Planned reforms to electricity markets will act as a subsidy system for new nuclear reactors that disadvantages other low-carbon technologies, a committee of leading MPs warn.
The Energy Select Committee will argue in a report released on Monday that the Government is being “deeply irresponsible” by refusing to admit that households will be subsidising up to 10 new nuclear power stations as a result of the reforms.
The Government favours a blanket package of measures aimed at encouraging all low carbon generation, because it has publicly committed not to subsidise the nuclear power building programme.
However, the committee believes that wind, tidal and solar power may suffer because incentives are not tailored to each sector.
The concerns come as some of Britain’s biggest industrial companies have warned the Government that plans for a UK tax on pollution in addition to European Union levies will destroy jobs.
Tata Steel, chemicals giant Ineos, and Syngenta, the seeds and pesticides group, are all reported to have lobbied Whitehall against the new “carbon floor” tax that will start in 2013.
The Business Department will also come under pressure this week to allocate funds from the £3bn Green Investment Bank to small-scale renewable energy projects that will deliver results more quickly than large-scale nuclear and wind power investments.
The Co-operative Bank has written to Vince Cable, the Business Secretary, today to argue that around 6,500 jobs and £56m in tax revenues could be generated if funding for small-scale projects is prioritised in the short term.
Tim Yeo, chairman of the energy select committee, said it was “not too late” to change proposed reforms to the electricity market to make them simpler.
“The Government must be up front about the support it is giving to nuclear and not hide subsidies in a one-size-fits-all design for long-term energy contracts,” Mr Yeo said.
Gaynor Hartnell, chief executive of the Renewable Energy Association, said: “One size will very definitely not fit all when it comes to what type of contract will suit renewable and low carbon generation. On that, and much more, we are in complete agreement with the committee.” EDF Energy poised to begin nuclear ‘push’.