Blair wants UK to keep nuclear power

Tony Blair will this week order the Government to keep open the option of building a new generation of nuclear power stations, despite receiving a report calling for much more investment in green sources of energy.

He and Energy minister Brian Wilson are determined not to close down nuclear energy in Britain, and will draw on passages in the report – prepared for him by his own Performance and Innovation Unit – that support this.

Environmentalists, citing selective leaks from the report, claimed last week that it condemned nuclear power, and would finish off the industry in Britain. In fact it is more balanced and says that "policy should keep the nuclear option open". But it recognises that, at present at least, nuclear power plants are likely to be too expensive to be built.

The report – a copy of which, dated 10 December, has been obtained by The Independent on Sunday – has been the subject of a fierce battle behind the scenes between the pro-nuclear Mr Wilson, who chaired an advisory group of ministers, and critics Peter Hain, the Foreign Office minister, and Michael Meacher, the Environment minister.

It also appears to have been heavily modified by officials in its final stages, to soften its approach on nuclear power and to make its emphasis less green. Earlier drafts stressed that protecting the environment should be the overriding principle. But the report now suggests that "economic and social objectives" could be given equal weight.

Nevertheless, the report emphasises the urgency of adopting "a radical agenda to enable the UK to put itself on the path to a low-carbon economy" – minimising the burning of fossil fuels which emit carbon dioxide, the main cause of global warming.

It pushes for a massive increase in electricity from renewable sources such as wind, sun and waves, saying that, as a target, these should provide a fifth of all power generated in Britain by the year 2020. This is lower than a 30 per cent target earlier considered by the unit, which reports to the Cabinet Office, but would still represent an eightfold increase over the proportion now generated in this way.

But it tacitly acknowledges that the Government has not made enough progress towards its present target of generating 10 per cent of energy from renewable sources by 2010. It makes recommendations on removing obstacles, including "the working of the planning system", which have held up progress.

The report also calls for a "step change in the nation's energy efficiency". Energy conservation in homes should be increased by 40 per cent by 2020, "approximately double the existing rate of improvement". This in turn, would help combat fuel poverty.

When the review was set up under Mr Wilson's leadership, nuclear companies believed that its report would revive their fortunes. British Energy and British Nuclear Fuels, which run the UK's 15 nuclear power stations, have been pressing to build new reactors as the present ones close.

The report takes an even-handed approach. It says new reactors should get the same incentives as other sources of power that do not emit carbon dioxide. But it also suggests that the industry should also meet the costs of waste disposal and reactor decommissioning – almost certain to make it uneconomic.

The report says that nuclear power is likely to be too costly for many years to come, and points out that no country has ever chosen to build reactors under free-market conditions. It calls for the development of cheaper reactors that produce less waste.

The Prime Minister, however, is said to be committed to retaining nuclear power as an insurance policy against the threat of oil or gas imports being cut off in the future by wars in the Middle East.

What Blair's advisers said...

On nuclear power: "Policy should keep the nuclear option open while ensuring that the energy system can respond flexibly to a new environment ... The Department of Trade and Industry should take the necessary action to keep open the nuclear option."

On cost: "Nuclear power seems likely to remain more expensive than fossil-fuelled generation."

On competitiveness: "Nowhere in the world have new nuclear power stations yet been financed within a liberalised electricity market."

Faster planning appeals for new plants: "The DTLR proposal for the reform of planning will address the current concerns which investors have concerning the planning process applicable."

On fuel poverty: "The UK still stands out as a country where, in contrast to the position of our Northern neighbours, many people spend a substantial proportion of their income of fuel, largely as a result of the age and energy inefficiency of the housing stock."

On renewables: "If renewables are ever to become a major feature of the UK energy balance, the industry needs the assurance that demand will continue to grow."