Britain needs new nuclear build, replacing the existing nuclear plants which are due to be phased out, in order to maintain the diversity of our energy supply, and on environmental grounds. Nuclear power is the only proven form of low carbon and low emission energy, other than hydro-electric power, which provides a steady supply of electricity 24 hours a day regardless of the weather.
If the price of carbon emissions is too low, there will not be enough incentives to move power generation in the right direction for either energy security or to reduce damage to the environment. Indeed, for this very reason, the British government has promised to work to ensure that the price of carbon does not drop below a certain minimum "floor" level. If the price of carbon is too low, we will not get new nuclear build, and for the reasons explained above I think new nuclear build should be one of the important elements of Britain's energy policy.
However, if the price of carbon is too high, and particularly if it is suddenly shoved upwards, there could be a damaging rise in the cost of energy, impacting on the price of fuel, heating and light to homes and businesses at just the wrong moment for our economy. Britain cannot afford to put a brake on economic recovery in that way, and neither can the rest of Europe.
Therefore I favour a policy of gradually reducing the number of carbon emission licenses and increasing their price, in a phased way, slowly enough to avoid causing energy price shocks.