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19 Apr 2007 : Column 186WH—continued
David Howarth: No, the problem would be that the nuclear stations could not be turned off and that is why the grid would fail. [Interruption.] It is dangerous, risky and expensive to turn nuclear power stations on and off. That is one of the difficulties of nuclear power. [Interruption.] I move on to other aspects of costing, because the oddity of costing nuclear power extends to the energy review. We have delved into the costing offered for nuclear in the energy review and we found some odd things indeed.
First, one of the things that is known about nuclear power is that there are risks involved in the construction stage, not only political ones, but the inherent risk of the very long construction stage. As a result, experience from around the world shows that the relevant financing costs are about 3 per cent. higher than energy industry averages, yet the energy review’s figure for financing the build stage of nuclear power is exactly the same as the percentage cited for all other technologies. That is simply a false assumption. Nuclear new build will involve a much higher level of risk—a 50 per cent. higher level of risk—than that borne by other sorts of projects.
We noted another odd thing. I suspect that this is for accounting nerds only, but it is important. The DTI’s energy review is not using standard techniques for calculating the weighted average cost of capital for nuclear projects. Instead, it is using a weird mixed technique that discounts only some of the costs and therefore gives a big advantage to long-term projects. In other words, it is favourable to nuclear power.
Were standard investment appraisal techniques to be used and the right cost of capital inserted, nuclear energy would be shown to be vastly more expensive than the Government claim. We could include a carbon cost of about £20 a tonne and assume that nuclear energy has virtually no carbon cost—I am willing to accept that for the sake of argument. In even those circumstances, nuclear power would come out as being more expensive than onshore and offshore wind power—without any subsidy—and more expensive than tidal stream technology and carbon capture and storage. The only thing that it would be cheaper than is coal.
Even without including all the figures for the hidden subsidies and without taking into account the arguments about nuclear power crowding out investment in renewables, the arguments about it undermining efforts at energy saving—that seems to have happened in Finland—and the arguments about locking in the grid system to a centralised system that would impact on the ability of the system to accommodate decentralised energy, nuclear power is not a good bet over the time scales that we are talking about.
Michael Connarty: I am sorry to keep coming back at the hon. Gentleman, but I must point out that the PB Power report of 2005 “Powering the nation”, to which the Select Committee referred, makes it clear what the costs are. The relevant cost of nuclear energy is 2.8p per kWh. The only sources that are cheaper are without carbon capture: gas and coal with none of the carbon capture. Even gas with carbon capture is more expensive per kilowatt-hour. This is a substantive report by an institute that everyone in the industry respects. I hope that the hon. Gentleman’s party also respects it.
David Howarth: Of course, those estimates are changing over time as new cost estimates are coming through. I am talking about what is in the energy review, which I think is biased in favour of nuclear energy in a serious way.
Mr. Quentin Davies: Will the hon. Gentleman give way?
David Howarth: I will not, because I need to finish my speech to allow the Minister and the spokesman for the official Opposition time to speak.
I just want to make a final point, which arises out of several comments that have been made. The nuclear industry needs to be open. A number of hon. Members have said that it has had a terrible record. The Chairman of the Committee made a very eloquent statement yesterday in the House when he commented on the statement. The industry has a terrible record of secrecy, which undermines confidence. Many other people have also said that. Bill Nuttall, the academic, says exactly the same thing in his works on nuclear renaissance. That is the message of the CoRWM report and Professor Gordon MacKerron.
However, there is a fundamental problem with that argument. That is, that nuclear power, because of its inherent technical links with nuclear weapons and weapons technology, can never be purely private. It will always have a security element. It is interesting, for example, that the person who was recently appointed to head the civil nuclear constabulary is not a career police officer; he is a career intelligence officer from the Secret Intelligence Service. There will always be a link and, because of that link, the industry can never be wholly open. That applies both to techniques and to materials. I agree that the industry would do itself a lot of good by being as open as possible. However, I think that it is an impossible dream that the industry could be as open as other industries.
5.1 pm
Charles Hendry (Wealden) (Con): May I begin by drawing the attention of the House to my entry in the Register of Members’ Interests, which shows that, last year, I went on a trip sponsored by E.ON to look at nuclear waste disposal in Sweden and a nuclear power plant in Finland? In case people fear that my soul has been bought, it is listed alongside the entry for a trip to look at onshore and offshore wind farms and oil and gas facilities.
I congratulate my hon. Friend the Member for Mid-Worcestershire (Peter Luff) on the way in which he has introduced this debate and the extremely robust report that his Committee has produced. The way in which he drives these things forward and his energy and commitment are evident throughout, not only in his speech, but in the thoughtful report that has been produced by his Committee.
We have had some extremely good contributions in this debate. A lot of knowledge and constituency interest have been brought to bear. I will pick up on a couple of those points. My hon. Friend the Member for Grantham and Stamford (Mr. Davies) is quite right to say that decisions need to be made soon. This is not an issue where we have the luxury of time on our side and where we can put off decisions until a future date. We need to make progress quickly.
I also pick up on the point that the hon. Member for Stroud (Mr. Drew) makes, namely, that we need a strategy for waste disposal. Regardless of whether we have a new generation of nuclear power stations, it is to our shame as a nation that we have not addressed that issue more substantially and earlier.
I listened with interest to the personal journey of the hon. Member for Linlithgow and East Falkirk (Michael Connarty) from old Labour leftie perhaps to Blairite, modern, new Labour luvvie, in a way that would bring joy to the hearts of the Labour Whips Office. However, I would not encourage him to take a swim in the tank in which the radioactive waste is stored. I understand that the water contains the radioactive waste and radioactive particles, and if he gets in it, he will be in very serious trouble indeed. That may also bring joy to the Labour Whips Office, but I would discourage him from doing so.
My hon. Friend the Member for Bournemouth, East (Mr. Ellwood) made an interesting reference to fusion. Fusion has been 20 years away for the past 50 years. One day, we will get there. However, that makes the point that we are making decisions that will stand for relatively few years and, in time, some new source of energy, which as yet is perhaps not even thought of, may come through and address these issues.
The hon. Member for Cambridge (David Howarth) talked rather idealistically. He talked initially as though carbon capture and storage were a certainty, and under pressure from the hon. Member for Linlithgow and East Falkirk, he said that it was quite possible that carbon capture and storage could outbid nuclear energy quite soon. I felt that that was quite a qualified comment in the circumstances.
The challenge of this debate is that we are expected to make the decisions now, when the technology for many aspects of energy and electricity generation is not yet clear. We do not know what their potential will be.
I agree with a great deal of what is said in the report; indeed, I agree with it overwhelmingly. The report is right to say that there should have been a more detailed assessment of future generating capacity before the energy review was published last year. I think it likely that the nuclear installations inspectorate will give life extensions to many of the power plants involved, but the Committee was being over-optimistic in saying that there was not a serious energy gap, because we do not know the role that coal can play. If carbon capture and storage can be made to be economically feasible, coal has a very bright future. However, without that feasibility, we would have a very serious energy gap opening up.
I absolutely agree with the report as well that the Government should be technology-neutral in these matters. The Government should be setting a framework in which business decides how to invest. That is why we have recommended that there should be a system of cap and trade. Under such a system, the Government would say that, over a period of years—many years, 40 or 50 years ahead—if carbon is going to be produced in the course of generating electricity, a certificate should be required to do so and the number of certificates would decline year on year. Therefore, people could invest with great confidence
and great knowledge of exactly what the price of carbon was going to be 20 or 30 years ahead. However, the Government absolutely should not be picking winners. They cannot build a dome, or a football stadium. What on earth makes anybody believe that they could decide on the right balance for our energy policy?
The report is also right in saying that the public are more supportive of nuclear power when it is linked with a greater commitment to renewables. A YouGov poll said that 56 per cent. of the population backed nuclear power in conjunction with a greater commitment to renewables. I am sure that that is true, but I query a little the statement that my hon. Friend the Member for Mid-Worcestershire made about the need for a national consensus. That consensus is certainly desirable, but it is noteworthy that in Finland the public support followed the political decision and the decision of the Government. It is the case that, once that decision was made, the public have been moving more in favour of the nuclear debate.
There is no doubt, however, that the Government are in something of a mess over the issue. There is no doubt that they should have consulted more on the nuclear aspect of this debate. As Mr. Justice Sullivan said in summing up the Government’s consultation proposals, it contained information that
“was wholly insufficient for them”—
“to make an intelligent response.”
I think that Greenpeace is largely right in saying that any consultation process requires clarity in identifying the problem; integration, to ensure that it ties in with wider energy policy and climate change debate issues; independence, in that it should be carried out by professional experts; a layered approach, so that the technical discussions should run alongside public engagement; and feedback, which shows how the consultation will affect the outcome of the Government’s policy.
Mr. Drew: Will the hon. Gentleman give way?
Charles Hendry: I will not give way, because I want to give the Minister time to respond. I hope the hon. Gentleman will understand that.
I agree with the Chairman of the Select Committee when he says that there are inherent complications if the Government decide to launch the nuclear consultation document at the same time as the White Paper, because that would require assumptions to be made that cannot necessarily be delivered.
Our preference is clearly for as much energy as possible to be generated through renewables. I believe that we are on the brink of a revolution, in terms of what is going to be possible. Indeed, every week we are seeing new ideas being developed. This is an extraordinarily exciting time for energy. However, we do not have a philosophical objection to nuclear power. The Opposition view is quite simple. We have said that we would prefer to see other sources of energy being developed, but we accept that, if nuclear power must be used to keep the lights on, then it has a role to play. More than that, we accept that, if people wish to invest in nuclear power, without subsidy and taking account
of the full long-term decommissioning costs, then, as the Chairman of the Select Committee has said, it is not the role of the Government to stop that sort of investment.
Therefore, there should not be a subsidy, and potential investors must take account of the cost of disposal of the waste. We are quite to happy to see that investment made, as in Finland, on the basis of pre-sale agreements, where customers are found in advance and therefore it is known exactly who will buy the electricity that is produced. We take what is an entirely realistic view on the subject, but we need to see who will come forward on that basis. E.ON, EDF and Atomic Energy of Canada Ltd have all told us that they will do so. However, the challenge for the Government is what happens if such companies do not come forward. As my hon. Friend the Member for Grantham and Stamford said, there is a significant chance that, when they look at the economics, they may decide simply not to take forward that investment. That would leave a gaping hole in the Government’s energy policy, one that we would avoid by saying that we take a much more neutral approach towards these issues.
If the nuclear policy is to move forward, the industry itself must do more to try to win this debate. Yesterday, a statement in the House highlighted the secrecy that has traditionally gone with the nuclear industry. It will only win hearts and minds by much greater openness than has been the case so far.
I have visited Sizewell B and know that the issue of safety there is paramount, but too many people do not believe that science has moved on since Chernobyl. They accept that there have been advances with their television and their car, with aviation and every aspect of science—everything, apart from the nuclear industry. The industry has to get out there more and persuade people that the world has changed. We must learn from overseas and look at how the debate was changed in Finland, for example, if this is to be the course that we take in this country. In Finland, two towns were bidding for a nuclear power station, partly because they wanted the business rates that went with it. In Sweden, there are two communities bidding for the nuclear waste site.
Mr. Cook, you will remember that 20 years ago it was suggested that Billingham in your constituency should be a nuclear waste site, but I do not think that 1 per cent. of the population would have backed that. However, in Oskarshamn in southern Sweden 80 per cent. of the population think that nuclear waste should be buried in that district. The nuclear industry there has won that debate, because it has been open and taken thousands of people a year to look at the potential site. It has, in many ways, put our nuclear industry to shame by the way in which it has conducted that debate.
We should also recognise where we as a nation can lead this debate. The work that Nexia Solutions, a former nuclear research body, is doing could lead to its playing a global role in using British technology and expertise. Regardless of whether we go down the route of new nuclear build, it has a significant contribution to make.
We are committed to changing the planning regime. There should be a level playing field. If people are going to come forward to invest in nuclear power,
which is not our preferred option, the planning regime has to be changed. There has to be site and type approval.
We must learn the lessons of the past where we have gone wrong. If we are going to encourage economies of scale, nuclear power stations must be built to the same design on various different occasions, without people saying, “We have chosen one from this design, two from another and one from that one”, which will massively increase the costs of building them. If that is to be a realistic option, we must learn to achieve the economies of scale, as they have done in France.
This has been a useful debate. The Select Committee’s report is excellent. There are three alternatives available to us: the not-at-any-cost approach of the Liberal Democrats, which is to put one’s head in the sand; the Government’s approach, which is that this must be an integral part of our energy policy, without necessarily having the means to deliver it; and the realistic one, which is to say, “Let Government create the framework and let business decide.”
5.13 pm
The Minister for Science and Innovation (Malcolm Wicks): I, too, think that this has been a useful debate. I have immense regard for the Select Committee system. I once chaired one myself. May I congratulate the Select Committee Chairman on the authoritative, lucid way in which he introduced its findings? The vast majority of the conclusions in the Committee’s report reflect the position and proposals that we advanced in the energy review, which hon. Members know set out how the Government plan to meet the two major challenges facing us in the 21st century, namely, climate change and our energy security. We use the word “security” advisedly, rather than simply “supply”.
It is worth reminding ourselves of the scale of those challenges. I have said before that when the history of the 21st century is written, not just for the UK, but globally, those twin issues will loom as importantly as some of the big issues about war and peace and the development of welfare states in the 20th century. Climate change is with us now. I was fortunate recently to visit Antarctica, where I talked to British scientists in the excellent British Antarctic Survey about their work on climate change.
In simple terms, we set out in our energy review that, in the face of those challenges, a low carbon and diverse energy mix is crucial. Those proposals will now be taken forward in our energy White Paper, which will be published next month. The Government responded to the Select Committee report last October. Last year, I gave evidence to the Committee on the energy review, so I do not want to use the time that I have this afternoon to repeat myself. Instead, it will be more useful to update hon. Members on recent developments. I shall also address the key elements that the Select Committee said should be the basis of any new policy decisions on new nuclear.
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