ON-LINE DEBATE

The Times: 7/1/2000

From Professor Ian Fells, FREng


Chancellor's energy tax paradox

Sir, The recent announcement of the closure of Bradwell nuclear power station in two years' time (report, Business, December 2) highlights the complaint made by Sir Bernard Ingham in his letter (December 21) and presents a dilemma to the Government.

In order to help meet the 20 per cent reduction in carbon dioxide emissions over 1990 figures to which it is
committed, it proposes to introduce an energy tax, euphemistically called a climate change levy. Because the
intention is to reduce emissions of carbon-containing gases,would it not have been more sensible to introduce a carbon tax, as some Scandinavian countries have done, and struck to the heart of the matter?

By taxing all forms of electricity it will penalise those clean, non-polluting, electricity generators who produce from renewable and nuclear sources. Renewable energy has now been exempt from the tax but nuclear electricity will still be taxed. Bradwell power station could have had a life extension of ten years but that would have required additional investment which, the company says, cannot be justified if the energy tax is going to be applied to nuclear electricity.

Here is the dilemma: government policy is to allow the gradual rundown of the nuclear power industry. By taxing nuclear electricity it may accelerate the closure of some of the older nuclear power stations and increase carbon emissions to the tune of four million tonnes a year by 2012 or earlier. This is just about the saving the Government expects to achieve by introducing the climate change levy.

As the Red Queen remarked to Alice, "here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that". She would have been equally appreciative of another energy paradox. The regulator is successfully driving the cost of electricity down to pre-1970 prices causing people to use it ever more extravagantly, so the Chancellor proposes to tax it, raise the price and cause them to use less.

Perhaps the time has come to try to put together a coherent energy policy, including transport, with our environmental commitments firmly in mind.

Yours faithfully,
IAN FELLS
(Professor of Energy Conversion),
Department of Chemical and
Process Engineering,
University of Newcastle, Merz Court,
Newcastle upon Tyne, NE1 7RU.

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