Russia’s invasion of Ukraine triggered an unprecedented period of energy price volatility. Energy security is now an important national and global priority. Russia’s position as a European fossil fuel giant gave Putin the brazen confidence to invade Europe, thinking the West would not react for fear of high energy prices.
I am proud that the British government stood up to Putin by providing arms and resources to Ukraine, while urging our NATO allies to maintain their support. But it is undeniable that this has a cost. Even though we depend very little on Russia for our oil and gas directly, we cannot protect ourselves from the volatility of the fossil fuel markets in which Russian companies are major players and on which we rely.
The fact is that we can never hope to influence the price of oil and gas, which are traded internationally. It is simply impossible for the UK to fill the void left in the European gas market, which we rely on. The North Sea is a mature basin and we export most of the gas we extract from it. The economic viability of exploiting our shale gas reserves is far from certain, but even if it were economic, it would not be a game-changer in terms of wholesale gas prices, just like sea gas North did not.
We currently depend on gas for most of our heating, but also for electricity production. We can protect households from gas price volatility by bringing more electricity generation capacity online from non-fossil fuels. This is the central idea of the British energy security strategy: to secure our gas supplies as much as possible, but while seeking to reduce our dependence on gas as soon as possible to reduce energy costs.
This is where nuclear power comes in. The security strategy declared an end to the UK nuclear lethargy which began with Tony Blair but sadly continued throughout the 2010s. adds to a series of other measures by this government, such as the Nuclear Energy (Funding) Act, the launch of the Future Nuclear Enabling Fund, the Future Fuels Fund and the confirmation of High Temperature Gas Reactors (HTGR) as the technology of choice for advanced nuclear demonstration.
More nuclear means cheaper gas to keep the lights on. Along with renewables, which have seen a dramatic drop in price over the past ten years, this will also help the government achieve its goal of a carbon-free electricity system by 2035 and a net-zero emissions economy. carbon by 2050. – nuclear and renewable energies – are now the key to achieving the three priorities of a good energy policy: security of supply, affordability and sustainability.
But there is a fourth bonus of the British nuclear renaissance: economic growth. The North West nuclear arc – of which my constituency (Ynys Môn) is a part – is home to much of the supply chain that will benefit from the eight new nuclear power plants the government is seeking to build. Each worker in the nuclear industry contributes an average of £96,000 of gross value added to the economy and has a median wage of around £45,000. Betting big on the highly skilled and well paid industry spanning the North West of England and North Wales is surely what the upgrade is all about.
However, while the nuclear industry has enjoyed enthusiastic support from the summit at 10 Downing Street, there is still work to be done to mobilize as much private investment into the industry as possible.
The Treasury is currently developing its “green taxonomy”, which clarifies for investors what is “green” and what is not. The rationale for the taxonomy is to mobilize as much private finance as possible into the net zero transition, as soon as possible. Although it is a form of carbon-free electricity generation, there is apparently a danger that nuclear power will be excluded from the “green” list.
This would not prevent investment in nuclear, of course. But investors are looking for “green” investments to meet their sustainability goals and because they know that, while 90% of the global economy is already covered by net zero goals, “green” means “growth”. Not having nuclear on the green list would simply mean a missed opportunity to get as much private investment as possible into this vital sector. This would potentially mean a greater role for taxpayers’ money, given the energy security imperative.
Also, if not greenlisting it increases the cost of capital by even one percentage point due to uncertainty, it could add a huge, unnecessary cost to building our new plants. electrical, reaching hundreds of millions of pounds.
The transition to clean energy is necessary, as continuing to depend on fossil fuels would mean a precarious, unaffordable and unsustainable energy system. Nuclear power – especially advanced, small-scale modular reactors – has a key role to play in this transition, providing the base load that coal and gas once provided and supporting renewables. Giving nuclear the final green light in the Treasury taxonomy is a must.