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In a press release that accompanied the Government’s competition on CCS, we were informed that the winner would be chosen by the end of June 2009. However, it is clear from the small print that the Government have already pretty well picked the winner by supporting one small post-combustion project rather than opening the competition to all the other CCS technologies. At the time, the Secretary of State noted that post-combustion was the most relevant technology, considering that, as he may well have seen
for himself in the past week, China opens an average of one coal-fired plant every four days. However, that misses the point: a number of companies, including Centrica and Scottish and Southern Energy, have proposals for more advanced—and arguably, cleaner—pre-combustion CCS projects, which have now been put in jeopardy.
With so much of our current capacity due to be decommissioned, the UK should not be confined within the mindset of only retrofitting. China, India and other heavy coal addicts will look for retrofit CCS, but the real future and potential for CCS is in making it integral to the original power plant design. We must ensure that we can also use the technology at home to minimise the carbon impact of any new fossil fuel capacity planned for the future. Given that tomorrow the European Union will publish its proposals for expanding CCS technology in Europe, we have concerns that the Bill merely sets out a framework for its own CCS competition rather than attempting to stimulate wider investment across the market.
Moreover, it is not clear whether the Bill establishes provision for liabilities. The permanence and safety of the CO2 stored in geological reservoirs need to be independently monitored and verified by a competent third party to check for leakage. We have anxieties that such safeguards are not in the Bill. Like many of the Government’s proposals, the Bill leaves a lot to secondary legislation.
CCS is all well and good, but it is not a limitless solution—it is only as good as the capacity of the hole in the ground to take the CO2. We must turn to the renewables industry to find a safe, clean and reliable energy source.
Alan Simpson: Does the hon. Gentleman accept that concerns are being expressed about the nature of the competition to see who will have monopoly ownership of the rights to put carbon dioxide in the ground? At this stage, the competition would include only those companies that have previously enjoyed monopoly ownership of the oil beneath the ground. British universities are working on carbon reclamation. Does the hon. Gentleman believe that it would be appropriate for the competition to consider all possible uses of carbon dioxide, including the prospect of separation so that oxygen and carbon were released to be reused?
Alan Duncan: That is an interesting comment. I am not so concerned by the ownership of the CCS technology as by the scope that the Government are giving for all such possible technologies to flourish. It is natural that a company that extracts oil and gas happens to own the porous rock into which the CO2 can then be put. I am worried that the Government have narrowed the options for CCS when they should have been widened to the maximum.
As the hon. Member for Nottingham, South (Alan Simpson) realised, I was turning to renewables. Let me first welcome the feasibility study on the Severn barrage, which we have been calling for. We might as well know the facts, know them properly and have a serious study of what the options are, given that the Severn barrage is potentially such an enormous contributor to our generated electricity. The issue of renewables is covered in part 2. Our understanding is that the Bill aims to improve the
effectiveness of the renewables obligation by banding the technologies depending on the level of investment that each technology requires. At the moment, the RO requires electricity suppliers to source a specific and annually increasing percentage of the electricity that they supply from renewable sources. Generators can claim one renewables obligation certificate for every 1 MW per hour of renewable electricity generated. Suppliers present their certificates, pay into the central fund, or both.
The scheme has had some success—since it was introduced, there has been a definite upsurge in renewables development—but it also has some serious flaws. Over 50 per cent. of renewables electricity sourced under the RO has been from biofuels, while almost 30 per cent. has been from onshore wind. The RO would have had a much greater impact on UK renewables capacity if it did better in supporting technologies for which a great deal of public resistance did not exist and for systems with fewer perverse outcomes. We welcome the Government’s introduction of banding technologies, which we hope will remove that undue bias. We also acknowledge, given the recent report on biofuels by the Environmental Audit Committee, that the Bill appears to include proposals to ensure that the Government will keep a close eye on biomass operators to ensure that their activities are sustainable.
However, there is a central problem with this part of the Bill. Tomorrow’s announcement from Brussels is expected to set a renewables target for the UK of at least 15 per cent. by 2020. As we heard earlier, the current approach will not get us there. We will certainly not reach 15 per cent. even with the Government’s shiny new Bill. The whole country is looking for a step change, and on that step the Government have stumbled. We have consistently spoken in favour of feed-in tariffs—“familiar arguments”, the Secretary of State said when we last met him at the Dispatch Box and basically repeated today. It is familiar because we think that it is the right policy and that now is the right time to implement it. It was particularly promoted by the Prime Minister’s own climate change policy guru, Sir Nicholas Stern, in his report published in 2006, which stated:
“Comparisons between deployment support through tradable quotas and feed-in tariff price support suggest that feed-in mechanisms achieve larger deployment at lower costs.”
The economics of feed-in tariffs is proven; the ethics of feed-in tariffs is certain. We must begin to make that move towards decentralised energy and microgeneration, not only to help to address our energy challenges but to stoke people’s imaginations and to increase their awareness of energy consumption and generation. The current policy is not ambitious enough. The renewables obligation excludes microgeneration technologies and, crucially, excludes heat; it also excludes any reward of energy efficiency in the home. Feed-in tariffs provide a potent response to those challenges, so we will fight for their inclusion in the final version of the Bill.
On 10 January, we heard the Secretary of State’s statement to the House on nuclear power, which formally gave the Government’s approval for a third generation of reactors to be built in the UK. We welcomed that, but with the provisions that there should be absolutely no subsidies for the nuclear industry and that there must be a clear statement from the Government on radioactive waste. Responding to our concerns, the
Secretary of State said that he thought the policy was clear—that energy companies must set aside funds to cover the full costs of decommissioning and their full share of waste management and disposal costs. He added that the economic modelling of new build had proceeded on a “prudent, conservative basis”.
I have looked through the Bill, the explanatory notes and the new White Paper, and I am disappointed to observe that there is still no clear statement on waste disposal. Such an approach is irresponsible. It risks jeopardising future investment and, just as importantly, it risks jeopardising public confidence.
Mr. Gregory Campbell (East Londonderry) (DUP): The hon. Gentleman alludes to waste disposal. Many hon. Members and the population as a whole are looking at the wider issue, but also at the crucial matter of waste disposal. Is not that the matter that needs the most attention from the Government? It needs to be resolved in order to allow us all to come to a conclusion about the Energy Bill.
Alan Duncan: I say “Hear, hear” to that. We are doing our best to help to facilitate investment in nuclear, but I am afraid it is becoming clear that we cannot yet trust the Government to resolve the problem of waste disposal.
We all understand the distinction between legacy waste and new waste. There is a process to manage the former, overseen by the Nuclear Decommissioning Authority, but what concerns us is the Government’s approach to the latter. In late 2006, the Government decided to re-establish the Committee on Radioactive Waste Management, commonly known as CoRWM, with new terms of reference, as a permanent independent body to provide advice and scrutiny on the Government’s Managing Radioactive Waste Safely programme. The first meeting of this new body took place on 28 to 29 November last year. That is very strange because, as the House of Lords Science and Technology Committee points out, DEFRA’s MRWS consultation, called “A Framework for implementing Geological Disposal”, closed for submissions on 2 November 2007. How can the consultation on managing radioactive waste close before the Committee in charge of scrutinising the management of radioactive waste has even had a single meeting? Moreover, the Government are committed to respond to the consultation in a White Paper, which we have been promised this year. That makes me wonder why we are debating a Bill that claims to
“make provision about the management and disposal of waste”
when the Government are planning future legislation to deal with the disposal of waste.
It is our understanding that the Bill demands that each energy company wishing to invest in nuclear power will have to submit a funded decommissioning programme to the Secretary of State for approval, laying out how hazardous material will be treated, sorted, transported and disposed of, crucially,
“during the operation of a nuclear installation”.
That clause oddly appears to neglect to provide a strategy for waste after the plant is operational. The White Paper makes it clear that the Government intend to
consult on what guidance such funded decommissioning programmes should contain. Again, the terms of the Bill are completely dependent on future consultations and actions. Moreover, given that the Government have still made little or no progress on establishing a lasting waste regime, it seems extraordinary to demand a thorough financial assessment from industry when a giant radioactive question mark continues to loom over the back-end costs. How can the Government invite companies to invest in nuclear power stations without giving them such certainty?
Mr. Jack: I concur with my hon. Friend’s observations about the lengthy process through which the Government have gone to determine a long-term solution to the question of nuclear waste storage, but does he agree that in new generation nuclear power stations it is feasible for waste materials to be dry-stored on site for a reasonable length of time while long-term problems are ultimately resolved?
Alan Duncan: My right hon. Friend is absolutely right to say that it is feasible, but if nuclear power companies are to guarantee knowingly that they will cover all the costs up front, they will not know what the costs of long-term disposal will be. My right hon. Friend is suggesting that that interim position is somehow okay for investment decisions, but the full picture needs to be known if investment decisions are to be made honestly. My concern is that all the documentation contains hidden suggestions that the interim status that my right hon. Friend identifies could last as long as 50 or 60 years. I do not believe that it is right to pass on to not only the next generation but perhaps the second or third generation responsibility for taking the ultimate decision. We are knowingly foisting that on them in the decisions that we make today.
Martin Horwood: I am confused by the hon. Gentleman’s position. He rightly argues that there are enormous problems with disposing of nuclear waste and that disposal of the previous generation has not yet been resolved. However, is it the Conservative party’s position that, if the economics can be made to work, it is prepared to support nuclear power? If so, where will it put the waste?
Alan Duncan: If the economics is totally known, the answer is yes. In that sense, our policy is similar to the Government’s: all the economics should be known; all the building blocks should be in place; and, within that regime, companies are entitled to build new nuclear power stations.
Alan Duncan: Let us have a free-for-all. The hon. Member for Copeland (Mr. Reed) has a special interest in the matter, so I shall instinctively go from right to left in taking hon. Members’ interventions.
Mr. Jamie Reed (Copeland) (Lab): Surely the right hon. Member for Fylde (Mr. Jack) is right. The costs of interim storage and disposal of radioactive waste are well understood by the sector, the Government and those who wish to invest in a new generation of nuclear power stations.
Alan Duncan: I take it for the moment that the hon. Gentleman agrees with me, but I did not quite understand his intervention. [Interruption.] The answer is yes.
John Robertson: I, too, have some reservations about what we do with waste. It is important to specify where it will be put, but that does not get away from the problem of energy security in future. Does the hon. Gentleman agree that we should perhaps take the reprocessing route and introduce MOX power stations, whereby we can get rid of 90 per cent. of the waste and spread it through the system? Reprocessing would tackle many of the problems that he envisages with the long life of high-level waste.
Alan Duncan: It is a bit like Question Time—it could be good practice.
To reply to the hon. Member for Glasgow, North-West (John Robertson), the option that he outlines exists, among others. Given that we are on the cusp of a scientific revolution in all options—fossil fuels, renewables and nuclear—nothing should be ruled out.
Mr. Chaytor: The country would be further ahead with waste disposal if the previous Conservative Government had not pulled the plug on their plan on the day that the 1997 general election was declared. However, is not the real question whether the generators, in paying their full share, pay the appropriate share of the capital cost of the repository, not only the cost related to building an extension to a repository to house their waste? What is the Conservative party’s view on that?
Alan Duncan: There is bound to be deliberate and wilful confusion between repositories that house old and new waste. The division of economics between those categories is important. However, I can fairly put that question to the Secretary of State and say that we are seeking exactly that sort of clarity on the economics of waste. When we get it, he can honestly and fairly say that investing companies have all the facts that they need to make a total, honest and complete assessment of their costs and the subsequent investment decision.
Dr. Alan Whitehead (Southampton, Test) (Lab): The hon. Gentleman has made the case that, without much greater certainty about the disposal of nuclear waste, it would be invidious to encourage nuclear generators to go ahead with building a new generation of nuclear power stations. Does he accept that a decision to replace any nuclear power stations that are going out of commission by 2025 has to be made by 2010 at the latest? Does he therefore rule out new nuclear power stations for the next 20 years or so or until his policies on waste are implemented? If so, does he suggest that the next generation of power replacement should be wholly renewable?
Alan Duncan: The irresponsibility—if that is what it is—does not lie with me, in being asked whether I rule something out; it lies with the Government, who are in office, in not taking a decision that should be taken now and that would give the complete picture now, rather than dumping the problem on future generations.
Mr. Hutton: I am intervening reluctantly, but my hon. Friend the Member for Southampton, Test (Dr. Whitehead) has asked exactly the right question, which the hon. Gentleman must be able to answer today; otherwise, I am afraid that his pro-nuclear policy will be open to substantial criticism. Is the hon. Gentleman saying that he would not approve a new nuclear power station until or unless a geological repository was established and open? He must answer that question today, because if he does not, the nuclear industry will understand that he is changing his position.
Alan Duncan: I am calling on the Secretary of State to honour his stated policy, which is to ensure that investment decisions can be taken without subsidy, with honest economics and with the factors being known. Quietly and by stealth, the Secretary of State is banishing one of those ingredients from his calculations, in the hope that nobody will notice. It is for him to come clean about what the total picture for a nuclear regime would be.
Sir Robert Smith: When the Secretary of State talked about having a fixed price for disposal in his opening speech, did he not say, in effect, that the public sector would be taking on a risk from the private sector? The very fact that the public sector is offering a fixed price to the investors means that there is a transfer of risk from the investor to the public sector.
Alan Duncan: Our policy calls for honesty and certainty. What we have learned today is that a massive air of mystery surrounds the regime that will govern nuclear waste. All generations over the past 40 years have had concerns about the nuclear industry not being able to handle waste. Of course, the situation in the ’40s was different from the situation today. However, now that we know and understand more, and are potentially on the edge of embarking on new investment for a new generation of nuclear power stations, we need to know the whole truth and nothing but the truth. That is our policy, and it is purportedly the Government’s policy, too.
Peter Luff (Mid-Worcestershire) (Con) rose—
Alan Duncan: I shall give way to the Chairman of the Select Committee on Business, Enterprise and Regulatory Reform first.
Peter Luff: I shall try to re-establish the consensus that I thought was ruling in the Chamber, but which both sides appear to be wobbling over at the moment. The Government’s White Paper is reasonably clear, actually. It talks about the energy companies being prepared to pay a substantial risk premium, over and above any realistic estimate of the cost of disposal. That is good, but there is one worrying sentence in the White Paper:
“These costs will include a proportion of the fixed costs of building a geological disposal facility.”
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