Nuclear power projects such as Sizewell C in Suffolk will be granted so-called “green” status under plans by Jeremy Hunt to unlock billions of pounds in funding for the industry.
The Chancellor is expected to announce the change within weeks as part of a broader shake-up of the UK’s financial rules on green energy.
It would see nuclear power projects classed as “green” or “sustainable” investments, clearing the way for more institutional investors and environment-focused funds to back them.
There are also hopes that the Treasury could fund new power plants with money raised through the Government’s green gilts and green savings bonds.
Generating nuclear power does not produce carbon dioxide, so the sector is seen as a key plank of Britain’s plans to reach net zero emissions by 2050.
A recent review by former energy minister and Tory MP Chris Skidmore said that supporting the construction of more nuclear reactors was a “no regrets” option.
However, the sector has faced difficulties portraying itself as environmentally friendly in the past because of concerns about nuclear waste, water usage, and the remote but catastrophic risk of nuclear accidents.
Top fund managers such as Legal & General and Aviva have previously expressed caution about the green credentials of nuclear, with Aviva chairman George Culmer last year saying there was an “ongoing debate”.
Nuclear industry insiders believe classing projects as “sustainable” would clear up much of this uncertainty, because it would allow investments to count towards the environmental targets of investors and major companies.
However, they were left disappointed in 2021 when the Government excluded nuclear power from the UK’s green investment framework.
Since then, the EU has given the technology its blessing and British ministers have suggested they now want to include nuclear in the refreshed investment guidance, however. In December they admitted plans to do so had been held up, blaming the “complexity” of the issue.
But a Whitehall source told the Telegraph that the proposals remain a “priority” and will be covered in a green finance strategy that the Treasury is expected to publish within weeks.
It comes as the EU is facing legal challenges against its own green taxonomy rules from charities including Greenpeace and ClientEarth, which have argued that the inclusion of nuclear and “sustainable gas” are political decisions rather than science-based ones.
A Treasury spokesman said: “New nuclear is key to Britain’s energy security, that’s why we intend to include nuclear in the UK Green Taxonomy, subject to consultation.
“It is important we take the time to get the taxonomy absolutely right, given the challenges faced in Europe.
“We plan to publish an update in due course as part of the Green Finance Strategy.”
Tom Greatrex, chief executive of the Nuclear Industry Association, joined other industry leaders earlier this month to urge Rishi Sunak and Mr Hunt to speed up the rule changes so that cash could be drummed up more quickly for projects such as Sizewell C.
He told The Telegraph: “Nuclear power is green. The UN confirms nuclear has the lowest lifecycle carbon, lowest land use, and lowest ecosystem impact of all electricity generation technologies.
“Investors are watching and waiting on the Government’s decision, and we urge the Prime Minister to follow through on the commitments that have been given and give nuclear the green label it deserves.
“It would make it cheaper and easier to finance nuclear projects from a wider pool of capital, which is what we need for our energy security and net zero.”
In December, the UK Sustainable Investment and Finance Association said it was “hugely disappointed” with the delay to the new taxonomy rules after a lack of clarity on the issue throughout 2022.
It warned that Britain risked falling behind the EU and other jurisdictions unless it made its position clear soon.
As part of the energy security strategy published last year, the Government is scrambling to boost the UK’s nuclear capacity as part of plans to reach net zero by 2050.
The technology is seen as an important and stable source of electricity that will help to balance out more intermittent sources such as solar and wind, as the UK winds down its use of coal and natural gas in the coming decades.
The UK has just five nuclear power stations left, with all except one – Sizewell B – currently scheduled to close by 2028.
Only one new plant, Hinkley Point C in Somerset, is under construction, while the Government has pledged about £700m to get a second, £20bn project in Suffolk, Sizewell C, off the ground.
Source: Yahoo News