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9 July 2008 : Column 461WH—continued
3.25 pm
Stephen Williams (Bristol, West) (LD): I join other hon. Members in congratulating the hon. Member for Stroud (Mr. Drew) on securing and introducing the debate. The issue has been around for an awfully long time. I went to school on the Welsh side of the Severn. It is curious that no Welsh Member of Parliament is seeking to take part in the debate. I am now a Member of Parliament for the other side of the Severn, in Bristol, and it has been a hot political issue locally for the past two years. I was pleased to take part in a discussion that involved politicians from both sides of the estuary in the summer of 2006—appropriately, it took place on the paddle steamer Waverley right in the middle of the Severn.
We have to balance many factors when considering this issue. There is the topic of climate change, which is easily the most significant contributor to my postbag and e-mail inbox. There is the UK energy mix and security of supply. There are the costs of any scheme. There is the opportunity cost in terms of the effect on habitats—the natural environment—and of course, there is the debate on the different engineering solutions that may be appropriate. I hope, however, that there might be agreement on the fact that it would be foolish not to have a serious exploration of whether it is possible to balance all those things and harness the power of the Severn. The very challenging targets that we have to meet have been mentioned. It is commonly accepted that the barrage or any other solution may contribute 5 per cent. of the United Kingdom’s electricity supply in the future.
The hon. Member for Stroud focused today on costs. The Government have commissioned their own feasibility study, which has several strands. Different consultancies and pressure groups will be considering engineering, the habitat and the transport opportunities, but the Government have specifically engaged PricewaterhouseCoopers—incidentally, I obtained my professional qualifications with PWC 15 years ago—to consider the questions of ownership and finance. Can the Minister give us an early indication this afternoon of when he expects some of the strands of the feasibility study to report to the House? Will they all come together in 2010, or can some progress reports and interim studies be laid before the House to inform our debate over the next two years?
We have already heard from one set of Government advisers—the Sustainable Development Commission, which recommended last year that the barrage should be entirely owned and managed by the public sector. Will the Minister say whether he or the Government accept that premise, or whether PWC is considering the questions of ownership and commissioning as well as the actual costs, wherever they may fall?
Many other factors and constraints will need to be weighed up that are relevant to the economic viability of a barrage, lagoons or any other engineering solutions. One factor is the capacity of the national grid to transmit the electricity that could be generated from such a major scheme to the places where it is needed. You may be aware, Mr. Weir, that there is already a fear of a capacity constraint in relation to bringing power down from Scotland—where there is great potential for harnessing the power of the wind and perhaps waves as well—to the centres of population much further south of the border. I wonder whether the national grid is geared up now to transmit 5 per cent. of the UK’s energy to the areas where it is needed, which may be well away from the Severn.
Another capacity constraint relevant to the economics of all this will be skills. Various figures have been bandied about for the number of jobs that could be created as a result of the construction and operation of the barrage. One press report that I read in preparation for today’s debate even mentioned the figure of 40,000 jobs, but does the UK have sufficient engineering skills to carry out such a major operation? It will probably be the biggest construction project that this country has ever carried out. Arguably, it will be bigger than the channel tunnel, and it will probably be the biggest construction project since Victorian times. Have we enough young people who are enthused enough to take on the subjects relevant to engineering, and are we doing enough to ensure that engineering graduates go into the profession for which they have trained, so that they will find it a lucrative career?
Frontier Economics has recently published a report, which was the impetus behind the hon. Member for Stroud initiating the debate. The report was commissioned by organisations such as the National Trust, the WWF—both of which I belong to—the RSPB and a coalition of angling organisations, all of which the hon. Member for Bridgwater (Mr. Liddell-Grainger) rather disparagingly referred to as the chattering classes. Those organisations have made an incredibly important contribution to this debate and to the national debate, and they would be failing in their duty to their members if they had not commissioned such a report. We should thank them for doing so.
There were two central headlines in the report, one of which referred to the estimate of the cost, which is £15 billion. Once a large figure is quoted in public, it often gets repeated over and again and it begins to gain currency. Will the Minister comment on whether £15 billion fits within the window of the Government’s current cost estimate and whether PricewaterhouseCoopers could produce an assessment of the cost? However the scheme is financed, the budget for the cost will remain the same.
Frontier Economics also says that there should be no Government subsidy or involvement in the operation of the barrage, in direct contradiction to the findings of the Sustainable Development Commission last year. Matthew Bell, the author of the report, said:
“It is hard to think of reasons for the public sector to build or operate a barrage which would not be equally applicable to many other projects and assets that sit in the private sector.”
Given the pressing economic conditions, will the Minister tell us the Government’s current assessment of the private sector’s ability to finance such a major infrastructure project, especially as the private sector is expected to finance a new generation of nuclear power stations, along with other renewable sources of energy? Will there be enough private sector investment around in the next 10 to 15 years to bring this project to fruition?
The hon. Member for Bristol, North-West (Dr. Naysmith) —perhaps I could call him my hon. Friend—referred to local economic conditions of the Port of Bristol, about which he and I care. I am also a former member of the docks and airports committee of Bristol city council. He and I used to disagree on whether it was suitable for the city of Bristol to own the Port of Bristol or Bristol airport. I am pleased that both are now prospering in the private sector. There are ambitious plans for the Port of Bristol to expand still further. The Bristol economy could benefit from another £3 billion of investment, which I would not want to jeopardise.
Will the Minister give both myself and the hon. Member for Bristol, North-West the local assurance that the feasibility studies will consider the effects of a barrage, lagoons or any other engineering solution on the viability of the ports that lie upstream from the likely line of a barrage? That would include Bristol and, presumably, Cardiff and Newport as well. In particular, will the studies consider the effects on the silting of the channel, the depths of the channel and the morphology of the mud banks?
This debate, which has been running in its new form for the past two years, has been given more impetus by the serious way in which we are tackling the challenge of climate change. Many previous debates on the subject, going back to Victorian times, have closed down with no action. I hope that we have made a decision on whether to proceed with the scheme by 2010. I am completely open-minded about the engineering solution, but I hope that, in 10 or 15 years’ time, we will see the natural power of the Severn contributing to the sustainable power that this country needs for the future.
3.34 pm
Charles Hendry (Wealden) (Con): I congratulate the hon. Member for Stroud (Mr. Drew) on securing the debate and on the very balanced way in which he introduced it. We have seen the House of Commons at its best this afternoon. We have seen a thoughtful, well informed and impassioned—if one can be thoughtful and impassioned at the same time—debate that has dealt with the real issues in a constructive way. Hon. Members have been willing to consider both the evidence and the facts. That is the right way for us to proceed at this time.
My hon. Friend the Member for Bridgwater (Mr. Liddell-Grainger) was perhaps a little harsh toward non-governmental organisations. A consultation process is under way, which is exactly the time when people should be expressing their views, especially if there is a cut-off point in the course of that consultation at
which the project might be brought to an end, and therefore they would wish their views to be known at an earlier stage.
Nevertheless, it has been a very good debate. There has also been a sense of déjà vu—a feeling that we have been here before. My hon. Friend the Member for Salisbury (Robert Key) has probably seen these debates many times over his long service in the House. Some 20 years ago, in the 1980s, millions of pounds was spent on studies considering these matters, and here we are, at it again.
During the course of the debate, we have heard that there are two principal themes. The larger one, costing some £15 billion, would produce about 8.6 GW, or 5 per cent. of our electricity supply, and would save about 5.6 million tonnes of carbon dioxide emissions, based on a comparison of gas and electricity generation being displaced. That does not take account of the immense amount of carbon that would be emitted in the course of constructing the project. The second and smaller plan would cost about a tenth of that amount, but would generate about an eighth of its power—about 1.5 GW. Therefore, we have two alternative schemes, but we need to add in the other options as well, such as the lagoons and the cost of doing nothing.
The Government’s approach has been broadly correct. They have considered those options and are deciding on a way forward—if there is to be a way forward. We must recognise the extent to which this is an issue that divides opinion among experts, environmentalists and public opinion. We must have a thorough and watertight case—probably not very watertight, otherwise it would not work very well—that stands up well to careful scrutiny.
The hon. Member for Stroud said that the Government must do some big things if they are to achieve their renewables target. We need to be convinced that the Government will do those things for the right reasons and they will not be giving the go-ahead to massive investment in technologies that are there to meet an artificial and arbitrary target agreed with the European Union. We need to know that they are doing it because it is the right thing to do.
There is a suspicion that the Government have already made up their mind about the project. My hon. Friend the Member for Weston-super-Mare (John Penrose) made the point that that was because they would be allowed to have a credit with the EU which would start on the first day of construction, years before the scheme produces any energy at all. The Minister must allay that suspicion, because people need to be clear in their mind that the decision will be based on facts, and facts alone.
The Government are right to consider all the options, such as the two main barrage options and the lagoon prospects, and then to make a decision that takes into account their impact on both local communities and the environment. The importance of tourism to the area has been mentioned. The Government need to look at the benefit that extra tourism would bring and at the costs of putting in place the infrastructure that it would generate as well. Infrastructure would include new rail links, road links and the facilities that would be required to make tourism sustainable. They also need to consider the economic implications for other businesses in the area.
I take on board the comments made by the hon. Member for Bristol, North-West (Dr. Naysmith) about
the port of Bristol, which is a very important facility. As he said, it is probably the port closest to the centre of England, so many miles of road usage are avoided by using the port. If we find that the port cannot get the new freight coming in because of the draft level being reduced, that would be very damaging indeed. I know that there are plans to build the largest container port in Europe there. The risk of jeopardising that potential investment and the great environmental benefits that that could bring has to be taken into account as well.
The hon. Member for Bristol, West (Stephen Williams) talked about the national grid connection costs. The total costs of those projects need to be taken into account, and I hope that that is what the Government will do.
It would be interesting to look at the scope for tidal lagoons, as some people say that they may be the way forward. It is an intriguing possibility. Not one has been built, so many people are trying to estimate what their value and cost would be. People’s views differ: some say that they would cost less but generate more electricity for the scale of the investment; others say that they would be less efficient. We need some clarity from the Government’s consultation process that will enable us to understand exactly the different benefits of different systems. We need robust answers, and I hope that they will be provided.
It is absolutely clear that opinion settles on two different sides on the matter. There are those who say that the barrage will create an enormous number of construction jobs—perhaps 35,000—of which, it is estimated, half could be in the greater Severn area. On the other hand, although the barrage could be the greatest building project ever undertaken in this country, a lot of the work would be done overseas. My understanding of the construction process is that massive cement structures would be built around the world and then floated in, anchored to the sea bed and gradually drawn down. The project would involve an enormous proportion of Europe’s cement construction facilities and would last for many years. There may be no carbon price for the electricity generated by the Severn barrage, but by that time, as the emissions trading scheme moves into its later stages, there would almost certainly be a carbon price for the production of cement.
We know that the construction costs will be high, but there are those who argue that because the lifespan of the barrage would be 100 to 120 years, the average lifetime costs would be quite low compared with other technologies. On the other hand, there are those who say that barrages are an inefficient and costly way of generating power. The load factor is expected to be 22 per cent. That does not compare favourably with offshore wind, which could have a load factor of 35 or even 40 per cent.
The comparative costs must be taken into account. Frontier Economics has estimated that electricity from the Severn barrage would cost £127 MWh compared with £55 MWh for wind. Tidal stream technology is thought to indicate a cost of between £60 and £100 MWh, according to the Carbon Trust, and it could provide up to 10 per cent. of the UK’s electricity demand. Greenpeace and others suggest that tidal lagoons would involve lower costs. Indeed, only solar photovoltaics and fuel cells are thought to have a higher cost per megawatt hour than a large barrage. According to Frontier
Economics, producing 17,000 GW of output—the installed capacity of the barrage—from wind or from combined heat and power would cost £900 million, at a cost per unit about half that of the Severn barrage. Many issues must be taken into account and assessed in the course of the study.
I hope that the Minister will also be clear about his attitude to public funding for the project. If the evidence is that there is a case for the project but that it cannot be done with private sector investment alone, would the Government be inclined to give support? I realise that we will be in government by the time the decision is made, but I would be interested to know what the Minister’s view is now. Does he see funding being delivered through the system of renewables obligation certificates, or through feed-in tariffs? How does he think the project should be funded? At this stage, we need some clarity about how the Government think that it could be done.
Will the study also take account of how the money could be used in other ways? The Royal Society for the Protection of Birds has estimated that £15 billion to £20 billion spent on things such as energy efficiency measures would make a much more significant contribution to solving energy demand problems in this country. Has the Minister considered whether the money could be spent on energy efficiency measures and what the reductions in demand would be?
There are those who claim that the Severn barrage will help against flooding. Again, there are two sides to the argument. Some say that a barrage would reduce flood risks, and some say that it would increase the risk in other areas. We can make decisions on the project only if the Government reach a final conclusion on which of the positions is correct.
We also need to be clear about how electricity would be generated. The barrage would produce two surges a day. Peak flow would be for about one and a half to two hours during those surges, which will often come at the wrong time of day. As power cannot be readily used at 3 o’clock in the morning, we would have to find a way to store it. That could mean converting it into hydrogen or holding the flow back and then allowing it through later, by which time the tide may be coming in again and its impact would be massively diminished. Alternatively—this seems bizarre—the base load nuclear power stations could be turned off to allow the surge to come through at that moment. Those issues all have to be taken into account.
We are entering an exciting and constructive debate. The idea has caught people’s imagination. As a boy, I heard about the Severn barrage—I am obviously younger than the Minister, who was probably a teenager at that time. It was thought to be an idea that was bound to come in good time, but the more one thinks about it and the more evidence one takes, the more one realises that there are real challenges that need to be overcome and assessed.
The Frontier Economics report concluded that
“under a range of plausible scenarios, a large barrage on the Severn is expensive compared to alternative ways of generating renewable electricity...there appears to be sufficient capacity to use other technologies to meet the barrage’s output and Government’s targets.”
We must ensure that this investment decision is made because it is the right one, not because it is part of a
design to meet European targets. The onus is on interested parties to prove the case for a barrage, not the case against it. We have seen a great deal of evidence from those who are concerned about it, and we have seen an enormous amount of enthusiasm from those who are in favour of it. Most of us want to be open-minded and to judge the project on the facts. We must judge it on the facts and not on emotion.
5.46 pm
The Minister for Energy (Malcolm Wicks): This has been a useful debate. I noticed that the hon. Member for Wealden (Charles Hendry) in his characteristic way asked me a question and then predicted that he would be in government by the time it was answered, but he was clearly too modest to publish the answer in a White Paper. That would have been immodest but consistent with his aspirations for government.
I congratulate my hon. Friend the Member for Stroud (Mr. Drew), as others have done, on securing this debate. His thought-provoking speech prompted a useful short debate, which has been entered into in the right spirit.
Our decision on a tidal power scheme on the Severn is some way down the line yet, for good reasons which I shall outline. We are carrying out a feasibility study to look at the costs, benefits and impacts of a tidal power scheme, which could be a barrage in one of several possible locations, or a lagoon or lagoons. It could involve another technology—ideas are being put to us about other technologies—or a combination of schemes. My hon. Friend asked for reassurance that we are not looking only at a barrage. As for successes with the Government, he was looking for his hat trick. I think that he is probably on about two and a half out of three, but I should not encourage him much further, given his well articulated opposition to the barrage.
Only when we have completed our study and analysed all the issues, including the costs, will we make a decision on whether to support a scheme and, if so, on what terms. The decision will be taken in the context of our wider energy and climate change goals. I shall not say too much about them, but there is always a danger that if we discuss one approach, whether nuclear power, windmills, the Severn barrage or lagoons, people think that we are forgetting the other things. Of course we are not.
For fundamental reasons relating to the nation’s energy security as well as the need to tackle climate change, we have made a bold and right decision about nuclear power. We are demonstrating the technology of carbon capture and storage, and we have published ambitious targets, but the targets will not distort the decision-making process for the barrage. I heard the concerns voiced about renewable energy, and we should consider the barrage in that context.
I shall not say more to the hon. Member for Salisbury (Robert Key) about climate change, because I am sure that he will agree that unless we tackle global warming, the geography, climate, flood levels and poetry of Shakespeare’s England will be rudely unsettled by climate change. Doing nothing is not an option, but I am not sure whether in respect of this project it would be right to consider the flood tide in the affairs of men—and, to be up to date, women.
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