EEF, the UK manufacturers’ organisation, has urged the government to back replacement nuclear build as part of a balanced sustainable long-term energy strategy for the UK.

The call comes with the release of a new report: Sustainable Energy – a Long Term Strategy for the UK, which contains substantial modelling and analysis of the costs of various energy sources. The report sets out a wide-ranging future energy strategy for the UK to deliver secure, reliable and competitive low carbon energy. In particular, future policy should include a range of options which feature fossil fuels, renewables and nuclear power.

Large rises in prices, supply fears over the next two winters and rising carbon emissions urgently require a sustainable long-term energy strategy, said the EEF, without which UK competitiveness will be threatened.

EEF’s modelling of the cost of various energy sources shows that:

• In a high gas and carbon cost scenario, nuclear power could be the most competitive form of energy supply.
• The competitiveness of nuclear power is very sensitive to the rate of return required by those potentially financing the construction of new plants and that the government can have a significant influence on this.
• The EU Emissions Trading Scheme is currently too immature to send a strong signal to investors about future carbon prices.

EEF therefore recommends the government:

• Address planning, licensing and liabilities issues that will make a substantial difference to the rate of return required by investors in nuclear power.
• Make a decision on the disposal of radioactive waste.
• Exempt nuclear power from the climate change levy.
• Replace the current Renewables Obligation with a zero carbon obligation in 2015.
• Consider the use of long-term power contracts with consortia of major energy consumers, or other forms of intervention which might assist the financing of large scale, low carbon power generation.

Commenting on the report, EEF director general Martin Temple said: “Energy is now right at the top of the agenda and there is no time to lose in putting in place a long-term strategy that will provide a competitive, reliable and secure supply and generate significant reduction in emissions. Business values the benefits of a liberalised energy market and would strongly oppose the government underwriting the nuclear industry. However, in current circumstances, the market will provide little other than new gas plants which will not provide us with a secure energy supply or deliver lower emissions. The government must therefore take clear lead on this issue to create a secure environment which will encourage investment in future energy sources.”