Isra-Mart srl:Updated: Huhne seeks to raise nuclear clean up cost cap to £1bn

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Energy and Climate Change Secretary Chris Huhne has today proposed a new rule forcing nuclear power plant operators in the UK to pay the first £1bn of clean up costs in the event of an accident, as part of the coalition's pledge to ensure new nuclear power plants are built without any specific public subsidy.

Huhne today proposed to increase the cap nuclear operators face following an accident seven-fold, from £140m to €1.2bn (£1.02bn). He also wants to widen the geographical scope of those eligible to claim compensation, and channel any liabilities automatically to the nuclear operator.

The current £140m cap exists under EU law because firms cannot buy insurance against a nuclear accident, on the grounds the costs could be virtually limitless.

DECC today launched a consultation on the proposals which will run to the end of April, following changes to the Paris and Brussels Conventions on nuclear third party liability.

Under the coalition agreement, the government has said it will support the expansion of nuclear power but insisted operators will have to build and run them without specific subsidies while also providing additional funds to pay for decommissioning.

The agreement was a compromise as the Liberal Democrats are traditionally opposed to the construction of new nuclear reactors. Lib Dem Minister Huhne told the Observer that he is determined to stick by that promise, but at the same time provide certainty to low carbon investors.

"We are taking steps to reduce any risk of the taxpayer having to pick up the tab for new nuclear [power] further down the track," he said." We've already set out how operators will be required to put aside money from day one for their eventual clean-up and waste storage, and now we're increasing substantially the liability to be taken on by operators."

The proposals are likely to be welcomed by critics of the current plan, who argue that the taxpayer would essentially be providing a hidden subsidy for nuclear operators if they agreed to pay clean up costs above £140m.

The government has come under fire recently after it emerged that the planned Green Investment Bank could fund the nuclear industry. Green party MP Caroline Lucas said funding nuclear through the bank would "make a mockery" of its purpose.