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6th Oct 2022

Nuclear debate sees rise in EU carbon prices

  • France is Europe's largest user of nuclear power (Photo: EUobserver)

European carbon prices hit a two-year high on Monday (14 March), as the region reassesses the future of its nuclear energy industry following events in Japan.

German Chancellor Angela Merkel said plans to extend the operating life of the country's nuclear plants would be suspended for at least three months, pending an inquiry into their safety, while Switzerland halted plans to build new reactors.

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Carbon permits under the EU's emissions trading scheme, which Switzerland is set to join, rose 5.5 percent to close at €16.60 a tonne on the ICE Futures Europe exchange in London.

The emissions scheme forms a key element of European efforts to cut CO2 emissions by 20 percent over the coming decade, based on 1990 levels.

On Monday, EU climate commissioner Connie Hedegaard presented her '2050 Roadmap' for a low-carbon economy to EU environment ministers in Brussels, stressing that a 25 percent cut was achievable if member states increased their energy efficiency.

Seven environment ministers went further, calling for an EU cut of 30 percent in an open letter to the commission. The ministers came from Britain, Denmark, Germany, Greece, Portugal, Spain and Sweden.

But analysts said an EU move away from the relatively-clean nuclear energy could cast a question mark over the bloc's ability to meet its carbon-cutting pledges.

"European governments will need to know what happened in Japan - look at it in terms of nuclear new build and the existing fleet," Peter Atherton, a utility analyst at Citigroup in London, told Bloomberg News. "That's a process that will take time. The big question is what this means for EU energy targets. Will politicians have the capacity to push them through."

A German government decision to cancel nuclear extensions would result in an additional demand for 700 million tonnes of carbon through 2020, Heiko Siemann, an analyst for UniCredit said.

Nuclear energy accounts for roughly 30 percent of Europe's energy mix, rising to as high as 80 percent in France.

French environment minister Nathalie Kosciusko-Morizet on Monday said events in Japan were unlikely to change her country's reliance on nuclear energy. "We can't switch to renewables overnight ... For the foreseeable future, we will need nuclear," she said.

Spanish and Italian ministers made similar pronouncements, while separately, EU energy commissioner Gunther Oettinger said events in Japan were likely to force a fundamental rethink of energy policy across the globe.

Oettinger agreed that EU member states could not simply switch off their nuclear power plants overnight but stressed that "nothing is irreplaceable".

"The unthinkable has occurred. Energy policy faces a fundamental new beginning," he told the German Press Agency DPA.

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