EDF Energy calls for UK carbon floor price

LONDON Tue May 26, 2009 6:39pm BST

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LONDON May 26 (Reuters) - Britain should encourage investment in low-carbon energy like nuclear power by setting a minimum charge that fossil fuel burning generators must pay to emit climate-warming carbon dioxide, EDF Energy said on Tuesday.

The UK arm of French state-run nuclear energy giant EDF (EDF.PA) has said it could build four new reactors in England as part of the British government's plan to replace the country's old reactors.

Power generators in European Union already have to buy permits to emit carbon from gas, oil and coal-fired power plants under the EU's Emissions Trading Scheme (ETS).

But emissions prices have been too low CFI2Z9 and unpredictable to really discourage high carbon fuels and ensure long term investment in clean generation because too many permits were given away in the first two phases.

"EDF Energy is proposing to strengthen the ETS scheme in the UK with a floor price for carbon," the world's largest nuclear power generator said in a statement, warning that Britain would not achieve its target to cut carbon emissions by 80 percent by 2050 without a carbon-free electricity sector.

"This is not a subsidy but a cost payable by carbon emitters. This would help create a level playing field for all low carbon technologies in the UK and deliver investments which achieve affordable prices for customers."

Like other European countries, Britain has its own additional support scheme for renewable technologies, which are more expensive than fossil fuel fired plants. But it has repeatedly refused to subsidise nuclear power despite relying on private companies to build enough multi-billion pound nuclear plants to replace the UK's ageing state-built reactors.

The government said in last year's energy White Paper it would consider ways to reinforce support for low-carbon energy to provide greater certainty for investors in the UK.

Full auctioning of carbon permits in phase three of the EU ETS, starting from 2013, may push carbon emitting costs high enough to support nuclear new build without an artificial floor. "We agree that a robust carbon price is part of the conditions that we need for long term investments," a spokeswoman for the Department of Energy and Climate Shange said.

"The best was achieving a robust carbon price is through the EU ETS and we think that will be significantly tightened in the third phase."

EDF Energy paid 12.5 billion pounds ($19.88 billion) for nuclear generator British Energy earlier this year so it could build new plants on its land and industry sources said it paid about 160 million pounds in an auction last month for some more land at another potential site. [ID:nLT011202] (Reporting by Daniel Fineren, editing by Anthony Barker)

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