Jeremy Hunt has been accused of wagering a “dangerous gamble on unproven technologies” in an effort to decarbonise Britain’s energy industry after ploughing more than £20bn into a series of projects.
In his budget speech, the chancellor confirmed plans to spend the money over the next two decades on carbon capture and low carbon energy projects; announced a competition to co-fund small nuclear plants and launched a consultation to classify nuclear as “environmentally sustainable”.
The government has created Great British Nuclear, a body designed to ease the creation of nuclear projects which are regularly delayed and over budget, and set a target for nuclear to “provide up to one quarter of our electricity by 2050”.
Hunt, who has been under pressure to respond to Joe Biden’s $369bn (£306bn) of climate subsidies, said: “Increasing nuclear capacity is vital to meet our net zero obligations.”
However, climate campaigners attacked the drive, which had no giveaways for the solar or wind industries.
Ami McCarthy, Greenpeace UK’s political campaigner, said: “This misguided budget shows the stranglehold fossil fuel and nuclear lobbies have on this government. Why else would it take such a dangerous gamble on unproven technologies?
“Squandering taxpayers’ money on nuclear reactors that don’t even exist yet and fanciful carbon capture is irresponsible, and does nothing to reduce our emissions now.
“Committing to £20bn over 20 years is frankly pathetic compared to the green growth investments being made in the US, EU and China.”
Helen Clarkson, chief executive of Climate Group, said: “This spring budget overlooks cheap and clean renewable energy, and instead rebrands nuclear as ‘environmentally sustainable’ and throws cash at carbon capture technology. This was a missed opportunity to renew the UK’s commitment to climate leadership.”
Senior nuclear industry figures said the reclassification would help attract investors to fund the proposed Sizewell C nuclear power plant in Suffolk, which the government has committed £700m towards.
Tom Greatrex, chief executive of the Nuclear Industry Association, called the move a “huge step forward for UK energy security and net zero”.
But Stuart Murphy, founder of tidal energy specialist TPGen24, said: “There is nothing environmentally sustainable about a finite resource which leaves a legacy of hazardous waste.”
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Britain’s energy industry has been under the spotlight since the war in Ukraine pushed already-high oil and gas prices higher.
On Wednesday, Hunt confirmed a widely expected U-turn in on a planned cut to energy support for households. He also said that from July, 4m households on prepayment meters will see their bills aligned with those on direct debits, who currently pay less.
The Office for Budget Responsibility (OBR) said it expected to see taxes brought in from oil and gas firms for 2022-23 quadruple on last year to £11bn, representing just a fifth of the £55bn in annual global profits of British energy giants BP and Shell.
The government introduced a windfall tax on North Sea oil and gas operators last May. The OBR said falling wholesale gas prices meant it had cut its forecasts by £4bn this year, and £10bn next year, compared with forecasts made in November.
The OBR also said it expects the bailout of Bulb to cost a further £3bn “but much of that cost is ultimately likely to be recouped” over an uncertain timeframe following the sale of the bust energy supplier to Octopus Energy.
