Chancellor Jeremey Hunt announced that nuclear energy will be classed as “sustainable” in the UK, also committing to co-funding the sort of small nuclear reactors being developed by Rolls-Royce Holdings PLC (LSE:RR.) if they are found to be viable.
“Subject to consultation, nuclear power will be classed as environmentally sustainable,” Hunt told MPs as he delivered the Budget in Parliament on Wednesday.
Changing the classification will give the nuclear energy sector “the same investment incentives as renewable energy,” he added, aimed at bolstering private interest in the industry.
He also launched the first competition for small modular reactors (SMRs) is set to be completed by the end of 2023, a corner of the energy industry where Roll-Royce is aiming to lead the way, using similar technology it has developed to power nuclear submarines.
“If demonstrated as viable, we will co-fund this exciting new technology,” Hunt added, marking good news for Rolls-Royce which is targeting government approval by mid-2024.
Rolls-Royce’s SMRs and are set to cost £1.8bn each, providing enough energy for 45,000 homes from a 10-acre site.
Prime Minister Rishi Sunak had hinted on Monday that mini reactors would be central in the UK’s new energy strategy that is set to be unveiled “shortly”.
“Increasing nuclear capacity is vital to meet our net zero obligation,” Hunt said, also announcing a new public body called Great British Nuclear, which he claimed would help deliver a quarter of the UK’s energy by 2050.
This will “bring down costs and provide opportunities across the nuclear supply chain,” he said, hinting towards Roll’s SMR design, which allows plants to be mostly assembled in factories, with 80% of the components sourced from British suppliers.
These plants are far cheaper than “traditional £20bn nuclear projects,” public body UK Research and Innovation deemed in February, and are able to be built in between four to seven years.
Britain’s move to label nuclear power as “sustainable” follows the European parliament’s ruling that investments could be advertised as ‘green’ in June, granting the sector access to the sustainable investment market, valued at US$8trn by Barrron's at the time.
Friends of the Earth’s head of policy, Mike Childs criticised the policy, saying that nuclear power is "much more expensive than renewables" and that innovations in energy storage are likely to soon make it "redundant" for the energy balancing needs cited by Hunt in his speech.
"Investment in this sector is simply throwing good money after bad."