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British government poised to label nuclear as “green”, but investors are not impressed

The British government is poised to redefine nuclear power as “green”
as it seeks to drum up more private investment in the sector to improve
domestic energy resilience. Ministers are set to consult on proposals to
change the so-called “taxonomy” — or financial classification system
— of energy in order to redefine nuclear projects as sustainable
investments. It is expected to lead to a reversal of the decision by the
Treasury as recently as 2021 to exclude nuclear power from the so-called
green investment framework.

The move echoes a decision last year by the
European Commission to label both nuclear and some forms of gas as
“green” investments, which prompted legal challenges from Greenpeace
and a coalition of WWF and Client Earth.

The consultation comes as thegovernment is set to provide about £80mn

in seed funding for the launch ofGreat British Nuclear, a new body which will

oversee plans to build a new
generation of nuclear power stations in the UK, according to two people
familiar with the negotiations. Ministers are anxious to accelerate the
programme which has been dogged by delays and cost overruns on the only new
nuclear plant under construction at Hinkley Point in Somerset. The
government, together with French state-backed utility EDF, are trying to
raise £20bn in private finance for the next power station at Sizewell in

But investors have shown little interest in backing greenfield
nuclear projects, because of the construction risks in the highly
regulated, safety- critical sector. All new nuclear projects across Europe
have been hit by delays and big cost overruns.

Nick Stansbury, head of
climate solutions at Legal and General Investment Management, warned that
the changes to the taxonomy were unlikely to drive investment. Ministers
will also update their strategy for reaching net zero by 2050 after a judge
ruled last July that the original document provided insufficient detail and
gave the government a deadline to rewrite it by the end of this month. The
energy department refused to comment.

FT 9th March 2023


March 10, 2023 - Posted by | business and costs, UK

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