APPENDIX 2
Memorandum from British Energy
1. BRITISH ENERGY
AND SUSTAINABLE
DEVELOPMENT
British Energy operates the eight most modern
nuclear power stations in Great Britian and produces around one-fifth
of the country's electricity. The company is a large employer
in the UK and plays an important role in keeping down emissions
of the substances which cause Climate Change and Acid Rain. British
Energy meets a key principle of Sustainable Development by accounting
for its major environmental impacts in its company finances and
business plans, and by continuously seeking to minimise these
impacts.
Like many other organisations in the UK we are
already examining the way in which we impact on society and the
environment and we have established certain indicators to help
us understand our performance and society's perception of us.
Industry and all other sectors of the economy
need to take a long-term view if they are to operate sustainably.
"Ensuring a better quality of life for everyone, now and
for generations to come" will require a long-term business
approach and a sustainable industry should not leave unresolved
issues for future generations.
We believe that the UK nuclear power industry's
cradle to grave approach to its environmental impacts is an example
of how industry can operate this way, although the Government's
report "A better quality of life"[1]
raised concerns about the disposal of radioactive waste.
The technology for waste disposal, is available
and Finland, for example, has successfully built an underground
waste repository. The issue in the UK at present, is which final
disposal solution is most sustainable. By contrast there is no
dispsoal route for the pollution produced by burning hydrocarbons
and the adverse effects of these activities—emissions of
Greenhouse gases and air pollution—are identified with the
DETR's report as headline indicators of environmental sustainability.
2. KEY ELEMENTS
OF SUSTAINABLE
DEVELOPMENT POLICY
Environmental and social costs and benefits
should be taken into account when carrying out commercial activities.
Without the internalisation of those costs and benefits companies
cannot be said to be operating sustainably.
When Government is developing policy, an appropriate
balance needs to be found between the economic, social and environmental
dimensions of Sustainable Development.
Government and business will need to work together
to promote Sustainable Development in industry. Companies will
need to consult with other key stakeholders, like employees, shareholders
and local communities, when formulating sustainable policy.
The Government should seek to ensure fairness
and consistency in developing policy. Policy measures which encourage
and reward good-practice are preferable to ones based on enforcement.
Achieving Sustainable Development will be an ongoing challenge
and the Government and industry will need to think long term to
promote it effectively.
EVIDENCE ON
OVER-ARCHING
THEMES IN
THE GOVERNMENT'S
SUSTAINABLE DEVELOPMENT
STRATEGY
The balance between the strands of sustainable
development; economic, environmental and social
British Energy believes that there has to be
an appropriate balance between the economic, social and environmental
dimensions of Sustainable Development.
When developing its Sustainable Development
policy the Government will need to ensure that efforts to promote
one aspect of sustainability do not outweigh others. In the environmental
field, principles like Best Available Technology Not Entailing
Excessive Cost (BATNEEC) appear to preserve a balance between
economic, environmental and social factors when applied objectively.
We would expect any Sustainable Development
policy that might affect British Energy to recognise the following:
— As a major electricity generator,
British Energy underpins the healthy economic growth of the UK,
provides signifcant direct employment (we have some 5,300 staff)
and maintains a valuable pool of skills.
— We materially assist the Government
meet five of the eight environmental and resource challenges listed
in Chapter 8 of the Government's report[2]
by generating largely emission free power, and by our efforts
to reverse trends of damage to landscape and wildlife on land
we own. Where we do have a major environmental impact we account
for it in our company finances and continuously seek to minimise
that impact.
Without the internalisation of the social and
environmental costs and benefits associated with their activities
companies cannot be said to be operating sustainably. However,
it is going to be extremely difficult to develop fair and consistent
values for those costs and benefits.
The nuclear power industry in the UK is one
of the few examples of a commercial activity that largely incorporates
it environmental costs. As an industry we currently have to account
for all major adverse environmental impacts (such as waste and
station-decommissioning) in our company finances. Managing and
minimising environmental impacts is also an integral part of industry
practice.
An EU funded programme (the ExterneE project)
recently sought to compare some of the environmental costs associated
with a range of generating technologies. The study suggested that
the environmental costs associated with fossil fuel based generators
were many times greater than those for nuclear and the renewable.
The identification of baselines, priorities and
targets for action
Priorities and targets for action should be
based on objective economic and scientific analyses and there
should be a clear need for them. In cases where the science is
uncertain and there is no clear-cut course of action, British
Energy would expect any decision to be based on a precautionary
assessment of likely risks, costs and benefits.
Companies should be encouraged to develop their
own Sustainable Development priorities and targets for action,
provided they effectively link into relevant macro indicators
and sector targets established by the Government.
Key issues in Sustainable Development—Climate
Change
Addressing Climate Change is recognised as a
key challenge of Sustainable Development. Its importance is reflected
in the fact that it is one of the few headline indicators outlined
by the DETR that has provoked an international agreement on reduction
targets. Government is currently formulating a strategy for reducing
national CO2 emissions as a result of commitments it made in Kyoto
on this issue.
In the UK the electricity supply industry is
the largest single source of CO2 emissions in the economy. Since
1990 emissions of CO2 have risen in all sectors of the economy
apart from the ESI. Continued reductions in this sector will be
critical if the Government wishes to achieve its reduction targets.
Nuclear power currently plays a major role in
keeping emissions down effectively avoiding CO2 emissions equivalent
to those from half the UK's road vehicles. Once the existing reactors
close early in the next century the significant reductions of
CO2 emissions the ESI has already made will be undermined.
The only other generating technologies which
emit minimal CO2 are hydropower and renewables (which together
provide around 2 per cent of the UK's electricity needs at present).
Both should have a part to play in meeting the UK's future electricity
needs, however, there are likely to be significant barriers to
them achieving major market penetration, at least in the early
decades of the next century.
In the UK the relatively easy gains for renewable
projects have already been exploited. even then there have been
significant difficulties in commissioning renewable projects that
have won Non Fossil Fuel Obligation (NFFO) contracts. It will
be harder to achieve future capacity increases.
In terms of Sustainable Development, British
Energy therefore believes that both renewables and nuclear power
will be needed if the Government wishes to sustain the reductions
in emissions of CO2 the electricity supply industry has achieved
since the early 1990s and meet Kyoto and post-Kyoto CO2 reductions.
Post-Kyoto reduction targets will need to be significantly more
ambitious if we are to stabilise levels of Greenhouse gas emissions.
The links between targets and indicators
There should be clear links between targets
and an indicator. We would prefer, for example, that the Government's
proposed Climate Change Levy was linked to national Greenhouse
Gas emissions rather than energy use.
The Government should reward commercial activities
which serve to promote its Sustainable Development targets.
Where positive incentives are developed by the
Government to reward activities which promote its Sustainable
Development objectives, they should be applied fairly across affected
sectors of the economy.
Industries should also have incentives to go
beyond minimum levels of compliance required by legislation. As
an example, "carbon trading" which the Government is
considering using to address Climate Change, would incentivise
those parts of the economy most able to take cost-effective actions
to reduce emissions to do so, by providing them with a mechanism
to sell on their surplus reductions. In contrast, the Government's
proposed Climate Change Levy is likely to be expensive, ineffective
and inflexible.
The identification of responsibilities for action
within Government
The Government must provide a clear and stable
regulatory framework when promoting Sustainable Development that
recognises industry's need to maintain competitiveness. Regulation
to promote sustainability should provide realistic time scales
for implementation, and enforcement must be fair and comprehensive.
British Energy would wish policy instruments
to be market based and to be incorporated into, or complement,
existing trading arrangements. Markets would allow businesses
to make decisions on Sustainable Development measures on the basis
of their cost-effectiveness. Markets are also dynamic and so are
able to reflect short-term changes which other policy instruments
might not be able to capture.
The degree to which the necessary partners for
sustainable development, that is local authorities, business and
industry and the voluntary sector, are signed up to the process
outlined in the strategy
The Government will have to ensure the participation
of all stakeholders to effectively promote Sustainable Development
in industry.
The Government will need to have regular consultation
with companies when formulating Sustainable Development policy.
Companies in turn need to encourage the involvement of employees,
share holders, local communities and other stakeholders to be
able to develop and effectively implement initiatives which promote
sustainability.
British Energy believes that voluntary measures
should generally be the Government's first option when promoting
sustainability. They allow companies to make their own choices
on how to achieve a target, taking account of their own specific
technology, economic drivers and so on.
To ensure that sustainability is integrated
into business decision-making it may eventually be necessary to
actively encourage or oblige companies to integrate the environmental
and social costs of their activities into their planning, accounting,
and reporting procedures. This "full cost" accounting
would require adequate disclosure of environmental and social
liabilities and oblige companies to make provisions for them.
The account taken of, and links made to, EU and
international policy initiatives
Policy measures should not be pursued in isolation
from those that are being developed in the EU and other industrialised
nations.
The arrangements for monitoring, reporting and
review, including the proposal for a Sustainable Development Commission
Any monitoring, reporting and review procedures
for indicators should impose minimal administrative and cost burdens.
June 1999
1 DETR "A better quality of life for everyone"
The Revised UK Sustainable Development Strategy 1999-section 8.8. Back
2
The Revised UK Sustainable Development Strategy 1999-Chapter 8-Major
environmental challenges. Back
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