|
UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 584-iv House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENTAL AUDIT COMMITTEE
KEEPING THE LIGHTS ON: NUCLEAR, RENEWABLES AND CLIMATE CHANGE
Wednesday 9 November 2005 PROFESSOR PAUL ROGERS, DR FRANK BARNABY, PROFESSOR KEITH BARNHAM and MR MALCOLM SAVIDGE MR RICHARD MAYSON and MR ADRIAN BULL MR ROBERT ARMOUR, MR PAUL SPENCE and MR CHRIS ANASTASI Evidence heard in Public Questions 326 - 444
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environmental Audit Committee on Wednesday 9 November 2005 Members present Mr Peter Ainsworth, in the Chair Mr Martin Caton Colin Challen Mr David Chaytor Mr Tobias Ellwood Mr Nick Hurd Dr Desmond Turner Mrs Theresa Villiers Joan Walley ________________ Memorandum submitted by the Oxford Research Group
Examination of Witnesses
Witnesses: Professor Paul Rogers, Global Security Consultant and Professor of Peace Studies (Bradford University), Dr Frank Barnaby, Nuclear Issues Consultant, Professor Keith Barnham, Energy Security Consultant and Emeritus Professor of Physics (Imperial College London), and Mr Malcolm Savidge, Parliamentary Consultant, the Oxford Research Group, examined. Q326 Chairman: Good afternoon and thank you for coming. May I offer a particular welcome to Mr Savidge who until the general election was more usually seen on this side of the committee room rather than giving evidence. You are all most welcome. I am grateful to you for your memorandum. May I start by asking some questions about the security aspects which you mention. You base quite a lot of what you say on the POST note about the risk of terrorist attacks on nuclear facilities. It just seemed to me that the conclusions that the Parliamentary Office of Science and Technology reached were very much more equivocal than your conclusions. Would you accept that? Professor Barnham: No, I do not think I would. Are you talking with respect to the risks of there being an explosion, some sort of incident like a terrorist attack or the consequences of those? Which are you referring to? Q327 Chairman: The risks are indefinable. The consequences are partly open to analysis, although obviously there is a lot of information that is secret, and therefore there is only very partial information available. What I am slightly concerned about is that this report here is hedged about and is equivocal. You have chosen to say that the risks associated with a terrorist attack are much the most serous problems associated with developing new nuclear power. My own view, and I will offer it to you, is that this document produced by the Parliamentary Office of Science and Technology does not justify that position. You obviously have your own views and have made your own analysis. Professor Barnham: Yes. In terms of the possible consequences, we note that POST reports both sides of the argument. In preparation for this, I checked through the analysis we based this on, and that is the one done by Frank Barnaby, my colleague. I would like to point out that I have obviously checked that one through and it does seem to me that it is taking a fairly conservative risk. It is talking about a small proportion of releases from the various places. Of course it is impossible to be sure how much would actually be released. By taking the fairly conservative releases and then comparing with the well-documented Chernobyl tragedy, I feel it is fairly conservative on the consequences side. Q328 Chairman: Do you agree with the POST opinion that even if there were a successful attack, it would be highly unlikely to cause large numbers of instant fatalities? Professor Barnham: I would actually disagree with POST. I feel that POST has taken a best situation by using quantitative figure from Sizewell, which, as we well know, is the most modern and the most protected; it is the one with a reasonably strong secondary containment. In terms of their talking about release, they are not looking at the breadth of the possibilities. Indeed, they should be looking at, as they themselves specifically mention and as you will notice, the problems there might be with the old Magnoxes and just leaving it like that. I am afraid I would say that was leaving out some uncertainties. Q329 Chairman: Is it not likely that the risk associated with a new build generation of nuclear power stations is likely to be less than that associated with the old ones, Magnox and Chernobyl and all the rest of them? Professor Barnham: One would certainly hope so. We come back to the fundamental point that the possible outcome of a terrorist attack is so terrible that we feel it has to be faced up to before any new build. Basically, we have so many potential targets as a result of the waste policy. I am sure we will come on to that. Q330 Chairman: The consequences of an attack on a chemical plant would be pretty bad, would they not? Think of Bhopal or Seveso: is not the risk there just as great? Professor Barnham: Absolutely. Mr Savidge: As you say, POST is extremely well balanced. It is worth noticing that it says that it is considered possible that an attack on Sellafield could result in hundreds of thousands of long-term cancers. It then very fairly quotes the BNFL claims the other way. Obviously, in relation to something like Sellafield which is an older station, one has considerably more risk; one has considerably more risks with the liquid waste tanks. We are saying that those problems ought to be resolved before we start to create new problems. Obviously nobody is questioning that there would be a greater attempt at security with any new facility. In fairness, I would say that if look at the quotes we took from POST, they were fairly carefully taken to be quotes which do not exaggerate what POST is saying. There is no doubt that they say that no reactors were designed to withstand being hit by a large commercial aircraft and they do state that the older Magnox plants are more vulnerable to terrorist attacks. Q331 Chairman: Obviously this is a very serious matter and needs to be thought about with great care. I am grateful for the evidence you have produced. I am just slightly concerned that there may be a danger of scaremongering here. To give you an example of that, you talk about the near certainty of a terrorist attack in the long term. Actually, of course, in the long term the dangerous material will probably be stored in a very secure place somewhere deep underground and therefore not be as accessible to terrorist attack as perhaps a current pond at Sellafield. Professor Barnham: I am afraid there is one point I would like to bring to the committee's attention. I am very concerned that the industry has not got a strategy and the necessary technology for long-term storage, high or low. On that particular point you are referring to, I would draw your attention to the next sentence in our report which states that the really important thing is to realise that whatever repository we are talking about - and, yes, personally I would like to see the waste underground as soon as possible - has to remain robust for 10,000 generations to look after the waste produced by two generations. It is that extrapolation that I am saying is the really crucial one of which I would like the committee to be aware. You ask how one makes a repository robust. Bear in mind we are just talking about keeping the material isolated from Al-Qu'aeda and about seepage into the environment; we are not just talking about terrorist attacks but about very small amounts of plutonium in the environment being extremely dangerous, toxic. What I am pointing out is that that has to be kept isolated for 80 times as long as Stonehenge has been there. I make the point that it is not safe. How can we be sure that people will even know where the repository is in 10,000 generations' time? Q332 Chairman: We do not know for sure, and it is not a near certainty that there is going to be a terrorist attack on any kind of future nuclear installation. We do know for sure that climate change is happening. If the nuclear industry is capable of coming up with a solution to climate change, is it not worth the risk? Dr Barnaby: The thing that bothers me most, and I am sure my colleagues, about a terrorist attack is the probability that a terrorist group will get hold of plutonium and fabricate and get a nuclear weapon, plus of course the dirty bomb. We are firmly convinced that if we move into the plutonium economy, over time the probability of that happening does become a near certainty because the fuel for the next generation and the generation after that in nuclear power reactors will be very easily converted into nuclear weapons. It is the nuclear weapon aspect as well as the attack on a facility that we regard as important. Q333 Chairman: We are going to discuss the proliferation issues in a minute. Professor Rogers: Could I come back, Mr Chairman, to your question of risk? You said at the start that risk is undefinable and that we are looking primarily at consequences. In a sense, risk is undefinable but trends are there to be seen. One can say that the risk has grown considerably of terrorist attacks on major targets, including nuclear facilities, in the past 15 years. To quote from Sir Ian Blair, the Metropolitan Police Commissioner, just last night, he has chilling evidence of new terrorist plots. We do not know what they are. One has to understand that paramilitary groups, terrorist movements if you wish, tend to be rather conservative in their operations but they can undergo changes. I give you two examples. One, as we know very well in London, was the move over to economic targeting by the Provisional IRA in 1992 with the very big political impact that had. More serious was the move to mass casualty attacks, starting in February the following year. Remember that the February 1993 attack on the World Trade Center was intended to bring the north tower down over the Bicester Hotel into the south tower and kill about 30,000 people in the space of a few seconds. That was the intention. During the course of the 1990s, there were other major attacks. There was an attempt by Algerian radicals to crash a fully-laden Airbus on the centre of Paris, which was countered by the French Gendarmerie in December 1994. There was the major attack on the Colombo World Trade Centre by the Tamil Tigers, killing 100 and injuring over 1,000. There were many other attempts. Q334 Chairman: We know that we live in a dangerous world. There is no doubt about that. Professor Rogers: My point is that it is a different world to 15 years ago. Q335 Chairman: That is also true. I go back to the question I asked, which I do not think has been answered, and forgive me if it has. Is not the risk of an attack on a chemical plant just as great, in terms of the immediate impact at least, on the people who live round it? Professor Rogers: In terms of the people who live round it, it may well be. Take the example of Flixborough, which had an immediate effect and killed 30 people. You are talking about a far greater effect if you have an attack on nuclear facilities, admittedly over weeks, months or years, but it is massive compared with probably the largest chemical plant attack you can imagine. They are of a different order of magnitude. Q336 Mr Ellwood: May I lead on from the Chairman's comments about those chemical attacks? Are you suggesting that we do not want to get involved in the requirements of needing plutonium in this country because it might facilitate some form of dirty bomb, or indeed larger bomb, when in fact if I were a terrorist and I was interested in gaining this substance, I would not look to Britain; I would look to another country where it would be much simpler to get. I am trying to understand whether you are saying we should not go down the road of using nuclear energy simply because we are then able not to have plutonium on the market, when actually terrorists can purchase this stuff or get it from another source and still use it in the United Kingdom? Dr Barnaby: There are very few countries that are reprocessing spent nuclear fuel. We are one and France is another, and Russia and Japan in 2006. The haul of plutonium in Britain we are storing is exceptionally high. Presumably that means it is at greater risk but, worse than that, we do tend to be moving into trade in plutonium in the form of MOX, for example, which means that we are spreading plutonium globally. A combination of those two I think makes Britain a special case here, along with France. Q337 Chairman: Is it really your view that a new generation of nuclear power stations would be as unsafe in terms of the risk of terrorist attack as the existing ones we already have? Dr Barnaby: When you say a terrorist attack, you mean a terrorist attack on the reactor itself? Q338 Chairman: Yes. Would they not be designed to higher specifications, bearing in mind the enhanced risk of a terrorist attack? Dr Barnaby: If you are talking about the terrorist attack on the reactor, that is possibly true. You do have to remember the pond. Q339 Chairman: We have already got that, though. Professor Rogers: But we are going to have very much more of it. If we move over to a plutonium economy, we have much more transport, much more storage, much more processing. If we are part of a system in which this becomes a global trend, and this is seen as a primary answer to climate change, then we move into a global plutonium economy, which we do not have the present time. Q340 Joan Walley: Could I press you a little further on that? As from now, the thrust of the questioning has been in respect of the nuclear solution to the problems that there are of global warming. Can I slightly extend it out from there? In terms of the priorities that the Government has stated about security of supply and all the things that we need from an energy policy, what do you think are the issues globally? We are at a point where we can perhaps change the direction of energy policy. Should we or should we not be looking at this in terms of the global insecurity that could come about if we do not actually deal with climate change? I am looking to put this into a slightly bigger framework than just whether or not we go for nuclear. Professor Barnham: We may not have time, I am afraid, to get on to it, but I do wish to make the point that there is some uncertainty as to what extent nuclear can mitigate carbon dioxide emissions. There is an uncertain amount of carbon dioxide emission, which we could discuss and perhaps get on to later. As we start to use up uranium supplies towards 2050, we will increasingly have to use uranium ores which will require more energy to extract and it will become more problematic how much CO2 nuclear power actually does displace. The second point is that we must remember that the new nuclear build is at least 10 years away. That is the prelude I would like to give to try to address your question. I have been working for 15 years in renewable energy. I think it can deliver. It is delivering worldwide. Wind, of course, is the first and most obvious. Our neighbours in Denmark have 17 per cent wind at the moment and planning for that to rise to 25 per cent, which is the same as our nuclear contribution. We have wave, tidal and my own area solar photovoltaic, all of which can start delivering here and now and not in 10 years' time. In the rest of the world, solar photovoltaic expanded at 57 per cent last year. The Germans doubled theirs, so there was a 100 per cent increase in their installations. Even from our ridiculously low level of PV in the UK, a 40 per cent or relatively modest increase would mean that by 2023 we could produce all our electricity from photovoltaics. Chairman: We were hoping to come on to all of this in a minute. We may now not have to. Could you pause there because we will have a question to you about your attitude towards renewables? Q341 Mr Hurd: Professor Rogers, I do not think you were involved directly in the memorandum. You are particularly welcome here today because I think you can neatly give us a global perspective on the risks associated with the trend towards proliferation of civil nuclear plants and risk associated with the move towards what I think you called a plutonium economy. Are we going forwards or backwards in terms of the process of reconciling Western monopoly in this technology and the aspirations of the developing world? Professor Rogers: I think we are going backwards. Historically, there were great fears for nuclear proliferation in the 1970s and 1980s. Happily, some of those were not realised. Argentina and Brazil forewent their nuclear rivalry. South Africa got out of it. Kazakhstan, Belarus and Ukraine all gave up their nuclear weapons back to Russia as the successor state of the Soviet Union. There was some progress. That turned round in the 1990s with the Indian and Pakistani developments, and more recently with Korea, and now of course with Iran. I was in Iran quite recently studying this. Essentially, we are at a point where the nuclear weapons proliferation problem is possibly about to get much worse. That is something which is happening for political and strategic reasons. The problem is that in those circumstances simultaneously you are moving to a more heavily involved plutonium economy. Put that with the political and strategic problems, and you have a really serous issue over the next 10 to 20 years. For example, if you have a country that believes it has a right to nuclear power and to nuclear weapons, then if you have particular countries which believe they should go for new generations, it makes it very much more difficult to say to any country "Thou shalt not". I think there is a combination of strategic developments with the possible new generations of nuclear power. If you put those together, you have a complex which is really quite difficult to counter. Q342 Mr Hurd: How do we reconcile those tensions? If I understand you correctly, you support the view that we are not in a position to dictate to these countries what technologies they should use. Professor Rogers: It is a question of not dictating but it is even worse to say, "Do as we say and not as we do". Essentially, if you want to play a major role in getting at the root of climate change, then you have to be one of the lead countries yourself. It gives you far greater authority to do it. I tried this in Teheran a few months ago. It is very difficult to say to senior Iranian politicians, "I do not think it is wise for you to go for nuclear weapons or nuclear power". They turn around and say, "Who are you to tell us that?" You can say, "Look, you are in a position to go very heavily for photovoltaics and other things; your geography, climate and solar radiation suits you better for that". They will turn round and say, "You are also in a position to do that with wind and wave. Why are you not doing it?" In other words, you do not have the authority to dictate. Q343 Mr Hurd: How do you see the role of the International Atomic Energy Agency, faced with this challenge? Professor Rogers: Mr El Baredei's comment in The Financial Times recently was extremely interesting. He was essentially saying that we have to re-visit what underlies the Non‑Proliferation Treaty. Essentially, if you have the Non-Proliferation Treaty, that basically allows civil nuclear power but not the proliferation of nuclear weapons. The one problem that was always known about is that the powers that were subject to Article 6 where they were required to get rid of their nuclear weapons have not done so, but the added problem, as Mr El Baredei says, is that we have actually got to look at the direct connection between nuclear power and nuclear weapons. I believe one of his seven comments in that article was in fact to have a moratorium on further uranium enrichment. I think that is right. You have a figure like that saying that you have to reconsider even the basis of his own agency's work, which is very powerful. We could table The Financial Times piece, if you wish. Q344 Dr Turner: Dr Barnaby, may I ask you a specific question? You state in your memorandum that Generation III reactors can use mixed oxide nuclear fuel, which is obviously a matter of concern for proliferation. Do they have to use MOX? Can they possibly use uranium? Dr Barnaby: Yes, they could use uranium. They do not have to use MOX, but there will be great pressure to use MOX for two reasons. Firstly, we have a store of plutonium which the authorities want to get rid of and therefore it is tempting to burn it as MOX. However, that does not solve the problem. The danger with MOX is that to separate the uranium dioxide and the plutonium dioxide from the MOX fuel - it is a mixture of the two, it is mixed oxide - is straightforward chemistry; there is no difficulty with the chemistry in doing that. If you produce MOX and you export it, making a global trade in it, you are making available to terrorist groups around the world material from which they could very easily get plutonium and very easily make from that plutonium a primitive nuclear device. Q345 Dr Turner: You have even greater concern about Generation IV reactors because of their use of plutonium. Dr Barnaby: Yes. Q346 Dr Turner: There are two types. Would you count the AP1000 and the pebble bed reactor as Generation IV? Dr Barnaby: No, that is Generation III. Q347 Dr Turner: Are you happy or not happy with the security issues surrounding the AP1000 design, which is the most likely to be proposed for this country? Dr Barnaby: Absolutely. Q348 Dr Turner: Did you say you are concerned with the security? Could you elaborate on that? Dr Barnaby: I am concerned about the security of the MOX fuel, certainly, for the reasons I have given. So far as the reactor itself is concerned, it is claimed that it is a safer design, mainly because the control rods work under gravity rather than with a motor and that obviously they are passively safer. It is the fuelling which is the problem. Moving into an era where we will use MOX and therefore plutonium on quite a large scale if the plans go ahead I think is very worrying indeed. If that happens, the probability that there will be a nuclear terrorist attack using a nuclear weapon that they themselves manufacture is really very high indeed. That does make me very unhappy. Q349 Dr Turner: Are you satisfied about their safety as reactors, given that one of the reasons for getting the cost down is to reduce the amount of paperwork, valves, et cetera, which of course are safety systems, and to reduce the containment? Dr Barnaby: Yes, the people that I have talked to about the AP1000 do say that. I have no reason to doubt them. I think this possibly is more passively safe than the current reactors, but the problem is the terrorist threat. Q350 Dr Turner: Does the pebble bed reactor give you any security concerns? Dr Barnaby: The pebble bed reactor is quite a lot safer because the fuel is more proliferation‑resistant, but the industry is, by and large, resistant to go in for them. I notice that the Chinese are very keen. They are really most suitable for small reactors, 100 MW to 200 MW type. I am not sure what the commercial prospects are for the pebble bed but it certainly is a more proliferation-resistant design than what we have at the moment. Q351 Mr Ellwood: May I clarify a question that Dr Turner raised? I think Dr Turner bracketed the 1000 series plus the pebble bed together and you said that they were both classed as Generation III. Was that correct? Dr Barnaby: The pebble bed reactor is not classed as a generation reactor. It is part of the family of reactors, yes. Q352 Mr Ellwood: I understand that it is not, and that is why I wanted to clarify that. On that point of the pebble bed, the concerns that you all expressed earlier were to do with the proliferation of plutonium. Am I getting the impression that were a prototype pebble bed reactor, such as I think the South Africans are looking at very seriously from the German designs of 20 years ago, going to be manageable and economic, you would be a supporter of such a reactor? Dr Barnaby: Yes. Professor Barnham: I believe there are still questions about the storage of the waste. There was a meeting at Imperial College last week on waste management. There are some very big questions to ask on waste storage of the pebble bed after irradiation. Though it has a lot of features which look more positive, there are still some big questions. Dr Barnaby: Once you have nuclear fission, you have waste. That is obvious. Any reactor is bound to produce waste. Professor Barnham: It is a very complicated fuel. Dr Barnaby: It is very complicated indeed. Professor Rogers: There may be differences in the inherent safety features of different reactors. There may well be a trend for new generations of reactors to be considered to be more safe, but that does not rule out the underlying theme that you are moving into an era in which you have larger amounts of fissile material in circulation, both prior to use in reactors and as waste products. That is the wider issue. Q353 Mr Caton: Professor Barnham, you have already touched on the issue of carbon emissions associated with nuclear this afternoon. In your memorandum you cite the work of van Leeuwen and Smith and the need to research the availability of high quality ores. Do you accept that on the basis of high quality ores, nuclear is almost a carbon-free source of energy, after generation commences at least? Professor Barnham: The industry figures are at around 8 to 10 per cent, as I understand it. There I am talking about the energy pay-back basically, the amount of energy that is required over the whole cycle. That is the energy input in creation, in separation, and with good ores and so on. Presumably that energy comes from conventional sources, so it will have evolved some CO2 and so sounds pretty low. I am concerned if you are doing a whole life cycle analysis, which is what should be done, and remember what I said at the beginning that waste has to be stored for 10,000 generations. The energy that is going to be involved there is discounted, as indeed is the cost of that within the analyses I have seen. How does one calculate the energy required at the back end, given that one does not know where the back end fuel is going to be stored and how it is going to be stored? I think that probably the industry figures for the best quality ore that you get from Australia and Canada are about right at 8 to 10 per cent. Our concern is that that will start running out, on IAEA figures, by 2050. The interesting thing about the reference you refer to, the van Leeuwen and Smith work, is that it very soon becomes uneconomic energy-wise as the quality of the ore declines. It can very soon go up to their sort of figure, which you may know is about 33 per cent, that sort of range, as you have to start using less good quality ore. Q354 Mr Caton: On that question of the availability of high quality ores, BNFL have submitted in their memorandum that economically recoverable reserves are adequate for around 170 years at current consumption rates. Do you accept that? Professor Barnham: That certainly disagrees with IAEA, yes. Professor Rogers: We could give you a supplementary note on this, once we have seen the evidence. Professor Barnham: We have not seen the evidence. Q355 Mr Caton: What do you think, if it is rather scarcer than they are suggesting, this is going to mean for the price of uranium, if, as you are saying, it may not be this 170 years? Professor Barnham: The uranium will certainly become more expensive. My concern is, as I say, that overall you will start having to use much more energy in separating the uranium and therefore end up by having a much bigger carbon dioxide load. That is my point. Mr Savidge: That is carbon dioxide as well as in financial terms. Professor Barnham: That is in carbon dioxide and financial terms. Both of them are important. Q356 Mr Caton: If nuclear fusion ever became a reality, would you count that as renewable energy? Professor Barnham: You are asking for my opinion on nuclear fusion! No, I would not actually. Here is our solar cell. If there is time, I will talk about this. It is a third generation photovoltaic cell. If I left it out on the windowsill in London all year, the electrical energy generation inside that would be four times what you may get in 50 years' time from the fusion rate. So we can do it already here and we get one-seventh of the funding of fusion. Q357 Mr Caton: You have fusion research tomorrow? Professor Barnham: Absolutely, and I would like to suggest that the committee as a very serious matter asks the MoD why it is supporting fusion research. Dr Barnaby: Fusion is not good from a nuclear proliferation point of view because high energy neutrons can produce massive amounts of plutonium and also, of course, there is the radioactive waste problem. Q358 Colin Challen: Could I pick up one point from Professor Barnham's contribution about the long-term 10,000 generation period for waste storage and the final solution? When the stuff is buried and sealed off, what is the ongoing energy consumption required and what carbon emissions can you ascribe to that particular question? Professor Barnham: There is a debate going on about whether it should be stored in a place that is retrievable so that we at least know in 70 or 80 generations' time if the containers have rusted and we can get it out and re-package it. Mr Savidge: It is important to stress, given the Chairman's earlier questions, that in a sense we are waiting for the quorum to suggest in this country whether we should have surface or near surface, easily retrievable waste or whether we should go for deep storage. Deep storage is deeply costly; the other one is less safe. I think there is a great danger that we could be in a position where the less costly one is mentioned when we are talking about finance and the more secure one, namely deep storage, when we are referring to safety. I think there is a real risk when one looks at it because deep storage is expensive. So far, we have no deep storage repositories in this country at all because it is expensive; it is politically unpopular as you have to choose defined sites; it is not particularly sexy because what you are protecting against is something that is seen in some ways as a remote possibility. We can think in terms that we have this solution but will we have the solution of deep repositories? Q359 Colin Challen: With respect, that was not really my question. My question was about the carbon emissions and the energy consumption that would be associated with long-term storage in a tunnel system, perhaps underground where it is sealed off. I assume that somebody puts a padlock on the door, locks it up and they do not throw away the key; that is the only thing. In the life cycle analysis that you have referred to, what are the climate change consequences for those 10,000 generations? Professor Barnham: This is a problem I think you have to face up to. It was not a flippant statement: 80 times Stonehenge - how are we going to tell the world in 10,000 generations' time that there is a plutonium store hidden underneath down there? How are we going to communicate that? Q360 Colin Challen: There is no way of assessing the future energy consumption. Professor Barnham: That is my point. Q361 Mr Ellwood: With the speed of technology that has moved forward, the amount of energy that is actually being extracted from uranium pellets is quite minimal compared with the energy that is in there. Do you feel that in 50 or 100 years' time there could be a possibility that rather than bury these and forgetting them, there may be technology that can re‑use these or get more energy out of them, or, alternatively, to have some form of process which would speed up the decay to make them completely safe? Dr Barnaby: You mean transportation; in other words, it is technically feasible but it is hellishly expensive. Q362 Mr Ellwood: It is today. Dr Barnaby: It is very hard to see a time when it will not be hellishly expensive. Professor Rogers: The context here is the problem for the next five to 30 years on climate change. We are looking at what needs to be done now and in the very near future. Professor Barnham: It does come back to our original point, that it will involve a lot of transportation of nasty materials. That is what we are saying, that we are worried about the third and fourth generation of that and the terrorist threat. It would be done at some central facility and you will move the spent fuel. It is almost certainly going to involve some more transportation around the country to a central point. All the facilities that I have seen described are central facilities at the moment which people are talking about. It is a long way away. It will again involve transport. I come back to the point that the transport of MOX, the transport of fuel and of spent fuel are all terrorist targets which we have to be aware of and try to minimise. Q363 Colin Challen: You are highly critical of the Government's ability to progress on introducing renewables. What evidence do you have that would give us any confidence that if they changed their attitude in a satisfactory way, renewables would be able to deliver and fill the generation gap by 10 years' time? Professor Barnham: As I say, the Germans achieved 100 per cent increase last year through their 100,000 roof programme. All we need just for photovoltaic is a 40 per cent increase per year from our current very low level to get to the current nuclear contribution by 2023. I would add that the vitally important point to realise about renewables is that there is such a variety. There is wind, tidal, wave, CHP and so on and our own photovoltaic application that we are pushing which involves a certain amount of energy efficiency, but there is enough spread there to provide. Q364 Colin Challen: Some of it is still at the theoretical stage. We are only at the point of prototypes with wave energy. There are grid connection problems and all these things. By 2015, could we really think that that would be making a significant contribution? Professor Rogers: Yes, certainly, particularly when one looks at micro generation. We are now having the first of the micro wind turbines coming on to the market at about ₤1000 to ₤1100 a time. There is massive potential there and for PV on roofs and even for the older solar collectors for hot water heating. The potential is clearly there. There needs to be much more in the way of fiscal inducements, but there is no doubt that the current technologies can do it. If, at the same time, we had had the kind of R&D in photovoltaics that we have had in the nuclear field over the last 30 or 40 years, we would probably already be at third and fourth generation PVs that are highly economic. It is a combination of really heavily investing in R&D while at the same time using the existing technologies and encouraging them to come onto the market very quickly. Q365 Joan Walley: On that point, you mention the fiscal inducements and the R&D and that that could help us close the gap by 2015. What about public awareness? The Government is saying that we need to have an informed public debate about the role that all the different energy options could take, including nuclear. Where is the public debate about the role of renewables in all of this? Professor Rogers: We absolutely welcome what the Government has said. We hope it is put into practice. My own local authority at Kirklees is the most advanced in the country at introducing micro wind power and PV on to schools. One of the things that recent study has shown is that as soon as you have that kind of facility, the kids in schools become far more aware of what is happening and why. It is a very strong public inducement to recognise the way we have to go. It is certainly far better than living next to a nuclear power station. Chairman: Most people would agree with that. Thank you. I promised you that we would get to renewable energy by the end and we have done. We are extremely grateful to you for your time and for coming here and sharing your knowledge with us. It has been most useful. Memorandum submitted by British Nuclear Fuels (BNFL) Examination of Witnesses
Witnesses: Mr Richard Mayson, Director, Energy Unit, and Mr Adrian Bull, Head of Energy Studies, British Nuclear Fuels Ltd, examined. Chairman: Good afternoon. Thank you for coming and for your memorandum. Q366 Colin Challen: Your memorandum discusses the security aspects and emphasises the physical robustness of reactors. It is the case, is it not, that in any new design security in itself would not necessarily be the prime consideration in terms of a new threat that we have been hearing about? Mr Mayson: I think the first thing to say is that, as you point out, security is a key consideration. There is a wide range of potential threats as a result of the terrorist problems that we face. Those do not just affect nuclear but affect a wide range of facilities, as the Chairman pointed out earlier. I take the view that because nuclear structures are very robust structures, they are in a very good place when it comes to security because they are built with several feet thickness of reinforced concrete and the sites have ongoing and continuously reviewed security arrangements. Q367 Colin Challen: Has any testing been done of the existing arrangements? I understand that the Finns, for example, in the design of their new reactors have actually tested concrete structures against potentially commercial airliners crashing into them. Have you done anything like that? Mr Mayson: There have been various tests done looking at that. For example, in America they did a test where they flew a Phantom jet at full speed into a simulated containment building. The containment survived and the Phantom jet disappeared. These sorts of tests have been done. Q368 Colin Challen: A Phantom jet is rather a small object compared to a modern commercial airline. Mr Mayson: Carrying fuel and going at considerable velocity, it has a fair impact. The other thing to say of course is that the Office for Civil Nuclear Security as the security regulator did, in the summer of this year, affirm its confidence in the security provisions within the nuclear industry. Q369 Colin Challen: On the information available, you seem very relaxed about the security aspects and that these facilities will withstand practically any kind of terrorist attack. On the limited information available, how can the public be so sure about that? Mr Mayson: I think it is important that we are as open as possible, bearing in mind that some of the security arrangements themselves have to be reasonably secure in relation to advising terrorists of such potential threats. I think we should do as much reassurance as we can on these issues. Particularly if we look forward to some of the newer technologies, there is substantial evidence of even better protection than with some of the older technologies. Q370 Colin Challen: You clearly have a vested interest in trying to sell new technology abroad. China has been mentioned as perhaps a great growth market, but there are other countries too, as we know, which are very interested in civil nuclear power. Do you have any fears about proliferation of civil nuclear power and the possible security implications of that? Mr Mayson: I take almost the opposite view to the previous speakers. I think that the International Atomic Agency's safeguard arrangements are thorough and extensive and have been applied very successfully over the last few decades. The Non-Proliferation Treaty, which pretty every country around the world with one or two very notable exceptions have signed and support, has been a very powerful vehicle for delivering protection against weapons proliferation. For me the comfort comes from the fact that when a nation does look as though it is stepping out of line, it is all over the front of the papers and the international community is putting huge pressure on that nation to comply. Q371 Colin Challen: We are increasingly stepping out of line. We are already concerned about Iran. I notice that Venezuela now has raised the hackles of George Bush in terms of its nuclear ambitions. There have been other problems. In Pakistan we have seen the leaking of information, which clearly is very critical. Do you not share those concerns? Mr Mayson: I obviously share the concerns. I would point out that the international pressure is on these countries to comply. I think the proof of the pudding will be in the eating in relation to when they do comply. Both those are signatories to the Non-Proliferation Treaty. Q372 Colin Challen: If we are looking at tackling climate change and the kinds of technologies that we need to sell hopefully on other methods to transfer to developing countries, would you see a future there for nuclear power? Would that not greatly increase the dangers of proliferation and a growing security threat? Mr Mayson: This is where I do take the view that you can in many ways separate the civil use of nuclear from the military use of nuclear. The Non-Proliferation Treaty is there specifically to avoid people taking it beyond the civil use of nuclear. Civil nuclear does make a huge contribution to avoiding global warming. It already avoids more carbon dioxide in OECD nations than will be saved under the Kyoto Protocol, over 1000 million tonnes of carbon dioxide a year. That makes a huge contribution to avoiding global warning. That is a very big issue for the planet. Q373 Colin Challen: Do you have a list of countries that you would not sell the AP1000 to? Mr Mayson: We do not have a list of countries in that category. Q374 Colin Challen: So you would sell it to any country if they had the money? Mr Mayson: I would have thought that any country that has signed the Non-Proliferation Treaty and that is in compliance with that treaty would be considered for commercial application. Q375 Chairman: Would you sell them to India? Mr Mayson: They have not signed the Non-Proliferation Treaty, so the answer would be no. Q376 Dr Turner: The AP1000, in addition to other Generation III and Generation IV reactors, either uses MOX or for future reactors plutonium. Is this necessary? Are you simply designing reactors to run on plutonium because we have a large stock of plutonium? Mr Mayson: It is not necessary. If the committee would bear with me, I would like to explain the generations of reactors from my perspective. This might help in responding to the question. Generation III reactors are those reactors that are really available for deployment today and, I would argue, for about the next ten years. Within that category you are talking about the European pressurised water reactor, the AP1000 and some of the advanced CANDU designs that the Canadians have developed, for example. If we look beyond that in timescales, then you come into the serious application of the pebble bed modular reactor that I would call a Generation III Plus reactor because it has not been deployed commercially; it will be deployed commercially but it will not be available for commercial deployment until about the middle of the next decade. In that context, I do not like betting on jam tomorrow, so I would say that that is not a technology that one should bank on for the future. Beyond that, Generation IV is a worthy venture that involves 11 nations doing long-term research, looking 30 years out at some technologies that would, around 2030, deliver improvements in relation to nuclear fission technology. Again, it is one of these issues where, until that technology is proven, which will be a long way out, at least two decade out, then one should not bank on that being available when it comes to looking at the nation's energy supply. Going back to your question about MOX and the use of uranium, the reactors are primarily designed just to burn standard uranium dioxide fuel. Some of them also have the opportunity to burn mixed oxide fuel, if that is appropriate. Clearly, the base case for any programme going forward would be the use of uranium dioxide fuel. Q377 Dr Turner: That is, rather than MOX? Mr Mayson: MOX is an option that whoever builds the stations would have the opportunity to consider. At the end of the day, it will be about fuel price and a whole range of other considerations. Q378 Dr Turner: If you are part of a consortium pushing a new fleet of AP1000, for instance, in the UK, are you telling us that they will operate on uranium fuel rather than MOX? Mr Mayson: I am saying there is the opportunity to do either. I am sure that decision would not just be down to BNFL or any consortium that might be set up. Q379 Dr Turner: You will have a view. You heard the concerns from our previous witnesses, the Oxford Research Group, about the proliferation implications of the use of either MOX or plutonium. It is all very well if the country has signed the Nuclear Non‑Proliferation Treaty but if the plutonium or the MOX falls into the wrong hands, it does not take much to be a very real threat. Mr Mayson: I have mentioned my views on the Non-Proliferation Treaty. I do not see that the use of MOX fuel significantly alters those considerations. Q380 Mr Ellwood: Could I probe a little further? You touched on the pebble bed reactor as a project itself. I had the opportunity last week in fact to visit the Eskom Koeberg reactor and to hear some of their plans towards the prototype of pebble bed reactor that they are hoping to build there. Could you first update us on what your relationship is with Eskom because you were doing some development works to do with pebble bed reactors? Mr Mayson: BNFL is a small stakeholder within PBMR Pty, as it is called, which is the pebble bed company that is developing the reactor. BNFL has a small stake in that and continues to secure that stake through the membership of one individual on the PBMR board. We also provide some nuclear technical advice into the project, particularly in relation to the fuel fabrication side of things. Q381 Mr Ellwood: That suggests to me that you have your foot in the door, in answer to Dr Turner's question. Would you be an advocate, would you be promoting this interest, or do you feel that there is not a future for pebble bed? Mr Mayson: As I mentioned before, in terms of timescales, I think pebble bed is an excellent prospect but for the medium term and only if the demonstration reactor performs as we would hope it will perform, that it has the economics that we hope it would have. Because it is a demonstration reactor and it is not available, then it is not a technology that I would give serous consideration to for the next five to 10 years in relation to any new build that the UK might consider. Q382 Mr Ellwood: The South Africans would argue that they are hoping to have one on-line in the next five to 10 years, which goes against what you are saying. Mr Mayson: I think the dates line up exactly. I think you are right that they are planning on getting it up and running, bearing in mind this is a demonstration reactor, by around 2010/2011. However, I think the UK would be unwise to think about investing in a technology before it had run for a few years. There will be teething issues. There will be the issues of making sure the economics stack up. I do not think we would want to go down the route that we have perhaps gone down in the past of not buying a proven product. It is very important that if the UK does look at nuclear in future, it buys a proven and established reactor design. Q383 Mr Ellwood: You do not think the pebble bed, if it is proven to work, will actually make your new AP1000s almost obsolete because they are running almost on a parallel timescale? Mr Mayson: That is the second point. You might wonder why we are interested in both. The reason we are interested in both is because we think there is likely to be a market for both in future. The attraction of the pebble bed is that it is a small modular reactor; it is only 170 MW electrical output. An AP1000 is around 1100 MW. I would argue that for nations which need large bulk base load capacity, like the UK, then something like the AP1000 would be entirely appropriate, whereas pebble bed is ideally suited where you need smaller slugs of power to light South Africa, and possibly in more remote regions within the UK where you need less access to power. If you can have small modular units, you can cut down the transmission costs. Personally, I see a market for both. Q384 Mr Ellwood: My final short question is this. It does beg the question then that if you only have a stakeholder interest in the pebble bed system, and you have mentioned one or two people there, why are you not investing more of your own time and research into looking at this if you think it is a viable option? Mr Mayson: One needs to bear in mind that we do have an active stake in it. I believe we have an appropriate level of stake in it. You need to look at where BNFL is in its development. BNFL is in the sales process of Westinghouse and that investment is therefore being considered as possibly part of that sales process. To make a significant shift in that investment at this particular stage, I think would look rather strange to our shareholder and our board. Q385 Chairman: So you are going to get rid of the stake? Mr Mayson: I did not say that. Q386 Chairman: We inferred that. Mr Mayson: Just to be clear, I think the view is that it is likely that the stake will be taken over by Westinghouse, but that is not confirmed. Q387 Mrs Villiers: It seems that you are considering selling both Westinghouse and BNG. I wonder if you could tell the Committee a little about what your reasons for that are and does it suggest that your enthusiasm for the AP1000 is waning? Mr Mayson: I do not personally know the status of the sales, as I am sure you can imagine, because it is all very closely protected information. In terms of the prime reason for both sales being considered it is maximising shareholder value - that is the number one reason. The Westinghouse moves towards a sale are more advanced. The British Nuclear Group sale that is being considered is supported by the BNFL board but it is now out to broad consultation with other stakeholders to see if that is the right option for the British Nuclear Group. To answer your question directly, does that mean we have got less enthusiasm for AP1000? I think that is just not the case at all; it is a case of getting shareholder value and it is a question of thinking about if there were new build in the UK what model might that happen under. I think no matter how you look at it, new build in the UK, if it did happen, would have to be with an imported, overseas, proven, well-established design. Practically everybody who works for Westinghouse is based in America; it is essentially an American company, and therefore in a sense it is like importing technology anyway. Q388 Mrs Villiers: If you were to sell British Nuclear Group do you know who the likely buyers might be? Mr Mayson: I have absolutely no idea. Q389 Mrs Villiers: It would probably be rather market sensitive if you did. Would there be any security concerns if a foreign company were operating UK nuclear facilities, or could the current security and regulatory structures deal with a new owner, regardless of whether they were UK owned or not? Mr Mayson: I am sure there would be absolutely rigorous tests of any potential owner in relation to their ability to manage nuclear facilities. We have a very rigorous regulatory system with the Nuclear Installations Inspectorate and the OCNS groups, and I am absolutely certain they would do a thorough vetting of whatever organisation came into to look after the facilities. Q390 Mrs Villiers: Taking you back to some of the points you were approaching and talking about Westinghouse, would the sale of the two, Westinghouse and British Nuclear Group, have an impact on our ability in this country to build a new generation of nuclear plants? Mr Mayson: No, I do not believe it would. The reason I do not believe it would is for the reason I intimated before: it is an American company; it would be buying in the technology. In a similar way if we were buying in another technology, whether that was the French design or the Canadian design or wherever, in effect we would have to be buying in the technology. In terms of our ability to support it if there were a new programme then there would still be a substantial need for the UK supply chain to support it in relation to construction jobs, in relation to operational jobs and in relation to other service opportunities. So I do not actually think it would make any real difference to the ability of the UK to deliver new build. Q391 Mrs Villiers: We are going to be looking, in a moment, at some of the problems and challenges in financing new nuclear build. What is your view as to whether it is preferable to stay in public ownership or to be run in the private sector, with the financing issues as the background? Mr Mayson: The nuclear industry has been around for 50 years and operated pretty successfully, I like to think, for 50 years. It has been in the public sector for rather too long. Getting it into the private sector would be very healthy for the industry. It is time nuclear was regarded as "normal" because it has been around for so long, and it seems to be attracting this "special" label because it has this extra political dimension that stems from the fact that it has remained in public ownership. So I very much welcome the moves to get it into the private sector. Q392 Mrs Villiers: Does BNFL have the technical and engineering capacity to build a series of reactors if the country is to go down the nuclear route to tackle climate change? Mr Mayson: I think it needs to be made absolutely clear that BNFL will not be building reactors in the new model. If, though, the subsidiaries are sold then BNFL would be unlikely to have a role in the new build programme that one would realistically expect other players to come in. I heard the dialogue with Mr de Rivaz from EDF last week, and I am sure there would be many other major energy players who would be interested in taking forward such a build programme. In terms of the engineering capability and so on, yes, I do believe the UK's infrastructure could rise to the opportunity that would be created by a new-build programme, but BNFL would not be a lead player in any such venture in future. Q393 Mrs Villiers: Lastly, could I press you a little on where you would expect that expertise to come from? EDF might well play a role. What other sorts of companies would be likely to ---- Mr Mayson: Any of the major leading energy companies. There are also other leading engineering organisations - the AMECs, the Bechtels, the Fluors, and the Shaw Group. There is a massive number of groups out there that could easily play a major role going forward as the integrators of such a project. Q394 Mr Caton: Moving on to planning and the timescale for possible new nuclear build, in your memorandum you say that an improved delivery process is achievable without legislative change, but the Government needs to show leadership. What do you want it to do? Mr Mayson: I think leadership is the key phrase because it is more than 15, probably nearer 20, years since any licensing and planning process was gone through for the nuclear industry, and the regulatory environment in which new build might take place has changed substantially. There has been new European legislation in the form of the justification considerations, the strategic environmental requirements, and the existence of OCNS, who did not exist at that time. So our view is that it is really a question of a definition of a regulatory strategy; that somebody actually thinks through how these things will all come together in order to enable new build rather than any specific requirement to change any legislation or any such thing. I have heard all sorts of rumours in the press that the industry wants changes in this, that and the other, and I just do not believe that is the case; I think it is about effective co-ordination of what is a relatively complicated regulatory arrangement for such a venture. Q395 Mr Caton: We have received evidence that even the first of a new series of power stations could not become operational until 2020/2021. What timescale do you think is realistic? Mr Mayson: I believe it could be done in around ten years. If I can perhaps talk through that ten years, that might help explain. Going from the back to the beginning: five years for construction, generally, is viewed as about the right sort of timescale, bearing in mind the recent experience in build in the Far East, and so on. Stepping back from that, the planning inquiry could be done in around two years. If you look at the history of planning inquiries on nuclear, the most recent planning inquiry was the Hinckley Point C Inquiry, which lasted nearer three years from the application to the Secretary of State's agreement, but there was an awful lot of discussion in that planning inquiry about the need and economics of nuclear, which, in effect, I would argue is more a government policy related issue and probably would not need to happen at the public inquiry. Therefore, a two-year process for the public inquiry looks achievable. Before that, there is the regulator, the Nuclear Installation Inspectorate, which I am sure could do a detailed review of the designs, and the Environment Agency do a detailed review of the designs, to establish the licensability and authorisability of those designs --- Q396 Joan Walley: How long will that take? Mr Mayson: Around two to three years was the indication the last time we asked, which was about three years ago. That was the indication we got from the regulator at the time. Q397 Joan Walley: So that is 11 years starting from now? Mr Mayson: No. That is three plus two plus five, which is ten; so I would say 2015-ish. Q398 Mr Caton: But that is assuming the Government makes a decision tomorrow. Mr Mayson: All right - 2016 then! Q399 Mr Caton: Realistically, it is going to be 2007/08, probably, before the Government gives the green light. I suspect your timescale is rather on the optimistic side anyway. So perhaps 2020/2021 is not that far out. Mr Mayson: We looked at it quite carefully, going back two or three years ago, and it looked certainly do-able, at that time, in around a ten-year timescale. If you look at the evidence from overseas, that is precisely the timescale in which Finland are doing it. Their first proposals really came in 1999 and they are going to be up and running by 2009. I think the EPR that is going to be built in France is pretty much on the same ten-year window. So it is do-able overseas, so there is no reason at all why it should not be do-able here. Mr Bull: It might be worth saying as well that in the first part of that ten-year timescale (certainly the first three years that Richard talked about, the licensing of the technology), there is no reason why that could not start at an earlier timescale and there is no implication of any kind of commitment to build anything simply by putting the designs through the regulatory process and asking the question: "Are they suitable for deployment in the UK?" Q400 Joan Walley: Are there talks under way about that at the moment? Mr Bull: No. Q401 Chairman: What do we need to kick the process into operation? Mr Mayson: What needs to happen to make it start? I think it would require the DTI to instruct the regulator to form a view on the potential candidate designs, as Adrian suggested, if you wanted to kick the process off to start sooner rather than later. If, on the other hand, you wanted to wait then you would be in a position where you would have to wait until somebody expressed an interest in making a formal application for a site licence, which would take rather longer because that would involve setting up a formal project towards new build. That would probably, as you said, be the 2007-ish timescale. Q402 Chairman: This does not involve the DTI instructing Ofgem to pick a winner? Mr Mayson: Not the Ofgem regulator, the safety regulator. I think quite the reverse: I am sure that if the regulator did form a view it would be as dispassionate a view of the various options that are available. Q403 Mr Caton: Can I put a quick question on the siting of any new generation nuclear power stations? The Government's Foresight flood defence research showed that climate change might result in widespread risks of flooding and coastal erosion. Most nuclear sites are located on or very near the coast. Have you conducted any assessment of the impact of climate change on existing nuclear sites? Should we really be building new nuclear plants on those sites? Mr Mayson: A lot of work has looked at this issue, and it will not surprise you it is not in the context of new-build. The existing safety cases for the facilities have done work looking at the effects of climate change. I am fairly realistic about it; for me, it is about what design basis you establish for your reactor. There is no reason at all why you could not design the reactors on those sites on the seashore to have adequate protection against any foreseeable rise in the sea level over the duration of operations. That is a perfectly feasible way of doing it. Q404 Mr Caton: So you would expect the new plants to be on the sites of the old ---- Mr Mayson: Recognising the local support there is for nuclear around the existing reactor sites, I think those reactor sites are the prime candidate sites for new build if it were to occur. Q405 Chairman: The weather is becoming more predictable and sea levels are rising but what would happen in the event of water getting into one of these reactors? Mr Mayson: Not a lot, I think, is the short answer. There have been events where sea water has got in when it was not wanted to have got in. There was one particular event I seem to recall in the early 1980s where that happened and it made a mess but it did not create any safety hazard. Q406 Mr Hurd: Could we talk about the economics of nuclear? We received evidence last week that there were very good reasons why people are not falling over themselves to invest in new electricity generation - basically it is very low margins and there are peaks of demand - but nuclear has added risks, specific risks. In the context of you wanting to be normal and you wanting to go into the private sector, you begin to question how those risks get allocated. A particular concern is waste. Is it your view that it is inevitable that the industry will need to allocate that risk to the taxpayer? Mr Mayson: I think it depends on what you mean by the risk. There is plenty of evidence out there. If we are clear about the waste issue, what we are talking about would be that the generator, the owner of the station, would pay some sort of fee, levy - whatever you want to call it - into a fund over the lifetime of the station, or quicker, depending on how quickly you wanted to accumulate the appropriate fund. There is evidence from around the world, and our submission clearly spells out the evidence from Sweden, that the fund that would be accumulated, even at a very, very low rate of interest (like 2 per cent), would be easily sufficient to cover the projected costs of some sort of long-term waste. That said, I think that gives great confidence that the taxpayer would not finish up with a large burden at the end of the day. Q407 Mr Hurd: How do we know? In previous evidence we heard a statement that your industry has no long-term strategy for waste. How can we be clear about what the costs are and the degree to which they can be capped? Mr Mayson: I think all we can do is judge from the experience in places like Finland, Sweden and America, where they do have proposed solutions. However, you are absolutely right, until CoRWM report in July of next year, and there is a policy put in place on the back of that and the specific options that would be extraordinarily expensive are ruled out, then there is a small element of risk, but we seem to be moving towards below-ground storage or surface storage as being the lead options from CoRWM, and those are the sorts of things that have been costed overseas. Q408 Mr Hurd: You say there is a small element of risk but you are also, if I understand correctly, stating that an uncapped liability for potential investors is a problem in terms of attracting private investment. Are those statements not inconsistent? Mr Mayson: You know as well as I do that the City is very wary of nuclear liabilities because of the history of the liabilities of the legacy of nuclear that we have. The key thing is that if we were building a new light water reactor programme we know exactly what the waste would be, we know exactly what the volumes of waste would be and we know exactly how to treat those and get them ready for long-term storage, but what we just do not know is what the final medium for long-term storage would be. So that, in a nutshell, would give me great confidence that there would be little risk. However, just because I have got confidence does not mean to say the City would. That is why you need some sort of backstopping against that perceived risk. Q409 Mr Hurd: You pointed to Sweden as an example of an effective fund administered independently. Given the failure of the UK nuclear industry to do this for itself, would you accept that the industry could not itself afford to pay? Mr Mayson: I am not quite sure I understand that. As I say, the new reactors would, of themselves, put aside a sufficient fund to provide a storage medium for those reactors in the long term. That is what I am saying. Q410 Mr Hurd: But you did not do this in the past. You have not demonstrated this. Mr Mayson: No, we have not, because of the legacy of nuclear waste, and we need CoRWM to form their view on the waste policy going forward. Q411 Mr Hurd: Just concluding on waste, can I be clear that you would be looking for a specific guarantee from the Government in terms of exposure to waste costs? Mr Mayson: I think there would be some sort of regular review of the size of the fund to be sure that the fund was going to be adequate to cover those costs. That is not the same as ---- Q412 Chairman: I thought you just said there would be more than enough, if you used the model. Mr Mayson: I acknowledge there is a small element of risk associated with that, so what you need to put in place is a review of the amount of the fund. If, for whatever reason, you found the fund could be larger then you could levy a larger amount on the reactor. So it should not need any government backstopping of the costs. Q413 Joan Walley: I wondered where you saw those increased funds coming from. Mr Mayson: From the generator itself. Q414 Mr Hurd: Just following that through, my earlier question related to the ability to pay, and in the event the generator is unable to pay the buck surely stops with the Government, in your scenario. Mr Mayson: Right, unless there is some sort of insurance provision against that inability to pay that has to be taken out by the generator. I confess I will have to go away and check, and I will come back and give you a position on that, but my understanding is that that sort of insurance is in place in places like Sweden. I will need to check that. Chairman: That would be very helpful. Q415 Colin Challen: I just wanted to clarify what "backstopping" actually means, because you used it twice. The first time was when the City wanted some kind of guarantee, or backstop, if they are going to invest and have to fund this long-term waste requirement. The second time you used it was that the Government would not need to provide a backstop; this review process would take care of it, but it leads to political uncertainty if you are going to have reviews all the time. So could I clarify, in the first instance, what you meant by "backstopping" if it did not mean the City looking to the Government to actually fund some kind of guarantee? Mr Mayson: I think the City, primarily, wants to seek clarity on what the arrangements would be, so that they would understand where they would sit within those arrangements. Q416 Colin Challen: It would only be a regulatory backstop not a funding backstop? Mr Mayson: That is how it could be set up. Obviously, these are just ideas on how it might play forward, but I will go away and get some better information on the analogues overseas if that would be helpful to the Committee. Q417 Joan Walley: If you could include in that information about insurance, pollution and terrorism in terms of the costs and the way that gets covered? Mr Mayson: Insurance? Q418 Chairman: In fact, we have run out of time. We have a number of further questions which we would like to put to you. I would be grateful if you could write to us about this one, but we will be contacting you with a supplementary list of questions we have not had time to cover today. I am going to close this session now because we are due to have a division in just under half-an-hour and we have another set of witnesses to talk to. Thank you very much for your time, and I am sorry we have run out of time. Mr Mayson: Thank you very much for your time. Memorandum submitted by British Energy Examination of Witnesses
Witnesses: Mr Robert Armour, Company Secretary, Mr Paul Spence, Head of Strategic Planning, and Mr Chris Anastasi, Senior Environmental Adviser, British Energy, examined. Q419 Chairman: Welcome. Thank you very much for your patience in sitting through that. As I have just said, we are expecting a division fairly shortly so we may have a fairly truncated session with you and we may have some further questions to follow up in writing, if that is all right with you. Thank you for your memorandum as well. Can I begin by asking you whether you accept that the previous generation of nuclear power plants in this country have been economic basket cases? Mr Armour: My name is Robert Armour. This is Paul Spence, Head of Strategy, and Chris Anastasi, Environmental Adviser. I think British Energy has been a nuclear generator, in one guise or another, through various emanations in the British industry, generating from our nuclear power stations in the last 30 years. We have gone through different markets and at this point in time we are in a much stronger market in terms of electricity price and where nuclear is a clear player going forward. We have had our troubles in the past, we will not deny that, but the restructured company that now faces the market is ready for that market. Q420 Chairman: One of the problems you have got in convincing anyone to invest in this technology is the track record of broken promises and repeated bail-outs by the taxpayer. Mr Armour: Clearly, if we look at the market several years ago we were operating in an entirely different regime. It was not just a problem facing nuclear generators, it faced all generators. Roughly 20 per cent of the conventional generators went into either receivership or were sold. There has been substantial consolidation of the industry and in recent times there has been a move to make generation more effectively economic than it was going back five years. If one goes back five years, no generator was able to make a profit at £16 mWh, and nobody was coming forward with investment. Q421 Chairman: Only you had to be bailed-out by the taxpayer to the tune of several hundred million pounds. Mr Armour: Indeed. In the market that we faced then, yes, we went to the Government. Q422 Chairman: Can I ask you specifically about your statement that if there is to be a new generation it will not be prototype technologies but, as it were, proven technologies and, in particular, the AP1000 is cited, and the European Pressurised Reactor. Is it not true to say, however, that neither of those have ever been built anywhere, so they are effectively prototypes? Mr Armour: We will see. The EPR and, to a degree, the AP1000 are evolutions of proven PWR technology. At this point in time nuclear is effectively the only large-scale generator that is CO2-free that is a proven technology and has the ability to tackle the issue on that sort of scale. Paul, would you like to come in? Mr Spence: The other point worth making is that whilst neither the AP1000 nor the EPR are built today there is a very well-advanced programme in Finland building the first of the EPR designs, and by the time, under any environment, we are talking about the UK considering build that will be there. I think it is a reasonable proposition from where we sit today that the AP1000 may well be in the same position either in China or the US. Q423 Dr Turner: Your own memorandum envisages a time-scale of 12-15 years for building 8 gW. Even if there was a Government decision next year, then, that would be not earlier than 2018 when the first kilowatt hour was generated. Is that, do you think, a realistic timescale? Do you think you are being optimistic? Even if you do not, is it not a bit late because we have got the generation gap between now and then, and by 2018 we will already need to have had new generation plant in place? Do you not think that is going to be non-nuclear, either combined-cycle gas turbine, or new build? How can you justify the role that you put forward for new nuclear build? Mr Armour: I would rather agree with the last speaker in terms of the ten-year estimate that he had for taking things forward. International experience says it can be done with the willpower. I would equally say, given the scale of things we are looking at, there is no one solution; we will need nuclear, we will need renewables and we will need other technologies. Mr Spence: I would echo what Robert has to say. The other point I would make that your previous witness did not make is that when this was looked at two or three years ago the technologies that we are talking about as potential UK technologies were less well advanced and the UK regulator will have the review of regulators in France, in Finland and in the US to build on when they look to do the review of suitability of designs for the UK. One would hope that that will allow the start to be accelerated at least somewhat to build on the work that has been done in those jurisdictions. I think the other point that I want to make is that, as Robert said, it is a balanced approach, both in terms of new generation but, also, in terms of the contribution from existing fleet. One of the things that we as a company have said very explicitly is that part of our strategy is to see whether we can make a case from a safety and economic point of view to keep the existing carbon-free generation running as long as we can. Q424 Dr Turner: If you are going to achieve a shorter timescale (and I find it surprising you do not make the suggestion in your memorandum, if you are serious about it), it is obvious that you would expect the Government to do something to help you along by simplifying or shortening the planning process and the licensing process. Would you not? What do you expect the Government to do to help you along? Mr Spence: We do not say in our evidence that we expect it to be simplified or shortened. We are not looking for reduced scrutiny, what we are looking for is a clear process where, as the previous witness said, the regulators provide us with a clear view of what it is that is needed by way of scrutiny and by way of public debate, and that we then have that and we have that once rather than repeatedly. That, I think, is perhaps one of the lessons of the past where, in previous generations of nuclear build consideration, we have been through a process where the need case was debated once centrally, debated again at the first planning inquiry and debated again at the third one. We want to avoid that situation, but we do want the proper scrutiny from the public and the regulators. Mr Armour: It is not a problem that is endemic to this industry. The issue of large infrastructure projects is one that currently the Scottish Executive has put forward a proposal on how to deal with. On issues of national importance, it is something there was an initiative on from Mr Prescott sometime ago. We operate in a very tightly regulated area. The Government sets a framework for the regulator, the Government sets the planning framework and in many ways the Government influences the market we operate in. We are asking Government to set some certainty and some practicality in the way through on that. I would not like that to be construed as we are asking the Government to do all the work, because the developer takes a huge amount of the risk; the developer comes up with the proposal but it has to do so against the certainty of the environment that the Government creates. Q425 Dr Turner: This is not totally convincing, though. You are not seeking to escape the planning process. The planning process is known and that looks unlikely to change - so you are not going to avoid a planning inquiry - but even if you are going to have a fleet of identical stations you are not going to get away with anything less than the first two years in that respect, and licensing is likely to take two to three years, albeit it is likely to be licensing the same design. You are going to have five years upfront in the first part of your timetable that cannot be avoided. Are you not? Mr Armour: I think the initial debate will be substantial, and it is proper that it should be; it should have proper scrutiny by the regulator and it should have proper debate. I think we would be saying that on the subsequent stations it would be proper to have that debate on the local issues that relate to those rather than repeating and going through and questioning the same thing again, at huge expense and at time - if we are trying to tackle the problem. Q426 Chairman: We heard from the previous witnesses that the industry desperately wants to appear to be normal. I think you are asking for some abnormal privilege here. If somebody wanted to build a sewage plant next to your home, and you presumably might raise some local objection on planning grounds, you would not like to be told that because the need for sewage plants had been established some previous years ago there was no opportunity to go and discuss it. Mr Armour: No, but if it was the tenth exactly similar sewage plant, and the regulator ---- Chairman: It is the fact it is next to your home. That is why it is contentious, that is why it needs to be debated. Q427 Dr Turner: You have to separate the site-specific issues from the type-specific issues. Mr Armour: Yes. Q428 Mr Ellwood: Going back to the question about the type of reactor that you might consider that you were not interested in, in prototypes, and you wanted to have something which was tested (and you cited the Finnish example), how familiar are you with the Canadians' approach and the Candu systems? Do you not think that is worth considering, were we to take the plunge into nuclear, using those - if we are only trying to test it? Mr Armour: We previously, of course, operated in Canada and operated Candus. We think it is likely it will be a light water solution or a Candu coming forward in the UK. We are clearly taking an interest in all the front-line designs you have talked about - the EPR, the AP1000 and the Canadian reactor (?). All of those are potential candidates, but I do not think we are in a position to rule any of them in or out; we would dearly like to see experience of operating. Q429 Mr Chaytor: You keep referring to the market you are operating in, but is it not a fact that if we had a real market you would not be here? Mr Armour: There are lots of factors that influence the market. Q430 Mr Chaytor: Are you operating in a market? Do we have a market in electricity generation? Mr Armour: Very definitely we operate in a competitive market. Q431 Mr Chaytor: Is it a free market? Mr Armour: It is a free market where you sell a volatile commodity now. Ultimately, whether it is an entirely free market that the Government ---- Q432 Mr Chaytor: What is the difference between a free market and an entirely free market? Mr Armour: If I take the analysis, do I think the Government would be prepared to let the market go to the point where power cuts and blackouts drove investment or would the Government want to manage the market so that we did not have that? Would the Government be prepared to see extremes in price, which would send signals to the market, or does the Government want to manage it so that is more stable for the consumer? We operate in an essential commodity market where the Government will always take an interest. Q433 Mr Chaytor: But the bail-out of British Energy was not due to the threat of blackout, it was because there was substantial spare capacity elsewhere in the market waiting to be brought on-stream, was there not? I think the bail-out of British Energy was for other reasons. Mr Armour: I think in many ways the Government intervened in British Energy because it wanted to ensure the ongoing generation supplies to the country and the safety of the nuclear power stations, but also because of the market we are operating in. Q434 Mr Chaytor: Do you agree with the statement in the 2003 White Paper that described the nuclear industry as a mature industry that could no longer justify public subsidy? Mr Armour: I think it is a mature technology and a proven technology. I take fusion slightly as a different aspect, but in terms of AGR fission and EWR fission, we know it is a mature technology. Q435 Mr Chaytor: But not a mature technology that no longer requires public subsidy? Mr Armour: I do not think we are looking for public subsidy. We are not looking for public subsidy, we are looking for a certainty of a framework which allows the market to come forward with a solution. Q436 Mr Chaytor: How do you distinguish between no public subsidy but certainty of framework? For example, you referred to the AP1000 in China and the US as the most optimistic possibilities of getting the AP1000 accepted here. Are they operating without public subsidy in the US and China - or will they operate without public subsidy in the US and China? Mr Spence: China is clearly a managed economy and in the case of the US the Government there has put in place a programme of incentives to help the US utility industry get through some issues associated with the launch costs for the first few nuclear reactors. I would be very happy to send you a piece detailing the incentive programme there and, also, the observed behaviour of the utilities there. Q437 Mr Chaytor: That would be very useful, but in brief now what kind of incentives are we talking about? This is a subsidy for construction costs or research and development? Mr Spence: What the US did was, first of all, provide a mechanism to allow the early regulatory consenting work to be done on a joint funding between the industry and government, then they provided tax incentives for the first number of plants to be built and then the final component is that they have provided insurance against the risk of regulatory delay in the consenting of those first stations. Q438 Mr Chaytor: Why do you assume that those kinds of incentives would not be necessary in the UK market for the construction of an AP1000? Mr Spence: I think the question about what incentives or what market structure is necessary is a package in total. In the US context that was taken against a framework of the US industry and the way that the US electricity market works in total. What we have said in our submission is that it is not clear what is required in the UK because we believe you need to be clear on all aspects of the financing framework, which includes the treatment of the waste costs, it includes what has happened in terms of licensing and planning, and then what happens in terms of the market that the power is being sold into. When one looks at that package in total one can judge the relative merits of different technologies and, therefore, the financability of those technologies. Mr Anastasi: There is one other difference between where we are going and where we have come from, and that is related to the cost of carbon. One of the things that has not come forward, I guess, in the past is the true benefits that nuclear brings to this country. It is carbon free, essentially, and for the first time we have a mechanism that the Government has brought in, the Emissions Trading Scheme, that serves to internalise that environmental cost. As this scheme progresses it is almost certainly likely to become more efficient and it will be more reflective of the cost of carbon and the costs of generators. That is a benefit, I think, that we have not had in the past. Q439 Mr Chaytor: That ought to be an argument for not needing any kind of incentive along the lines of those provided by the US. If it internalises the cost of carbon then, presumably, it reduces the case for any kind of specific fiscal incentive or direct subsidy for the industry itself. Mr Anastasi: It does. Q440 Mr Chaytor: The follow-up question, therefore, is do you believe that the effect of the internalisation of the cost of carbon on other forms of generation will be sufficient to avoid the need for direct public subsidy, or fiscal incentives, for nuclear? Mr Spence: I think the reality of the position today is that we see, with the Emission Trading Scheme, as Chris said, a very successful first step but it does not provide a long-term signal of the price of carbon or the targets. It runs, first stage, 2008; second stage, 2012. As we have already discussed, the sort of technologies we are talking about today and the sort of investments that we are talking about, whether it is nuclear or any other, are living over a much longer life than that, so the question is "What comes after?" Mr Armour: If I was building a new conventional power station today I would be coming along and seeking an allocation from the new-build reserve for credits to allow me to run and emit carbon from a coal or a gas station at this point in time, and I would get that as a new entrant. Q441 Mr Chaytor: Given the timescales involved, it is interesting that your estimates of the timescale are more conservative than BNFL, and they are quite gung-ho about ten years. My recollection is you have talked about 12-15 years. If, on your assertion, the lead-in time is 12-15 years, and if the decision is taken in 2008, we are then talking about sometime between 2020 and 2025 before the first AP1000 ---- Mr Anastasi: If I can just correct something, the memorandum actually says that to build what the Committee asked for, which was eight nuclear power stations, would take 12-15 years but we actually say that the first plant could be built within ten years. Q442 Mr Chaytor: I am sorry, that is my misunderstanding. You agree with BNFL that ten years is the minimum but up to 15 years for a fleet? Mr Anastasi: That is right. Mr Armour: If you look at the French programme in the mid-80s where they built 50 gW of capacity within a decade, if there is the willpower it is possible to do it. The other thing worth thinking about is that the decisions we make now or in ten years' time are going to be the plants that allow us to fulfil or not fulfil the Government's aspirations, not just in 2020 but in 2060. If we are actually going to have a carbon reduction of 50/60 per cent in 2060 it is difficult to see how we can do that without a nuclear component making a substantial contribution. Q443 Mr Chaytor: My question is, I suppose, given these huge timescales and given that, again, according to an earlier witness, by 2030 we may be having a fourth generation, is it likely that City investors are going to be able to make a judgment as to the likely rate of return in 2025? Who knows what the circumstances are going to be in 2025? Almost as soon as the full fleet of AP1000s, or whatever, is up and running the fourth generation ones will be coming; they will be obsolete almost as soon as they are commissioned. Is it possible to make financial judgments over these long time-spans? What do you think a reasonable rate of return ought to be for someone thinking of investing in a new fleet of nuclear power stations? Mr Spence: If I can take the first part of that, that is an investment challenge that faces not just the nuclear industry or the generation industry in total; it faces all capital intensive industries about forming a view about what is going to happen in the intermediate future. We are all talking about things that are very long-lived assets. The way the market does that at the moment is by pricing some of that into the rate of return that it seems to achieve. Mr Chaytor: In most industries the risks are measurable, are they not? In your industry the risks cannot be measured because we do not yet know what the cost of waste disposal is. Q444 Chairman: It is horrible to leave it hanging in the air. Have you got a two-sentence answer? Mr Spence: Let me have a go at a two-sentence answer, which is that we believe, as I think the previous witness said, that some of the costs of waste streams are conservatively allowed for in the generation estimates that are provided. There is a degree of uncertainty but it is not a material ---- Chairman: It is not just the waste stream, though, that creates this uncertainty; there are a whole lot of other factors - which we will have to pursue with you in writing since I rather suspect this is a division quite a lot of us would not want to miss. Thank you very much indeed. |