Select Committee on Trade and Industry Fourth Report


3  Constructing and operating nuclear power stations

32. The delivery of a new generation of nuclear reactors would be a complex and time-consuming process. This chapter looks at the broad range of issues that the Government would need to address if it wished new nuclear build to come online before the end of the next decade. It considers a number of areas which have been widely debated in the media over the course of the Energy Review, ranging from the planning and licensing process and the availability of sites, to the choice of reactor technology and the implications for security and proliferation.

Planning and licensing

33. One reason why the Government is conducting its Energy Review now is because it is likely there would be a significant period of time between a potential decision in favour of new nuclear build, and the point when new power stations would actually start generating electricity. This is partly because the construction of power stations takes a number of years. Even the most optimistic estimates for this are in the region of five years.[27] Experience in the UK to date has shown it can take much longer, with an average construction period for existing nuclear power stations of almost 11 years.[28] In addition to this concern, which in any case would be a matter for the potential construction consortium rather than the Government, there is the issue of the planning and licensing process that precedes construction. This is an area where we received a significant amount of evidence citing the regulatory system as a key inhibitor to any investment in new nuclear build, both at present and in the future.[29] At the forefront of the minds of those who would consider investing in new build is the most recent experience, Sizewell B, where it took seven years from a decision in principle to the start of construction. Therefore, in this section we look at the existing structure and process for the planning and licensing system. We then go on to consider how this could potentially be reformed if the Government wished to reduce regulatory risk for investors, before discussing the feasibility of such reforms.

THE REGULATORY PROCESS

34. Prior to the start of construction and operation of a new nuclear power station, there are several bodies in the UK from whom approvals must be obtained. The principal authorities include the Nuclear Installations Inspectorate (NII), which is part of the Health and Safety Executive (HSE); the environment regulator (either the Environment Agency in England and Wales, or the Scottish Environment Protection Agency); the Office for Civil Nuclear Security (OCNS); Local Planning Authorities; the Department of Trade and Industry (DTI) and, depending on siting, the Scottish Executive. Each of these has a key role to play in the regulatory process.

35. There are a number of consents and approvals that a potential operator would need to seek from these bodies. Of these, key permissions include the nuclear site licence, the Section 36/37 consent and the authorisation to make discharges and disposals of radioactive waste. A site licence is required under the Nuclear Installations Act 1965, and is administered by the NII. It looks at three aspects—the reactor design, its siting, and the organisation of the potential licensee.[30] Within these three areas, the NII has 36 standard licensing conditions which must be met before a licence can be awarded. These cover a broad range of issues, including safety-related functions such as the handling and storage of nuclear material; incident reporting and emergency arrangements; design, operation and maintenance; and control, supervision and training of staff.[31]

36. The Section 36/37 consent is required under the Electricity Act 1989, and stipulates that for any new power station in England and Wales with capacity greater than 50 megawatts, the operator must seek approval from the Secretary of State for Trade and Industry. The Scottish Executive holds similar powers in Scotland. The Local Planning Authorities (LPAs) for the area where a new plant is proposed are statutory consultees under the Act. If the LPA objects to the proposal then the Government has to hold a public inquiry before consent can be given. Even then, the operator must still gain all other relevant consents and approvals before it can proceed.

37. The authorisation to dispose of radioactive waste, including making radioactive discharges, is required under the Radioactive Substances Act 1993 and is issued by the relevant Environment Agency. The Agencies require that the radioactivity of waste and discharges is minimised. The Agencies consider the design of the plant and how it will be operated, including the management arrangements of the operator. Other environmental and construction waste management will also be needed.

38. Other matters include 'Justification', under the 2004 Justification of Practices Involving Ionising Radiation Regulations, which involves weighing the benefits and detriments of a new nuclear power station so as to ensure that there will be a net benefit from operation. In the case of a new programme of nuclear reactors it is likely that a Strategic Environmental Assessment (SEA) would also be necessary. This would assess the likely effects of a proposed plan or programme on the environment. Although there is no approval associated with such an assessment, it would be used to inform the site selection and public inquiry process. At this stage, it is not clear to us whether the SEA would be nationwide, or site-specific, or whether it would be led by the Government or the developers.

CONSTRAINTS UNDER THE EXISTING SYSTEM

39. The evidence we received raised questions regarding both the licensing and planning aspects of the existing regulatory process. The chief concern was the length of time required for each. On licensing, it can take around two years for the Nuclear Installations Inspectorate to approve a design for a particular site and organisation. This follows on from a two to three year period during which the detailed design specification is drawn up. This timetable would be for one company's design proposal for a single site. If there were to be a programme of new reactors delivered on a competitive basis, thus requiring assessment of various designs for multiple sites, we would expect this process to take significantly longer. A lengthy period for licensing would increase the regulatory risk faced by any operators and would discourage them from entering into the process in the first place.

40. Similarly on planning consent, the potential for the procedures to take much longer than expected has been highlighted as an important risk. Here, the main area where there would be a likelihood of delay is in the public inquiry process. In the case of Sizewell B this went on for around two years, and largely focused on issues of energy strategy and the reactor technology proposed, rather than local site-specific issues.[32] In so doing, the inquiry opened up for debate at a local level, issues that had already been discussed earlier in the process.[33] In addition, two years later when the public inquiry took place for Hinkley Point C, which in the end was not built, many of the same issues of policy, need and economics were debated again.[34] It seems clear, then, that the existing licensing and planning regimes are a significant barrier to investment in new nuclear build. Whilst we do not dispute the utmost importance both of ensuring public engagement and confidence in the process, and guaranteeing safety, the feasibility of reforming the system is something to which the Government will have to give serious consideration in weighing up the issues relating to new nuclear build.

HOW MIGHT THE SYSTEM BE REFORMED?

41. We set out below the evidence we received on how the regulatory process could be changed to reduce the time taken for planning and licensing if that were considered desirable. This evidence focused on two specific areas. First was the proposal for the Government to set out clearly its plan and timescale for firms seeking regulatory approval. Secondly, it was proposed that the Nuclear Installations Inspectorate should consider pre-licensing generic reactor designs, and potentially also sites at an early stage. [35] With reforms in these areas, the regulatory process would still take up to five years for the first of any programme of new reactors.[36] However, it could reduce the risk of the procedures taking significantly longer.

42. Regulatory risk, that is the uncertainty over the timing and outcome of the regulatory process for planning and licensing, is one of the main reasons why investors are currently not willing to enter the sector. As a result, our witnesses argued that, if it were to decide in favour of new nuclear build, the Government would have to set out a 'roadmap', showing clearly the process for achieving regulatory approval, which would provide a predictable timescale, thus reducing regulatory and project risk as the project progresses.[37] As discussed in the previous Chapter, there would need to be a preceding national debate on the need for a new generation of nuclear power stations, and there would need to be a Strategic Environmental Assessment, which would consider generic issues relating to new build and the basic characteristics of suitable sites for such new build.[38] The main aim of such an assessment would be to close off debate on the wider issues relating to new build at an early stage so that the public inquiry, later on, focused instead on local concerns.[39] This would prevent a repeat of the Sizewell B experience.

43. The second main area in which the industry is looking to the Government to reform the existing system is through the potential pre-licensing of reactor designs. As we noted earlier, the licensing phase considers the reactor design, its siting, and the organisation of the potential licensee. In the past, these three factors have been considered in conjunction—a defined reactor design, on a specific site, for a particular operator. The Nuclear Installations Inspectorate told us, though, that it could potentially look at the reactor design before considering the site or the organisation. This would be done by considering generic designs put forward by applicants on the basis, too, of a generic site envelope that covered all the likely sites in the UK.[40] The aim of this would be to assess whether there were any fundamental problems with particular designs, so that when the eventual licence application was made, there would be a much lower risk of delay, thus allowing the licensing process to be completed before any public inquiry. The other potential advantage to this approach is that the licensing for subsequent reactors would take less time because many of the design and siting issues would have been addressed right at the start.[41] The process could also be quicker if subsequent reactors were to use the same design. We discuss the advantages and disadvantages of this approach later on in this Chapter.

44. Two further issues were raised by our witnesses: international collaboration and resourcing. On the first of these, in relation to assisting with the potential pre-licensing of reactor designs, we were told that it may be possible for the NII to make use of information shared with other nations' nuclear regulators. There is a significant amount of safety and design information available from countries such as the United States, Canada, and potentially now France.[42] The advantage of making use of such resources is that it would not require the UK regulator to 're-invent the wheel' in considering proposed reactor designs.[43] On the issue of resources, our witnesses noted that the requirement on regulators to conduct pre-licensing and contribute to environmental assessments would substantially raise their workload. In particular, the NII would find it difficult to cope with licensing generic reactor designs unless its resources were increased.

45. All of the proposals discussed above focus on changing the regulatory process. Potentially, the Government might also need to consider the current structure of nuclear regulation to see if there is scope for greater efficiency there. One suggestion, which we put to the NII and Environment Agency, was whether a nuclear 'super-regulator' would help avoid unnecessary overlaps in the regulatory process. Defra has previously considered this issue and concluded against it, on the understanding that there should continue to be close working between the two regulators.[44] The Director for Civil Nuclear Safety made a salient point to us, though, that the UK's regulatory framework is at present geared towards an industry that is decommissioning and winding down. Were there to be a programme of new nuclear build, an important consideration should be whether that model of regulation remained the most appropriate.[45]

FEASIBILITY AND RISKS

46. Although both the arguments in favour of regulatory reorganisation and the proposed changes to the system seem rational, we have concerns in relation to the actual feasibility and risks of such reforms. Primary amongst these is the need to maintain public confidence in the regulatory process. Whether justified or not, the issue of nuclear power generates a high degree of public concern, particularly regarding the risks to public safety. Many of those who submitted evidence to us suggesting possible reforms to the system also stated it was essential that public confidence in the process should not be undermined.[46] For example, the Chief Executive of EDF Energy, Mr Vincent de Rivaz, told us: "we should not cut corners about issues that public opinion wishes to address. Public acceptance is a condition precedent for all potential investors to make their decisions".[47] It is not surprising to us that, when the industry talks about streamlining, concerns are raised over the maintenance of public confidence in the rigour of the licensing and planning system. A 'roadmap' of the route to licensing may help maintain transparency and hence engagement in the process, but it is difficult to see how it would be enforced in practice. In the event of there being delays, it could be damaging to public confidence were the Government to be seen to be rigidly adhering to a pre-defined timetable, at the expense of allowing debate on issues that are impossible to predict at this stage.

47. We note also that changes to the planning system are typically fraught with difficulty, and evidence suggests that, if anything, since Sizewell B the consent process has become even lengthier.[48] Previous attempts to streamline the planning system have had limited effects on the length of the process. It should also be noted that the issue of planning approval for new electricity generation cuts across the whole sector—and, indeed, distribution or gas storage—and is therefore not unique to nuclear power. For example, failure to get planning consent has prevented the development of many onshore wind farms in the UK, and even new planning guidance (PPS 22) designed to help the renewables sector is taking time to have an effect. As a result, the Government is considering the wider consents regime as part of its current Energy Review.

48. Another important consideration is that planning consent is a devolved matter. Two of the UK's seven AGRs are in Scotland, at Torness and Hunterston. As we discuss later in this Chapter, there is a possibility that developers of a new fleet of reactors would seek to locate them next to the site of existing reactors. The existence of a different planning regime in Scotland would have implications for the Government's ability to draw-up a 'roadmap' for the regulatory process that it would have the power to enforce. Moreover, if the Scottish Executive were to adhere to a policy against new nuclear build, it would be able to implement this through the planning system. This is one more reason why the Government must build a national consensus for its energy policy to be a success if that policy is to include new nuclear build.

49. The International Atomic Energy Agency (IAEA) has recently completed a review of the basis for the Nuclear Installation Inspectorate's appraisal of reactor designs in advance of any specific proposals for new nuclear build.[49] The terms of this review included consideration of the NII's readiness to regulate and license any new reactor designs, and to identify areas for improvement to the UK nuclear safety regulatory regime by exchanging knowledge with IAEA experts. Despite the NII having not made a detailed study of any reactor design since Sizewell B in the early 1980s, the IAEA's report was positive. Nevertheless, it made recommendations to the NII that it should clarify the current licensing and approval process for potential applicants, and also that it should consider the resource requirements posed by any new build programme.

50. As part of the Energy Review, the Health and Safety Executive has produced an expert report looking at the health and safety risks arising from recent and potential energy developments.[50] This includes consideration of a new generation of nuclear power stations and the potential role of pre-licensing assessments of candidate designs. This concludes that a two-stage licensing process, as discussed above, could be completed in roughly three to four and a half years. Generic design acceptance would be the longest part of the process, estimated at between 33 and 42 months, followed by a shorter, site-specific licensing process of 6 to 12 months. However, HSE note that these timescales would be dependent on the availability of resources, the quality and timeliness of the safety submissions received, and the significance of any issues arising, among various other factors. In other words, there is a risk that it could take longer than this.

51. HSE's report also comments that the precedent for pre-licensing in the UK has already been set with the Sizewell B reactor. There, the Nuclear Installations Inspectorate had begun looking at the Pressurised Water Reactor (PWR) as early as 1973, before the then Central Electricity Generating Board made a formal application in 1981, which then took six years to complete. HSE suggest that the reason for the length of time for licensing was partly because of the 'first of a kind' nature of the PWR, but also because the 1979 accident at Three Mile Island nuclear power station, in the United States, led to subsequent changes in the Sizewell B design. In the case of a new build programme in the UK today, we note that pre-licensing would still face many of the 'first of a kind' factors, which slowed the process for Sizewell B. Whilst lessons have been learnt from past experience, the timescales suggested by HSE for new nuclear build still look very optimistic.

52. The two year licensing period for Heysham 2 and Torness—the last of the AGR power stations—suggests there is scope, though, for greater efficiency with subsequent reactors, if new nuclear build occurred in sequence. As such, the extent to which the Government can speed up the regulatory process also depends on its willingness to dictate the choice of reactor for any new nuclear power stations. If it stipulates one design for the whole of a potential programme, there is real scope for regulatory efficiencies. However, such an approach would be at odds with the Government's stated desire for market delivery of any new build.[51] Moreover, if a number of applicants for pre-licensing were to approach the NII with different reactor design proposals, the extent to which the Inspectorate could manage this workload would largely depend on its resourcing. Although the NII would be able to cover additional costs by charging for pre-licensing work, which would also rationalise its workload, its Chief Inspector said to us that they "are finding it difficult to recruit".[52] Nevertheless, the NII was confident that it would be able to draw on national and international experience should it need to 'ramp up' its resources quickly.[53] Its comparatively small size within the industry may make this easier, although if a programme of new build received the go-ahead, it would still be competing with the rest of the industry for what is a diminishing supply of skilled workers.[54]

53. Evidence that we received stated that the current planning and licensing systems are a significant deterrent for investment in new nuclear power stations in the UK. To overcome this problem, the Government would need to take a more managed approach to the entire regulatory process, including resolving the national debate on nuclear power early on, and through the pre-licensing of generic reactor designs. Whilst we accept that the Government should do what it can to manage the regulatory risks faced by potential operators, we have doubts as to the extent to which it will be able to achieve this. Factors militating against success include its past experience with planning reform, the role of the Scottish planning system, the available skills base, and the extent to which the Government would be willing to close down public debate in order to meet any regulatory timetable, and whether such changes would maintain public confidence. Finally, we note that the issue of planning delays applies to the whole of the energy sector, and is not a concern specific to nuclear power.

Finding suitable sites

54. The ease with which a new nuclear power station could get planning consent is largely determined by the proposed location. We have already noted that a Strategic Environmental Assessment would be necessary to identify candidate sites. However, we received a large amount of evidence, during our inquiry, suggesting that one way of finding suitable sites would be to position any new reactors next to existing nuclear locations. There are a number of sites in the UK which already hold a nuclear licence. In the case of the second generation AGR reactors, these are owned by British Energy. The older Magnox reactor sites, formerly owned by BNFL plc, are now under the custodianship of the Nuclear Decommissioning Authority (although British Energy also owns land at Bradwell). Figure 1 below shows the location of the various sites.

Figure 1: Nuclear reactor sites in Great Britain


Source: BBC Online

55. Overall, there are a number of potential sites for consideration, several of which have a fairly large amount of land available within the perimeter of the existing facilities.[55] The following sections look at the advantages and disadvantages of this approach, and the consequences of having to look elsewhere.

ADVANTAGES OF USING EXISTING SITES

56. From a number of perspectives, there would be potential advantages from using existing sites for a programme of new nuclear reactors. For example, such sites already hold licences from the Nuclear Installations Inspectorate. Although this does not mean that a site licence would be guaranteed for a new reactor, the Inspectorate's prior knowledge of the location would potentially make the licensing process less complicated. Its Chief Inspector told us that: "clearly we understand the sites and the aspects of the sites more than any new site; therefore we would have a better start than if we had to start with a different site".[56] The Environment Agency agreed with this point, stating that "existing sites are well characterised in terms of geography, demographics, situation etc [although] we would not seek to be any less rigorous".[57]

57. There could also be potential advantages in terms of the planning process that new nuclear build would have to go through for existing sites. As we noted earlier, communities that already have a nuclear power station near to them tend to be more favourably disposed towards nuclear power. This is partly because they are used to it as part of their local environment, but also because it provides employment opportunities.[58] Whilst there is evidence to support this view, we would note that the lengthy public inquiry for Sizewell B, which was built next to an existing nuclear site, suggests that the use of such sites would not guarantee the easing of planning consent. A major contribution to the length of the Sizewell B inquiry was that it was the first of that kind of reactor design in the UK, as would be the case with any new reactors now.

58. Finally, evidence we received also highlighted the prior existence of grid connections at current nuclear sites as a potential further advantage, saving the need for investment in network upgrades and new connections.[59] We discuss in more detail the grid implications of new nuclear build later in this Report. We note here, though, that there is potentially limited scope to realising these benefits. Locating new reactors alongside existing operating units may not preclude the need to make grid upgrades down the line. In addition, the Magnox reactors typically have, or had, lower voltage connections to the grid than would be expected for the current designs of nuclear power stations.[60] Although it is likely to be easier to upgrade an existing line than to build a completely new one, replacing old reactors with new ones would still have an impact on the national electricity grid.

RISKS OF USING EXISTING SITES

59. A common feature of most of the UK's existing nuclear sites is their location on the coast. This allows them to use seawater for cooling. However, there is growing concern about the extent to which these sites will be available in the future, because of the effects that climate change may have on them. The International Panel on Climate Change (IPCC) estimates that sea levels may rise by between 0.15 and 0.95 metres by 2100. This creates a greater risk of flooding due to storm surges as well as increasing concerns of coastal erosion. BNFL plc argue, in their submission to the Energy Review, that such changes could easily be accommodated in the design of a new power station on an existing site through either the positioning of a station above the predicted water level, or through purpose-built sea defences.[61] The chief executive of E.ON UK told us that dealing with rising sea levels is "well within the range of civil engineering capability, but clearly it is a serious problem and would need a lot of detailed work to make sure we got it right".[62] This would clearly have cost implications for the plant, though, as the large amounts of cooling water required by the power stations would have to be pumped a higher vertical distance than would otherwise be the case.

60. The Nuclear Installations Inspectorate told us they had not as yet made any assessment of the existing sites, but that, at any rate, it would be incumbent on the licence applicant to demonstrate that they had taken such risks into account and that they would maintain defences to a high standard.[63] As one of the Inspectorate's officials told us: "It is not a matter of saying, 'You cannot use these sites', but rather, 'If you choose this site you will need to defend the site to this standard and bear the costs'".[64] At this stage, there is limited evidence available about what the impact of climate change might be on the UK's existing nuclear sites. A report conducted by Nirex, which looked at this topic in the context of radioactive waste storage, cast some doubt, for example, over the viability of Dungeness and Hinkley Point (currently owned by British Energy) in the long-term.[65] However, this work was preliminary, and looked 100 years ahead and beyond—a somewhat longer time frame than it would be necessary to consider for a new generation of nuclear reactors, even taking account of decommissioning. We note that the Met Office has recently begun a two-year detailed study on this issue. It will play an important role in assessing the viability of existing sites.

61. An additional concern for us, with regard to using existing sites, is the implications of their current ownership, either by British Energy or by the Nuclear Decommissioning Authority. The power companies told us that they "would look to gain access to those sites at a commercial rate".[66] We are unclear, though, as to how they would expect the Government to ensure this, given that these sites are largely privately owned—moreover, half of them are owned by a company that would hope to play a significant role in any programme of new build, and therefore might be unwilling to release them to a potential competitor.

62. Finally, the availability of some sites may also be affected by the possible presence of decommissioning work taking place onsite at the same time. In some instances, the process of decommissioning would have to take place in order to release land for new build. In other areas, sites may not have the capacity to cope with dismantling work being conducted at the same time as construction nearby. These factors will affect the timing at which some sites would become available for any new build.

LOOKING ELSEWHERE

63. If it transpires that not enough of the UK's existing nuclear sites were available for a new programme of nuclear reactors, then the Government and industry would have to look elsewhere for suitable locations. This could pose significant additional obstacles to the timely delivery of any build. For example, the public inquiry process would be undertaken within an environment that had potentially no prior experience of nuclear power. As such, companies would face the challenge of needing to engage with the local community to seek its backing for a power station in its area. Also, long lead times could be necessary for providing a transmission grid connection where one was not already present, and for implementing any required upgrading to the grid infrastructure down the line.[67] Finally, looking at new locations is likely to come after a Strategic Environmental Assessment process has gone through a lengthy process of determining the viability of the existing nuclear sites. These timing issues would have to be factored into the lead times for the nuclear power stations themselves. The Parliamentary Office of Science and Technology is currently preparing a study on nuclear power station siting criteria, which will be published at the start of the 2006-07 Parliamentary Session.

64. The siting of a potential new generation of reactors in the UK could be aided by locating them next to existing nuclear power stations. There are possible advantages from doing this with regard to public acceptance, licensing and grid access, although none of these is guaranteed. However, the availability of some of these sites may be affected by rising sea levels and coastal erosion, arising from climate change. As a result, more research would have to be carried out on these potential effects before the industry could proceed. In addition, we are unclear as to how the Government would make existing sites available to the nuclear industry, given that many of them are privately owned. There would need to be a potentially difficult commercial negotiation with the current owner—probably British Energy—before development could proceed.

Choosing the right technology

65. The UK's existing nuclear power stations comprise three types of technology. Magnox, the first generation of reactors, were developed during the 1950s and 1960s, born out of the Government's earlier military research programme. As these were very much prototype designs, they are now obsolete, with the remaining UK Magnox reactors due to close in the next five years.[68] The UK's second generation of nuclear power stations were commissioned between 1976 and 1988. These Advanced Gas-cooled Reactors (AGRs) were subject to significant design problems and cost over-runs. Whilst they are still in operation, under British Energy Group plc, they represent the last generation of UK-designed reactors. The one subsequent addition to the UK's nuclear fleet, Sizewell B, was designed by the American firm, Westinghouse, and employs the widely used Pressurised Water Reactor (PWR) design.[69] Because there has not been a 'home-grown' reactor in the UK for around 20 years, and given advances in technology abroad, it is certain that any new generation of nuclear power stations in the UK would use a foreign design.[70] In the following sections we outline the choice of reactors that should be available to potential developers; anticipated future developments in the sector; and factors that would need to be taken into account in choosing a reactor design.

AVAILABLE REACTOR DESIGNS

66. The European and American markets for new nuclear power plants has been stagnant for the last 20 years, with very little new build. Nevertheless, reactor vendors have continued to develop what are known as 'evolutionary' designs.[71] These are third generation models, which use existing technical knowledge while adding system simplifications to improve safety performance. As such, there are now four designs that should be sufficiently developed in the coming years to enable potential UK nuclear operators to purchase 'off the shelf'.[72] The two most likely options are the AP1000 pressurised water reactor, developed by Westinghouse/BNFL, and the European Pressurised Water Reactor (EPR) offered by the French firm Areva. The AP1000 has a capacity of around 1,100 megawatts and incorporates passive safety systems. These use natural forces, such as gravity or natural circulation, where possible, in safety systems so as to reduce the use of pumps, fans, diesels, or other rotating machinery, thus decreasing the risk of failure of a safety feature for technical reasons. The developers argue that this not only improves safety but also reduces the complexity and therefore the potential capital cost without compromising safety.[73] Operators in the United States are currently seeking licensing approval for the AP1000 for stations on six sites. As yet there are no examples of this type of reactor in commercial usage. [74]

67. Areva's EPR has an output of around 1,600 megawatts and is based on a scaled-up version of existing reactors currently operating in France and Germany. Unlike the AP1000, it uses active safety systems that shut down the reactor in the event of an accident or abnormal operating situation.[75] The first EPR is now under construction at Olkiluoto in Finland. It was expected to be operational in 2009, although it is already reported to have fallen nine months behind schedule, a year after construction began.[76] A further demonstration EPR is being constructed in La Flamanville in France.

68. The industry believes that these two reactor designs are ready to seek licensing approval in the UK now.[77] In addition, there are two further models, which are being actively marketed to potential UK operators. These are Atomic Energy of Canada Ltd's (AECL) CANDU reactor, predecessor designs of which are operating in Korea,[78] and General Electric's Economic Simplified Boiling Water Reactor (ESBWR). However, it is expected that the technology licensing process for both of these designs would take substantially longer than for the two front-runners, therefore reducing the likelihood that they would be selected for any pre-licensing arrangements.[79] Indeed, neither of the most recent designs has yet been built for commercial use anywhere. Furthermore, of the 24 reactors officially under construction around the world, 23 use designs that, for various reasons, it would either not be possible to use in the UK, or would face difficulty competing in our market.[80] This leaves only the Finnish EPR, which is still under construction, as a recent example from which any potential UK developers would be able to draw lessons.

FUTURE REACTOR DESIGNS

69. The Institute of Physics outlined to us how, in the future, possible 'revolutionary' or fourth generation reactor designs will become available. These are High Temperature Gas Reactors (HTRs), which use ceramic, rather than metal, components in the active core. This allows much higher operating temperatures, leading to greater thermal efficiency.[81] In other words, as the Institute's Professor Gelletly put it to us, this means "one can extract more bang for one's buck".[82] Overall, revolutionary designs could give significant performance improvements over the current evolutionary reactors, using less fuel and producing a lower amount of waste.[83] To date, six potential designs have been selected as the focus of a collaborative international research effort, of which the UK is a part. Be that as it may, the first examples of such reactors are not expected to be ready for commercial use for at least 20 years, if not even longer.[84] This rules out the possibility of using such designs in the UK for any new nuclear build within the next two decades.

FACTORS TO CONSIDER

70. One of our witnesses noted that there is comparatively little objective research on the relative advantages and disadvantages of the most viable current reactor technologies.[85] Part of the reason for this, as noted above, is the dearth of operational experience. This has implications for the extent to which reliance can be placed on any cost estimates cited by the industry.[86] Moreover, the fact that potential developers in the UK would be among the first in the world to use the evolutionary designs outlined above, must also present certain technical risks. These would have to be borne by the reactor vendor and buyer. That said, the use of international designs should also enable the UK to make use of operational and industrial experience from abroad.[87]

71. Another issue, about which we heard divergent views, is the extent to which the Government should play a role in determining the choice of reactor design for any new nuclear build. If, say, there were to be a fleet of 10 new reactors, then there would be potential advantages from these all using the same technology. This would allow operators to benefit from learning-by-doing, thus reducing costs with each successive reactor.[88] Such an approach would also generate only one type of waste, rather than several different types of waste if various reactor designs were used.[89] A possible disadvantage to this approach could be that it would lock the UK into a particular technology, which would create problems if the wrong technology choice were made at the start. However, we need only look to the UK's experience with its AGR programme to demonstrate the risks of not following a consistent design approach. The cost overruns and delays, which for example led to the construction of Dungeness B taking 18 years, were to a large extent attributed to the use of varying designs and different contractors for each of the seven AGRs.[90]

72. The difficulty we see here is that because the Government would expect the market to deliver any new nuclear build, this leaves open the possibility that competing operators might opt for different reactor designs. The Nuclear Industry Association (NIA) told us that "it did not think that it is for Government to choose which design is built in the UK".[91] This means that in order to gain the cost benefits from a series of nuclear reactors, the Government would have both to ensure, somehow, that the market settled on a single reactor design, while still allowing the market sufficient flexibility to make the initial choice of design itself. This could pose difficulties if there were a number of consortia vying to build and operate new reactors, particularly in ensuring that there remained effective competition for new build throughout the development of the fleet.

73. Of the two main reactor designs viable for the UK, neither has yet been built anywhere in the world. There will, therefore, be both technical and cost uncertainties associated with any new nuclear plant, the risk of which could be mitigated by using a single reactor design for all new build. However, in a liberalised electricity market with competing consortia, each vying to build one or more new power stations, there is no guarantee that a single reactor design would be chosen for all new build. To a certain extent investment decisions would be influenced by pre-licensing generic designs, as those so licensed would have a significant cost advantage. Moreover, costs will decrease as each reactor of the same design is built.

The supply chain

74. A programme of new nuclear power stations would represent possibly one of the largest and most costly civil engineering undertakings to be attempted in this country. As such, a key question is whether the UK has the capacity, both in terms of skilled workers and the component parts required for the construction of a reactor, and if not, the extent to which it would be able to buy these in from abroad. In the sections below, we look at the scope of the UK's supply chain and where we see potential constraints in the future. We then go on to consider the global supply chain capability and the possible risks therein.

UK CAPACITY AND CONSTRAINTS

75. As noted in the previous section on technology, it is almost certain that the design for any new generation of nuclear reactors in the UK would have to come from a foreign company. An interesting point, raised by the nuclear industry, though, is that a large proportion of the required engineering and construction work would not be directly nuclear-related. The industry estimates that construction of a nuclear power station comprises 55% plant and equipment, 30% civil engineering, and 15% project management and technical support. Of these, it is mainly in the area of plant and equipment that the UK lacks the domestic capability. For example, the civil engineering requirement for construction of a new nuclear power station would only be about 2-3% of national capacity, with the equivalent figure for mechanical and electrical capacity in the range of 4-5%. Overall, the Nuclear Industry Association estimates that the current UK supply chain could provide about 70% of a nuclear plant, and that this figure could reach 80% with sufficient investment in resources and facilities.[92]

76. However, it is worth noting that the technical capacity assumed by the NIA derives from our present activities in operating nuclear power plants, and in carrying out decommissioning and waste management. While this domestic capacity may exist, it will be for the market to determine where components and labour are supplied from. The extent of UK involvement would depend on the structure of consortia and the choice of reactor design. Some design owners may well have their own supply chain arrangements, hence reducing the scope for UK participation.[93] Moreover, it seems unlikely to us that new construction projects would be able easily to draw resources away from other parts of the nuclear sector, where firms are already reportedly competing with each other for skilled employees, and where there is expected to be significant growth in the areas of decommissioning and long-term waste management in the coming years.

77. Concerns about the availability of skilled and experienced staff were expressed in several of the memoranda we received, including those from the Institution of Electrical Engineers and the Institute of Physics.[94] A number of witnesses also raised it as a serious issue in oral evidence.[95] Today, the nuclear industry directly employs 50,000 people. Yet, because of the period of time since the UK's last new build programme, a large proportion of this workforce is now approaching retirement. This would not be a problem were it not that the industry is struggling to replace those who are leaving with suitable science graduates. In part, the problem is that the current nuclear industry is not perceived as offering interesting opportunities to new entrants. As Professor Gelletly put it to us, "… nuclear decommissioning is not as sexy as building a new power station. It is one thing to see a bright new future in reducing carbon dioxide emissions and saving the planet, but if it is just a matter of taking a reactor apart and burying bits of it that is not exciting for young people".[96]

78. The shortage of chemistry, physics and engineering graduates is not a problem unique to the nuclear industry; it is an issue for the whole UK economy. Cogent, the Sector Skills Council, which covers the nuclear, chemical, polymer, and oil and gas sectors, has reported that while the number of higher education students in general has risen by 19% in the past 10 years, those entering and completing courses specific to Cogent have been in decline.[97] This decrease in demand has led to the closure of courses and, indeed, entire departments. Since 1995, 18 physics departments and 28 chemistry departments across the country have shut. Moreover, of those students that do graduate in relevant courses, only 6.5% presently take up employment in the Cogent sector.[98]

79. Fortunately, the long lead time for nuclear power stations provides an opportunity for the UK further and higher education sectors to respond to the skills needs that a decision in favour of new nuclear build would create. One report suggests that with notice of between two and five years, additional staff could be trained either in-house or through industry training schemes.[99] The Nuclear Decommissioning Authority (NDA) and the power industry are also considering establishing a nuclear skills academy to promote the skills required for both operation and decommissioning.[100] In addition, a couple of our witnesses gave evidence suggesting that there has been a recent increase in student interest in pursuing nuclear-related course modules.[101] While this in no way completely solves the skills shortage problem, it does provide us with cause for optimism. One industry representative said to us that if nuclear power is back on the agenda, then he had "no doubt that we shall be able to attract, train and retain the talents and skills we need".[102]

80. Some of our witnesses were also cautiously optimistic that UK constraints in the provision of some component parts to nuclear power stations could be overcome if there was confidence in the future of the sector. Professor Grimes, of the UK Energy Research Centre, and Professor Gelletly, of the Institute of Physics, noted that a programme of new build, combined with growing international demand for nuclear power, might well provide the incentives for UK engineering companies to invest in the domestic supply chain.[103]

81. Addressing gaps in the UK's supply chain would require the co-ordinated participation of industry, academia and the Government. However, the industry has made it clear that for it to have the incentive to invest, both with regard to skills and infrastructure capacity, it will need an understanding of the level of business it is likely to win from any new build programme. This information is as yet unknown, as it would depend on the extent of such a programme, the proposed reactor design, the structure of the construction consortia, and their procurement strategies.[104] This potentially creates a 'catch-22' situation, since by the time the UK industry obtains this information it may be too late to make such investments. As a result, the Government would have an important role to play in clearly communicating its long-term position on nuclear power in order to provide the industry with a degree of confidence. It could have difficulty providing sufficient assurance, though, given it would expect a market-driven approach to any new build.

GLOBAL CAPACITY AND CONSTRAINTS

82. As noted previously, there are a number of areas in which the UK would be reliant on the global supply chain were it to pursue a programme of nuclear new build. These include the fact that there is no UK-based design owner, or capability for the fabrication of the required turbine generators. Generally, evidence suggests that the global market will be able to provide the systems and sub-systems that the UK market is unable to supply, although the global capacity for some key items appears to be limited.[105] For example, potential pinch-points exist with regard to reactor pressure vessels, steam generators, large turbines, and large forgings.[106] The last of these has received particular attention as a possible constraint. The only existing suppliers are in France and Japan, and whilst both are reportedly considering investment in increased capacity, at the moment lead times of up to 10 years could be envisaged in the worst case.[107]

83. More generally, there is a risk that if a number of countries place orders for nuclear reactors at the same time as the UK, the design owners may not have the capability to increase their operations. Demand for nuclear power is expected to rise from around 370 gigawatts in 2004 to between roughly 450 and 530 gigawatts by 2025.[108] Although the main developers are confident that they can meet greater demand, the possibility that they might not cannot be ruled out, hence the timing of any orders from the UK would be important if operators were to avoid the possibility of significant delays. At the same time, even a large programme of nuclear new build in the UK might be considered relatively small in the context of global expansion in this sector and, therefore, might not be a priority for potential suppliers, operators or investors.[109] This concern is particularly pertinent where the UK would be dependent on international suppliers. With respect to operators and investors, we take comfort from the interest in possible UK new build expressed to us by Europe's three main electricity generators, RWE, E.ON and EDF, and these companies' ability to finance large projects. However, if this interest is to be sustained, these investors would need to be convinced that the UK has a robust long-term energy policy.[110]

84. The UK's domestic supply chain could meet only a proportion of the skills requirements that a programme of nuclear new build would pose. Although there are considerable concerns with regard to the current shortage of domestic nuclear skills, there are signs of a pick-up in this area. The domestic supply chain could also meet a proportion of the infrastructure requirements of a new build programme. Where there are shortfalls, the global market should be able to fill these gaps, though there are constraints regarding a few important reactor components. The growth in worldwide interest in new nuclear build also means that the relatively small UK market will face fierce competition in accessing skills and plant from other countries. As such, a clear and long-term commitment to nuclear power from the Government would be key both to timely investment in the domestic supply chain and for ensuring the global sector's willingness to engage in the UK market.

Uranium fuel availability

85. The reliable operation of a new fleet of nuclear reactors in the UK would require a stable and secure source of uranium fuel supplies for the next 50 to 60 years. Recent reports in the media have suggested that the availability of uranium could pose a significant constraint on any potential new nuclear build, with prices having risen from $6.70 per pound in 2001 to $41.50 per pound today.[111] In contrast to gas-fired generation, the cost of primary fuel does not bear heavily on the economic attractiveness or otherwise of nuclear power, representing less than 10% of the total cost of generation.[112] Nevertheless, it is still the case that the long-term availability of uranium would be a crucial consideration in determining whether new nuclear generation was possible. In this section we look at the current and future demand for uranium, the capacity of the supply side of the market, followed by other developments in the sector, as well as the future role of fuel reprocessing in the UK.

DEMAND FOR URANIUM

86. Rapid economic growth in countries like China and India is fuelling a worldwide expansion in energy demand. As a result, these economies, and others, are increasingly looking to nuclear power to meet their energy needs. The OECD Nuclear Energy Agency and the International Atomic Energy Agency (IAEA) produce an annual 'Red Book' of worldwide uranium resources.[113] Their latest estimates are for global demand for uranium to rise from 67,320 tons per annum at the end of 2004 to between 82,275 and 100,760 tons per annum by 2025. This is based on predicted growth in worldwide nuclear generating capacity during this period from 369 gigawatts to anywhere between 449 and 533 gigawatts. This expansion does, however, mask regional variation in demand growth, with capacity expected to double in East Asia, in contrast to a predicted decline for Western Europe over the same period. The range of growth in uranium demand is difficult to predict with any accuracy because of the level of uncertainty in many countries regarding the future role of nuclear power. Be that as it may, global demand is unlikely to fall during this period.

URANIUM SUPPLIES

87. Current media concern regarding the reliability of future uranium supplies stems largely from awareness that there is expected to be a shortfall in the next few years.[114] In 2004, world uranium production provided around 60% (40,263 tons) of global requirements (67,450 tons).[115] The remainder is met through secondary sources, including inventories built up during the 1970s oil crises, decommissioned warheads, and re-enrichment of depleted uranium tails (a waste product of the uranium enrichment process). However, the availability of these secondary sources is expected to decline in the coming years. Although primary uranium production in 2004 grew 12% on the previous year, to 40,263 tons, and is expected to have reached 41,250 tons in 2005,[116] this growth may not be enough to prevent a shortfall in the near future. It is this expected tightening in the market that has contributed to recent price rises.

88. It is difficult for primary uranium supply to expand quickly in response to rising prices because the identification and bringing to production of uranium requires a long lead time, typically in the order of 10 years or more.[117] In addition, because secondary sources have been able to contribute so significantly to global supply, there has been little exploration for new sources over the past 30 years.[118] Exploration for and development of new mines is also very expensive. This means the industry would need to see sustained high prices and demand in order to create the required incentives to develop new sources of uranium. However, the OECD/IAEA's latest 'Red Book'[119] suggests there is already evidence that higher prices are having an effect, with worldwide exploration expenditure in 2004 up 40% on 2002 at $133 million, and expected to have risen to $195 million in 2005.

89. Despite short-term concerns about uranium supply, it is in fact a relatively plentiful resource, being as abundant globally as either tin or zinc.[120] There are about 3.8 million tons of total identified uranium resources recoverable at a cost of less than $80 per kilo, and approximately 4.7 million tons in total at a cost of less than $130 per kilo. These levels have risen in recent years as a result of re-evaluations of known resources. Total undiscovered resources on dry land are estimated at around 10 million tons.[121] Uranium is also present in seawater in even greater quantities, although it is for the time being uneconomic to extract.[122] With the existing world nuclear fleet, well-known uranium reserves would sustain nuclear generation for about 85 years using current technology. This rises to around 270 years if all known resources are taken into account. These numbers compare favourably with current estimates of the remaining reserves of oil and gas, which are expected to last for respectively 41 and 67 years.[123] One concern raised was that, as existing stocks of uranium are used up, new sources could be of a lower grade, thus requiring more energy to extract, refine and enrich it to a level that is usable in a nuclear reactor. This could increase the overall carbon 'footprint' of nuclear power.[124] We discuss this issue further in Chapter 6. Overall, though, all of the witnesses we spoke to were unconcerned about the long-term future quantity of uranium supply.[125] Given that a potential new generation of UK reactors would not come online until the latter half of the next decade, it is likely that the current short-term capacity constraints in the uranium market will have been overcome by the time any new UK reactor operators would seek to purchase fuel.

FUTURE DEVELOPMENTS

90. The UK does not have an indigenous primary supply of uranium. While the current industry is able to make use of secondary sources, such as those outlined above, and also employs reprocessed uranium, it is likely that a potential new generation of reactors would be almost entirely reliant on imported fuel. This dependency does not generate the same level of geopolitical concerns as fossil fuels, because in excess of 50% of uranium reserves are located in OECD countries, with Australia, Canada and the United States in possession of most of the world's stocks.[126] Figure 2 shows the distribution of reasonably assured uranium resources around the world.

91. Kazakhstan is expected to challenge for prime position in the coming years. In addition, Niger, Russia and Uzbekistan are becoming increasingly important uranium sources. Focus in the uranium market is gradually shifting away from OECD countries.[127] Nevertheless, Australia is likely to remain one of the primary sources of uranium for the foreseeable future, providing a reliable source of supply for the UK. Kazakhstan is also considered to have a positive relationship with OECD countries and a stable regime that is unlikely to interfere with the uranium industry.[128] As a result, we do not believe that the sourcing of uranium fuel from abroad should pose a significant concern in considering the merits of new nuclear build.

92. Finally, some of the witnesses we spoke to highlighted how advances in technology should make future reactors more efficient. Fourth generation reactors, or 'fast-breeders' may have much higher 'burn-up' rates, thus reducing the amount of uranium required to produce a given level of electricity.[129] Although these types of reactors are still many years from being widely deployed, they could extend the period over which uranium is available to thousands of years.[130] However, as noted earlier in this Chapter, such reactors would not be sufficiently developed in time for any new nuclear build in the UK in the next two decades.

Figure 2: Distribution of uranium resources in countries with major resources



Source: OECD/IAEA 'Red Book'

FUEL REPROCESSING

93. One of the ways in which many countries seek to conserve their uranium supplies is through the reprocessing of spent fuel. After five years in a reactor, spent fuel consists of about 96% unused uranium, 1% plutonium, and 3% highly radioactive waste.[131] Reprocessing enables the extraction of used uranium and plutonium for recycling as reactor fuel. Because 97% of the spent fuel is re-used, this process also acts to keep down the amount of high level waste requiring management. The UK has one of the world's few commercial reprocessing plants at Sellafield, serving both domestic customers, as well as countries including Japan, Germany, Spain and Sweden.

94. Fuel reprocessing has been controversial in the UK for a number of reasons. Because it generates plutonium, historic reprocessing has brought about a stockpile of plutonium. While this poses a concern in terms of proliferation risks, one of the ways in which this stored plutonium could be used is in mixed oxide fuel. We received evidence suggesting that, used in this way, the UK's plutonium would be sufficient to power the full lifetime of two nuclear reactors, should that be the Government's desire.[132] Fuel reprocessing has also been controversial because of its environmental impact. The majority of nuclear discharges into the north east Atlantic are from reprocessing plants, with Sellafield regarded as one of the main culprits. Reprocessing is also very expensive and, given the current price of uranium, is seen as uneconomic. As such, the working assumption of many in the nuclear industry is that, were a new series of nuclear reactors to receive the go ahead, it would be on the basis of spent fuel not being reprocessed. Instead, it would be stored onsite in anticipation of long-term disposal. This decision has implications both for the level of dependency of the UK on the world market for uranium, and the level of waste it would have to manage arising from any new build. It also has consequences for the outlook of the UK's reprocessing industry, and could rule out longer term use of some fourth generation reactors, highlighted above, that would use recycled fuel. We discuss the issue of waste in the next chapter.

95. As regards fuel availability, demand for uranium is set to increase markedly in the future, with greater global energy consumption, particularly in East Asia. In the short-term we have concerns about the availability of fuel supplies as secondary sources, such as commercial inventories, are used up. However, in the long-run we believe increased prices and global demand will help maintain reliable uranium supplies, thus not representing a constraint on any new nuclear build in the UK. This provides some reassurance about fuel availability, as it currently seems unlikely that new nuclear power stations would be in a position to use fuel reprocessing to recycle their nuclear waste back into re-usable uranium.

Security and proliferation

96. 2006 marked the twentieth anniversary of the Chernobyl disaster. The event remains present in the minds of many when the issue of nuclear power is debated. Although the tragedy stemmed from a range of procedural failures and a reactor design that would never have been licensed in the UK,[133] the issue of nuclear security has, nevertheless, risen up the public and political agenda in recent years in the wake of the 11 September and 7 July attacks.[134] In this section we look at the structure of nuclear security regulation in the UK; how it has evolved in recent years; the risks the sector faces; and the potential implications of a new generation of nuclear power stations. We close the Chapter by considering the proliferation issues posed by new build.

SECURITY REGULATION IN THE UK

97. The Office for Civil Nuclear Security (OCNS) is the Government's security regulator for the civil nuclear industry. It covers security arrangements for the protection of nuclear and radioactive material on civil nuclear sites and nuclear transports, while also having responsibility for information and personnel security for the sector. For example, all those permanently employed in, or engaged in contract to, the civil nuclear industry have to be vetted and security cleared by OCNS.[135] The Office has a relatively small staff of 42. However, its function is supported by the Civil Nuclear Constabulary—an armed police force of about 700.

98. The Office's procedures have been significantly improved in the wake of the 11 September attacks. The Anti-Terrorism, Crime and Security Act 2001 gave rise to the Nuclear Industry Security Regulations 2003. Under these, every civil nuclear site in the UK is required to have in place a site security plan detailing the physical measures designed to protect that site and the nuclear material it holds. The responsibilities of OCNS inspectors are to ensure compliance with the plans, monitor a schedule of improvements, and conduct inspections where appropriate.[136] In addition, this year, in the wake of two security breaches at Sizewell B by Greenpeace, unauthorised access to a nuclear site has been made a criminal offence.[137] Outside OCNS, there are also numerous off-site counter terrorist activities aimed at maintaining the security of the UK's nuclear sites. These include intelligence gathering, surveillance of suspect individuals, and taking measures at airports to detect and prevent hijackers.[138]

RISKS TO SECURITY

99. Modern nuclear reactors are designed to stringent regulatory standards. The main reason for this, to date, has been to protect them against 'acts of God' such as earthquakes, tsunamis and tornados.[139] While the third generation reactor designs that would be considered for new nuclear build in the UK do not have anti-terrorist features specifically designed-in, there are various aspects to such designs that militate against the risk of a terrorist attack. For example, BNFL note that these reactors have massive reinforced concrete shields, the thickness of which should increase their robustness against an attack, for instance by a hijacked aircraft.[140] Such reactors also employ a 'defence in depth' approach, whereby a number of different systems perform the same function so that the safety of the plant does not rely on any single feature.[141] Current reactor designs are also relatively small as compared to the targets of 11 September.

100. One of our witnesses described the safety record of the UK's civil nuclear industry as "second to none".[142] Indeed, in the sector's history, there have been no events recorded either with off-site consequences or where all safety measures had been exhausted (the Windscale accident in 1957 occurred at a military reactor).[143] However, the Sustainable Development Commission noted that recent changes in the modus operandi of terrorist groups make it difficult to predict the nature of any potential future attack.[144] For example, Greenpeace have recently raised concerns regarding the vulnerability of the transportation of spent nuclear fuel in the UK by train.[145] In its evidence to us, we received assurances from OCNS that all transportation of high level waste in the UK took place relatively infrequently, and did so with the maximum of forward planning.[146] Nevertheless, analysts suggest that an attack on a road or rail shipment of radioactive material could be easier to accomplish than one on a fixed installation, although the amount of material would probably be less and would probably be dispersed over a smaller area.[147]

THE IMPLICATIONS OF NUCLEAR NEW BUILD

101. A programme of new reactors in the UK would require an increase in the resourcing of both OCNS and the Civil Nuclear Constabulary. However, unlike the rest of the industry, these bodies would probably not face the same competition for a diminishing supply of skilled workers. Those employed in the security of civil nuclear sites tend to be security experts first and foremost, who then acquire technical training as necessary to carry out their jobs.[148]

102. An important consideration for any new nuclear build, highlighted to us by OCNS, would be the need to ensure that the lessons learnt from the previous generations of nuclear power station construction were reflected in whichever site and reactor design was used. This could be a problem, given that most of the companies taking forward new build here would not have had previous experience of building a nuclear power station in the UK. OCNS would be involved throughout the process of licensing and constructing any such power stations. For example, it would have to approve a site security plan and then conduct pre-commissioning inspections to satisfy itself that its standards had been met.

103. One concern that the Office raised with us was the likely workload it would face providing clearance for personnel engaged in a new build programme. Last year OCNS issued just under 18,000 clearances. Its particular worry was with regard to the potentially large number of staff from overseas that would require vetting, and the challenge this might present for ensuring knowledge was not passed onto a third party with malicious intent.[149] To cover the cost of this additional work, the Office would have to increase the amount of its funding from the industry. At present, £2.3 million of OCNS' £2.4 million annual budget comes directly from the sector.

104. New nuclear power stations in the UK would also require material damage and liability insurance, as is the case for every civil nuclear site in the UK. Currently, the Nuclear Installations Act sets an upper limit on the amount of insurance that operators are required to have, at £140 million. Liabilities beyond this, in the event of a claim, would have to be met by the Government. This is stipulated under the Paris Convention, to which most European countries, including the UK, are signatories.[150] It is likely that these thresholds will rise in future as recent updates to the Paris Convention have increased the liability limit to €700 million. For any new nuclear power stations, the industry would want the Government to ensure continuation of the current international agreements, capping the liability of nuclear operators in the event of major incidents, and allowing them to insure for potential liabilities up to that cap.[151] Evidence suggests that, at present, the insurance market appears to have capacity to cover most risks within the proposed limits from 2006, although debate on some detailed issues is continuing.[152]

105. Most of the implications raised above with regard to nuclear new build should not present a concern as regards the viability of any future programme. As such, the security issue comes down to the extent to which further nuclear power stations present an additional risk over and above that which exists already from the UK's current nuclear installations. We do not believe this would be significant.

PROLIFERATION

106. Nuclear proliferation is the dissemination of technical knowledge to potentially hostile states or groups that might in the future enable them to construct nuclear weapons. With Iran's nuclear programme occupying the headlines in 2006, the issue of proliferation remains a consideration when debating the future of the UK's own civil nuclear activities. However, there are safeguards in place to ensure there is very little risk of proliferation resulting from information escaping or being released from either UK sites or workers. The UK is a signatory to the Non-Proliferation Treaty and the Euratom Treaty. International safeguards are also in place to detect and discourage the diversion of nuclear materials to weapons use.[153]

107. If the UK were to go ahead with a new generation of nuclear power stations, it is unlikely this in itself would present a significant increase in the risk of proliferation, assuming OCNS is able to maintain its current standards in vetting procedures. Indeed, this is acknowledged in the Government's Energy Review consultation document.[154] Nevertheless, in its evidence to us, the Sustainable Development Commission noted that the risk associated with the proliferation of nuclear technology around the world remains an extremely important issue.[155] In particular it noted that, if nuclear power is to be part of the UK's solution to climate change, then, under the United Nations framework Convention on Climate Change (UNFCC), it could be considered a suitable solution for all countries.[156] However, we note that, whatever the UK decides, countries with large nuclear programmes, such as France, Japan and the United States, are likely to continue with their policy of developing nuclear power. Nevertheless, due regard should be given to the political message that a decision in favour of new nuclear build in the UK would send to those countries it is seeking to discourage from developing their own nuclear programmes.

108. The importance of security and the risks of proliferation are of the utmost concern to the Government in protecting its citizens. As such, it is vital for the UK civil nuclear industry to adhere to international treaties and uphold the highest regulatory standards. While these considerations should not be neglected in the debate on new nuclear power stations in the UK, we do not believe that such a programme would pose a significant additional security or proliferation risk, although by definition it extends the period of that risk. However, we accept, too, that there are ethical considerations to take account of in this debate, and that the UK's position should not necessarily be determined on the basis of the relative risk any programme would present.


27   British Nuclear Fuels plc (BNFL), Supporting paper on nuclear energy issues, March 2006 Back

28   Fabien A. Roques, William J. Nuttall, David M. Newbery, Richard de Neufville and Stephen Conners, Nuclear Power: A Hedge against Uncertain Gas and Carbon Prices?, 2006 Back

29   Appendices 5 (British Energy), 11 (BNFL plc), 12 (Chemical Industries Association), 16 (EDF Energy), 32 (Institution of Electrical Engineers), 38 (Nuclear Industry Association), 47 (RWE npower) and 50 (Shell UK); Centrica, Response to 'Our Energy Challenge...', 2006; CBI, Response to 'Our Energy Challenge...', 2006 Back

30   Q 312 (Dr Mike Weightman) Back

31   Appendix 30 (Health and Safety Executive) Back

32   CBI, Response to 'Our Energy Challenge...', 2006 Back

33   Q 239 (Dr Paul Golby of E.ON UK) Back

34   Q 69 (Mr Keith Parker of the Nuclear Industry Association) Back

35   Appendices 4 (Atomic Energy of Canada Ltd), 5 (British Energy), 11 (BNFL plc), 12 (Chemical Industries Association), 16 (EDF Energy), 38 (Nuclear Industry Association), 47 (RWE npower) and 49 (Scottish Power); Centrica, Response to 'Our Energy Challenge...', 2006; CBI, Response to 'Our Energy Challenge...', 2006  Back

36   Q 74 (Mr Keith Parker of the Nuclear Industry Association) Back

37   Appendix 16 (EDF Energy) Back

38   Q 239 (Dr Paul Golby of E.ON UK) Back

39   Q 69 (Mr Paul Spence of British Energy) Back

40   Q 312 (Dr Mike Weightman) Back

41   Centrica, Response to 'Our Energy Challenge...', 2006 Back

42   Q 318 (Dr Mike Weightman); see, for example, Financial Times, page 2, 10 June 2006 Back

43   Q 324 (Dr Mike Weightman) Back

44   Q 344 (Mr Joe McHugh) Back

45   Q 411 (Mr Roger Brunt) Back

46   Appendices 4 (Atomic Energy of Canada Ltd), 5 (British Energy) and 38 (Nuclear Industry Association) Back

47   Q 239 (Mr Vincent de Rivaz) Back

48   Hammonds ARUP, Consenting procedures for new nuclear power in the UK, 2006 Back

49   Appendix 30 (Health and Safety Executive) Back

50   Health and Safety Executive, The health and safety risks and regulatory strategy related to energy developments, June 2006 Back

51   See paragraph 71 f below Back

52   Q 330 (Dr Mike Weightman) Back

53   Q 334 (Dr Mike Weightman) Back

54   We discuss the issue of skills availability later in this Chapter. Back

55   Q 348 (Dr Mike Weightman) Back

56   Q 347 (Dr Mike Weightman) Back

57   Ibid. Back

58   Q 76 (Mr Keith Parker of the Nuclear Energy Association) Back

59   Q 242 (Mr Vincent de Rivaz of EDF Energy)  Back

60   Appendix 32 (Institution of Electrical Engineers) Back

61   British Nuclear Fuels plc (BNFL), Supporting paper on nuclear energy issues, March 2006 Back

62   Q 243 (Dr Paul Golby of E.ON UK) Back

63   Q 349 (Dr Mike Weightman) Back

64   Q 353 (Mr Les Philpott) Back

65   Nirex, Summary note for CoRWM on the impact of rising sea levels on coast sites with radioactive waste stores, September 2005 Back

66   Q 246 (Dr Paul Golby) Back

67   We discuss this further in Chapter 6. Back

68   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 1: An introduction to nuclear power - science, technology and UK policy context, March 2006 Back

69   Ibid. Back

70   Q 79 (Mr Keith Parker of the Nuclear Industry Association) Back

71   Institute of Physics, The future of fission power - evolution or revolution?, 2004 Back

72   Q 20 (Prof Robin Grimes) Back

73   Institute of Physics, Op. cit. Back

74   British Nuclear Fuels plc (BNFL), Supporting paper on nuclear energy issues, March 2006 Back

75   Ibid. Back

76   For example, The Guardian, 24 April 2006. Back

77   Appendix 38 (Nuclear Industry Association) Back

78   Appendix 4 (Atomic Energy of Canada Ltd) Back

79   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 1: An introduction to nuclear power - science, technology and UK policy context, March 2006 Back

80   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 8: Economics of nuclear power, March 2006 Back

81   Institute of Physics, The future of fission power - evolution or revolution?, 2004 Back

82   Q 17 (Prof William Gelletly) Back

83   Q 42 (Prof Robin Grimes) Back

84   Appendix 33 (Institute of Physics)  Back

85   Q 20 (Prof Robin Grimes) Back

86   We look at the issue of cost uncertainty in more depth in Chapter 5 of this Report. Back

87   Q 78 (Mr Paul Spence of British Energy) Back

88   Q 181 (Prof Keith Palmer) Back

89   Q 40 (Prof Robin Grimes) Back

90   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 1: An introduction to nuclear power - science, technology and UK policy context, March 2006 Back

91   Q 77 (Mr Keith Parker) Back

92   Nuclear Industry Association, The UK capability to deliver a nuclear power plant, 2006 Back

93   IBM Business Consulting Services, An evaluation of the capability and capacity of the UK and global supply chains to support a new nuclear build programme in the UK, 2005 Back

94   Appendices and 32 (Institution of Electrical Engineers) and 33 (Institute of Physics)  Back

95   Qq 28 (Prof William Gelletly); 29 (Prof Robin Grimes); 92 (Mr Robert Armour); 120 (Sir Jonathon Porritt); and 242 (Dr Paul Golby) Back

96   Q 28 (Prof William Gelletly) Back

97   Cogent, An assessment of current provision for the nuclear industry, 2006 Back

98   Ibid. Back

99   IBM Business Consulting Services, An evaluation of the capability and capacity of the UK and global supply chains to support a new nuclear build programme in the UK, 2005 Back

100   Q 92 (Mr Robert Armour of British Energy) Back

101   Qq 29 (Dr William Nuttall) and 30 (Prof William Gelletly) Back

102   Q 242 (Mr Vincent de Rivaz) Back

103   Qq 23 (Prof Robin Grimes) and 26 (Prof William Gelletly) Back

104   IBM Business Consulting Services, An evaluation of the capability and capacity of the UK and global supply chains to support a new nuclear build programme in the UK, 2005 Back

105   Ibid. Back

106   Q 79 (Mr Keith Parker of the Nuclear Industry Association) Back

107   Geological Society, How to plug the energy gap, November 2005 Back

108   IBM Business Consulting Services, Op. cit. Back

109   Ibid. Back

110   Appendices 16 (EDF Energy), 22 (E.ON UK) and 47 (RWE npower)  Back

111   For example, The Guardian, 7 June 2006, page 8 and 18 May 2006, page 7. Back

112   Q 233 (Mr Vincent de Rivaz) Back

113   OECD Nuclear Energy Agency & International Atomic Energy Agency, Uranium 2005: Resources, Production and Demand, June 2006 Back

114   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 8: Uranium Resource Availability, March 2006  Back

115   OECD Nuclear Energy Agency & International Atomic Energy Agency, Uranium 2005: Resources, Production and Demand, June 2006 Back

116   Ibid. Back

117   Ibid. Back

118   Q 5 (Prof Robin Grimes) Back

119   Op. cit. Back

120   British Nuclear Fuels plc (BNFL), Supporting paper on nuclear energy issues, March 2006 Back

121   OECD/IAEA, Op. cit. Back

122   Q 6 (Prof William Gelletly) Back

123   Appendix 16 (EDF Energy) Back

124   Q 125 (Sir Jonathon Porritt) Back

125   Qq 6 (Prof Robin Grimes); 125 (Sir Jonathon Porritt); and 234 (Mr Vincent de Rivaz) Back

126   Q 234 (Dr Paul Golby of E.ON UK) Back

127   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 8: Uranium Resource Availability, March 2006 Back

128   Ibid. Back

129   Q 17 (Prof William Gelletly) Back

130   Qq 42 (Prof William Gelletly) and 236 (Mr Vincent de Rivaz) Back

131   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 5: waste and decommissioning, March 2006 Back

132   Appendix 16 (EDF Energy) Back

133   BNFL plc, Supporting paper on nuclear energy issues, 2006  Back

134   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 6: Safety and security, March 2006; Appendix 35 (Dr David Lowry) Back

135   Appendix 41 (Office for Civil Nuclear Security) Back

136   Q 380 (Mr Roger Brunt) Back

137   Q 391 (Mr Roger Brunt) Back

138   Parliamentary Office of Science and Technology, Assessing the risk of terrorist attacks on nuclear facilities, July 2004 Back

139   Appendix 4 (Atomic Energy of Canada Ltd) Back

140   BNFL plc, Op. cit. Back

141   Parliamentary Office of Science and Technology, Op. cit. Back

142   Q 56 (Mr Robert Armour of British Energy) Back

143   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 6: Safety and security, March 2006 Back

144   Ibid. Back

145   Appendix 29 (Greenpeace) Back

146   Q 415 (Mr Roger Brunt) Back

147   Parliamentary Office of Science and Technology, Op. cit. Back

148   Q 401 (Mr Roger Brunt) Back

149   Q 407 (Mr Roger Brunt) Back

150   BNFL plc, Op. cit. Back

151   Centrica, Response to 'Our Energy Challenge...', 2006 Back

152   Appendix 16 (EDF Energy) Back

153   Q 57 (Mr Keith Parker of the Nuclear Industry Association) Back

154   Department of Trade and Industry, Our energy challenge - securing clean, affordable energy for the long-term, January 2006 Back

155   Q 166 (Sir Jonathon Porritt) Back

156   Sustainable Development Commission, The role of nuclear power in a low carbon economy, Paper 6: Safety and security, March 2006 Back


 
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