Only the very poorest countries would be eligible to receive funds for building new coal-fired power stations under proposed new rules
Fiona Harvey , environment correspondent guardian.co.uk, Monday 4 April 2011 09.56 BST
The World Bank is planning to restrict the money it gives to coal-fired power stations, bowing to pressure from green campaigners to radically revise its funding rules.
The new proposals would not mean an end to funding for fossil fuels, but would represent a departure from previous regulations. Under these rules, the bank has provided sizeable financial support for coal-fired power stations in the developing world in spite of protests from governments and green groups.
Under the proposed new rules, only the very poorest countries would be eligible to receive grants or loans for building new coal-fired power stations, and then only if they could prove they were necessary and that alternatives – such as renewable energy – were not feasible.
An entirely new energy strategy is being written by the development bank, in part because of concerns that its current funding practices favour fossil fuel power. The new draft proposals, seen by the Guardian, emphasise the potential of renewable sources of energy.
But the proposals were criticised by campaigners as inadequate. "The draft strategy is disappointing. It looks as though the World Bank is trying to greenwash its activities while by and large continuing with dirty business as usual," said Alison Doig, senior adviser on climate change at the charity Christian Aid. "While it proposes a ban on coal lending to middle-income countries, the bank will continue its fossil fuel investments in the poorest countries, condemning them to a high-carbon future. In real terms, this means that the bank could still end up spending more than ever on fossil fuels, because it intends to keep backing such dirty projects in the poorest countries."
She added: "The draft strategy eloquently describes the plight of the more than 2 billion people who live in energy poverty, cooking on smoky open fires and with no electric lighting and no power for their small businesses. But it is worryingly vague about how it will tackle this and the target is woefully short on ambition - it would reach less than 2% of people who currently do not have electricity in their homes."
The World Bank's record on funding fossil fuels has long been a target of green campaigners. Last year, for instance, the World Bank was attacked for its controversial decision to grant nearly $4bn (£2.5bn) to the South African company Eskom to build what would be one of the world's largest coal-fired power stations.
The bank spent £3.4bn – one-quarter of all its spending on energy projects – on coal-fired power in developing countries in the year to June 2010. That was 40 times more than the sum spent five years previously.
Robert Zoellick, the president of the World Bank, has frequently spoken out in public about the need to realign the institution's funding criteria with its climate change goals. The World Bank is also one of the world's biggest funders of low-carbon energy generation, but critics complain that there has been a lack of a coherent, institution-wide strategy on energy funding to date.
The bank has also been attacked for its attempts to take over the international funding of climate change projects. Under the 2009 Copenhagen accord, the bank could be charged with dispensing the billions of funding that rich countries are due to send to poor countries, in order to help them cope with the effects of climate change and cut greenhouse gas emissions.
Doig said: "The World Bank seems to think it can manage the world's new climate funds while continuing to bankroll high-carbon development. Instead, it should be coming up with a coherent, credible strategy to promote thriving green economies which help developing countries to adopt technologies fit for the 21st century."
The new proposals are likely to take months to be accepted.
Tuesday, 5 April 2011
Loophole in energy bill could see UK taxpayers funding nuclear bailouts
Obscure clause would make government liable for unexpected costs, despite assurances that the industry will not receive public subsidies
Fiona Harvey , environment correspondent guardian.co.uk, Monday 4 April 2011 15.36 BST
The coalition government is opening a legal loophole that could allow taxpayer-funded guarantees to nuclear power stations, while publicly insisting that the industry will stand on its own.
An obscure clause in the forthcoming energy bill, seen by the Guardian, means that nuclear power companies could in future be eligible for bailouts, despite ministers' repeated denials that no public subsidies would be made available. The move also threatens to open cracks in the coalition over nuclear energy, with Liberal Democrat members and grassroots opposed to the technology.
The apparent back-tracking by the government came as a key debate in parliament on Monday night over the government's record on green issues had to be cancelled, to the fury of Labour MPs.
Clause 102 of the energy bill currently going through parliament provides for the secretary of state to make public agreements with nuclear power companies on how much they will spend on certain items, such as decommissioning. But the government cannot change these public agreements in future if new situations arise – for instance, if a new safety feature is developed that ought to be installed. If the nuclear company stuck to the original agreement, the cost of these unforeseen circumstances would then have to be met by the taxpayer instead.
Meg Hillier, the shadow spokeswoman for energy and climate change, said: "This clause is so confusing and loosely worded that it really does leave open a potential loophole that could leave taxpayers facing liabilities in future. The government is saying one thing on nuclear and doing another."
The Department of Energy and Climate Change (Decc) said the clause would not allow for taxpayer money to flow to nuclear power, but green campaigners and Labour MPs are concerned that the loose wording of the provision means that future governments and nuclear companies could take advantage of it to allow bailouts. The clause also represents a major problem for Liberal Democrat MPs, who back coalition moves to reform the energy industry, despite the party's opposition to nuclear power.
The Lib Dems had said in their election manifesto that they would reject new nuclear power stations and the climate and energy secretary, Chris Huhne, had previously branded nuclear a "failed technology". The coalition compromise was that new nuclear power stations would only be built if they received no public subsidy.
Under current rules, the secretary of state is allowed to approve a "funded decommissioning programme", by which a company explains how its nuclear sites are to be cleaned up and how the waste will be dealt with. Companies are required to put aside sufficient money for clean-ups.
However, under clause 102 (previously clause 99 when the bill was debated in the House of Lords), these obligations will be subtly changed, because the secretary of state can give a guarantee at the outset that any arrangement with the nuclear company cannot be amended in the future, except by mutual consent. This will mean that if anything unexpected happens – for instance, if there is an accident at a plant, or issues with stored waste, or if new safety features are developed that should be installed – then the government would become liable for the extra cost, rather than the nuclear plant owner.
Nuclear power developers are likely to insist that the secretary of state exercises this power, in order to minimise their future risk and reassure investors. The transfer of that risk to taxpayers represents a hidden subsidy to the nuclear industry, according to green campaigners.
Decc said the clause would not pave the way for taxpayer funding. An official told the Guardian: "It's not a weakening of the rules on what the nuclear industry will have to pay for. The Energy Act 2008 ensures that prospective operators of new nuclear power stations must accumulate funds to cover the costs of decommissioning their facilities and of managing and disposing of their waste. To ensure this, operators must submit a Funded Decommissioning Programme (FDP) for approval by the secretary of state. When approving an FDP the secretary of state must be satisfied that it makes prudent provision for all the costs. The amendment does not alter any of these requirements. [It] allows the secretary of state to enter into an agreement with a prospective operator setting out how he will, or will not, exercise this power to modify an FDP. The aim of such an agreement is provide to greater clarity and certainty to investors to enable them to make the very large investments necessary. However, when entering into such an agreement, again, the secretary of state must do so with the aim of ensuring prudent provision."
But green campaigners said that allowing ministers to enter into agreements that could not be adapted to changing circumstances was a mistake. Martyn Williams, an energy expert at Friends of the Earth, said: "It's incredible that ministers can keep a straight face when promising not to subsidise new reactors – they're already drafting new laws to bail out the nuclear industry with taxpayers' money if radioactive waste costs are higher than expected."
He added: "The Alice-in-Wonderland economics of nuclear power are notorious and cost overruns are frequent. These proposals to shift financial risks on to taxpayers are yet another hidden subsidy."
The coalition has repeatedly stressed that nuclear power plants would not receive public subsidies under their reforms. However, the planned "floor price" for carbon dioxide emissions, which will prop up the price of carbon that fossil fuel industries have to pay, and other measures that benefit "low-carbon power generation" – which includes nuclear power as well as renewables such as wind and solar – will bring financial advantages to the nuclear industry. Up to eight new nuclear power stations are planned for the UK.
The government's former chief scientist, Sir David King, has sought to allay fears arising from the nuclear incident in Japan by saying nuclear power is "the safest form of electricity generation", and has pointed out that passengers on transatlantic jets are exposed to more radiation than people in the Fukushima district around the stricken power plant.
The scheduled debate on the coalition's green record was cancelled following an unusual move by the government, which tabled four public statements that meant there would not be enough time for the 7pm debate.
Hillier added: "Chris Huhne seems to have a habit of disappearing. He is leading a green ghetto, and is not being listened to by the rest of government." She said the debate cancellation was the result of "high-handed" behaviour by the government. "I don't sense that being green is a coalition-wide priority."
But a government source said that instead of cancelling the debate, Labour could have agreed to shorten it or cancel a debate on policing instead. The source also pointed out that the Labour front-bench tabled an urgent question, which also contributed to the loss of time available for the debate.
Labour has pledged to amend the clause during the committee stage of the bill.
Fiona Harvey , environment correspondent guardian.co.uk, Monday 4 April 2011 15.36 BST
The coalition government is opening a legal loophole that could allow taxpayer-funded guarantees to nuclear power stations, while publicly insisting that the industry will stand on its own.
An obscure clause in the forthcoming energy bill, seen by the Guardian, means that nuclear power companies could in future be eligible for bailouts, despite ministers' repeated denials that no public subsidies would be made available. The move also threatens to open cracks in the coalition over nuclear energy, with Liberal Democrat members and grassroots opposed to the technology.
The apparent back-tracking by the government came as a key debate in parliament on Monday night over the government's record on green issues had to be cancelled, to the fury of Labour MPs.
Clause 102 of the energy bill currently going through parliament provides for the secretary of state to make public agreements with nuclear power companies on how much they will spend on certain items, such as decommissioning. But the government cannot change these public agreements in future if new situations arise – for instance, if a new safety feature is developed that ought to be installed. If the nuclear company stuck to the original agreement, the cost of these unforeseen circumstances would then have to be met by the taxpayer instead.
Meg Hillier, the shadow spokeswoman for energy and climate change, said: "This clause is so confusing and loosely worded that it really does leave open a potential loophole that could leave taxpayers facing liabilities in future. The government is saying one thing on nuclear and doing another."
The Department of Energy and Climate Change (Decc) said the clause would not allow for taxpayer money to flow to nuclear power, but green campaigners and Labour MPs are concerned that the loose wording of the provision means that future governments and nuclear companies could take advantage of it to allow bailouts. The clause also represents a major problem for Liberal Democrat MPs, who back coalition moves to reform the energy industry, despite the party's opposition to nuclear power.
The Lib Dems had said in their election manifesto that they would reject new nuclear power stations and the climate and energy secretary, Chris Huhne, had previously branded nuclear a "failed technology". The coalition compromise was that new nuclear power stations would only be built if they received no public subsidy.
Under current rules, the secretary of state is allowed to approve a "funded decommissioning programme", by which a company explains how its nuclear sites are to be cleaned up and how the waste will be dealt with. Companies are required to put aside sufficient money for clean-ups.
However, under clause 102 (previously clause 99 when the bill was debated in the House of Lords), these obligations will be subtly changed, because the secretary of state can give a guarantee at the outset that any arrangement with the nuclear company cannot be amended in the future, except by mutual consent. This will mean that if anything unexpected happens – for instance, if there is an accident at a plant, or issues with stored waste, or if new safety features are developed that should be installed – then the government would become liable for the extra cost, rather than the nuclear plant owner.
Nuclear power developers are likely to insist that the secretary of state exercises this power, in order to minimise their future risk and reassure investors. The transfer of that risk to taxpayers represents a hidden subsidy to the nuclear industry, according to green campaigners.
Decc said the clause would not pave the way for taxpayer funding. An official told the Guardian: "It's not a weakening of the rules on what the nuclear industry will have to pay for. The Energy Act 2008 ensures that prospective operators of new nuclear power stations must accumulate funds to cover the costs of decommissioning their facilities and of managing and disposing of their waste. To ensure this, operators must submit a Funded Decommissioning Programme (FDP) for approval by the secretary of state. When approving an FDP the secretary of state must be satisfied that it makes prudent provision for all the costs. The amendment does not alter any of these requirements. [It] allows the secretary of state to enter into an agreement with a prospective operator setting out how he will, or will not, exercise this power to modify an FDP. The aim of such an agreement is provide to greater clarity and certainty to investors to enable them to make the very large investments necessary. However, when entering into such an agreement, again, the secretary of state must do so with the aim of ensuring prudent provision."
But green campaigners said that allowing ministers to enter into agreements that could not be adapted to changing circumstances was a mistake. Martyn Williams, an energy expert at Friends of the Earth, said: "It's incredible that ministers can keep a straight face when promising not to subsidise new reactors – they're already drafting new laws to bail out the nuclear industry with taxpayers' money if radioactive waste costs are higher than expected."
He added: "The Alice-in-Wonderland economics of nuclear power are notorious and cost overruns are frequent. These proposals to shift financial risks on to taxpayers are yet another hidden subsidy."
The coalition has repeatedly stressed that nuclear power plants would not receive public subsidies under their reforms. However, the planned "floor price" for carbon dioxide emissions, which will prop up the price of carbon that fossil fuel industries have to pay, and other measures that benefit "low-carbon power generation" – which includes nuclear power as well as renewables such as wind and solar – will bring financial advantages to the nuclear industry. Up to eight new nuclear power stations are planned for the UK.
The government's former chief scientist, Sir David King, has sought to allay fears arising from the nuclear incident in Japan by saying nuclear power is "the safest form of electricity generation", and has pointed out that passengers on transatlantic jets are exposed to more radiation than people in the Fukushima district around the stricken power plant.
The scheduled debate on the coalition's green record was cancelled following an unusual move by the government, which tabled four public statements that meant there would not be enough time for the 7pm debate.
Hillier added: "Chris Huhne seems to have a habit of disappearing. He is leading a green ghetto, and is not being listened to by the rest of government." She said the debate cancellation was the result of "high-handed" behaviour by the government. "I don't sense that being green is a coalition-wide priority."
But a government source said that instead of cancelling the debate, Labour could have agreed to shorten it or cancel a debate on policing instead. The source also pointed out that the Labour front-bench tabled an urgent question, which also contributed to the loss of time available for the debate.
Labour has pledged to amend the clause during the committee stage of the bill.