EDF backs carbon tax

EDF’s UK nuclear development head has welcomed Treasury moves to introduce a carbon tax.

Humphrey Cadoux-Hudson, managing director of nuclear development, told the Westminster Forum’s nuclear conference that there is an increasing “convergence” between technologies like hydrogen and nuclear.

Utility Week reported in July that as well as supplying electricity for the grid, EDF is also examining the use of power it generates for manufacturing hydrogen fuel and tapping into waste heat for homes and industry.

Cadoux-Hudson said in his keynote address at the virtual conference that the deployment of these technologies could be facilitated by the rollout of a carbon tax, which the Treasury is exploring to replace the UK’s membership of the EU emissions trading system (ETS).

“The commercial structure for that will become really clear when carbon is costed properly in the economy. We welcome thinking going on in the Treasury about the carbon tax because that is the key way to enable an arbitrage between the different uses of heat, between electricity and hydrogen. The more we can do that, the more we stabilise the system.

“We are moving to that (net zero) world but it requires some innovative work by government to ensure even pricing between different uses of energy, transport, heat and lighting.”

He also said that the company is examining how to make better use of the heat generated at its nuclear power plants, around 40 per cent of which is currently turned into electricity.

Finding uses for the remaining heat could make a “real impact on the economics of net zero”, he added.

Alan Raymant, chief executive of CGN’s proposed nuclear plant at Bradwell B in Essex,  said the project is not being derailed by controversy over the Chinese ownership of his company, which is also partnering on the construction EDF’s plant at Hinkley Point C.

He said the “bigger challenge” for the project is the “geo-political headwinds” resulting from  deteriorating relations between the UK and Chinese governments

“Governments in London and Beijing will decide what relationship they will have. We will get on with the job, delivering significant volumes of clean, reliable energy.”

Tom Greatrex, chief executive of the Nuclear Industries Association, said the government understands that a new financial mechanism is required to support large scale nuclear development.

“The government understands that it won’t work with the current financial mechanism unless you have a comparatively high strike price,” he said, adding that these costs would then have to be passed onto consumers.

The Department for Business, Energy & Industrial Strategy consulted last year on applying the regulated asset base (RAB) model, which seeks to minimise interest payments by paying the developer throughout the lifetime of the project rather than waiting for it to be up and running, to nuclear.

“Whether a pure RAB model or some form of equity stake, there needs to be a new financial mechanism for new reactors to be built. If that happens there will be real boost and sites written off will come back into contention.”

Greatrex also expressed hope that the energy white paper, which the energy minister said yesterday is due to be published in the “next few weeks”, will provide greater policy coherence.

“Up until now, we’ve had disjointed messages to different energy sectors and no coherence. If you are going to have a target to 2050, that won’t happen automatically and calibration of those different messages is required.

“That is well understand by government and we are cautiously optimistic that the energy white paper will give us a much stronger picture.”