UK Clears Bond-Market Path for Nuclear to Be Treated as ‘Green’
(Bloomberg) -- The UK will for the first time allow money generated from green-bond sales to go toward financing nuclear power, taking a step long seen as controversial among environmentalists.
Britain’s government is adding “nuclear energy-related expenditures” to a revision of its green financing framework, according to a document published on Wednesday. That effectively means that funds raised through the issuance of green gilts or green saving bonds from Nov. 27 may be allocated toward the development of the technology.
“This is a vital step that will help reduce the cost of financing, unlock investment at scale and put nuclear on a level footing with other clean energy technologies,” said Tom Greatrex, chief executive of the Nuclear Industry Association.
The move means a form of energy associated with waste disposal and radiation risks will now get the same access to financing as renewables such as solar and wind. It comes as Britain powers ahead with its ambitious plan to build Hinkley Point C and Sizewell C plants, and to invest in the development of small modular reactors (SMRs).
But the construction of complex nuclear plants and the development of new technologies are notoriously slow, with the cost overruns and delays already seen at Hinkley threatening to undermine investor enthusiasm for the sector. For Hinkley alone, budgeted spending has soared to more than £40 billion ($52.8 billion) due to Brexit-related snarls, construction struggles, the Covid pandemic and an inflation surge. Earlier this year, the government announced final approval for the Sizewell C plant after securing private investment in the £38 billion project.
While new UK nuclear capacity won’t be online by 2030 — the government’s deadline for reaching a clean power system — the goal is to reduce Britain’s reliance on imported fossil fuels and replace aging reactors. Atomic energy can provide low-carbon power around the clock to meet growing demand from the electrification of industry, transportation and from the artificial intelligence boom.
The document, titled , effectively provides a roadmap for how the debt management office will raise funds for specific projects. Investors, such as large pension funds and asset managers, use it to determine what can be considered green or environmentally-friendly under the government’s principles.
The revised framework establishes that funds under the nuclear energy green category could be used to support the design, development, construction, commissioning, safe operation, lifetime extension, or supporting infrastructure of new or existing nuclear power generation assets, the document says. It also includes research and development for future fission and fusion energy technologies.
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