Yesterday The Independent splashed with the news that internal BP documents showed the oil major is planning for the possibility of the world’s worst ever oil spill happening off Scotland’s coast.

The Indy reported an admission from BP that in the event of a blow out, at what the company hopes will be their deepest ever UK drilling project, a spill could be twice as bad as the Deepwater Horizon accident.

BP admits internationally significant protected nature areas could be hit around the Shetland Islands and if there were a spill there’s as much as a 90% chance of the oil reaching Norwegian waters.

The UK’s biggest green groups – including the RSPB – have urged energy and climate change secretary Chris Huhne to block BP’s plan.

Twenty four hours later and David Cameron has travelled north with BP’s chief executive to personally welcome a wave of new investment in oil drilling off the Scottish coastline.

Politics Home tweeted that the prime minister said:

“Today we celebrate what is a great day for North Sea oil and what is a great British company.”

BP chief executive Bob Dudley added:

“After some years of decline, we now see the potential to maintain our production from the North Sea at around 200,000-250,000 barrels of oil equivalent a day until 2030.

“And we are working on projects that will take production from some of our largest fields out towards 2050.”

Today’s speech from Mr Cameron follows a string of announcements that have infuriated the environmental movement and suggest he is abandoning the centre ground on the environment as well as his ‘vote blue, go green’ theme.

Allegra Stratton writes in her column today that chancellor George Osborne continues to set his sights on ripping up environmental protections, which he sees as hampering growth – but here are some other recent examples:

• During the Tory conference, transport secretary Philip Hammond explained he will try to raise the speed limit on motorways, which will grow oil dependency and lead to a rise in climate change emissions.

• The chancellor knocked investor confidence in green industry in the UK when he used his speech to conference to warn he might try and review the UK’s carbon targets downwards.

• This prompted Phil Murphy, of the gas exploration BG group, to say:

“The chancellor’s comments are hard to see as anything other than a kick in the teeth for the low-carbon economy.”

Even the CBI said:

“What business wants above all else is certainty and anything that adds to uncertainty is unwelcome.”

• The chancellor is holding up billions of pounds of new investment in clean energy projects in the UK by delaying any decision over the support scheme for renewables, and throwing the whole scheme into doubt. Meanwhile, the pilot projects for Carbon Capture and Storage technology (CCS) are reportedly close to collapse.

• This follows a Cabinet row (which saw the PM back the chancellor in a row with Chris Huhne) that saw the Green Investment Bank denied of the power to either borrow or loan so the potential for billions of investment in new energy projects was sidelined.

• A number of senior Cabinet ministers have lashed out at The National Trust, Campaign for the Protection of Rural England and other conservation groups, accusing them of a “smear campaign by left-wingers based within the national headquarters” and “talking bollocks”, with Greg Clark saying the Trust is not a serious charity and acting out of “nihilistic selfishness”.

This after countryside protection groups warned the UK’s natural environment is at risk because of the Conservative party’s proposed planning reforms.

As Professor Tom Burke, who advised Michael Heseltine, John Gummer and Michael Howard on the environment, told The Guardian:

“The leadership are getting the politics badly wrong, as the change is being interpreted as the return of the nasty party. Green vision was central to Cameron’s detoxification of the party: without it what is left?”

See also:

• If Osborne gives up the lead on climate change, he can kiss goodbye to a recovery – Andrew Pendleton, October 10th 2011

• Exposed: Boris Johnson’s efforts to evade air pollution rules – Darren Johnson AM, October 4th 2011

• Government continues not being greenest ever – Alex Hern, October 3rd 2011

• Hammond hammers another nail in the coffin of the “greenest government ever” – Alex Hern, September 30th 2011

• “Greenest government ever” ordered to face High Court on air pollution – Shamik Das, September 16th 2011

• ‘Greenest government ever’ turning out to be less radical than CBI on mandatory carbon reporting – Willie Bain MP, August 8th 2011

• Climate sceptic Tory MEPs will send us sleepwalking towards disaster – Martyn Williams, July 5th 2011

Slipped out yesterday as growth figures grabbed the headlines, was the news the people dubbed “deregulation zealots” and “right wing ideologues” by energy secretary Chris Huhne have seemingly won another battle inside government.

In a significant shake up of the UK’s planning laws, ministers are proposing a new presumption in favour of developments like roads, supermarkets and other major building works in the countryside.

Responding to the Conservative proposals The National Trust warned:

“Green belt could be sacrificed to Los Angeles-style urban sprawl in the name of economic growth.”

But planning is just one policy area where the Tory Right are seeing environmental laws as “red tape” and agitating to scrap them.

Already Labour’s pledge to make all new homes zero carbon by 2016 has been significantly watered down. Equally, the Green Investment Bank has been curtailed – prohibited from acting as a bank until 2014 at the earliest.

A recent rebellion by David Cameron’s MEPs in Brussels saw them defy him to vote down new European proposals aimed at cutting emissions and boosting green industry. Never mind that more than 70 major European businesses including Google, Unilever, Scottish and Southern Energy, and Phillips said the proposals in question would make our economy stronger.

Never mind that the companies supporting the new green measures between them account for more than 3.8 million employees, with an annual turnover of more than €1 trillion a sum, superior to the combined GDPs of Poland, Sweden and Austria.

Mr Cameron’s supposedly pro-industry MEPs decided instead to side with Poland’s coal lobby and Germany’s car industry and voted down the new green plan. Following the vote, Mr Huhne reportedly launched an investigation into whether his coalition partners were, on this occasion, ‘got at’ by Big Carbon lobbyists.

As our economy flatlines, we can expect Lord Lawson’s climate denial lobby group and their friends on the Tory Right to once again up the pressure for cutting green laws. According to Tim Montgomerie, polling for his Conservative Home website reveals Tory members rank Mr Cameron’s environmental policies as one of his biggest mistakes since becoming leader.

Yet rather than heed their calls, Mr Cameron would do better to follow the lead of German Chancellor Angela Merkel. She is a Conservative beginning to recognise the potential of clean industries to be an engine of her country’s economy.

The LSE’s Michael Jacobs, a former government environment adviser, wrote recently that with a green industrial agenda:

“…lies the makings of an alternative economic strategy, focused on growth, skilled job creation and a revival of Britain’s manufacturing sector.”

In other words, far from curtailing growth, environmental laws and green investment can boost our economy. As Der Spiegel’s Christian Schwägerl put it, Germany is becoming “the world’s most important laboratory of ‘green growth’”.

Chancellor Merkel’s administration is planning:

“…to double the share of renewable energy to 35 per cent of consumption in 2020, 50 per cent in 2030, 65 per cent in 2040, and more than 80 per cent in 2050. At the same time, the Chancellor vows to cut CO2 emissions (compared to 1990 levels) by 40 per cent in 2020, by 55 per cent in 2030, and by more than 80 per cent in 2050.”

Britain, meanwhile, has slipped in the league table for green investment from third to 13th. Without a new strategy from the UK chancellor, Britain will continue to lose jobs and industries to economic leaders like Germany.

Over recent weeks there has been a fierce row at the top of government over whether or not the cabinet should accept the recent recommendations of the Committee on Climate Change (CCC). This committee is the government’s independent advisory body on how the UK can best meet its Climate Act obligations in the most cost effective way.

Under the Climate Change Act, the government must set five-yearly “carbon budgets”. The committee advises the government how big these budgets should be – i.e. how much effort there should be in the short term compared with the medium and longer term and right through to 2050 by which point the act demands an 80 per cent cut in the UK’s emissions.

The committee also advises on what policies are required to then stay within these emissions budgets once they’re established.

So far since the Climate Act was passed ministers have always accepted the committee’s advice in terms of what the size of the carbon budgets should be. The recent argument has been about whether the cabinet should accept the committee’s advice for the size of the next carbon budget from 2023-2027. The Climate Act requires a decision on this by next month.

Were the cabinet to reject the CCC’s advice, it would throw into doubt the UK’s ability to cut its emissions in line with the Climate Act and send a signal to the business and investment community, as well as the international community, that the UK government isn’t serious about following through on all their green rhetoric.

It would also mean that green industries would likely take their business elsewhere, in particular to Germany which is rapidly becoming Europe’s laboratory for green growth.

After a series of leaked letters, and media spin and counter spin (£) in the weekend papers, the BBC reports this morning that the prime minister has decisively intervened and backed the climate secretary Chris Huhne in supporting plans to accept the committee’s advice as to the size of this so-called ‘fourth carbon budget’. This follows pressure from green campaign groups, 38 degrees and Ed Miliband who all piled on pressure in recent days, and also follows the intervention of Lord Turner who is said to have mediated in the cabinet’s dispute.

On the face of it, Cameron’s decision is a rare case of the green agenda winning out over what one Whitehall source described to the Observer as “the dark forces at the Treasury”.

Certainly, it’s fair to say Cameron deserves personal credit for overruling opposition from Osborne and Cable who would’ve settled for a far worse deal. It is also true that the UK now has the toughest legally-binding carbon targets through to 2027 of any country in the world. However, in spite of this, HMT and Vince Cable did both win significant ‘get out clauses’.

In particular, it appears that whilst the government will accept the CCC’s advice on the scale of the carbon targets for the mid-late 2020s, they won’t accept the recommendation that short term cuts need to be increased.

Understandably, some will rightly point out that it’s convenient for the prime minister to agree to a 50% cut in UK emissions by 2025 – when he’s unlikely to still be in power, but to reject the advice of raising the 2020 target. Equally, it is understood that government will announce tomorrow it will rely on carbon offsets to a greater extent than is recommended by the climate committee.

But the more important point about all this though is the one made by James Murray, in his post this morning for Business Green:

“In one of those strange coincidences that so often litter the political landscape, news that the coalition is to sign the UK up to one of the world’s most ambitious low carbon economic strategies has come within hours of the release of a major new report eviscerating the primary policy for delivering that very strategy.”

The focus going forward must surely be the coalition’s failure to establish any credible plan to hit these carbon targets. The Treasury’s consistent sabotaging of any moves towards a green industrial strategy means budgets for clean energy programmes have been slashed, the Carbon Capture and Storage (CCS) scheme has been hugely scaled back, and the flagship Green Investment Bank is unable to borrow or lend.

David Cameron’s intervention is to be welcomed, but he and Nick Clegg now need to work out how to deliver these new clean energy jobs and industries.

The Liberal Democrats have long been seen as the greenest of the main three parties, and went into the election with strong promises about clean energy and ambitions to protect the environment and boost green industries. So how counter-intuitive to read on today’s Guardian front page that Vince Cable has been privately lobbying to water down the UK’s most important climate change targets, while William Hague has sought to defend them.

The FT (£) and Today Programme also reported today how leaked letters show that Vince Cable is arguing that the prime minister should reject on Monday the key recommendations of the government’s independent advisers on how to meet their legal obligations under the Climate Act.

The debate centres on recommendations from the Committee on Climate Change (CCC) that the government should adopt:

• An indicative 2030 target to reduce emissions by 60 per cent relative to 1990 levels;

• A fourth carbon budget of 1,950 million tonnes of carbon dioxide on a gross basis (i.e. without purchasing offsets but done domestically) between 2023 and 2027.

This decision has been described by the head of the CCC - David Kennedy - as “the key test of the government’s commitment to the low-carbon agenda”, and yesterday the director of Friends of the Earth said Huhne should resign out of principle if he failed to persuade the prime minister to follow the CCC’s advice.

Left Foot Forward has learned that it’s not just the foreign secretary backing Huhne, but also Grant Shapps, Caroline Spelman and Oliver Letwin. However, officials in HMT and the Transport Department are lobbying against them and as with the argument over the Green Bank (an argument Huhne lost), it will ultimately be Cameron’s decision when it comes on Monday.

Cable’s remarks will be deeply embarrassing for the Lib Dem leadership, coming as they do just 24 hours after Nick Clegg told Andrew Marr he wanted to put a new sense of priority on the green agenda, and on the same day (and in the same paper) that Danny Alexander told Patrick Wintour he wanted to see a new focus on the environment. It’s also interesting timing for David Cameron as Saturday will mark one year since he promised to lead “the greenest government ever”.

As tensions rise in the coalition, the low-carbon agenda could be seen as part of the glue that could bind the leadership together offering common ground for Tory modernisers and the Lib Dems and an opportunity for the Lib Dems to put some clear water between themselves and the Tory Right. It seems Vince Cable doesn’t see it like that but Monday’s decision from the prime minister will be key.

The Mirror reports this morning that taxpayers face a secret £15 billion bill for new nuclear power stations despite assurances from Nick Clegg earlier this week that the government would not break their coalition agreement promise not to provide handouts to the nuclear industry.

Ian Jackson - a former adviser to the government on nuclear power who has worked in the nuclear sector for 20 years - has prepared a report for Greenpeace on the planned hidden subsidies the government have lined up for new nuclear stations.

These are financial benefits in addition to the windfalls – described in my last blog post – that the nuclear industry can also expect from the introduction of the carbon floor price. Jackson’s report details how the hidden handouts centre on something called the “waste transfer price”.

Put simply, because nuclear waste lasts for many thousands of years, the government inevitably has to take over the management of it as the companies most likely won’t be around. The government proposes that the nuclear generators pay the government to take the waste off their hands.

The price gets fixed in advance so that builders and operators know what they are dealing with; if they don’t the unknown nature of the costs would worry and deter investors. Once the waste has been handed over to the government, cost over-runs fall onto the taxpayer.

So the question arises as what this “waste transfer price” should be. Of course, if the price is too low the taxpayer will be picking up the tab for cleaning up the nuclear industry’s mess.

The government have published their proposals on how to fix the price and it’s this that Ian Jackson looked at for Greenpeace.

There are two elements to how that waste transfer price is made up:

1. Variable unit price – this is the price the government charges for dealing with each tonne of uranium in the waste. This is because each tonne of uranium waste will need careful treating and repackaging into a form that (they hope) means it will remain contained for hundreds of thousands of years. And the more hot uranium waste they have to deal with the more expensive it gets.

The government estimate for this is £1005 million for each reactor – this is the amount that government would receive from EdF (and others if they build reactors). However Ian Jackson proposes that a more realistic estimate, given the challenges of nuclear waste management, is £1450m, so a subsidy of £445m per reactor, or £4.45bn if there are 10 reactors.

2. Maximum price cap – The government will set a cap on the total amount that a utility will pay, again to give the nuclear power industry certainty over their costs. That cap will need to be set reasonably soon. According to their consultation, the government’s estimate for this is £1656m (£1.66bn) for each reactor.

Ian Jackson estimates that, given the historical record of how fast nuclear waste management costs are rising in UK and US (much greater than inflation rate), that the cap could be too low. £2783m (£2.78bn) per reactor is his estimate, making the subsidy from this element of the proposals £1127m per reactor. Or £11.27bn for 10 reactors.

Taken together the two bits of subsidy are £1.57bn per reactor, or £15.7bn for a fleet of 10 reactors.

Crudely put, the energy department is fixing the price for nuclear waste so that taxpayers absorb the final-end risk so that the nuclear industry doesn’t have to.

The front pages of The Daily Telegraph and The Guardian today report comments from deputy prime minister Nick Clegg that new nuclear power stations may no longer be built in the UK.

Clegg reportedly said:

“We have always said there are two conditions for the next generation of nuclear power stations. Firstly, they must be safe and, secondly, we cannot let the taxpayer be ripped off, which is what has always happened in the past.

“There will be no rowing back from the coalition agreement on this, which means there will be no public subsidy. The coalition agreement was very clear.”

As I’ve previously detailed for Left Foot Forward, there are already a planned series of hidden public subsidies designed to make new nuclear plants in Britain possible so ministers including Clegg are already breaking this promise.

One of these hidden subsidies was announced in last week’s budget, and will see billions in taxpayer cash handed to the nuclear industry, including for their existing nuclear stations. As Channel 4’s Krishnan Guru Murphy put it on his blog:

“Your energy bills are going to rise to pay the French.”

Because one of the main beneficiaries is likely to be the French state-backed utility, EDF. On budget day The Times also reported (£) that the introduction of the new floor price for carbon would lead to “invisible subsidies for offshore wind and nuclear power”.

It has been convenient for all three main parties to operate a cross-party consensus on subsidies for nuclear power – that is, to provide them to the industry on the quiet, whilst opposing them in public. This way, the leadership of each party hasn’t really needed to defend itself against accusations they were giving hand outs, but at the same time, they could be reasonably confident new plants would be built.

However, Clegg’s comments yesterday suggest that all this may be about to change. He appears to be drawing a line in the sand, indicating that no more hand-outs will be allowed, even if these are considered necessary by the pro-nuclear lobby, to offset increases in costs arising from the Japanese disaster.

The Daily Mail quotes a Lib Dem source saying that after the recent accident:

“We could be in a situation now where the potential costs and liabilities are higher – that makes it much harder to get private investment.”

This is simply a statement of the obvious. Costs are undoubtedly going to rise for new nuclear following the accident at Fukushima, and it was already the case that no nuclear station has ever been built anywhere in the world without public subsidy. Even for nuclear supporters, the economics of nuclear following events in Japan look more problematic than ever. As the energy secretary Chris Huhne has said, events at Fukushima have:

“undoubtedly cast a shadow over the renaissance of the nuclear industry.”

Clegg may have calculated that with this in mind, the cross party consensus of denying public subsidies would start to become an untenable line. Either his party would need to accept more nuclear subsidies, or it would need to accept the coalition’s nuclear plans would be scaled back or even stopped altogether. His comments indicate that he would prefer to take a punt on the latter, and not the former – perhaps not sure how his party would accept another broken promise just now.  The real question though, is where does this leave Chris Huhne – who has been able to secure Tory support for his low-carbon transition plans, at least in part because of the security they provided to the allies of the nuclear industry.

The Lib Dems have historically had a strong anti-nuclear position. Before the election they claimed to be committed to opposing a new generation of nuclear plants in the UK, saying they were committed to “100 per cent carbon-free, non-nuclear electricity by 2050”. Before the election Huhne himself called nuclear a “failed technology”.

Ironically since then, he has not only u-turned and allowed hidden nuclear subsidies to slip through – but at the same time, his party has lost a series of key battles for measures which could have secured investment in the viable alternatives to nuclear – energy efficiency, renewable energy, and CCS.  

Some might even argue that it’s a little late for Nick Clegg to remember his party’s principled position on nuclear power, when last week saw him cave in to demands from the treasury, to delay the introduction of borrowing powers for the Green Investment Bank. Delays on the GIB, assaults on the newly introduced feed-in tariff, and a general conviction that the coalition preferred nuclear power and gas to wind, solar and tidal power, has seen the a huge slump in investor confidence in renewables investment in the UK. Yesterday the BBC reported green investment in the UK has fallen by 70 per cent in the last twelve months.  

Clegg and Huhne will need to force a major re-think on green investment inside the government as a whole, and particularly inside HMT, if they want their promises on nuclear power and carbon targets to mean more than they have done on tuition fees.

Back in November the prime minister appeared before the cross-parliamentary energy and climate change committee and told MPs that despite newspaper reports of rumours to the contrary, the Green Investment Bank would indeed be a bank and not a fund.

A few weeks later when those rumours and news reports just wouldn’t go away the energy secretary Chris Huhne wrote to The Guardian saying:

“The green investment bank must be a bank. Ducks quack, and banks borrow as well as lend.”

In what is undoubtedly the single most significant decision for the low carbon agenda since this government came to power, the Financial Times reports this morning that the Bank won’t in fact be able to borrow and operate as a proper bank until at least 2015.

Tomorrow’s budget will see the announcement of a duck that can’t quack, or can’t fly, or something. Mr Osborne and his officials have seen off Mr Huhne’s plan and prompted just the latest green u-turn.

Ernst and Young (E&Y) calculated there is a £370 billion low carbon funding gap that needs to be filled by the Green Bank. The Bank was intended to use relatively small amounts of public money to leverage much larger sums of private capital for investment in clean energy and energy efficiency. It was anticipated that a real green bank with the ability to borrow could raise £200-£300bn in private sector investment.

Even before today’s news E&Y warned that confidence in the UK clean tech sector is faltering. Their survey in January found that fewer UK-based corporates, financiers and clean tech companies now believe UK investment in clean energy and clean technology will increase in 2011 compared to 2010.

Just 7% of those surveyed expect there to be sufficient investment in 2011 to give the UK competitive advantage, compared to 17% in research a year earlier.

Hot on the heels of the bad news about the Green Investment Bank, the FT also reports this morning that the key funding stream for the UK’s programme of building at least four Carbon Capture and Storage (CCS) demonstration projects in the UK will also be axed by Mr Osborne later this week. This leaves the coalition agreement pledge to build four CCS demos unfunded with no indication of whether the money will now be raised from general taxation of if the coalition plans to simply renege on their commitment altogether.

The demos had been due to be paid for by a levy on energy bills, which would have raised £9.5 bn, but the scheme would in turn have raised £6.5bn each year, created about 100,000 jobs and made the UK the world leader in developing this cutting edge technology.

The CCS cuts follow confirmation that the government’s scheme for supporting large scale solar power generation via so-called ‘Feed in tariffs’ was cut by 70 per cent last week, just a year after it was created, prompting fury from the clean tech industry and the loss of hundreds of jobs that were in the pipeline.

Like the cuts to CCS technology, this news will deter investment and see jobs and industries going overseas. A partner at Ernst and Young told the BBC:

“The whole investor market was totally disengaged as a result of the feed in tariff being ripped up.”

Equally, Ray Noble at the Renewable Energy Association, a trade body, said:

“No new (solar) projects will start after this comes into effect.”

Now with extremely limited funding for the proposed CCS programme, insufficient funding for renewables and energy efficiency, and with reports in the last few days suggesting even Mr Huhne admits that following Japan there may be delays and cost increases for the government’s proposed new nuclear programme, today’s news casts doubt over the coalition’s entire low carbon strategy.

It’s apparent that only an intervention by the prime minister to reign in Treasury officials, and prevent them from running energy policy entirely out of Number Eleven, will be able to breathe new life into their increasingly laughable claims to be the “greenest government ever”.

A High Court Judge yesterday green-lighted a far-reaching legal challenge that will have significant implications for ministers’ plans for new deep sea oil drilling off Scotland’s coast.

The Guardian recently reported that Chevron’s own modelling showed an oil spill off Shetland could reach the coastline of Greenland and Norway, while The Times reported (£) that, according to an American oil company seeking to drill one of Britain’s deepest wells, a spill could:

“…last for more than ten weeks and involve almost as much oil as was lost from the BP Deepwater Horizon well in the Gulf of Mexico last year.”

The newspaper reported that the company called Hess has admitted that attempts to contain the slick “are unlikely to be effective” because of the heavy seas and high winds common in the area.

Honourable Mr Justice Ouseley said that the High Court would now review the energy secretary Chris Huhne’s decision to grant oil licenses in these deep UK waters following a challenge from Greenpeace. The government will now need to defend in court its decision to waive through new licenses for deep sea oil drilling to the West of Shetland.

If the High Court upholds Greenpeace’s legal challenge, the government would be unable to grant licences for deep sea drilling without completing a thorough environmental assessment of the impact of deep water drilling on specially protected areas.

If the environmental assessment were to reveal risks to protected areas and species then the Ministers would not be able to issue licences in the normal way. Equally, if the Court upholds the challenge, some oil drilling licenses that have already been granted could be quashed.

Earlier this year a cross-party group of MPs warned that taxpayers could end up footing the bill from a major spill in UK waters and said they had “serious doubts” about whether oil companies’ spill response plans would be effective given the harsh conditions off Scotland’s coast.

The Financial Times has also reported how the Health and Safety Executive (HSE) recently warned that there has been a sharp increase in the number of UK oil leaks, saying they regarded them as:

“…potential precursors to a major incident.”

John Sauven, executive director of Greenpeace, said:

“The government is ignoring the lessons from the deep water horizon blow out in the Gulf of Mexico. The BP spill was a game-changer, highlighting the very real risks of dangerous deep sea drilling for both important wildlife and the economy.

“Rather than approving ever riskier oil drilling projects Chris Huhne should be developing a comprehensive plan to end the UK’s dependence on oil.”

“Liberal Democrats have long opposed any new nuclear construction. Conservatives, by contrast, are committed to allowing the replacement of existing nuclear power stations provided that they are subject to the normal planning process for major projects…

“And also provided that they receive no public subsidy.”

That’s the Coalition Agreement on nuclear power. It’s pretty clear – no taxpayers’ money for new nuclear power.

Energy secretary Chris Huhne – who in opposition called nuclear power a “failed technology” – elaborated on this shortly after taking the job, telling The Times (£):

“I have explained my position to the industry and said public subsidies include contingent liabilities.”

But Left Foot Forward understands that via complicated, structural measures, the government is planning on green-lighting a multi-billion pound taxpayer giveaway to the nuclear industry.

Here’s how:

Firstly, Chris Huhne has:

“…agreed to reduce the risk to industry of building nuclear plants by setting a fixed price for disposal of waste.”

This transfers the huge risks associated with nuclear power to taxpayers. As the Oxford Professor of Energy Policy, Dieter Helm, explained back in 2008:

“It’s a fixed-price contract for the government to take the waste. The government absorbs the final-end risk.”

Helm has said recently Mr Huhne’s pledge not to subsidise nuclear plants is “more rhetoric than substance”; he told (£) The Times:

“There has never been a nuclear programme which is entirely funded by the private sector.”

Secondly, as The Sunday Times explained (£) back in May:

“The government is planning to rig the carbon trading market in a move that will encourage the creation of nuclear power plants.”

Peter Atherton, head of European utilities at Citigroup, said:

“Putting a floor under the power price would effectively transfer risk from the nuclear developer to the electricity consumer.”

That sounds a lot like a subsidy. Today the Financial Times published new findings showing the nuclear industry could receive a £3.43 billion windfall this way between 2013 and 2026 via a plan outlined in Mr Huhne’s new energy market reform proposals.

There is nothing intrinsically wrong with introducing a floor price for carbon. It could even be a good idea – offering greater support for clean energy projects and improved energy efficiency. But it should not be used as a backdoor way of giving taxpayer support to a nuclear industry that has already benefited from more than £10 billion in public support in the last decade and that has proven that it can’t stand on its own two feet.

For example, in 1995 the Sizewell B nuclear power plant was completed at a cost to electricity consumers of more than £3bn, yet a year later when the newer nuclear plants were privatised as British Energy, it and seven other nuclear power plants of about the same size were sold for only about half this cost.

In 2002, despite acquiring eight nuclear plants for a fraction of their construction cost, British Energy went bankrupt and was saved only by the government committing £10bn of taxpayers’ money.

The government should find ways to avoid channelling our money into the black hole that is the failing nuclear industry, especially at a time when Ministers say there is such need for cut backs. Green campaigners including WWF point out windfalls for nuclear utilities could be avoided via a windfall tax on those companies to claw back these revenues.

Energy Secretary Chris Huhne pledged that this government will make sure the UK develops the fastest growing renewable energy sector in Europe and creates hundreds of thousands of new jobs in the process. However, a study from Ernst and Young, released in the last couple of weeks, shows that confidence that the government will deliver the right framework for growth in the clean energy sector has fallen sharply following the Comprehensive Spending Review (CSR) and Mr Huhne’s new proposals for reform of the energy market.

Today, he announced another key clean energy scheme aimed at incentivising green power has been put under review, prompting protests from the clean energy industry who said it could lead to job losses, and from Friends of the Earth who warned it was just the latest bad signal to investors on clean energy.

Indeed, the Ernst & Young report found:

“Doubts over whether effective financing frameworks will be in place in 2011 to support growth in the clean tech sector have also markedly increased. The survey found that only 12% believe the right frameworks will be in place, compared to 36% originally.

“Furthermore, the survey also found that fewer people (51%) now believe that UK investment in clean energy and clean technology will increase in 2011 compared to 2010, a fall of 10% from the original survey.

“And just 7% expect there to be sufficient investment in 2011 to give the UK competitive advantage, compared to 17% in the earlier research.”

The Financial Times reported:

“A recent report by Ernst & Young found 97 per cent of 300 people in the UK’s renewable energy and green investment sectors – did not think a stable policy framework had been established to support clean technology.”

The research – which surveyed 529 UK-based corporates, financiers and clean tech companies over the past three weeks – found that just 13% of respondents believe the coalition will establish the conditions for success in the clean tech sector in 2011. This compares to a figure of 38% from a similar survey undertaken between August and October last year.

Steve Lang of Ernst & Young said:

“The government has not yet established a clear and long-term policy framework for clean tech that will unlock the investment needed to establish infrastructure and create jobs in such an internationally competitive sector.”

In fact, not only has the government failed to so far deliver the right framework, they’re also sending the wrong signals to investors they say they want to invest in clean energy. For example, a new report for the government to underlie its proposed reforms to the energy market outlines a new government objective of achieving only 35% of electricity generation from renewable sources by 2030.

Most energy analysts would have anticipated a much higher figure for almost 20 years from now. After all, it is the government’s policy to get 15% of our energy from renewable sources by 2020. By the government’s own admission this means about 29% of our electricity would come from renewables by 2020.

The message the government seems to be sending is that they plan to then put renewables growth on hold as the same documents say they only anticipate another 6% growth in the sector over the following ten years between 2020 and 2030. That doesn’t make sense, especially as between 2020 and 2030 there should be a big increase in demand for electricity due to the planned electrification of transport.

It would appear that these DECC figures aren’t based on technical analysis or cost projections for renewable energy – just officials sending a signal that they’ve heard the demands of a fossil fuel and nuclear industry that don’t want to end up being squeezed out of the energy market.

In another bad signal to clean energy investors, in an early statement to the House of Lords, the government’s spokesman on energy, Lord Marland, said of onshore wind:

“It is our determination that there should be no dramatic increase in this and that the emphasis should be offshore.”

But figures from DECC, exposed by a parliamentary question from Joan Walley MP to energy minister Charles Hendry on January 27th, show there’s been no increase in offshore wind either. In fact, no new offshore renewable projects have been consented for the past two years. Now, delays in consenting risk pushing offshore consortia up against the deadline of 2014 when the current two-renewable obligation credit commitment expires - which could make the projects become uneconomic.

Nick Clegg said just a few days ago:

“We are determined to foster a new model of economic growth, and a new economy – one built on enterprise and investment.”

Last week more than 50 corporations brought out a full page ad in the Guardian calling for David Cameron to intervene and establish a proper Green Investment Bank to use relatively small amounts of public money to incentivise much larger flows of private capital into these new industries, which could form bedrock of the new economy. Signatories to the ad included Jaguar, Pepsi, Microsoft, the TUC and Bank of America.

But as the FT reported, Chris Huhne has been battling regressive Treasury officials over the size and scope of the proposed new bank. Left Foot Forward understands that this may be decided once and for all later this week. The outcome of the battle over the Green Bank will be a litmus test of whether the reality of investment in the new economy will match up to the rhetoric.