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19 Apr 2007 : Column 153WH—continued

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I have spoken already for roughly the time that I had hoped to speak for, but I want to say a few more things, briefly. I will therefore rush through a few other issues.

There are big issues concerning where to site nuclear power stations. Most of the existing sites—where it is assumed that new power stations will go—are coastal. Rising sea levels resulting from climate change and endomorphic tilt will make some of them unviable in the coming decades. Most of those sites are owned by British Energy and the NDA. How will other developers gain access to them? What impact will the decommissioning work on older power stations have on the availability of adjacent land for new power stations?

On reactor technology, traditionally, we have seen two frontrunners in the UK: the Westinghouse AP1000, and Areva NP’s European pressurised water reactor, which is being built in Finland and is due to open in 2009. However, that is the only example in the world of either of those technologies being put to commercial use, so any new build in the UK will be using largely untested technology. That poses risks for the pre-licensing process. However, Atomic Energy of Canada Ltd is making a strong case for its advanced CANDU reactor to be licensed for use in the UK, and its experience and track record make it a strong candidate for being added to the list.

There are also questions about the supply chain.

Michael Connarty: Two things confuse me about this. First, on whether AP1000 has been built, I understand that a series already ordered by China is in the process of being built, as is the reactor from Areva. By the time the UK comes to order such technology, it will have been tried and tested elsewhere. The worry would be if the UK tried to engineer the technology to a higher specification and got it wrong.

Secondly, on the Canadian CANDU reactor, I understand that the proposal is to initiate the new build of another technology beyond that used at present. I believe that there is an order from somewhere within Canada. It looks as though all three will be competing here with technology that will be new but which will have been built elsewhere and tried and tested.

Peter Luff: Atomic Energy of Canada Ltd has extensive experience of reactor technology, and many of its reactors are working around the world using similar technologies. I agree that all those technologies have important new elements and I think that we need to put Atomic Energy of Canada Ltd into the frame as a potential supplier, in addition to the two technologies that are currently being talked about.

Mr. David Drew (Stroud) (Lab/Co-op): The hon. Gentleman did not mention the role of Westinghouse. Some of us are still spitting feathers over what I, for one, felt was a hurried decision to dispose of Westinghouse, the British answer to new reactor design. There was no debate; we certainly had no debate in this place. Did he look at the implications of that, given that it came at roughly the same time as he was doing his investigation, or at some of the implications of not having our own answer?

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Peter Luff: To my immediate recollection, we did not receive any evidence on that subject during our inquiry and therefore did not consider it, but I have considerable sympathy for the hon. Gentleman’s concerns. I am sure that the Minister has heard them and will wish to respond to them in his reply.

I will not talk at length about the supply chain, in which there are concerns about constraints on certain key components, such as large forgings of the sort needed in reactors, but I will talk briefly about skills and uranium supplies.

Mr. Ellwood: My hon. Friend has been very generous in allowing people to contribute while he delivers his main speech. The report suggests that two main nuclear reactor designs seem to have grasped the attention of the Committee. I am pleased that the Chairman has gone further than that in saying that they are not only looking at the AP1000 and the EPR Areva models, but the CANDU model, which some of us visited around a year and a half ago. It was impressive in that that reactor can now be built in four years. Has he considered what is happening in South Africa with pebble bed reactors, which do not require to be built by the sea, because they are not cooled by sea water? They are far smaller and normally built in blocks of four. They can be placed anywhere and are ideal for places such as South Africa, but could have a role to play in the United Kingdom.

Peter Luff: I am indeed aware of that technology. Once again, sadly, to the best of my recollection, the Committee received no evidence on that. Committees are driven by the evidence that they receive rather than what they may intuitively know or think. Such reactors are attractive in many ways, because, apart from anything else, it is easy to connect smaller power stations to the grid than the bigger stations with higher outputs that we are talking about in relation to these other technologies. Such reactors have considerable advantages and I would like to know more about that technology.

On skills, the nuclear work force are ageing and many will be used to cope with decommissioning issues. However, it seems that more graduates are being drawn to the sector, so I think that we can be more optimistic.

I mentioned uranium supplies. We would be entirely dependent on imported uranium; we will not have any domestic sources of fuel for economic and other reasons. The Committee was optimistic that the increased market price of uranium would lead to increased exploration and an adequate supply.

On grid capacity, the UK has a centralised grid. It is the view of the Committee that, irrespective of what new technologies fill the generating gap, we need to renew the grid. That is also subject to the planning constraints that affect nuclear build. However, grid renewal is an important issue irrespective of whether we build new nuclear power stations.

I have spoken for longer than I intended, for which I apologise. In conclusion, there are two questions that we did not ask in this report, but on which political judgment is needed before a decision is made to proceed with any new nuclear reactors. First, do we need to replace large-scale generating capacity with other large-scale generating capacity, or can energy
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efficiency and local energy close the gap? Secondly, if we do need to replace the coal and nuclear power stations that will be closing in the relatively near future, do we need nuclear energy to play a part in that replacement programme?

My personal conclusions are based squarely on my understanding of declared Government policy—which I support—that no special favours or subsidies should be given to nuclear new build; it will be left entirely to the market. I agree with that approach, as do potential declared investors in new nuclear capacity. My view is simple, and here it is based upon another unanimous Committee report into local energy. The report concluded that we need new large-scale generating capacity. Energy efficiency and local energy cannot keep the lights on.

I believe that diversity in energy supply is good. Clean coal, gas, renewables, nuclear, local energy and, crucially, energy efficiency, all have their part to play. However—rightly—all the Government intend to do is to create the conditions to make sure that the technologies can compete fairly and then leave the market to decide—within the targets set by the European Union for renewable energy, of course.

Happily, most of the issues that will determine the viability of new nuclear build need to be addressed anyhow, and urgently, for the wider energy sector. They range from gas storage to grid renewal and wind farm developments. Two key matters that must be resolved are the planning regime and the price of carbon. Some issues, especially waste disposal and licensing, also need urgent decisions and are specific to the nuclear industry. However, waste disposal issues must be resolved to deal with the large historic legacy of nuclear waste in the constituency of the hon. Gentleman the Member for Copeland (Mr. Reed).

I have concluded that it is likely that some new nuclear capacity will be built if the Government choose the correct technology-neutral policy framework. However, there is still a big “but”: how much capacity will be built? The Prime Minister has hinted that he wants to replace current nuclear capacity, but his Government have no means of delivering that objective. They can only facilitate it, sit back and see what happens.

Given the substantial fall in wholesale gas prices and the increasing interest in carbon capture and storage, is the electricity generating industry showing the same interest in new nuclear build as it did a year ago, when gas prices were high and carbon capture looked further off? Is there any sign that City interest in financing such expensive, long payback projects is waning? In other words, will new stations actually be built, even if, in their second consultation, the Government finally conclude that replacing nuclear power stations is desirable?

The cost of capital is the largest component of the cost of nuclear power, and the one thing that puts up the cost of capital is political uncertainty. Companies such as EDF are very interested in building new nuclear power stations in the UK, but the issues that we are debating will have to be settled—and fairly quickly—if that new build is to happen.

As I said on the Floor of the House yesterday, the nuclear industry has an obsessively secret past. What we now need—to be fair, we are getting it—is the
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maximum possible openness. I am clear that, in such an open environment, the public can be shown that we have nothing to fear from new nuclear power, but I am far from clear that we will actually see substantial new nuclear build.

Several hon. Members rose—

Frank Cook (in the Chair): I am waiting for Members to catch my eye, and I have here a number of letters from those who wish to do so, but it appears that some would prefer to stay in their seat.

3.1 pm

Mr. Jamie Reed (Copeland) (Lab): Thank you, Mr. Cook—I was momentarily elsewhere.

I welcome this debate, which is long overdue. The Select Committee’s report and the Government response illustrate an impressive and encouraging degree of unanimity on some of the key issues facing the industry and new nuclear build.

I agree with what the hon. Member for Mid-Worcestershire (Peter Luff) said about the Minister, who was indeed an excellent Energy Minister. I have had many in-depth conversations with him about the essential need for new nuclear generation and renewable generation in this country.

I shall be brief, but I must declare an interest at the outset—or perhaps I should say 17,000 interests, because that is the number of jobs that the industry sustains in west Cumbria. It is a matter of fact that I, like many other Members here today, am an enthusiastic advocate of the industry. Indeed, there are currently five or six freedom of information requests against me about my links with the industry.

Mr. Drew: Ours as well.

Mr. Reed: Well, there we go. I think that my interests have been declared and are well and truly understood.

The report discusses nuclear skills, and the Government have done an awful lot on the issue in the past 18 months or so. The headquarters of the national nuclear skills academy will shortly be based in the constituency of my hon. Friend the Member for Workington (Tony Cunningham), and that £30 million-plus project will be fundamental to this country’s nuclear skills portfolio and ability to fulfil its nuclear ambitions, as I believe that it must and eventually will.

The hon. Member for Mid-Worcestershire also mentioned uranium prices—for time reasons, he did so only fleetingly—which have increased by 70 per cent. over the past 12 months. The reprocessing of spent nuclear fuel is therefore a live reality—I would, of course, say that, being a former Sellafield employee and having Sellafield in my constituency. This country is good at reprocessing and should continue doing it. There is an undeniable market need for reprocessing internationally, and it is matter of fact that China, Japan and other countries are looking to the British industry to fulfil their huge market requirements.

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There are four key issues in the report, which the Chairman of the Committee mentioned. Paragraph 5 of the report states:

The first of those—I do not want to play party politics with an issue of this importance, but it is a relevant issue—is:

How can that be so—how can it be a qualifying factor in a nuclear policy—given that the Liberal Democrats are opposed to nuclear energy and the current net effect of the Opposition’s policy would be no nuclear at all? Nuclear as a last resort means no nuclear ever. If we do not take the decisions now for the nuclear industry, our skills base will wither. That was exactly the argument used by Opposition Members in the Trident debate: if we did not take the decision, the skills would be lost, and we should have to outsource our manufacturing requirements and seek the products overseas. The same is true for the nuclear industry. The Conservative party’s policy has to change.

Michael Connarty: My hon. Friend may know that I completely disagree with him if he is one of those who voted to renew weapons of mass destruction. On the question of the skills base and legacy and the policies of other parties, I am secretary of the all-party group on nuclear energy and have been studying the problem of energy, after many years of being opposed to nuclear energy. My hon. Friend will know that an election is now going on in Scotland. Liberal party policy is that no more energy should be produced in Scotland other than by renewable means. Yet nuclear now supplies 38.5 per cent. of the base load electricity for Scotland. The Scottish National party would appear completely to have disregarded the report, though its leader is a Member of this House. What chance does my hon. Friend think there is of consensus when people stand for election to a devolved Assembly entirely on the basis that whatever happens to the lights—which, I am told, would be switched off in Scotland within 10 to 15 years without nuclear energy—as they are opposed on an ideological but not logical basis to renewable nuclear energy?

Mr. Reed: My hon. Friend touches on an incredibly important point. First, good luck with keeping the lights on in Scotland, if our party should lose control there after the elections. The issue is real and pressing. How do we achieve consensus? I do not know. For too long the nuclear debate and the need for new nuclear has been characterised by wilful misinformation from certain ideologues and people who want an end to the industry per se, irresponsible and destructive as that would be. My hon. Friend’s point supports the one that I want to make. Is the criterion in the report a satisfactory or credible one on which the Government should proceed with a new nuclear policy, given the difficulty in establishing such a consensus? I do not think so.

Secondly, the report specifies:

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Peter Luff: The point about consensus is not a theoretical political point, but a practical, economic one. Without the confidence in the industry that decisions that it is asked to take in the next couple of years will be supported for the next 30 or 40, it will not be able to make the investments. That is a hugely important point, which transcends party politics, and I hope that leaders of all parties, including the SNP, will take it fully on board.

Mr. Reed: I agree with the hon. Gentleman’s point. In a way I think that he supports my point. We need to give the market the comfort and security to invest. That is why, with regret, I made the point that I did about his party’s official policy. I do not think, if I may embarrass him, that it in any way reflects his view.

Peter Luff: In fact, my view is that my party’s policy, because it is more robust on carbon pricing than the Government’s current position, is more likely to deliver nuclear power than the Government’s currently declared policy. However, I suspect that the Government will move.

Mr. Reed: I sincerely hope that the Conservative party will move on that, so that we can give the industry comfort that energy policy is above the vagaries of party politics and it can have the confidence to move forward. I would appreciate being able to sit down with the hon. Gentleman in future to discuss those issues. A cross-party approach is absolutely necessary. We should jettison the vanities of party politics on issues of this importance.

The third element is:

Key progress is being made. The CoRWM recommendations will be of pivotal importance in years to come. Finally, I absolutely and wholeheartedly agree on the fourth element:

However, the report does not touch on a number of issues, and I should like to go into them now, if that is permitted within this debate. I seek your guidance, Mr. Cook. They are entirely germane to the subject.

Frank Cook (in the Chair): If the hon. Gentleman is seeking guidance, my advice is that as long as the new material is relevant, that is most acceptable.

Mr. Reed: Thank you, Mr. Cook. I think that you will find that it is.

Frank Cook (in the Chair): I will soon let you know if it is not.

Mr. Reed: I have no doubt about that whatsoever.

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