The RAB model isn’t perfect, but it might be the only route to net zero

Last week the Committee on Climate Change issued a stark warning to the government; progress in the last year on reducing carbon emissions and preparing for climate change has been negligible, and unless meaningful action is taken in the next eighteen months, the UK faces losing all credibility as a global leader on climate action. With data from the European Space Agency showing that this year saw the hottest June in human history, climate change is no longer a problem for the future: it is happening now and so far the response from the UK government has been rich in rhetoric, but poor on policy action.

Meeting the kind of net zero target that is necessary to keep climate change within manageable limits is going to require bold thinking and decisive action. Most credible scenarios for reaching net zero, including those produced by the CCC itself, and by National Grid, anticipate a substantial rise in the demand for electricity, as key sectors like transportation and heating are increasingly electrified.

To meet this demand, these scenarios suggest we will not only need to massively expand the deployment of renewables, we also need alternative sources of low-carbon power, in addition to energy storage, to balance the intermittency of wind and solar. Prospect members working in the nuclear electricity industry currently supply around a fifth of our electricity needs. Nuclear power is, at present, the only proven, scalable technology that can meet this need for significantly more ‘always on’ low-carbon power, alongside renewables.

With this in mind, National Grid have suggested that a net zero target could require double the current capacity of nuclear by 2050. This will require a substantial new building programme, as most existing nuclear capacity will have been decommissioned by 2030. But, whilst Hinkley Point C is under construction and hitting key project milestones, its funding model has attracted widespread criticism. No other new nuclear projects have been approved, while two have been abandoned by developers in the last year at Wylfa in North Wales and Moorside in Cumbria. These projects enjoy widespread workforce and community support; however, the developers could not make the funding model on offer from government work.

A new funding model is therefore urgently needed. Direct public procurement would likely be the cheapest way to fund new nuclear, but an infrastructure spending commitment on this scale is unlikely under the current government. The only other option under active consideration at the moment is the Regulated Asset Base (RAB) model, which would essentially see consumers sharing risk with the developer in order to lower total project costs. Media report this weekend have suggested that the government is about to back this approach. To realise these lower costs, consumers will have to start paying for plants while they are still under construction, much like the Thames Tideway ‘super sewer’ project, a fact which has already attracted some criticism.

Concerns about what the RAB model could mean for consumers are not wholly without merit; developers may try to inflate costs or projects may run over budget for example. But with a strong regulatory regime, these risks can be mitigated, while consumers end up paying a lot less than they will for the Hinkley power plant. At the same time, as Prospect has argued previously, new build nuclear projects will create thousands of jobs, inject hundreds of millions of pounds into the economies of rural coastal communities, and provide an important source of business rate revenues for cash-strapped local authorities. And, crucially, they will help us avoid catastrophic climate change.

The RAB model is not a perfect solution, but it could be the approach we need to get nuclear projects over the finishing line, and with the threat of climate change bearing down on us, it is critical to keep the bigger picture in mind. If you support urgent action to decarbonise our economy, it is increasingly hard to maintain opposition to new nuclear. And if you are concerned about cost, then models which reduce the burden for bill payers should be welcomed.

The costs of coping with unmitigated climate change will be astronomically high; nuclear is key to avoiding such an outcome, and if the RAB model is the only route to getting new nuclear projects built, then it should be supported.

Sue Ferns is the deputy general secretary of Prospect Union.

First published on Business Green: https://www.businessgreen.com/bg/opinion/3079136/the-rab-model-isnt-perfect-but-it-might-be-the-only-route-to-net-zero