The Week in Green - BusinessGreen Blog

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The Week in Green

So has the government promised subsidies to support the next generation of nuclear power stations?

No, insists John Hutton, the market will decide if they are built or not. Yes, argue the green groups, its all in the small print, the government help out with dismantling costs if required and will also deliver "greater certainty for investors" by underpinning the price of carbon if need be – though whether this will ever be needed given revelations this week from the European Commission that it is committed to delivering significant increases in the price of carbon from 2013.

As Polly Toynbee eloquently explained in this morning's Guardian the rest of us are left to try and work out which set of physicists and economists we should believe: the ones who support nuclear or those who think the government has just made a costly and potentially dangerous error. It really is a case of nuclear physics and the vast majority of us aren't really qualified to work out who is in the right.

For green businesses in particular the nuclear question, like the question of Heathrow expansion, is deeply vexed. The government has argued that nuclear must make up part of the energy mix if we are to hit our carbon emission targets and has made nuclear's low carbon credentials a key part of the case for new nuclear power stations.

Most business groups, including the CBI have bought this line of reasoning, and there is little doubt that new nuclear is preferable to anymore fossil fuel power stations.

But even leaving aside the unresolved issue of what to do with the radioactive waste there have to be valid concerns that the sheer scale of the investment that will flow into nuclear will leave renewable energy projects decidedly cash strapped. As Ecotricity's Dale Vince argues, if onshore wind had received just a fraction of the cash nuclear has taken off the government over the years the UK would already be the greenest country in the world.

Inevitably the government has offered assurances that the energy bill will also bolster support for renewables, but despite the welcome introduction of improved subsidies for offshore wind and marine technologies it is hard to take its commitments that seriously when it continues to cling to its perverse refusal to embrace the feed in tariff mechanism which has proved far and away the most effective means of driving renewable energy adoption. It is hard to dispute the Renewable Energy Association's view that even with the new Energy Bill we remain well off the pace if we want to meet the EU target of generating 20 per cent of energy from energy from renewables by 2020.

Thankfully the green business sector is doing its upmost to make up the lost ground, be it through the ongoing flow of capital into renewables as evidenced this week by SSE's acquisition of Airtricity and GE's new alternative energy investments; the torrent of new energy efficient products many of which were on display at this week's Consumer Electronics Show in Las Vegas; the emergence of potentially sustainable fuel crops such as Switchgrass and Jatropha, the auto industries new found commitment to green cars; or the booming carbon offset market.

And yet without unequivocal support from government all these sectors face an uphill struggle to deliver the carbon savings that they all promise.

The revelation this week that changes to the Treasury's capital allowances tax breaks will effectively undermine existing green tax breaks may not affect vast numbers of firms but it is indicative of the contradictory and muddled thinking that characterises too many of the government's climate change decisions.

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