Supplementary memorandum submitted by
Rt Hon Alan Johnson MP, Secretary of State, Department for Trade
and Industry
SUPPLEMENTARY QUESTIONS FROM THE ENVIRONMENTAL
AUDIT COMMITTEE
ENERGY REVIEW
1. What discussions specifically on the
Energy Review have you, as Secretary of State for Trade and Industry,
taken part in, and when?
I have taken part in numerous discussions on
energy policy, including more recently the Energy Review, with
a range of stakeholders, including the EAC.
2. Does the Government intend to publish
more detailed terms of reference for the Energy Review than those
released on 29 November 2005? If so, when?
The Terms of Reference for the Review were those
published on 29 November.
3. The terms of reference dated 29 November
2005 appear to distinguish between the Review itself and the role
of the Review Team in "informing the review". Can you
set out what specific outputs will result from (a) the review
and (b) the work of the Review Team, and when these outputs can
be expected?
I will answer (a) and (b) together, as it certainly
was not intended that the Terms of Reference should distinguish
between the Review and the role of the Review team.
A consultation will be launched in the new year,
with a statement of current evidence on the Energy White Paper
goals and the Government's plans for engagement with the public
and stakeholders. The ultimate output of the Review will be Government
publication of proposals on energy policy next year.
4. Could you please provide a list of members
of the Review Team, with information on their positions and backgrounds?
Could you also provide the remit or terms of reference for the
Review Team?
The cross-departmental Review team (led by Energy
Minister Malcolm Wicks) will be based in DTJ with secondees from
DEFRA, Department for Transport, HM Treasury and the Prime Minister's
Strategy Unit. In addition there will be input from ODPM and FCO.
The devolved administrations and territorial departments are already
involved and will continue to be involved throughout the course
of the Review.
The remit and Terms of Reference for the Review
team are:
The Government will review the UK's progress
against the medium and long-term Energy White Paper goals and
the options for further steps to achieve them. The aim will be
to bring forward proposals on energy policy next year.
The Review will be informed by analysis and options
drawn up by a Review team led by the Energy Minister Malcolm Wicks.
This will be a team of officials drawn from key relevant departments
and the Prime Minister's Strategy Unit. In drawing up the analysis
and options, the Energy Minister will undertake extensive public
and stakeholder consultation. The Review will be taken forward
in the context of the Government's commitment to sound public
finances and will take account of all short-term, medium-term
and long-term costs and liabilities both to the taxpayer and energy
user. The Review team will report to the Prime Minister and the
Secretary of State for Trade and Industry in early summer.
5. Will the Review seek to go beyond analysing
and assessing performance against the objectives and targets set
in the Energy White Paper by considering possible changes to the
policy and regulatory framework?
As stated in the Terms of Reference, the Government
will review the UK's progress against the medium and long-term
Energy White Paper goals and the options for further steps to
achieve them.
6. What will the "formal consultation
phase" to begin in January focus on, given the fact that
the Review itself will not be concluded until early summer?
As stated above, a formal consultation will be
launched in the new year, with a statement of current evidence
on the Energy White Paper goals and the Government's plans for
engagement with the public and stakeholders.
7. Can you provide an assurance that any
conclusions reached by the Review will be subject to full public
and stakeholder consultation after the Review has reported, and
that any future White Paper would fully take into account the
results of such consultation?
Stakeholder and public engagement will play an
important role throughout the Review. As appropriate, there will
be stake holder and public engagement on implementation of the
Review conclusions.
NUCLEAR: PLANNING
AND LICENSING
ISSUES
8. In your evidence, you stated that—including
licensing and planning—it would take between 15 and 17 years
for a nuclear plant to be built (Q668-669). On the basis of present
licensing and planning arrangements, do you therefore accept that
2021 would be the earliest that a new nuclear plant could become
operational?
There are many factors that affect the construction
lead times for new energy infrastructure, especially nuclear.
It is therefore difficult to make definitive predictions, and
the Review will be examining what other countries such as the
USA have done to enhance their licensing and consents process
for energy infrastructure projects.
For the most recently constructed nuclear power
station in the UK, Sizewell B, it took l4 years from the application
for planning consent to the plant commissioning. On that basis
(and without any change to licensing and planning arrangements)
a new nuclear plant might be operational by 2019-20. It should
be stressed again that no decision has been taken to encourage
nuclear new build and that this is an issue for the energy review.
9. Could you please set out what specific
licensing and planning processes an application for a new nuclear
power plant would currently have to go through, the licenses and
authorisations involved, the order in which they are undertaken,
and the timescales the DTI considers each stage would take?
A number of different consents are required in
order to build and operate a nuclear power station, with various
responsibilities split between the Nuclear Installations Inspectorate,
the Environment Agency (and Scottish Environment Protection Agency
as appropriate), the Office of Civil Nuclear Security and my Department:
— A nuclear site licence under the
Nuclear Installations Act 1965 (NIA 1965) (HSF/NII).
— An approved nuclear security plan
under the Nuclear industries Security Regulations 2003 (OCNS).
— Radioactive discharge authorisation
under the Radioactive Substances Act 2003
(RSA 1993) (EA/SEPA).
— Non-Radioactive discharge consents
under the Pollution Prevention and Control (England and Wales)
Regulations 2000 and the Pollution Prevention and Control (Scotland)
Regulations 2000 (FA/SEPA).
— Approvals for water abstractions
and discharges to controlled waters under the Environment Act
1991 (EA/SEPA).
— Waste management licences under the
Waste Management Licensing Regulations for non-radioactive waste
(EA/SEPA).
— Consent under section 36 and 37 of
the Electricity Act 1989 (EA 1989) (DTI, Scottish Ministers).
— Electricity generation licence under
section 6 of the Electricity Act 1989 (OFGEM - in Scotland after
consultation with Scottish Ministers).
In the case of new designs which involve practices
not either already carried on or justified, justification under
the Euratom Basic Standards Directive 96/29 (as implemented by
the Justification of Practices Involving lonising Radiation Regulations[34]
(DTI, Scottish Ministers, Welsh Assembly, as appropriate).
10. When asked what practical measures the
Government could take to facilitate nuclear, you suggested that
you "could get moving with pre-licensing pretty quickly and
save about three years on the timescale if you were going down
this route." (Q668). Could you set out in detail what would
be involved in such a proposal, how this would affect the timetable
(as set out in response to the previous question), and whether
you have asked the relevant authorities to consider such a change?
There are ways in which the timescale can be
contracted whilst still ensuring proper scrutiny, however there
is no internationally agreed definition of pre-licensing—at
this early stage of the Energy Review we are not in a position
to be able to comment what a pre-licensing scheme might constitute
in the UK and how it would relate to the other consents that need
to be obtained for a new nuclear power station. No requests have
been made to any of the regulators to change the way they issue
the relevant consents for nuclear installations.
But by way of example, I understand that recently
commissioned new reactors in Finland and France are expected to
take roughly 10 years between their initial project proposals
and their coming into service.
11. Has the DTI considered any other practical
steps which the Government could take in relation to licensing
and planning to facilitate and shorten these processes? If so,
please provide details.
The Government has committed to examining all
the options for helping the UK to meet its medium and long-term
energy objectives. An assessment of current licensing and planning
regimes that impact on investment in energy infrastructure will
be apart of this examination.
12. Would pre-licensing (see Q1O above)
or any other initiatives (see Q 11 above) require any statutory
changes to the current licensing and planning arrangements?
The Government has committed to examining a number
of options during the Review. Because we are at such an early
period of the Review, the Government has not yet made any formal
assessments of the needfor legislation for the individual options
that will be under consideration in the Review.
NUCLEAR: INVESTMENT
RISK
13. In the evidence you gave to the Committee,
you stated that "giving the green light" to nuclear,
or "going down the nuclear route" would not involve
any form of Government financial support. Apart from possible
changes to planning and licensing processes, are there any other
practical steps which the Government might take to reduce the
risks to investors which are associated with nuclear new build?
Has the DTI given any consideration to what these might be?
There are various measures which could encourage
low carbon generation (which might include nuclear new build),
These will be considered further as part of the Energy Review
analysis.
14. Do you accept that there are ongoing
revenue risks associated with investment in new nuclear, and that
some form of long-term contract or assurance on the purchase of
nuclear energy would be required if such investment is to take
place? To what extent does the DTI consider that there may need
to be possible changes to the structure of the electricity market
to facilitate this, and how far are long-term contracts compatible
with liberalised markets?
Revenue risks will be one of the elements we
will look at as part of our analysis of different generation technologies
in the context of the Energy Review.
OTHER FOLLOW-UP
ISSUES
15. You promised to provide supplementary
information on a number of topics:
(a) when the Government would clarify its
interpretation of the Large Combustion Plant Directive (LCPD).
I am pleased to say that since my appearance
before the Committee, we have let industry and other stakeholders
know how Government intents to implement LCPD in the UK. In light
of stakeholder requests for certainty, the UK Government intends
to submit a National Plan to the Commission based on the combined
approach and a "Plant= Windshield" definition by the
end of February 2006. We are also extending the opt-in deadline
to 3 February this will allow a little more time to those companies
to make their decisions in light of the UK decision to implement
on a "Plant= Windshield" basis. In light of the Commission`s
commitment and interpretation of the combined approach we are
also giving plants the option, to reconsider whether they want
to be under National Emission Reduction Plan (NERP) or apply Emission
Limit Values (ELV). If they want to swap from their existing preference
they must let government know by 3 February. We believe that this
decision by the Government delivers the certainty industry need
to make their investment decisions.
(b) what analysis, if any, the DTI has undertaken
on the carbon emissions associated with nuclear. In particular,
the Committee understands that the nuclear industry is itself
concerned about the availability of uranium supplies after 2015,
and that the use of lower-grade ores might result in very large
increases in carbon emissions. The issue of nuclear life-cycle
carbon emissions would therefore seem to be important.
These are important issues which will need to
be considered as part of the Review's analysis of how different
technologies could help us meet our Energy White Paper goals.
DTI has not carried out a review of the life
cycle carbon emissions from nuclear, but there are a number of
studies which have done this, which will help inform our analysis.
In response to the particular question of uranium
supplies, DTI has undertaken no studies to examine the impact
that lower grade uranium ores would make on carbon dioxide emissions.
However, the OECD Nuclear Energy Agency has informed the Department
that there is no imminent use of low-grade ore envisioned. And,
the nature of the ores to be mined in the near future is very
much similar to that of the past 40 years. As l said at the time
of the oral evidence session, this is an issue for consideration
in the review.
(c) the total funding available for the
Low Carbon Building Programme in relation to the funding available
under the previous programmes which it replaces. The Committee
would also like to know why the DTl restricted the LCBP to three
years after initially indicating that it would be a 6 year programme;
and when the first funding round under the LCBP will take place.
Between 2000-06 this Government has committed
£53.5 million to funding small-scale renewable installations.
This money was split between three programmes as outlined below.
— £10 million has funded PV field
trials through a domestic scale programme and a large-scale programme.
This programme has run since 2000.
— £31 million funded the Major
PVdemonstrati on programme which has run since 2002 and has currently
provided grants to 1,735 projects.
— £12.5 million was allocated
to the Clear Skies Initiative for household and community renewables
projects. This programme has provided grants to 6,434 schemes
since 2003.
Both the Major PV demonstration programme and
the Clear Skies Initiative will end in March 2006, by which time
all funds will be allocated, and will be replaced by the Low Carbon
Buildings Programme (LCBP), which has £30 million of funds
to allocate (although £1.5 million will be brought forward
as explained below) over three years between 2006-09. Although
the original consultation proposed a six year programme, when
the level of available funding was confirmed we decided that it
would be better to spread the money over three years to keep the
spend per year at a similar level to that provided by the existing
programmes. Further funding allocations will be subject to the
Comprehensive Spending Review.
The LCBP will be designed to take a holistic
approach to reducing carbon emissions by using innovative combinations
of microgeneration technologies and energy efficiency measures.
As well as continuing to fund single installations
the programme will focus on supporting large scale developments
in the public and private sectors to act as exemplars and encourage
further projects. Potential community beneficiaries could include
schools, leisure centres or even remote villages that are not
connected to the grid Other projects could include housing estates
or business parks. The focus on larger developments is designed
to engage the construction sector more widely and to help push
microgeneration products further down the road towards commercial
viability.
We aim to have the LCBP in place by April 2006,
which would mean that there would not be a significant gap between
existing programmes ending and the new programme beginning. At
the moment we anticipate having the first call under this programme
in April 2006, subject to EU State Aids clearance. But, in order
to ensure a smooth transition, we are bringing forward £1.5
million to be split equally between the Major PV programme and
Clear Skies.
Given that our various support schemes started
at different times it is difficult to calculate a true average
spend Overall, between February 2000 and March 2006, £55
million will have been spent, which averages out at £9.2
million per year. Whereas the LCBP will actually provide £9.5
million per year.
It is important to note that capital grant schemes
are not the only means by which we can promote microgeneration
technologies. We are currently developing a strategy for the promotion
of microgeneration that will address the barriers preventing widespread
take-up of these technologies and will help the development of
a sustainable market.
20 December 2005
34 SI 2004/1769. Back
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