Mary Ann Sieghart: What will the fallout be for our own energy policy?

The immediate danger at the Fukushima nuclear plant may have passed. But the fallout is spreading way, way beyond the 20-kilometre exclusion zone in north-east Japan. All over the world, politicians are now facing public disquiet about nuclear power stations and either demanding greater safety measures, suspending building programmes or shutting down existing plants.

In Britain, this may turn out to be a toxic problem for the Coalition. Perhaps mischievously, David Cameron appointed Liberal Democrats to be Secretaries of State for the two most divisive issues in the Government: tuition fees and nuclear energy. Vince Cable has already suffered the pain. Chris Huhne is waiting for it to hit him.

The Liberal Democrat manifesto said the party would "reject a new generation of nuclear power stations". Now Huhne is the cabinet minister in charge of encouraging electricity companies to build 10 new nuclear power stations in Britain.

The timing couldn't be worse. Since the radiation leaks in Japan, the latest YouGov poll shows that 48 per cent of voters oppose new nuclear power stations. These people were disproportionately likely to vote Lib Dem at the last election, as both Labour and the Conservatives supported an expansion of nuclear power. Based on the existing constituency boundaries, if just 1,500 Lib Dem voters in each seat were to move to the Greens at the next election, the Lib Dems would lose a third of their MPs.

There is always a spike in Greenpeace membership after a nuclear disaster, and countries tend to turn against nuclear power for years. However much people are told that coal has, over time, taken more lives than nuclear, there is something particularly scary about the invisibility of radiation and the fact that it threatens everyone in the affected area, not just people who choose to earn their living by going down a mine.

Also, the whole calculus of risk has changed since the credit crunch. The drying up of the wholesale credit markets was thought to be such an improbably tiny risk that no bank bothered to prepare for it. But, as Nassim Nicholas Taleb famously wrote in The Black Swan,it is events with small probabilities but devastating consequences that trip us up most catastrophically. He has received nearly 600 requests for interviews on the "black swan" that has just hit Japan (and turned down all but one).

Huhne's response to the Japanese disaster was to commission a report into the safety of British nuclear plants by the chief nuclear officer, Dr Mike Weightman. The interim findings will be published in May and the full report in September. Already, pro-nuclear Tories are suspicious. "I do have a sense that this is back-pedalling," one told me yesterday. "It suits Chris Huhne very well, as he's in an awkward position vis-à-vis his party. My sense of it is that he'll use this to walk away from the commitment to build new nuclear."

Actually, it is unlikely he will do so as directly as the German Chancellor, Angela Merkel, who has ordered seven nuclear power stations to be temporarily shut down. But he may hope the market will achieve for him what, in the context of a Coalition Government, he couldn't do alone.

The Coalition Agreement has a contorted passage on nuclear energy, which allows for the Government to put a "national planning statement" on new nuclear power stations before Parliament, at which point a Lib Dem spokesperson will oppose it, and Lib Dem MPs may abstain. Crucially for Huhne, the agreement confirms that there will be no public subsidy for new nuclear.

Behind the scenes, though, there is some argument about what constitutes subsidy. At a hearing of the Environmental Audit Committee in January, the Economic Secretary to the Treasury, Justine Greening (a Tory), astonished the Lib Dems and infuriated the Green MP, Caroline Lucas, by suggesting that the new Green Investment Bank might be allowed to give low-cost loans to the builders of new nuclear plants. If that's not a subsidy, I'm a banana.

Others suggest that Huhne's own plans for feed-in tariffs and contracts for difference (don't worry about the jargon) also constitute subsidies for nuclear, as they will apply as much to nuclear as to renewable energy such as wind power. According to a senior Tory yesterday, "It's just a fig leaf to cover up the fact that if you're going to justify the huge investment that goes into building nuclear power stations, you've got to guarantee that the investment will get a return. It's a device to conceal something that we don't want to call a subsidy."

For the Lib Dems, the nuclear issue could blow up into something nearly as potent as tuition fees. Thousands of students and environmentalists are likely to demonstrate at the sites of new power stations, just as they did when a new coal-fired station was mooted in Kent. In yet another throwback to the Eighties, nuclear power could turn into another Greenham Common. And while Margaret Thatcher relished taking on the CND protestors, who most definitely weren't "one of us", Lib Dem ministers would feel extremely uncomfortable about turning on their own kind.

So Huhne's only hope is that the financial markets rescue him and his party. The electricity companies will have to raise their own money to build these plants, and the cost of capital has already risen significantly since the Fukushima disaster. After the Three Mile Island nuclear incident in 1979, the market refused to finance any new build in America. Until then, virtually every reactor there had been built with private money.

Nuclear energy was a risky investment before the Japanese earthquake. A new power station in Finland, which was much praised for its modern, safe design, has turned out to cost twice as much as planned and is now four years overdue. If, as a result of safety reviews, governments demand even stricter safety measures on new plants, then the rate of return to investors will look less attractive still.

If that happens, Chris Huhne can sincerely tell his coalition partners that he is doing all he can to get new reactors built in Britain. And if it simply can't be done? Well, it won't be his fault. Just blame the markets.

m.sieghart@independent.co.uk

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