Monday, February 26, 2024

Brussels at odds over funding rules for nuclear power

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European commissioners are at odds with each other over including nuclear power in new funding rules aimed at boosting green industries in the EU just 48 hours before the legislation is due to be announced.

Nuclear fission was included as a “strategic net zero industry” in an early draft of the law, meaning atomic power plants could be in line for fast-tracked permitting, preference in public procurement contracts and fiscal incentives to boost investment. But the technology has since been eliminated from the text amid heated discussions that have exposed ideological divides along national lines within the 27-strong college of commissioners.

Promoters of nuclear included the European Commission’s president, Germany’s Ursula von der Leyen, and France’s Thierry Breton, the internal market commissioner, along with eight others largely from central and eastern Europe, according to people familiar with the talks.

In the opposite camp were Frans Timmermans, the EU’s climate commissioner and former Dutch foreign minister, and Denmark’s Margrethe Vestager, the bloc’s competition chief, as well as four other commissioners from southern and central Europe. Among the other opponents of the inclusion of nuclear in the proposals are Austria’s Johannes Hahn, the EU budget commissioner, and Portugal’s Elisa Ferreira, commissioner for cohesion and reforms, according to two people with knowledge of their views.

The remaining commissioners had not yet showed their hand, one person said.

They are expected to continue their discussions over the issue until the last minute, three people said. Officials said von der Leyen was pushing a compromise that would include small modular reactors, but not larger nuclear plants.

Officials debated nuclear’s inclusion for more than two and a half hours on Monday night and failed to agree, with the text still open to changes before being formally announced on Thursday, one person with knowledge of the talks added.

The Net Zero Industry Act has been rushed through the EU legislative process in order to respond to the $369bn of tax credits and subsidies that the US announced for clean technologies last year and prevent an exodus of European companies across the Atlantic.

“We need to create a regulatory environment that allows us to scale up fast and create conducive conditions for sectors crucial to reaching net zero,” the draft of the document says.

France, which is heavily reliant on nuclear power to generate electricity, has been pushing hard for its classification as a low carbon fuel for several months as the EU draws up rules for the green transition. Allowances for nuclear technology have also been included in reforms to the bloc’s electricity market, announced on Tuesday, and rules for the production of renewable hydrogen, in part due to pressure from Paris.

But countries including Austria and Luxembourg are opposed to nuclear in principle, setting up further disagreements with member states should the technology be included.

EU diplomats said France pushed the nuclear agenda repeatedly in meetings on energy policy and tried to change language in documents already agreed to ensure nuclear power is included in generation targets and eligible for funding.

“Nuclear is low carbon. But it is not renewable,” said one diplomat. “They want to change everything to low carbon. It’s war from the French side.”

Another diplomat said. “The French never asked nuclear to be considered a renewable energy, but they insist that nuclear must not be discriminated against as it is a decarbonised energy that can be part of the solution together with the renewables.”

The issue emerged on the heels of a separate EU challenge from Germany over a key piece of its climate legislation: a 2035 ban on cars with combustion engines. Several other member states including Italy and Poland have backed Germany in its last-ditch effort to block the ban unless Brussels exempts cars that would burn carbon-neutral e-fuels. The last-minute U-turn is seen as a sign of the countries’ domestic car industries seeking a concession that would keep some combustion engines on the market.

The commission declined to comment on the talks.

Additional reporting by Sam Fleming in Brussels

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