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EC urged to block 100-year subsidy to UK nuclear firm

(Brussels, 17 September 2004) Friends of the Earth is urging the European Commission to throw out a multi-billion plan to subsidise the UK operator of eight nuclear power stations for the next 100 years. The environmental group is calling instead for British Energy plc, the firm concerned, to be forced either to put up its prices or to go into administration.

British Energy ran into financial difficulties in 2002, narrowly avoiding bankruptcy though an emergency loan from ministers in London. A proposal to ‘restructure' the company, submitted for approval to the Commission last year, includes approximately €6bn (L4bn) in state aid that would pay for some on-going operating costs and for much of the huge nuclear decommissioning costs over the remainder of this century. The Commission could take a decision as early as next week.

“Nuclear cannot be exempted from market realities. The high cost of nuclear electricity should be reflected in its price, and not loaded onto taxpayers by the backdoor. The Commission must not allow huge subsidies that are effectively forever,” said Mark Johnston of Friends of the Earth Europe.

The British Energy case is also a test of the relationship between the competition laws in the EC treaty and the 1957 Euratom treaty, which was set up to promote nuclear power. The Commission has already said that the case falls between the two agreements. On current plans, the Euratom treaty will stay in force alongside the new constitutional treaty.

“Euratom cannot be an excuse for state aid. Other industries carry risks and hazards, but this does not mean they get subsidies. The same rules that apply elsewhere must also apply to nuclear,” added Mr Johnston.

Contacts:

Brussels: Mark Johnston +44 (0) 79 7331 9249 m
Edinburgh: Lang Banks +44 (0) 131 554 9977 or (pager) +44 (0) 7654 2009037
London: Roger Higman +44 (0) 77 8066 1807 or press office +44 (0) 20 7566 1649

Notes:

The amount of aid referred to is discounted to indicate the value now of costs that will be incurred in the future. In undiscounted terms, the aid is in excess of L10bn (€15bn).

British Energy's eight nuclear stations are planned to close in stages over the next 31 years, with the last (Sizewell B) expected to close in 2035. The seven older AGR stations, the last of which are expect to close around 2023, would then undergo decommissioning for 85 years, up to around 2108. The single newer PWR station, which is expected to close in 2035, would then undergo decommissioning for 50 years, up to 2085. Decommissioning reactors does not resolve the issue of radioactive waste.

The full description of the British Energy restructuring proposal, as published in the Official Journal (OJ/2003/C180, pages 5-28), is available from Friends of the Earth on request. The Commission's announcement of its formal investigation is set out in press notice IP/03/1082.

Friends of the Earth Europe campaigns for sustainable and fair societies and for the protection of the environment,
unites more than 30 national organisations with thousands of local groups
and is part of the world's largest grassroots environmental network, Friends of the Earth International.