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We have heard from the Conservatives about smart metering. While there is a bit in the Bill about metering, there is practically nothing about smart metering. Given that we will eventually replace every meter in the country, at a cost of billions, we need a framework to
get on with that. However, yet again we have missed the opportunity to use the Bill to do that.
There is nothing in the Bill about decentralised energy and combined heat and power, either. There are many aspects to this. We need a diverse strategy, yet the Bill is trapped in an old way of thinking.
There has been mention of Ofgem and its remit. I cannot put it better than the Sustainable Development Commission, which said:
“We would like to see”—
as would the Liberal Democrats—
“Ofgem’s primary duty changed so that its central focus is on creating a sustainable system that costs as little as possible, rather than making a low cost system as sustainable as possible.”
The opportunity to change the priorities of the regulator has been missed. There can be a forward-looking and diverse energy policy of the sort that I have described, but, regrettably, it is not in the Bill.
5.52 pm
Mr. Michael Meacher (Oldham, West and Royton) (Lab): I want to put forward a rather different case from that made by Government and Opposition Front Benchers. In the last analysis, the Government’s case for nuclear was that it was needed to keep the lights on and to help Britain to meet its climate change commitments. The Government also said that that could be achieved without any public subsidies—that was repeated today—and that the waste problem would be perfectly manageable. Sadly, it is clear from the evidence that all four of those statements are very far from true.
First, nuclear power cannot keep the lights on because reactors take too long to build. The Government’s consultation conceded that even under their accelerated procedures, it would take at least eight years for construction to start. The consultation then assumed a five-year construction period. Optimistically, the earliest time at which a new nuclear power station could operate would be 2020, but that would be too late because, by then, there will be an energy gap in the order of 20 GW, which is the new electricity capacity that will be needed to replace obsolete nuclear and coal plants.
No nuclear station has been built on time or on budget in recent times. The average reactor takes three times as long to build, and costs twice as much, as was planned. My hon. Friend the Member for Morley and Rothwell (Colin Challen) referred to the plant in Finland, which is the only plant to have been built in Europe in a decade. It is already two years late—there has only been two years’ building—and it is something like £1 billion over budget, even with substantial subsidies from the Finnish and French Governments. It is not true that nuclear will keep the lights on when it is needed to address the energy gap between 2017 and 2020.
Secondly, it is false to claim that the only way in which we can slash our carbon emissions while delivering energy security is by building nuclear power stations. Nuclear cannot do that because half our energy demand is for heat, which is mainly gas-based, and the next biggest demand is for transport, which is mainly oil-based. Electricity generation, which is where
nuclear comes in, represents the smallest component of energy demand, and new nuclear would be a small portion of that. At present, nuclear supplies only 3.5 per cent. of our total energy and that figure is falling.
Thirdly, the Government say that there will be no hidden subsidies. Well, I wish that were true, but it is clearly not the case. Paragraph 3.73 of the White Paper indicates that the Government intend to put a cap on the cost of decommissioning for nuclear operators and then to provide a mechanism for the taxpayer to meet the cost. Paragraph 3.52 is the real give-away when it says:
“If the protections we are putting in place through the Energy Bill prove insufficient, in extreme circumstances the Government may be called upon to meet the costs of ensuring the protection of the public and the environment.”
Those circumstances will not be extreme because the costs of decommissioning after 150 years—the time between the start of a new nuclear plant and point at which the waste is finally put in a geological repository—cannot be estimated. Those costs could increase exponentially. The bill for decommissioning and dismantling existing plants is more than £70 billion and, according to the Nuclear Decommissioning Authority, a further £20 billion will be required for the disposal of waste. I remind hon. Members that those figures together are the equivalent of 7 per cent. of our entire gross domestic product.
Even those sums leave out two important liabilities for the public purse, one of which is what happens if a nuclear plant goes bust. That is not a figment of the imagination because let us not forget that when the nuclear holding company British Energy went bankrupt a few years ago, the taxpayer had to pay £5 billion to bail it out. The other liability arises because the Government and the taxpayer will always remain the last-resort insurer in the case of a large nuclear incident. Again, that is not a figment of the imagination, because paragraph 2.66 of the White Paper admits that
“we cannot dismiss the risk”.
In the light of all that, it is frankly disingenuous to suggest that there are no hidden subsidies.
David Taylor: My right hon. Friend is talking about risks and hazards. Does he agree that my right hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr. Ingram) and the hon. Members for Rutland and Melton (Alan Duncan) and for Northavon (Steve Webb) were rather short in listing the hazards? Does he agree with this comment, which was made yesterday by a very well known politician:
“Around the world we are already seeing new interest in nuclear power as a source of energy supply and this increased interest in civil nuclear power also brings with it increased risk of proliferation for military purposes”?
That was said in India by our right hon. Friend the Prime Minister. Does my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher) think that that should be factored into the equation?
Mr. Meacher:
The source is absolutely impeccable. The truth is that one can touch on only a few items in eight minutes. The risks of nuclear proliferation and of cancer and leukaemia clusters around nuclear power stations—of course, that is much disputed—are
present, but I do not have time to deal with them. However, I am grateful to my hon. Friend for raising that point.
Fourthly, the Government made the case in the consultation that the waste problem was manageable, but that is really pushing it. There are already 10,000 tonnes of long-life radioactive toxic waste in this country. According to the Government’s figures, there will be 500,000 tonnes by the end of the century. The Committee on Radioactive Waste Management still has not come up with any solution. In fact, there has been no progress at all since the last Conservative Government finally abandoned the search for a nuclear dump in 1997. Where will the waste go? Let us not forget that that was one of the criticisms in the previous High Court ruling.
The industry makes the case that the quantities of waste will be considerably less this time. I am sure that that is true, but it is not the point. That waste will still be additional to the existing overload and, given the design, it will be more radioactive and hotter, which will make it more difficult to manage. The waste problem has not been solved. Regrettably, there is no movement towards a solution.
Mr. Laurence Robertson (Tewkesbury) (Con): The hon. Member for Morley and Rothwell (Colin Challen) mentioned Finland and said that the waste had not been dealt with but, about four years ago, I went to Finland and stood in the repository. Intermediate-level waste had certainly been dealt with; I stood underground next to it. At the time, a high-level waste underground repository was being built. We should not confuse the lack of possibility with the lack of political will.
Mr. Meacher: Nuclear has been around for 50 or 60 years, so there have been plenty of opportunities to find a satisfactory, affordable and workable solution but as far as I know, no place in the world has succeeded in doing so. The Americans intended to put their waste under Yucca mountain, but they are withdrawing from that proposal. There is great uncertainty and a real problem.
The Government’s case does not stand up to examination for the reasons that I have given, but there is one other consideration that fundamentally alters the energy equation. As has been said, tomorrow the EU will announce mandatory targets for each EU country, so that we can achieve an overall target of 20 per cent. of EU energy coming from renewable sources by 2020. We do not know the UK target but it is widely predicted that it will be 15 per cent. The crucial point is that we are talking about not just electricity generation but fuel for transport and heating. The contribution that renewables make to transport fuel is next to nothing, and their contribution to heating is relatively small, at least at the moment. The implication is surely that the UK will be required to generate 30 to 40 per cent. of its electricity from renewable sources by 2020. That is an eightfold increase. That means delivering on the promise to provide 33 GW from offshore wind power—a promise that I was pleased to hear my right hon. Friend the Secretary of State make recently—as well as kick-starting a range of measures.
There is not one simple panacea. There is a range of technologies, including renewable and decentralised technologies, in which Britain can lead the world; I am thinking particularly of wave and tidal power. Meeting the targets means building power stations that use combined heat and power, and which achieve an efficiency of 90 per cent. plus, as has been done in Scandinavia. It means being able to burn cleaner fuels such as biomass, as well as fossil fuels. It means switching from the renewables obligation certificate system to feed-in tariffs that give fixed prices, not variable support—a point on which I agree with the Opposition spokesman. Such tariffs have proved massively successful in Germany. There must also be an enormous improvement in energy efficiency.
If we do all those things, we will not need any nuclear power stations, but the crucial point is that we have to do those things if we are to meet the mandatory targets. The irony of this debate is that even if the Bill receives its Second Reading tonight, it will have to be subject to major revisions tomorrow, when the—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I call Peter Luff.
6.3 pm
Peter Luff (Mid-Worcestershire) (Con): What is intriguing about the debate so far is how little of it has related directly to the Energy Bill. It has instead been about energy policy. That highlights a problem for the Government. It would have been much better if we had had a proper debate about the energy White Paper published last year. We have not had that debate. One can see that the House is bursting with enthusiasm on this important subject, and rightly so. It is a shame that we have to squeeze a policy debate into a debate on a narrow, technical Bill that is not that interesting or controversial, although the issues on which it touches clearly are.
Next week, I will have the advantage of seeing the Minister for Energy when he comes before the Business, Enterprise and Regulatory Reform Committee to discuss fuel prices and energy security—that is, to discuss keeping the lights on—so I will have the opportunity to go beyond my eight minutes with him then. However, it is a great shame that we are restricted to such a short debate on such a complicated, important subject, and on such a curious Bill.
Fuel poverty is growing as a result of fuel price rises. I am not sure what our response to that should be. It is interesting to explore why prices are rising. The energy gap is bearing down on us. I did not agree with everything—in fact, I agreed with hardly anything—that the right hon. Member for Oldham, West and Royton (Mr. Meacher) said in the early part of his remarks, but towards the end of his speech he said some interesting and important things about how we will fill the looming energy gap. I think that there is a real possibility of life-extension for nuclear power plants, which would help. The Government clearly hope that the Bill will help them massively to expand renewables production, but if it does not, the looming gap would be filled by gas and coal. It may well be that there will be no gap in the market for new nuclear investment, and the right hon. Gentleman might then get his wish, for reasons that he would not endorse—a
massive increase in as yet unclean hydrocarbon generation. It is a shame that we cannot debate the issues at more length and that we did not get the chance to discuss them sooner.
I suppose that the big policy change in the Bill—it was heavily signalled, and announced in the White Paper—is on the renewables obligation and its banding. I understand why the Government made that change, but until now, the obligation has been a technology-blind mechanism to encourage renewable power, and I tend to prefer it when Governments are technology-blind. It used to be left to developers to determine the most cost-effective way of building new sources of renewable energy. Given that renewables are quite an expensive way of cutting carbon emissions—we should not forget that; nuclear, however, is a cheap way of doing so—that was the right approach. It turns out that developers chose onshore wind, which is controversial, and biomass co-firing. We are now going for an approach that favours specific technologies, including wave, tidal and solar. That might suggest the direction that the Government’s thinking will take on the Severn barrage and the Severn tidal energy sources.
My concern is that the renewables obligation process is hellishly complicated. It is not at all straightforward; it is a difficult system to work. One leading expert in the field said to me last week, “It’s almost a parody of a piece of regulation now.” When we add the complexity of banding and the grandfathering of existing rights, heaven knows what kind of mess it will be to operate. The renewables obligation certificate process is difficult, and it is made more difficult by the Bill. The Government say that the changes to the process will bring forward more renewable energy and a broader range of technologies. It probably will do the latter, because it will increase the subsidy for expensive technologies, but I do not see how it will bring forward more renewable energy.
One of the virtues of the system is that the cost to consumers is predetermined. The overall amount of subsidy from consumers is known—and it is citizens, not as taxpayers but as consumers, who pay for the renewables obligation process. If we are to shift the way in which the money is spent—if we move the deckchairs around—how will it lead to more rapid development of the total contribution that renewables make to our electricity needs? I just do not think that it can. In fact, it is likely to lead to a slower rate of contribution to our total energy needs for renewables.
I am nervous about Governments picking winners; they often make the wrong decisions. The Mayor of London has made the wrong decision about whether hybrid cars should pay the congestion charge. I do not think that they are the most environmentally friendly way of reducing carbon dioxide emissions. Instead, there are new diesel technologies. When Governments pick winners, we get into difficulties.
Feed-in tariffs have featured extensively in the debate. We all think that they are a good thing, and we all cite examples from around the globe of their contributing to decentralised energy generation. We all think that they are marvellous. However, when my Select Committee undertook its report on decentralised
energy last year, it hedged its bets on the issue. I think that the jury is out on feed-in tariffs; I am open-minded on the subject. The issue is really who pays for feed-in tariffs. My real worry is that it is the early, middle-class adopters who will get the benefit of such tariffs. When the price goes up for electricity as a whole—as it will, because someone has to pay for the scheme—the risk is that poorer people will find that the price of their electricity goes up. They cannot afford the generating technologies that allow them to take advantage of feed-in tariffs. We have to be careful about the assumption that feed-in tariffs are a good thing, and I remain open-minded on the subject.
The debate inevitably became passionate on the subject of nuclear, but in fact there is not much in the Bill on the nuclear issue. The Bill forms a narrow, technical but important part of the Government’s progress towards providing a new generation of nuclear reactors. There was a big debate between the Front Benchers on the issues of waste management and costing. I think that the Government’s heart is in the right place, but I hope that they will move towards greater clarity soon, because at present we do not know what the phrase “full share” really means. I disagree with the right hon. Member for Oldham, West and Royton about the practicalities of nuclear waste management. However, making sure that the payment process is transparent and that there is no hidden subsidy is a big problem, and the Government must move fast to clarify their position.
On the issue of permitting a new generation of nuclear reactors, there is something else of huge importance that the Bill does not cover—the staffing levels of the nuclear installations inspectorate, which has just six people available for the task. Approval of the Sizewell B design approval took 270 man years of the then regulator’s time, so it would take six people 40 or 50 years each of their entire working life to approve a single reactor design, never mind the three or four proposed for the new generation. I therefore hope that the Minister will repeat the Government’s assurance that the nuclear installations inspectorate will learn from extensive international experience. It is not just one reactor in Finland that is being built worldwide—there are reactors being built around the globe, some of them extremely successfully. I hope that we will learn from that experience, and not reinvent the wheel. I rather hoped for an intervention, so that I would gain an extra minute.
Peter Luff: I shall give way to my former colleague on the Committee.
Sir Robert Smith: One subject on which the hon. Gentleman has not touched is the welcome introduction of initiatives on gas storage. Does he not think that if we are to sort out the gas price, it is not just the problem of gas storage that we must crack but the problem of having the same regulatory regime throughout Europe?
Peter Luff:
I am happy to endorse that observation, as the problems remains a key issue in the future of our energy market. The Committee is shortly going to
Brussels, subject to the Whips’ permission, to explore progress on it, because it is the single most important question in the workings of the market.
It is great that the Bill does a lot to create a regime on carbon capture and storage, but we still do not have a workable commercial demonstration or project. The Bill’s provisions therefore do not amount to much, as we need reassurance that the system is going to work. The big thing missing from the Bill is the smart meter question. I have seen evidence from the industry, including Centrica, in which it says that it would like a mandate in the Bill for smart meters. Centrica has proposed a system for rolling out regional franchises, and I believe that a competitive energy market would deliver smart meters to both the business and private sectors, because meters provide an enhanced service to people whom companies supply with energy. That is not happening, so the Government must make sure that their approach—I accept that an Ofgem study is under way—will deliver smart metering. I do not think that intermediate display technology is a sensible way forward, as it runs the risk of disincentivising investment in smart meters. I have undertaken a rapid rush around the issues. We look forward to the Minister’s winding-up speech and to hearing what he says to the Committee when he appears before us next week.
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