Examination of Witnesses (Questions 60-79)
DEPARTMENT OF
TRADE AND
INDUSTRY
6 FEBRUARY 2006
Q60 Judy Mallaber: A while back you
were very positive in your evidence on the possibility of a resurgence
in coal and in your opening you talked about a carbon-capture/clean-coal
technology. Obviously you have not made any final decisions yet,
you will say it is all part of the energy review, but what is
your thinking at the moment about the Government's commitment
to the future of the UK coal industry and the work that needs
to be done on clean-coal technology?
Alan Johnson: As far as the UK
coal industry is concerned, we have put something like £60
million into helping the UK coal industry. The reason I say coal
has become much more interesting is because as the price of gas
has gone up, coal has become much more competitive. At the same
time, you have the carbon sequestration technology which has come
along. In a much wider sense than our review, we did a deal last
year when we went to China on the EU/UK summit which is the first
step to sharing technology with China who will never build tons
of wind farms and who believe that developed countries lecturing
them about the need to get their carbon emissions under control
is just a way to stop their growth. They are suspicious of that
but they understand the problems of the environment. So you come
along with something like clean-coal technology and it opens up
a whole new prospect there. That is why I say coal. Would it be
British coal? The figures suggest at the moment that we are getting
31.6 million tonnes of our coal from Australia and South Africa,
18 million from the UK, so there is obviously still an attraction
in importing coal from abroad as it is cheaper. What comes out
of this review in relation to coal is one thing. The ramifications
for UK coal are something completely different and we shall have
to wait for the review to see what emerges, but coal is going
to be a central feature of that review.
Q61 Judy Mallaber: I do also have,
within my constituency, which is built on coal, continuing pleas
from those who are campaigning against opencast mining with a
concern that that might get back into the equation and change
the criteria which we strengthened against environmental damage
through just scooping off the surface of the environment. Is that
an area that you are looking at in the review or not?
Alan Johnson: It is, yes. Opencast
mining is one of the aspects that we should have to look at. It
is not just about deep mines: it is about opencast mining as well.
Q62 Mr Clapham: You made the point
earlier about my interest in coal and I have always believed that
coal can play a very significant part in the economy, particularly
as burned in new clean-coal technology units. It is compatible
with renewables if it is burned cleanly and a number of people
are now coming round to that particular view. What are we doing
at the present time, for example, to incentivise the generators
to invest in what may be the first phase of clean-coal technology
and that is super-critical boilers with carbon capture?
Alan Johnson: The first thing
we have to do is get a proper demonstration model which might
be set up with the BP Miller site on carbon capture and storage
and a number of other demonstration sites. We have set aside some
money to help this process along until we get the full picture
here. I understand that carbon capture and storage can reduce
CO2 emissions by 80%, which still leaves 20% but is obviously
a huge step forward. Not quite renewables in terms of cleanliness,
but the first thing to do is invest in the technology and the
science to get a proper demonstration model that we can then take
further and that is what we are doing.
Q63 Mr Clapham: Coal burn is much
more flexible. Take, for example, nuclear stations: in go the
rods, out comes the electricity, it has to be taken down the line.
The one thing about coal units is that they are much more flexible
and can be turned on and off as demand comes on and, in that context,
fitting new clean-coal technology means that there is a much more
reliable source. Is that something that you will be looking at
as well in the review, how different mixes have the potential
for that greater flexibility?
Alan Johnson: Yes, because it
meets security of supply, it meets the challenge on carbon emissions
and it also would be an aspect of affordability that we need to
look at. I do not know whether we have looked at anything specific
on the specific technology that Mike mentions.
Chairman: I know you are anxious to get
away Secretary of State, but there is one whole section on nuclear
before we let you go. Could you write to us on that particular
point possibly?
Q64 Mr Hoyle: Mick Clapham has touched
on the energy mix and I just wonder whether you have a vision.
I know you are a man of vision; you are always saying what is
going to happen in the future. Under your vision, how do you see
the energy mix coming out? Would you think 30% coal, 30% nuclear,
20% gas and 20% renewables? What mix do you have in mind?
Alan Johnson: I do not have any
mix in mind and I have a vision on many things but I have not
had a vision on this, unless one comes to me. We are not starting
off on that basis; we are not starting off on the basis of "Wouldn't
it be nice to get?" the point about ring-fencing that Mick
Clapham made. We are going to have the review. We are going to
get all the information, get all the contributions that people
want to make to this, look at the whole thing in the round and
then I might form a vision or a view about what the proper mix
should be. Diversity is the key issue.
Q65 Miss Kirkbride: It seems to me
that you have been a bit schizophrenic today about energy policy.
On the one hand the gas market is for the market to decide and
on the other hand you were taking credit for the renewable target
of 15% which is very much driven by the Government and very welcome.
You have rightly said that we cannot possibly have 80% of our
electricity supplied by gas because of the vulnerability that
would lead to. In the exchanges we have just had it is obvious
that carbon capture is not there yet today or even for the immediate
tomorrow. Does nuclear not have to be part of that mix?
Alan Johnson: It does not have
to be. I should draw a line between interfering in the market
and helping a sector that was non-existent, but perhaps should
have been. If we had got into wind farms and wind turbines in
the 1980s when the Danes got into it, we could have had a market
there, but there was no market at the time of the energy review
and creating a market from nothing, given the importance of climate
change, was very important. The Renewables Obligation was perfectly
justifiable in that respect. There is a difference between that
and our clod-hopping into the market on prices and everything
else. In terms of whether nuclear has to be part of the equation,
no, it does not have to be part of the equation. We do not start
from saying we are going to do this review but nuclear has to
be part of the equation otherwise the professional cynics, who
have said that this is all pre-determined, would be right. They
are not right. The only decision we have made on nuclear, as the
Prime Minister has said, is that it is time to make a decision
because of the long tail between making a decision and having
a nuclear power station. If nuclear is to be part of the mix,
it is very much for the market to decide that, but the market,
quite rightly, would be saying they need signals from the Government
if they are going to go down that route. If you look at it from
the point of view of climate change, security of supply, affordability
and you look at energy in the round, nuclear does not have to
be part of the solution.
Q66 Miss Kirkbride: But this Government
have already failed to meet their target; CO2 emissions have gone
up since the Government came to power despite the fact that you
said that you did not want them to do so. How can we possibly
continue at the level of economic activity that we have today
and keep carbon emissions under control unless we have nuclear?
Alan Johnson: That is a question
for the review.
Q67 Miss Kirkbride: You must have
a view on that? It is not possibly surely, is it?
Alan Johnson: I do not actually
have a view on this. I have never been particularly pro- or anti-nuclear.
The reason why we are having the review is to answer that very
question. Does it need to be part of the mix? Is it an essential
to be part of the mix? The issues that the Energy White Paper
looked at in 2003 about affordability and about waste, toxic waste,
are a very important consideration which we shall be looking at.
Q68 Miss Kirkbride: The Government
had a review of energy just two years ago, knowing that the amount
of energy produced by the nuclear sector was going to drop from
around 19% today to 7% in 2020 and did not refer to this at all.
We cannot re-commission the Magnox; we cannot extend the life
of the Magnox reactors. We are facing quite a serious crisis now
and it is very hard to see, given the competition for energy resources
across the world, how we are going to meet that demand here unless
we go nuclear like pretty much all the rest of the developed world
is.
Alan Johnson: My view is shared
by the shadow trade and industry spokesman who I saw in an interview
on Saturday, who was saying precisely the same thing. There is
no reason why there cannot be a solution to this, when we have
looked at all of this, that says actually nuclear will not be
part of this equation. I can see a lot of reasons, a lot of arguments
why that should not be a conclusion reached, but it is still perfectly
possible to reach that conclusion. We do not start from the basis
of saying that we are having this review because it is quite clear
to us that we have to have nuclear new build and the review is
about how to implement that. That is not the purpose of the review.
Q69 Miss Kirkbride: So are you saying
that we can finish this energy review, not re-commission any nuclear
reactors and still meet our climate change aspirations?
Alan Johnson: If we did, we would
say, this was now Government concluding that in our long-term
energy policy nuclear would have no role. That is the difference.
By the end of this review, we shall either be opening the door
to nuclear new build or we shall be closing it. We shall either
be Germany or we shall be France.
Q70 Mark Hunter: I want to probe
a little bit further on this issue of nuclear power because obviously
it is very central to the whole energy review which is ongoing
at the moment. I am pleased that the minister has commented and
in fact given reassurances that no decisions have yet been made
on this. As he says, there are many cynics, professional and otherwise,
out there who feel otherwise. What would you say to the point
that many who are opposed to nuclear power are advancing that
the Government's priority ought to be to clean up the nuclear
waste which already exists in our nuclear power stations around
the country before any thought at all is given to an expansion
of nuclear power?
Alan Johnson: Sceptics would have
been a better word than cynics; professional sceptics on this.
It is a very important point. That was the big issue in 2003,
it is the big issue now. We set up the Nuclear Decommissioning
Agency. Previous governments of all persuasions ought to be wearing
sackcloth and ashes for just not doing anything about this issue
of nuclear waste. There are big tubs of it and tanks of it hanging
around. The Nuclear Decommissioning Agency, which must be welcomed
by everyone, which was set up at the beginning of last year and
the money, something like £50 billion that will go into this,
shows that cleaning up toxic waste is an absolute priority. The
argument of course that we are in the middle of from the pro-nuclear
and anti-nuclear lobby is how much we would add to that, whether
new technology now makes it safer, whether the waste would be
much easier to get rid of, whether, if we continue with fission,
we shall then be in the realms of fusion where we will not have
the problems of waste. These are big issues that we have to grapple
with on the review but whatever comes out of this review, we have
to tackle the problem of nuclear waste.
Q71 Mark Hunter: On a slightly different
timetable but still to do with nuclear power, do you think we
can have any confidence in the claims which are currently being
made for how nuclear power could contribute in the future, given
some of the claims that were made for it in the past like, for
example, ultimately it will be too cheap to meter?
Alan Johnson: We have to learn
from that experience and the amount of money that governments
of all persuasions spent on nuclear research et cetera.
Yes, that has to be a consideration, but we have to start from
where we are now and where we are now is that we need to get a
60% reduction in CO2 emissions by 2050. We have a situation where
the more wind farms, the more wave power, the more sea power we
use, the more renewables we produce we do not actually increase
the level of CO2 emissions, whilst a very important source of
clean energy—that is nuclear, clean in the sense of CO2
emissions—is actually declining. If you look at what has
happened in Finland and the debate they had there, an awful lot
of environmentalists are now feeling differently about the pros
and cons of nuclear. They changed their minds over the last five
or 10 years. If you come at this with a fresh mind and you are
not in any of the camps digging trenches and you look at it objectively,
that is the best way to come to a conclusion and that is the position
I am in.
Q72 Rob Marris: You just talked about
nuclear being clean in the sense of CO2 emissions. Are you going
to be looking at the energy cost in fossil fuel of building nuclear
power stations, for example, all the fossil fuel you have to use
to mine uranium and then pour concrete for nuclear power stations
and so on?
Alan Johnson: Yes.
Q73 Rob Marris: You would accept
that nuclear is not entirely clean in terms of CO2 emissions taken
in the round?
Alan Johnson: Yes. If you build
anything as big as a nuclear power station, there are going to
be CO2 emissions.
Q74 Rob Marris: In terms of security
of supply and uranium, if there is a big trend around the world
to go nuclear as it were in terms of power generation, then are
you going to look at the question of security supply of uranium
because high quality uranium in stable countries is going to run
out pretty quickly? Then we shall be down to looking at low quality
uranium with a higher energy extraction cost from unstable parts
of the world. Are you going to take that into account?
Alan Johnson: Absolutely.
Q75 Rob Marris: You talked about
the door being opened and the door being closed and so on, whether
we are France or whether we are Germany. Can you set the framework
here? Could a power generator today apply to run a nuclear power
station, a new one, to build and run one in the United Kingdom
under current legislation?
Alan Johnson: Yes. They are not
queuing up to do it, but yes.
Q76 Rob Marris: Are there any such
applications that you have heard about?
Alan Johnson: No.
Q77 Rob Marris: Would that say something
to you about market forces?
Alan Johnson: One of your colleagues
chaired a committee of the Environmental Audit Select Committee
which spent a long time on this and I can see the argument that
there is not a queue of entrepreneurs waiting. What potential
investors would say, having seen what has happened, Germany pledging
to close every nuclear power station, France being gung-ho on
nuclear energy, having seen the 2003 White Paper as being equivocal,
the door was ajar and could close, is that they see no point.
They need a clearer signal from Government. They are not going
to get a signal from Government that says "Here is a big
open chequebook from the taxpayer". It is up to them to put
the money in and put the investment in, but it is fair to say
it is so long term that they need a signal.
Q78 Rob Marris: As part of that signal
do you envisage, just talking about the framework for nuclear
power generation, we could have a situation where the Government
would not be effectively the insurer of last resort, either as
regards a meltdown of a nuclear power station and the meltdown
of the operating company financially as a result, or in terms
of disposal of nuclear waste? Surely, the Government would then
have to be the insurer of last resort, which is not necessarily
a bad thing but does take us a step away from the market forces
to which you referred.
Alan Johnson: On the last issue
of toxic waste, Government cannot duck that responsibility; we
have ducked it for too long and we cannot duck it now. In terms
of the actual cost of building nuclear power stations, we do not
intend to provide any of that, it is up to the market.
Q79 Rob Marris: I am just talking
about a framework here, I am not trying to push you one way or
the other because you are not going to say, but would you then
see that the Government would step away from nuclear power generation
completely and say "Oh well, if your operating company goes
bust and you leave all that nuclear detritus around, we shall
have nothing to do with it and we shall not be the insurer of
last resort"? Or do you think the Government would, in that
situation, then spend taxpayers' money perhaps on cleaning up
the mess?
Alan Johnson: Those are issues
for the review.
Chairman: These are fascinating questions
which we are right to ask, but we shall not get many answers.
We shall have to get you back at the end of this process and push
you even harder.
| 
