Nuclear reactors to be branded green to lure investors

The Government is set to rebrand nuclear power as green energy to lure reluctant investors to get behind Sizewell C. 

Nuclear power is included in a draft report from the Treasury laying out which energy sources are classed as eco-friendly, a sources told The Mail on Sunday. 

This may clear the way for big City investors, including pension funds, to invest in nuclear power, such as the planned £20billion power station on the Suffolk coast. 

The issue could be one of the first big industrial decisions the new Prime Minister has to take in their first weeks in office. 

A consultation was expected in the summer, but was delayed. 

Industry sources say Britain risks falling behind other nations. Some countries in the European Union – which has already classified nuclear power as environmentally friendly – are scrambling to launch nuclear projects after the invasion of Ukraine sent gas prices surging. 

Business Secretary Kwasi Kwarteng gave initial approval for Sizewell C in July. A final decision is due early next year. France’s state-owned energy giant, EDF, is lined up to take a 20 per cent stake, with the Government expected to commit a similar amount. 

British Gas owner Centrica is understood to be willing to join as an equity investor. 

But some potential backers are wary of investing in nuclear power because of ESG – environmental, social and governance – concerns. 

Big asset managers now vie over their ESG credentials and are fearful of ploughing money into large, long-term projects such as Sizewell C while under pressure to purge their portfolios of dirty energy. 

But the Ukraine war and soaring energy prices have challenged the conventional ESG agenda. There is now a debate over whether previously shunned sectors such as defence and even some fossil fuel production should be rehabilitated. 

However, City investors want clarity from the Treasury about nuclear’s official ‘green’ status before committing cash. 

Fans of nuclear power argue it is one of the most reliable forms of energy generation and, crucially, that it is low-carbon. Kwarteng, tipped to be Chancellor if Liz Truss becomes PM, is supportive of the sector. 

In May, the Government set up the Great British Nuclear body, which includes a £120million fund to support new programmes. Ministers want to approve eight new reactors by 2030. 

A source said: ‘When a project the size of Sizewell C is on the table and investors want to move to 100 per cent green portfolios, they want to know if it’s ‘in’ or if it’s ‘out’ before they put any money in.’ 

The Suffolk plant could power six million homes and generate electricity for 60 years – though it would take nine to 12 years to build. 

The Mail on Sunday understands several pension funds are already considering backing it. When pressed on a Sizewell C investment last year, Phoenix Group said in correspondence seen by the MoS it had ‘no plans’ to back it directly, in part because its ESG rating was unclear. 

But the FTSE100 firm, which owns Standard Life, now says: ‘If the right conditions are met and the debt has an investment grade within our risk appetite this is something we may consider.’ 

It added that one of the major issues was still the ‘wider environmental impact’ of nuclear power and how it was classified. 

The Universities Superannuation Scheme, which manages more than £80billion of academics’ pensions, said it was looking for investments in the sector.

A senior industry source was ‘pretty certain’ the Government would classify nuclear as ‘green’ adding: ‘Great British Nuclear will be the solution to building at scale, on time and on budget. This is the last chance for the UK. 

‘If we don’t follow through now, we’ll rapidly fall to the back end of the queue. It’s scary stuff.’ 

Alison Downes, of the campaign group Stop Sizewell C, said: ‘Even if the Government pretends nuclear is green and bribes investors with guaranteed income from stretched households, Sizewell C remains high risk. 

‘Investors should pay more attention to EDF’s financial woes, a plagued reactor design, escalating costs, lengthening build schedules and local opposition.’ 

A Treasury spokesman said it would consult on classifying nuclear as eco-friendly ‘in due course’ adding: ‘The Government’s Energy Security Strategy made clear that nuclear energy is, and will continue to be, a key part of the UK’s low-carbon energy mix alongside solar, wind and other energy sources.’