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The benefits of UK investment in renewable power that will add £100 a year to household energy bills are in jeopardy and should be bolstered with an approach that would add a further £20, the government’s climate watchdog has said.

Assuming the UK remains legally bound to cut its greenhouse gas emissions to 20 per cent of 1990 levels by 2050, this would still be up to £100bn cheaper than increasing reliance on new gas-fired power plants, according to a report by the Committee on Climate Change.

The government has already committed to spending nearly £8bn a year by 2020 to support new nuclear power stations and wind farms. These developments are expected to add about £100 a year to bills.

But there is a “high degree of uncertainty” about what will happen after 2020 according to the climate change committee, a statutory body set up to advise the government on meeting its climate targets.

The government should, therefore, agree to extend its funding commitments so they total £10bn by 2030, the committee says.

It should also – in the energy bill that is now moving through parliament – set a 2030 target for sharply cutting the carbon intensity of power generating plants. Some rebel government MPs are already saying they would support such an amendment.

These additional measures would add a further £20 to power bills between 2020 and 2030 but would help save consumers from £25bn to £45bn and up to £100bn, if gas and prices for emitting carbon soared, the committee says.

The committee’s 74-page report amounts to a stout rejection of the view in some parts of Whitehall that it would be cheaper for the UK to defer building new nuclear plants and offshore wind farms until closer to 2050, especially if shale exploration opens up new national sources of natural gas.

David Kennedy, the chief executive of the committee, said such views are incorrect, in part because delaying the building of low carbon power plants would greatly add to their expense.

That is because investment in relatively immature technology, such as offshore wind farms, to get them up and running, helps drive technical advances. It also lowers the cost of capital, as lenders see proof that such projects can provide financial returns.

“To invest in low-carbon technologies to 2020, then to [change] focus on investment in gas in the 2020s and to move back to investment in low-carbon generation in the 2030s simply doesn’t stand up,” said the Lord Deben, the committee chair and Conservative peer.

“Such an approach is likely to drive up costs, by up to £100bn in some scenarios.”

The Dutch government on Thursday removed the final obstacle to a full privatisation of Urenco, saying it would join other state shareholders in seeking an exit from the uranium enrichment company.

The announcement clears the way for a sale later this year that could value the business at between €8bn-€14bn, with the sale of shares to the public through a flotation also an option under consideration. Urenco’s bankers have already held informal talks with potential buyers.

Headquartered in Buckinghamshire, England, Urenco is the world’s second-largest nuclear enrichment company after Russia’s Tenex. The enriched uranium is used as fuel in nuclear power stations. It employs 1,400 staff, and has four manufacturing sites in Europe and one enrichment facility in America.

Its complicated ownership structure and the sensitive nature of its work have frustrated previous attempts at privatisation. It is owned by Britain, the Netherlands, and two German utility companies, RWE and Eon. The British government announced last month it planned to sell its share. Both RWE and Eon had already signalled their intention to exit in the wake of the German government’s decision to phase out nuclear power.

Jeroen Dijsselbloem, Dutch finance minister, told the Netherlands’ parliament of the decision to sell in a letter on Thursday. Mr Dijsselbloem said the moves by other shareholders had put the Dutch government in the position of becoming a possible minority shareholder.

That would render moot the state’s reason for holding the shares, namely to safeguard the public interest in non-proliferation, nuclear safety, and security of supply for the Netherlands’ own nuclear reactor.

Mr Dijsselbloem said the government had “investigated whether the public interest could be safeguarded in some other way other than by share ownership”.

The Dutch government said it was designing a set of security mechanisms to ensure the public interest is preserved under any private ownership arrangement, and that further information on the nature and timing of a sale will be released in the summer.

The three shareholders will now explore a potential co-ordinated sale of their holdings, the UK government said on Thursday.

Established in 1971, Urenco’s activities are governed by the treaties of Almelo, Cardiff and Washington, which were drawn up to control the proliferation of nuclear technology and stop enriched uranium from falling into the hands of terrorists. A joint committee of the three nations supervises its operations, and the arrangement will remain in place following the sale or flotation.

British ministers have told would-be bidders – thought to include Areva, the French nuclear services group; Cameco, the Canadian uranium miner; and Toshiba, the Japanese conglomerate which owns Westinghouse, the nuclear reactor maker – that a privatised Urenco would be subject to similar “special share” arrangements to those at BAE Systems, the defence contractor, and Roll-Royce, the aero-engine maker. There would also be limits on gearing, and some oversight of management appointments.

Urenco is now set to be the second big state sell-off of the year, alongside Royal Mail.

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A downturn at Pennon’s Viridor waste management business has prompted the group, which also owns South West Water, to report writedowns approaching £200m and a sharp fall in full-year pre-tax profits.

Viridor operates a network of landfill sites, recycling and waste incinerator plants across the UK, and normally contributes about a third to Pennon Group profits. But poor domestic and international demand for its recycled waste – along with asset impairment charges totalling £189m, centred on its declining landfill business – dragged down group performance.

In the year to March 31, pre-tax profit before exceptional charges at Viridor fell by more than a third to £36m, while pre-tax profits at South West Water rose 7.5 per cent to £152m.

Pennon had signalled in February that it was reviewing the asset valuations at its waste management arm in the face of a sharp fall in recycling demand. On Thursday, Ken Harvey, chairman, suggested there would be no early recovery, as prices of waste material – known as “recyclate” – remained depressed.

“Recyclate prices have fallen back sharply from the peak reached in the first half of 2011-12, reflecting world economic conditions including weakness in the eurozone economies and uncertainty about the speed of growth in China,” he said.

“Revenues per tonne have recovered a little from their lows of October to December 2012 but we remain cautious about the prospects for further recovery in the short term.”

In the past year, the average revenue commanded by a tonne of recycled rubbish – including payments for collecting it and subsequent sales of recyclate – has fallen from £118 to £99.

Falling margins on recyclates were among the factors that prompted lenders to Biffa, the UK’s second-largest waste management group by sales, to take control of the debt-laden company in November – four years after it was acquired by private equity firms for £1.7bn in 2008.

Pennon said Viridor had mothballed or closed six recycling plants in the past year and made 152 redundancies across its business. It has also had to make £90m of increased provisions for the maintenance of sites after their closure.

The company now expects to be operating just three landfill sites by 2020, compared with 21 at present.

However, Mr Harvey insisted that Viridor was well positioned to achieve its planned transformation from predominantly a landfill operator to a leader in waste recycling and incineration.

Pennon also said that customers of its South West Water business, who are already set to receive a government-funded £50 rebate of per household, would benefit from service improvements as a result of a £60m investment in its network.

The government grant is forecast to cut the average annual household water bill 7.3 per cent to £499.

In spite of the sharp fall in pre-tax profits, Pennon raised its recommended full-year dividend 8 per cent to 28.46p – uncovered by earnings per share, which fell from 47.8p to 7.4p, but justified by the company on the basis of higher underlying operating profits.

Analysts at Deutsche Bank described the results as “broadly in line with our expectations, stripping out one-offs” but noted they “reflected the challenging performance of [Pennon’s] waste business Viridor”. 

Pennon shares closed 0.5p down at 704p on Thursday.