Oil giant bosses warn of 'damaging' changes to drilling laws if governments over-react to Deepwater Horizon spill

Exxon Mobil has warned against quick reactive changes to deepwater drilling laws that damage long-term investment decisions and urged all governments to take time to assess the reasons for the Gulf of Mexico oil spill.

Senior executives of oil major Exxon Mobil Corp also underscored the importance of production from deepwater drilling in meeting global energy demand.

"We need to guard against premature reactive changes to legislation that may not in the longer term be helpful but detrimental to the industry," said Exxon Mobil senior vice-president Andrew Swiger.

"It is too early to speculate on any changes to legislation until the investigation is complete," he told reporters at an industry conference in Kuala Lumpur.

The Obama administration recently put on hold new deepwater exploratory drilling in the US for six months, pending the findings and recommendations of a presidential commission investigating the causes of the explosion in April that sank Transocean's Deepwater Horizon rig leased by BP. The review may lead to new laws on drilling.

Yesterday, President Obama sought to challenge criticism that he has not taken strong enough action. "We have had a lot of trials in the last year and a half," he said during a reception in Washington. "Right now we've got brothers and sisters in the Gulf Coast who are going through an incredibly difficult time. I want to emphasise again that we're going to do everything we can in the weeks, months and years ahead to make things right."

BP said its containment cap had captured 16,600 barrels of oil (697,200 gallons/2.64m litres) between 3 June and 6 June and it expects an increase in the amount of oil and gas collected in the coming days. A second system should soon be in place, enabling BP to siphon the vast majority of oil spewing from the leak about a mile (1.6 km) below the water's surface.

The progress over the weekend came as BP's chief executive Tony Hayward insisted he had no plans of quitting over his handling of the environmental disaster.

Mark Albers, Exxon Mobil senior vice president told Reuters the impact of the moratorium on deepwater drilling in the Gulf would be much longer than the six-month ban proposed by Washington, since it takes time to understand the effect of new regulations and bring the rigs back to work.

"It's important that in the next five years, deepwater will contribute 10m barrels per day of oil. That's equivalent to what Saudi Arabia is producing," Albers said in an interview in Beijing. "It's a very important element of meeting the world's energy demand."

Following the order to idle 33 deepwater rigs, oil firms including Royal Dutch Shell, Exxon Mobil, Chevron and Marathon have begun curbing their operations in the Gulf. Critics argue such meaures will exacerbate the harm to a Gulf Coast economy already losing fishing and tourism business thanks to the spill.

A lengthy deepwater drilling moratorium could also hit future US oil and natural gas output. According to the US Energy Information Administration, US Gulf offshore oil operations produced 1.6m barrels of oil per day in 2009, accounting for eight per cent of US liquid fuel consumption.

The Interior Department has also outlined a series of potentially costly new safety rules and standards that oil companies will have to contend with.

"There will be significant impact to the thousands and thousands of people who work, not only in the industry, but those who support the industry – from catering, to diving to inspections," Albers said.

The Louisiana Mid-Continent Oil and Gas Association estimates the moratorium could sideline up to 7,000 highly paid rig workers and cost four to five times as many support jobs at firms supplying catering, service boat and drilling.

Swiger added that Exxon Mobil has been providing assistance in response to the oil spill in the Gulf. "We stand ready to support efforts to determine how such an incident can be prevented from happening again," he said.

• Deepwater Horizon oil spill
• Oil spills
• Oil
• Pollution
• Energy
• Oil
• Exxon Mobil
• BP
• Oil and gas companies
• US economy
• United States

The blackout-blighted country should be free to accept development help from China, and not rely on US financial aid

From the whitewashed mansions of Clifton, Karachi, to the dusty village shacks in Gujar, Punjab, the two words heard most regularly on the lips of Pakistanis right now? Load-shedding, the political euphemism that is used by everyone – be they state official, liberal intellectual or housemaid – to discuss the country's long, daily blackouts. Power cuts and energy shortage are nothing new for the subcontinent; in six decades of being, Pakistan's infrastructure has never been able to cope with basic rate of growth and demand for energy – let alone been able to provide unlimited, uninterrupted electricity for its people. And yet, the country's current energy crisis is unprecedented: in the last two years it has become nothing short of a national disaster.

Just over a week since I arrived back in London – having spent six days criss-crossing the Punjabi province – and Pakistan is being held hostage to the most punishing heatwave in living memory. Record-breaking temperatures of 53C were recorded across the country last week, the death toll is consequentially rising even faster than the mercury. The heat is brutal, penetrative and unbearable to be caught outside in, but the real killer seems to be Pakistan's energy policy. Or, as it might be more accurately defined, the distinct lack of one.

Up to 12 hours of the day are routinely being endured without electricity across the country. Cities and villages take it in turns to have the lights turned out … to keep them on. Tolerating the current heat without power, without working fans, fridges, air conditioning (for those lucky enough to have afforded installation in the first place) and light, is not just a matter of inconvenience though: heatstroke, food poisoning and dehydration are killing in their hundreds while the death of livestock, paralysis of small and large business and the real threat to livelihoods and families is hurting further. The wealthy will switch on their generators to keep a running supply of power every time the electricity trips; the poor are simply left to swelter and suffer.

Foresight has rarely been a historic strength of Pakistani administrations, the last government failed to add a single megawatt of new power to the national grid under almost a decade of rule. The farcical current regime, led by Asif Ali Zardari, has been forced to scramble for a solution only to land itself between a rock and a nuclear place. An energy programme to tackle the problem long term, facilitated by the actual building of power plants and coal-mining projects (rather than through the financial aid pledged by Obama's administration), has been laid on the table by the Chinese government.

Given that the two countries would be co-operating in a civil nuclear programme to build several new nuclear power plants, the project has been met with the wholesale disapproval of the US government. China has cited the rules under its membership of the Nuclear Suppliers Group (NSG), which make it clear that no nuclear trade can be entered into with a country that has not signed the nuclear non-proliferation treaty. This, despite legislation being passed to enable similar nuclear trade between the US and India. Hypocritical twitchiness from the White House is nothing new. In this case, it does the US little favours in terms of its public perception from the region. Any attempt to block an essential power-generation deal between China and Pakistan will only be viewed with the same bitter contempt the public have for the daily US drone attacks to the country's tribal regions.

Pakistan consumed just 0.39% of the world's total electricity consumption last year, but energy providers such as Pepco (a nationalised company) are still unable to cope and meet the 4,000-5,000 megawatt shortfall in electricity needed to keep powering the country. No new dams have been built or planned for, although almost a third of the country's electricity is generated through hydropower. Meanwhile, the Thar coalfield in Sindh (the second largest province in Pakistan) contains an estimated 175 billion tonnes of deposits. If a Chinese-funded coal-mining power project is to go ahead, this could provide decades of cheap (albeit highly polluting) power. The country also has vast reserves of natural gas. And yet, with 65% of the country's supply delivered by thermal power – mostly generated through costly imported oil – no steps have been taken to switch to natural gas power production.

There is little doubt that Pakistan's ruling elite are to blame for short-sightedness, for being too greedily corrupt to install basic, decent utilities for the country's people. Now that moves could be made to correct this can only be a hopeful sign for the future. The Chinese policy, to offer trade and build projects rather than cash aid, is a sound one that further cements the historic relationship between the two countries. Unless the US has firm plans to propose a similar project, its intervention as a "special ally" is not only unwelcome but entirely unnecessary.

• Pakistan
• Energy
• Nuclear power
• US foreign policy
• China

Ten big-name festivals - including the Big Chill, Reading and Latitude - pledge to cut 10% of their emissions during 2010

The Big Chill, Latitude, Bestival, Reading and Lovebox: some of the coolest places to hang out in Britain this summer are among a host of big-name music festivals joining a campaign to cut carbon emissions.

Starting with the Isle of Wight last weekend, 10 festivals have joined the Guardian-supported 10:10 mission to cut their greenhouse gas emissions by 10% during 2010.

The venues - hosting a wide variety of bands and artists including Jay-Z, Lady Gaga, Elbow, Lily Allen, The Prodigy, Hot Chip, Florence + The Machine, The Flaming Lips, Spandau Ballet and Seasick Steve - have joined up as 10:10 begins a wave of international launches from France to the west coast of the United States.

Each festival has agreed to cut its emissions from power use for lighting, sound systems and stalls, from waste and from water use. Innovations include a solar-powered stage on the Isle of Wight to recycled or compostable cups and cutlery at Latitude, Reading and Leeds, and composting toilets at Bestival. They will be helped by low-carbon music industry specialists Julie's Bicycle.

The announcement follows research by Oxford University which showed that the combined emissions from 500 festivals in the UK was 84,000 tonnes of carbon dioxide in one year - more than the annual emissions of several small island states.

Tom Findlay, one half of electronic music duo Groove Armada and the founder of Lovebox, said the appeal of the 10:10 campaign was that "it makes change feel achievable".

The 10:10 campaign director, Eugenie Harvey, said that festivals helped the campaign reach new groups – particularly younger music fans at events like Reading and Leeds – and helped discard the image that all campaigns to tackle climate change preach denial and dismal living.

"Cutting carbon isn't all about staying at home and giving stuff up," said Harvey. "British summertime's all about getting out there and enjoying it while it lasts. And enjoying it all with 10% less carbon, well, who can argue?"

As the festival season gets underway, 10:10 has announced that four new international campaigns are being launched in France (where events are headed by Earth from Above photographer Yann Arthus-Bertrand), Germany, Portugal and Washington state in the US. This brings the total number of countries to 10: the Netherlands, Norway, Ghana, New Zealand, Ireland and the UK have already joined up.

The London-based campaign group said it is talking to another 17 overseas groups in Australia, Bosnia & Herzegovina, China, Nepal, Nigeria, Serbia and Spain. Other plans include a day of global action on Sunday 10 October - dubbed 10:10:10.

"As soon as we get over the excitement of one country wanting to start their own 10:10 operation, another gets in touch," said Lizzie Gillett, campaign director for 10:10 Global. "It goes to show 10:10 is inspiring people to make a genuine difference through simple changes."

• 10:10 climate change campaign
• Carbon emissions
• Waste
• Energy
• Ethical and green living
• Festivals

Now is the time to establish a new environmental corps, which could hire and train hundreds of thousands of jobless Americans

Not so long ago, the hottest political slogan on the American right was "drill, baby, drill." Gas prices were high, and the GOP, in hoc to the peculiarly virulent know-nothing'ism of Sarah Palin, was courting public support (and big oil money) by arguing that American waters and remote wildlife refuges should be opened to a second oil rush.

Now, of course, with the unfolding Deepwater Horizon catastrophe in the Gulf of Mexico, such rhetoric sounds naive at best, vastly negligent at worst. One indication of just how bad this oil spill is is the fact that serious voices are being raised suggesting the leak be sealed off with a nuclear explosion underneath the sea. Once gung-ho drill babyers, such as California governor Arnold Schwarzenegger, have publicly backed away from their previous positions. And those who haven't backed off, including Palin, are increasingly criticised by pundits and fellow politicians for their intransigence in the face of calamity.

This should, by any rational measure, be a moment of environmental awakening, a 21st century equivalent of, say, John Muir's wilderness philosophising, the publication of Rachel Carson's A Silent Spring, or the Chernobyl disaster. It should be a moment when the world, and America's voters in particular, recoil from laissez-faire models of resource extraction and instead demand greater government regulation, greater public accountability of vast corporations such as BP, greater acknowledgement of the fragility of the ecosystems upon which we all rely.

Amazingly, however, the opposite seems to be occurring. Rightly or wrongly, the government's response is perceived as hapless; and while almost everyone is furious about the environmental damage, and while more people blame BP than the federal government for the disaster, the systemic failings emanating out of DC are being used by anti-government activists to call for a further erosion of federal power; this would, presumably, ultimately further corrode the very regulatory agencies that fell down on the job this time around. It's a perfect example of the cutting off of one's nose to spite one's face approach to politics: as a punishment for their ineffectiveness, neuter regulatory agencies even more.

That said, I do think the federal government, in allowing itself to be perceived as drifting in the face of crisis, bears some of the blame for this incoherent political reaction. For it is missing a powerful educational opportunity and is shying away from a moment ripe for innovative reform.

Here's a suggestion: in the 1930s, with the centre of the country devastated by dust storms, with coastal erosion, and with an underfunded national parks infrastructure, Roosevelt's administration created the Civilian Conservation Corps, blending environmentalism with public works. Huge numbers of young Americans were put to work salvaging endangered local environments, bulking up the country's environmental infrastructure, and building trails, coastal resorts, campgrounds and the like, that, three generations later, still enrich our collective experience.

Today, the Gulf Coast's wetlands and marshes are being inundated with crude oil, and, despite the thousands of volunteers and paid workers engaged in clean-up activities, news reports continue to show evermore damage being inflicted on these beautiful, and ecologically vital, coastal areas. At the same time, around the country state parks are being closed and the services offered in those that remain open pared back, as a result of brutal state budget crises. Flood protection systems in many regions are dilapidated. And large numbers of polluted Superfund sites remain unrepaired and dangerous.

Given the public anger at Big Oil these days, as well as the staggering number of unemployed Americans, the administration would be wise to harness this anger in order to push for a modern-day Civilian Conservation Corps. In a very limited way, the Clinton-era AmeriCorps programme performs this role; but the numbers of people who go through the programme are relatively small and the breadth of its activities is somewhat narrow.

Why not marshal public fury at the Gulf oil disaster to generate funds for a huge new environmental corps, capable of hiring, and training, hundreds of thousands of unemployed Americans? The first few billion dollars could be provided by BP, at the urging of the government, as a downpayment on the epic liability costs the company knows it will have to incur over the coming years. The next few billion could be reaped from imposing increased profit taxes on oil companies – a tax that would have been viewed with great suspicion a couple years ago, but which, today, would likely curry popular support. And the federal government could then agree to something like a matching fund commitment, so that as big oil's tax contributions into the environmental corps increased, so too would those of the federal government.

For an industry desperate to regain a modicum of public support and political credibility, agreeing to pay taxes specifically earmarked to fund an environmental corps would likely be seen as a small price to pay for increased respectability. And for an administration critiqued by many as being out of touch with the pain of poverty and joblessness experienced on a daily basis by tens of millions of Americans, the added cost to the federal budget of such an employment-generating programme would be defrayed by huge long-term dividends.

An Environment Corps would have concrete environmental benefits; would help a significant proportion of the country's unemployed, especially youngsters fresh out of school or college; and, as importantly, would go some way toward re-establishing the notion in Americans' minds that government can, at its best, be a force for public good.

The alternative is too gloomy to countenance; a public, whipped into a frenzy of anger over an environmental cataclysm, responding with a knee-jerk anti-governmentalism that renders it even harder, in the long-run, to rein in Big Oil or to clean up Big Oil's messes when they next occur.

• Deepwater Horizon oil spill
• Oil spills
• BP
• Corporate social responsibility
• Oil
• Oil and gas companies
• Energy
• Energy industry
• Obama administration
• US politics
• US unemployment and employment data
• United States

Supplier of 130m-high turbine pulls out, saying it cannot comply with new health and safety regulations by games' opening

• London Olympics could flunk chance to be green
• Blog: ArcelorMittal's emissions make a monumental joke of Olympic park tower

Plans to build a 130 metre-high wind turbine to provide 5% of the energy needed to run the Olympic park have been scrapped, according to the Olympic Delivery Authority (ODA).

Dubbed the Angel of Leyton, the turbine had been hailed as a green beacon. It was said to be key to the ODA's commitment to deliver 20% of the park's legacy energy needs from renewable sources from 2014 onwards.

The scheme, however, is "no longer feasible", said David Higgins, chief executive of the ODA, which is building the infrastructure for the games.

Higgins said that construction of the turbine became unfeasible after new safety legislation forced substantial design changes under a "challenging" delivery timetable. After the preferred bidder's turbine supplier had pulled out – citing inability to comply with the new regulations in time for the opening of the games – there had been little commercial interest elsewhere.

The turbine, which was to be built in Eton Manor in the north of the Olympic park, was planned as a visible symbol of London 2012's commitment to deliver a sustainable games.

Higgins, an Australian project management fixer, said: "We have a strong track record in sustainability and we remain committed to meeting the challenging renewable energy targets we have set ourselves," he added.

"Our focus is now on researching a number of alternative renewable energy options across the Olympic park site to help contribute to these targets and complement the other state-of-the art new energy infrastructure we are building."

The ODA has 7,500 people working on the Olympic site and is on schedule to complete by mid-2011.

The sustainability watchdog for the 2012 games, the Commission for a Sustainable London 2012 (CSL), said that it backed the decision to scrap the turbine.

Shaun McCarthy, who chairs the watchdog, said the ODA must still meet the agreed carbon emission reduction targets by alternative means.

"The symbolic power of a wind turbine at the park, whilst valuable, does not outweigh the considerations of the optimal use of resources," he said.

Hackney council said that it was proceeding with a plan to erect a second turbine on a nearby site at East Marsh.

It said in a statement: "The decision not to have a turbine on Eton Manor does not affect the viability of the proposal for East Marsh although there will be a reduction in the potential amount of power available overall. East Marsh is a different site to Eton Manor and does not present the issues that have, in part, prompted the ODA's decision."

Hackney's plans are still at an early stage and it is still in talks with potential turbine suppliers. Any scheme would have to be the subject of a planning application.

• Olympic games 2012
• London
• Wind power
• Renewable energy
• Energy

Sharp rise in premiums for oil rigs following Deepwater Horizon spill in Gulf of Mexico

The oil industry has been hit by a sharp rise in insurance premiums for rigs following the Deepwater Horizon disaster.

The news came as BP's credit rating was downgraded by credit ratings agency Fitch today, just hours after its chief executive admitted the company had not been properly prepared to fight the oil spill in the Gulf of Mexico.

The insurance industry, reeling from losses estimated at between $1.4bn and $3.5bn (£2.4bn) caused by the disaster, has been quick to raise its prices. Deepwater Horizon is the largest single oil drilling rig loss since the 1988 Piper Alpha platform explosion in the North Sea, which triggered $3.6bn of insured losses (in 2009 dollars).

In a report on the fallout from Deepwater Horizon published today, credit ratings agency Moody's noted that insured losses would be "significantly" higher if BP, the operator and majority owner of the project, had purchased liability insurance in the commercial market instead of self-insuring its risks through its captive insurer, Jupiter Insurance.

The agency said early reports indicated that insurance premiums for deepwater rigs have jumped by up to 50% since the 22 April explosion, while the cost of insuring rigs operating in shallow waters has climbed by 15-25%.

"With the 2010 hurricane season just around the corner, any additional offshore energy losses in the Gulf of Mexico this year could further bolster pricing for offshore energy exposures," the agency warned. "Likewise, we expect offshore energy liability insurance premiums to trend higher, perhaps meaningfully, as insurers and reinsurers take stock of their losses and reevaluate the complex risks associated with drilling in deep waters."

• Oil
• Deepwater Horizon oil spill
• Energy industry
• Oil and gas companies
• Oil spills
• Energy

Square Mile starts to discuss whether BP will survive the Deepwater Horizon disaster

• Reactors builder won big concessions on key issues
• Rethink on costs is in effect a subsidy, says Greenpeace

The nuclear industry is being offered what campaigners claim is a taxpayer subsidy on the disposal costs of waste from new reactors following a secret lobbying campaign, the Guardian has learned.

The revelation will put further scrutiny on the new government's promise that there will be no subsidy for nuclear power. Liberal Democrat Chris Huhne, the new energy and climate change secretary of state, admitted to the Guardian this week that the government already faces a £4bn funding black hole over existing radioactive waste.

The previous government had planned to charge the industry a high, fixed, disposal levy tied to the amount of nuclear waste it produced. It had also originally told the industry that responsibility for the waste should be transferred to the state only once the waste had been disposed of, at least 110 years from the start of a reactor's operations. Both proposals were deeply unpopular with the industry.

In March, the Labour government published revised proposals that made significant concessions on both issues. Consultation on the plans will conclude this month. A spokesman for the energy department said the consultation was continuing but declined to comment on whether the new government would take a different approach to the previous administration.

Documents released under a freedom of information request reveal the extent of behind-the-scenes lobbying last year in Whitehall by EDF Energy, the French firm that wants to build the first new reactors in the UK for decades. The lobbying focused on the two key proposals which were revised in March.

In one meeting with officials from the energy department in July last year, EDF Energy's presentation concluded that the original proposals were "non-acceptable" [sic]. In another meeting in October, the presentation warned: "At current levels, [the proposed] fixed price model will significantly impact the economics of NNB [nuclear new build] in the UK and could make an investment unattractive." In a letter in July to the department, the company even warned that the cost calculations could "be open to challenge in future on the grounds of prudency".

A spokesman from Greenpeace said: "These documents blow EDF's claim that they won't need any subsidies for new nuclear clean out of the water. They know full well that the economics of nuclear don't stack up and that new reactors will only ever happen if the British taxpayer is forced yet again to carry the atomic can."

In an effort to protect the taxpayer from having to pick up the tab, last year the government proposed charging a very high fixed unit price for waste disposal. But EDF argued it was much too high. The revised proposal would allow operators to set aside a much lower amount for the first 10 years of a reactor's operation.

The original plan had also been for the government to assume title – or responsibility – for the waste once it had been disposed of in a new underground storage facility, which has yet to be built. This transfer – and the transfer of funds by operators to the government to cover the costs – would take place after 110 years of the reactor beginning operation, at the earliest. But EDF said this would involve too long-term an investment risk, as the returns from their waste disposal fund would have to cover the costs when it matured over a century later. The consultation instead proposed the transfer taking place once decommissioning has been completed, after around 60 years.

An energy department spokesman said: "The allegation that outcomes of the consultation have been pre-agreed with industry have no foundation. The coalition has committed that there will be no public subsidy for new nuclear."

• EDF Energy
• Nuclear power
• Nuclear waste
• Utilities
• Energy industry
• Energy

Energy secretary blames predecessors for avoiding tough decisions in 'classic example of short-termism'

Britain is facing a £4bn black hole in unavoidable nuclear decommissioning and waste costs, Chris Huhne, the energy and climate change secretary disclosed tonight.

The decommissioning costs over the next four years revealed by officials to Huhne are so serious that he has already flagged the crisis up to the cabinet.

The revelation places an unexpected burden on his department's £3bn annual budget ahead of difficult spending negotiations this summer. "As you can imagine, this is a fairly existential problem. The costs are such that my department is not so much the department of energy and climate change, as the department of nuclear legacy and bits of other things," Huhne told the Guardian.

The additional costs derive from slowly rising expenditure on nuclear decommissioning, and falling income due to the closure of ageing power plants, Huhne said.

Huhne disclosed that in current financial year the Nuclear Decommissioning Authority's budget is expected to be in balance.From 2011-12, the deficit suddenly rises to £850m, in 2012-13 the gap increases further to £950m and then to £1.1bn in the two subsequent years.

The black hole is equivalent to wiping out one-sixth of the overall cuts in public spending identified by the Treasury with such fanfare last week.

But Huhne insisted: "I do not think it is possible for anyone responsibly to stand aside and say we are not going to deal with it. We just have to, but what we are effectively paying for here is decades of cheap nuclear electricity for which we have suddenly got a massive postdated bill."

The revelation will also hand further ammunition to those who say a new generation of nuclear power stations in Britain will end up being more expensive than the industry claims.

Huhne – a Liberal Democrat and nuclear sceptic – refused to make that argument directly, saying instead it just underlined the need to ensure that any new nuclear stations had watertight agreements that debar all public subsidy. In any case there are growing signs that the nuclear new-build timetable is slipping as costs rise.

Huhne, already in talks with the Treasury about the black hole, said it was very hard to avoid the expenditure: "There are genuine nuclear safety issues here that means it has to be paid for."

If the Treasury refuses to shoulder the full costs, Huhne's department would inevitably have to make cuts with possible implications for energy efficiency and climate change programmes.

Huhne revealed that as soon as he discovered the problem, he travelled to Sellafield nuclear plant in Cumbria and concluded: "There is no way of dealing with this, but by making sure this expenditure goes ahead."

Since the NDA was formed in 2004, the clean-up of legacy nuclear facilities has been paid for with a mix of funds – roughly half in direct government grants and half generated commercially by the NDA – and allocated in three-year cycles.

Huhne said: "My predecessors avoided taking tough decisions when they should have done and the result is that it is much more expensive to deal with than if we had dealt with it in a timely manner back in the 70s and 80s. A lot of it is spent fuel, and was not dealt with at the time. It is a classic example of short-termism. I cannot think of a better example of a failure to take a decision in the short run costing the taxpayer a hell of a lot more in the long run."

The Liberal Democrats oppose new stations, but have said they will abstain in any key Commons votes on the issue so long as their Conservative coalition partners ensure no new station enjoys any overt or hidden public subsidy.

Huhne said: "New build is clearly more efficient, there is less waste, and the decommissioning can and should be designed in, but … we need to make sure all the costs are properly dealt with."

• Tax and spending
• Nuclear power
• Energy
• Chris Huhne
• Liberal-Conservative coalition
• Nuclear waste
• Liberal Democrats
• Conservatives

• Report highlights widespread failings at Europe's biggest atomic site
• Safety watchdog closes one plant and takes legal action against site's operators

The government's safety watchdog is cracking down on Britain's biggest and oldest nuclear complex after a series of radioactive leaks and safety blunders, despite private sector managers receiving multimillion-pound "performance-related" payments from the Nuclear Decommissioning Authority.

The Health and Safety Executive (HSE) has closed down a vital nuclear waste plant at Sellafield in Cumbria, and is taking legal action to force the site's operators to improve their flawed safety procedures.

The HSE has also rejected a £40bn plan for cleaning up Sellafield because of proposed delays in dismantling ageing and potentially hazardous facilities.

The disclosures come at a critical time for the nuclear industry which is trying to convince Chris Huhne, the energy and climate change secretary, it is efficient enough to build a new generation of reactors.

But the crackdown is also embarrassing because Nuclear Management Partners (NMP) – a consortium involving Amec, URS and Areva – is believed to have made "profits" of up to £50m over a 12-month period.

NMP took over control of Sellafield in November 2008 and was given the opportunity to win incentive payments if it improved the efficiency of Europe's biggest atomic site over the first 12 months. A spokesman for Amec confirmed "fees were paid" but said he was unable to give further details.

The decommissioning agency said the private companies had received £16.5m for the first four months of their work but it said figures for the last financial year would be published in July. It said the maximum under the contract could be £50m – in line with £16.5m for four months – and independent industry experts believe NMP won close to that top figure.

The HSE's latest report on Sellafield, posted online, discloses a litany of problems at the crowded site which sprawls over six square miles on the edge of the Lake District and is home to more than a thousand nuclear facilities, some dating back more than 50 years.

One of the main plants for solidifying highly radioactive liquid waste has been shut for safety reasons since 31 March, the report said. The case for continuing to operate the facility safely has been deemed "inadequate" by HSE inspectors.

According to the report, HSE has also taken enforcement action after cooling water needed to prevent highly radioactive waste tanks from overheating leaked twice in 10 months. Sellafield has been ordered to rectify an alleged breach of its safety licence – failing to give staff proper training – by 18 June.

HSE has taken further regulatory action over a leak of radioactively contaminated water from a pipe during nuclear fuel reprocessing operations. Along with another government watchdog, the Environment Agency, it has ordered Sellafield to correct breaches of radiation rules that enabled the leakage to occur.

The HSE report, which covers the first three months of this year, revealed there had been two other leaks in evaporators which process "highly active liquor". Sellafield is also criticised for taking more than 18 months to fix "known defects" with the fire protection systems at the thermal oxide reprocessing plant.

The HSE said the site will fail to meet a deadline of 1 August for clearing radioactive sludge out of old ponds and repackaging it into steel containers. The watchdog also has "concerns" about the management of change on the part of the site still known as Windscale.

In addition, HSE has refused to endorse the latest "lifetime plan" for Sellafield outlining schedules for decommissioning plants over the next 110 years. "It will not be a plan we can accept," its report said, because of worries about the "deferral dates for some facilities".

Sellafield is home to "the world's most dangerous stockpile of high-level liquid waste," according to Marianne Birkby, from the anti-nuclear group, Radiation Free Lakeland. "The evidence shows the industry cannot safely look after its existing wastes."

Sellafield Ltd, the company that runs the site, conceded there were "challenges" due to "ageing facilities and assets". "The new NMP team has been specifically brought in to improve on the historic record and is already delivering significant improvements and results," said a company spokesman. The site has been given £1.5bn this year – its highest level of funding to date – to reduce the hazards.

The spokesman added: "We have a clear focus on hazard and risk reduction on the site and have prioritised our significant resources at those areas that present the most difficult challenges."

The HSE said it will continue to highlight problems at Sellafield. "Our inspectors closely regulate operations on the site and on occasion where required will take enforcement action," said an HSE spokeswoman. "We are satisfied that Sellafield Ltd recognises, and is taking steps to effectively manage the risks and hazards on the site."

• Energy industry
• Amec
• Regulators
• Nuclear power
• Nuclear waste
• Energy