Examination of Witnesses (Question 560-580)
PROFESSOR SIR
DAVID KING
17 NOVEMBER 2005
Q560 Ms Barlow: Yes.
Professor Sir David King: The
White Paper contains a statement: Keep the nuclear option open.
While at that time I would have to be frank and say that I was
arguing that we needed every tool in the bag to tackle climate
change, including nuclear, I now feel it was probably the right
policy in the sense that we have now focussed on developing renewables
and energy efficiency. Energy efficiency is the big economic win-win.
We reduce emissions—as I mentioned with the BP case—and
reduce costs. I think focussing attention since 2003 on those
two has been good, but if we come back to the energy review I
think it is inevitable that the energy review would need to have
a second look at nuclear. A year ago nuclear was 24% of energy
on the grid; it is now 21% on the grid. By 2020 it will be down
to 4% on the grid with Sizewell B being the only operating power
station. If we do not re-commission power stations as the current
old stock are de-commissioned we will have an energy gap in terms
of zero carbon dioxide producing power stations. I believe that
is where all the interest has now come from.
Q561 Chairman: The White Paper and the
PIU Report concluded that nuclear was, at that time, uneconomical
and therefore not desirable. If you add that to what you have
just said about new nuclear power stations being a kind of inter-generational
technology, that must surely raise questions over the financeability
of building them, if what is being built is likely to be overtaken
by some other form of technology within its useful working lifetime.
Professor Sir David King: I think
that would be a misunderstanding of the position as I would see
it. Any investment in a power station whether it is coal fired
or nuclear is going to only pay off over the lifetime of that
power station, but most particularly with nuclear because most
of the cost is upfront in terms of a nuclear power station. The
payback time is the following 30 or 40 year life time of the power
station. I do not believe that any utility is going to switch
off a nuclear power station unless instructed by government to
do so.
Chairman: Surely the flip side of that
is that you are not going to get the huge scale investment needed
in the next generation of technologies whether it is fusion or
whatever because there will not be any incentive to do that, given
the life span of the nuclear power stations that will have been
built.
Q562 Emily Thornberry: If government
is seen to be giving encouragement to nuclear power so soon after
the White Paper, if it now looks like we have shifted again is
that not going to discourage investment?
Professor Sir David King: I think
your comments are, with respect, based on a misunderstanding.
The Renewables Obligation has been stretched out, as I said before,
to 2027; this is precisely because the utilities wanted to guarantee
that their investment would have a significant payback time. We
have an obligation to 10% to 2010, 20% to 2020 and that obligation,
I would suggest, would not be removed, not by any government.
That has to be a guarantee maintained as we move forward in time,
otherwise the utilities will loose confidence in government decision
making.
Q563 Emily Thornberry: Given the urgency
should we not be increasing that in any event? Given the alarming
things you said at the beginning those sorts of targets are not
sufficient anyway.
Professor Sir David King: Yes,
and at the same time what I also said to you was that they are
not building the wind turbines as fast as the Government is providing
support funding. There is 10% funding available for all off-shore
wind farms; there is a Renewables Obligation. They cannot get
them up fast enough mainly because of planning permission problems.
I think the utilities are moving as quickly as they can; the Government
is providing the backup but the system is not allowing it to happen
that quickly. If I could go back to the major point that has been
made, I personally would not advise government to say, "We
are going to fund nuclear power stations"; I think we still
stay with the utilities and then it would be a utility decision
whether or not it is a financial prospect to build nuclear power
stations if the green light has been given to them. The new financial
situation—which was the point you asked—is the success
of emissions trading, for example. When emissions trading began
in Europe in January as you know it was trading at
8 per ton of carbon dioxide; it is now, today,
23 per ton. I believe a figure of around
30 a ton is enough to balance in favour of nuclear
on a full cost analysis including decommissioning costs and so
on, and I do think the utilities would be required to build in
decommissioning costs to their economic process.
Q564 Mr Chaytor: When you say decommissioning
costs and so on do you mean waste management costs?
Professor Sir David King: Yes,
I do.
Q565 Mr Chaytor: You have not actually
dealt with that radio-active stock pile.
Professor Sir David King: Until
we have an outcome of the process so that we know exactly what
the process of dealing with the waste is, we would have to have
a figure attached to that process. What I am saying is that it
would be very unwise not to tell the utilities that it is expected
that they would cover the full cost.
Q566 Mr Chaytor: It would be more logical
to wait for the construction of the repository or whatever it
is going to be and then have an understanding of the exact cost
of a unit of radio-active waste before telling the utilities that
these are the costs that have to be included in their calculations.
Professor Sir David King: I am
sure you will raise this with ministers but as an advisor I would
remind you of an earlier question, why are we not moving more
quickly? I believe the issue of nuclear new build or not is one
which should be dealt with with some urgency.
Q567 Mr Chaytor: Even though the exact
costs of waste will not be known.
Professor Sir David King: Even
though the exact costs of waste will not be known but I think
a good ball park figure could be established.
Q568 Mr Chaytor: If the AP1000 is the
sure fire winner for the next new build, why is BNFL so keen to
sell Westinghouse?
Professor Sir David King: I think
first of all it is a big "if". I mentioned the AP1000
as one example we could look at. We can look at the Candu reactor
which at least has sales. AP1000 has, at the moment, no purchasers.
I do not think by any means it is a sure fire winner on the market.
I hope I have not just depressed value of Westinghouse. Perhaps
I could rephrase that and say I am sure it is a winner.
Q569 Mr Chaytor: Then logically BNFL
should be holding onto Westinghouse because it would be interesting
to the tax payer to own the company that had the sure fire winner.
Professor Sir David King: Yes,
and the counter to that argument is that the private sector is
where it belongs and BNFL is not, as you know, in the private
sector. The other way to approach this is to sell Westinghouse
when the price is optimal and put it into the private sector.
Q570 Mr Chaytor: Could I ask you about
fuel and uranium supplies. Are these supplies reliable in terms
of them being plentiful and can Canadian and Australian uranium
supply the world's nuclear power stations over the next 30 years
or so? Can you say something about the quality of the uranium
ore and the implication of moving to poorer quality uranium?
Professor Sir David King: I would
like to amplify my reply in writing, if I may, but just to say
in terms of security of supply the countries where gas and oil
come from are the Middle East, Russia, Algeria, and there are
perhaps bigger questions to be asked about security of supply
there than there might be from the countries that you have listed.
What I think I want to add is that we do have a rather large stock
pile in the UK and if could just mention around a hundred tons
of plutonium. This is a matter of interest to me as a government
advisor, how do we treat the plutonium stockpile that we have?
You can either treat it as a fuel in MOX and the Westinghouse
AP1000 which is a very good reactor I believe could run on MOX
so we can remove the plutonium stock pile and use it as an energy
source. If we do not remove the plutonium in that way the question
is how would we remove it? Either we treat the plutonium as an
energy source or we treat it as a major waste issue. I think processing
it through a nuclear plant is by far the preferable way to go
forward. Producing waste that does not have the same nuclear proliferation
problems that are associated with plutonium, every country has
to consider what it is doing with the plutonium stock pile they
have; ours happens to be a rather larger one. We do have a significant
source of plutonium and uranium so there is a stockpile there.
If security of supply issues arose we would of course be able
to turn to that stock pile.
Q571 Mr Chaytor: Is it cheaper to burn
MOX than fresh uranium?
Professor Sir David King: It depends
what you are paying for the uranium. In other words, I am suggesting
that the difference with plutonium is between the cost of having
to treat it as a waste and the resource it is as a fuel. That
turns the economics in favour of MOX I believe.
Q572 Mr Chaytor: Essentially that is
a way of saying there really will need to be a hidden subsidy
to the growth of nuclear power because if the plutonium were not
burnt in MOX the tax payer would have to pick up the cost of storage
anyway.
Professor Sir David King: I am
afraid my logic goes in exactly the opposite direction. If you
do not have nuclear build it will cost a lot of money to deal
with the plutonium. As a matter of fact my advice would be to
build a machine that looks just like a power station but does
not generate power and convert the plutonium to waste. The ideal
way of dealing with plutonium is through generating waste and
energy. It is a potential resource and, to be honest, I think
it really is a significant factor in the new build question.
Q573 Mr Chaytor: You said you would write
to the Committee about the other issues around uranium and about
how long term the supplies in Australia and Canada are, and which
other countries have uranium would be of interest to us.
Professor Sir David King: I was
planning to do that.
Q574 David Howarth: Could I bring you
to another part of your responsibility which is security? It has
been argued to us very strongly that nuclear has particular problems
in terms of security in three different ways. One is that nuclear
installations are themselves potential terrorist targets in a
way which windmills obviously are not. Secondly there is the question
of security of materials, both in the installations and transport.
Those already create a separate police force. Thirdly, there is
the problem of nuclear weapons and the question about whether
you would have any credibility as a country saying that this technology
should be available to us but not available, say, to Iraq. Do
you have any points to make on those questions, especially on
the seriousness of the questions?
Professor Sir David King: Let
me take the last question first. The question of proliferation
by example (I think that is what was contained in your questions)
has been with us for some time, but as I said earlier the countries
that are currently building nuclear power stations are countries
like India, China, South Korea, North Korea and Iran. In other
words, the countries that are developing the technological capability
are amongst the countries that perhaps we would have thought in
the past we should not set a bad example to. I am simply suggesting
at this point in time that is no longer a real issue. In other
words, those countries have developed their own technology regardless
of the British position or the Swedish position.
Q575 David Howarth: Does that assume
there will not be any new rogue states in the future that we have
not thought of yet?
Professor Sir David King: But
the question I think you are leaving in the air is: would it make
any difference if Britain were to build new nuclear power stations?
Would it make any difference to them? The expertise in developing
these power stations now exists in all those countries so I frankly
do not believe that this argument is any longer a major part of
the debate. It is for others to decide on that. I am not a politician,
I have to remind you. Targeting of installations is an issue that
I have examined, as you might imagine, in some detail but which
I could not report on here. Certainly it is an issue that we have
looked at and I would be happy to talk to you out of committee
on that issue. In terms of transport, this security of transport
of nuclear material is regulated by the Office of Civil and Nuclear
Security; they are the security regulator. They are responsible
for approving all of the security arrangements for the industry
(including hospitals using radio-active material) specifying of
standards and so on. In effect I think your question is one of
how good is that regulatory process? How thorough and how safe
is it? At this point I have no reason to feel that we should be
overly concerned.
Q576 David Howarth: There are costs of
preventing incidents and the costs of the incidents themselves
if they happen. The total cost of this concern is the two things
added together. The cost of trying to prevent an incident is part
of the cost as would be the cost of an incident if it did happen.
What I am trying to get at is this, I mentioned the idea of the
full cost previously, would you accept that those costs form part
of the full cost of a nuclear bid and these costs would be slightly
higher than for wind power or tidal or wave power?
Professor Sir David King: The
security costs that you are referring to are with us. We have
a significant number of power stations; we are also a nuclear
power. We have waste, and we have waste at every level of waste.
All of those issues are with us now so the question we are really
asking is, what is the change in the cost of managing the security
around that process as we go into nuclear new build? The answer
I know is that actually delta cost is quite small and mainly the
reason is the same as the waste issue. It is our legacy waste;
it is our legacy of developing nuclear power in a very short space
of time in the late 1940s and 1950s. We were the first country
in the world to have a nuclear power station. The reason was not
necessarily because we wanted to generate electricity from nuclear
power, it was because we were becoming a nuclear power and that
was the big driver. It was all done with enormous haste and it
was also done, I would suggest, as the pioneering country in the
field. In that pioneering process the waste that we have now and
the security issues were developed. The new power stations that
we were talking about earlier on are a very, very different beast;
they have been designed with safety in mind from the beginning.
Q577 David Howarth: If you have the assumption
that the present nuclear generation capability is falling away
that cost or some of it would fall away with it so you could argue
that the maintenance of the security apparatus is in effect the
cost of new build because otherwise that cost would not exist.
Professor Sir David King: You
could; I would not. I would not argue it that way.
Q578 Chairman: Can I just go back to
something you said earlier about the energy review and the setting
of policy and putting in place an ability of the market to deliver
on energy in the future? You talked about the Government giving
the industry the green light and in particular the nuclear industry
to go ahead. We have been struggling to discover what form this
green light might take and nobody has yet been able to tell us.
What is your view of the green light?
Professor Sir David King: I think
that the utilities would require a similar time guarantee to the
Renewables Obligation that I was talking about earlier. In other
words, I do not believe the utilities are going to take on the
onus of purchasing a new nuclear power station unless the Government
has discussed with them what kind of guarantees can be given over
the expected life time of such a power station. If you were investing
up front that sum of money for a utility you would want to have
a very clear pathway ahead for what costs you are expected to
bear and what the time scale would be over which you could produce
energy on the grid. All of the payback comes back over that long
time.
Q579 Mr Chaytor: This is an exact contradiction,
surely, to what you said earlier about not believing the tax should
be financing the power.
Professor Sir David King: I did
not say the cost of the tax payer.
Q580 Mr Chaytor: You are not talking
financial guarantees to set up the price of electricity so what
guarantees are necessary other than financial guarantees from
the point of view of the utilities?
Professor Sir David King: The
kind of comfort the utilities can take is looking at countries
like Sweden and Germany. Sweden still has 50% of its energy from
nuclear onto the grid despite the referendum of 1980 where the
Swedish people decided not to build new nuclear power stations.
In other words, the comfort is that despite changes in government
once the power station is up and running the economics have driven
the ability to keep running the power station to the end of its
day. Nevertheless, I do not think a utility would just go ahead
and die. The principal reason would be the question of public
acceptability. I do not think that any government—and I
would suggest any government in this country—could proceed
with nuclear new build if there was a sense in which this was
unacceptable to the public. Taking the public along is absolutely
essential in that process. I would suggest it is for the Government
to lead that discussion and to feel the temperature of the public.
I do not think the utilities could move until all of that had
been cleared.
Chairman: As the Prime Minister said
to the Liaison Committee not very long ago, which of you colleagues
would like a new nuclear power station in your constituency? Thank
you very much indeed; that has been extremely helpful and we are
most grateful to you.
| 
