlier this month, the group said it thought the world could be 95 per cent powered by renewables by 2050.

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