Energy Bill

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Q 120Mr. Jamie Reed (Copeland) (Lab): I have a few questions—first, for Mr. Parker and Mr. Spence. Do you have any frustration at all with the Bill with regard to other, non-nuclear electricity generating sources and the management and funding of the intergenerational wastes that they produce, particularly the radioactive wastes that the oil and gas sectors produce during their extrapolation and use? Are you frustrated by the way in which those sectors are not expected to fund their intergenerational waste in the same way as the nuclear industry?
Paul Spence: I am not sure that it makes sense for me to voice frustration. As well as operating nuclear power stations, we operate a coal station, and I hope that in future we will be a generator of more than just electricity from nuclear stations. It is appropriate in considering new build that we can show that we can cover the costs of what we are producing, and those costs should include any waste that we produce. That is an appropriate principle to start from and I am pleased to be part of the industry that steps up to that principle at the moment.
Keith Parker: I agree that the principle about the polluter paying should be evenly distributed across the sectors, but the nuclear sector is confident that it pays for its waste, decommissioning and other pollution.
Q 121Mr. Reed: On a broader point, may I ask the whole panel, but particularly Dr. Roxburgh, how long do you think it will be before the UK could have a deep geological repository operating?
Dr. Ian Roxburgh: That is a good question, but is probably two months too early. I understand that the Government intend to publish a White Paper towards the end of April, following on from the Corum debate, to set out how they will define a community, how they would expect a community to volunteer, and how they might define compensation. So, the question is just a little early.
However, if you are thinking about the technicalities rather than the politics—the difficult issues of arriving at a community that has volunteered and has the right technology—I do not believe that the technical aspects need delay it over-long. Thinking back—Mr. Tipping might appreciate this—it took just more than four years to sink the Asfordby mine to what would be a similar depth, through some of the most difficult hydro-geological material in the country, so there is good experience. It should not take too long.
Q 122Mr. Reed: To the panel more generally, if a decision were taken to postpone investment in nuclear build in this country pending the creation and operation of a deep geological facility, what effect would that have on investment decisions by those who wish to invest in new nuclear now? Given that there are vast international opportunities out there for everyone who wishes to invest in the UK market, what effect would it have on the UK nuclear skills base?
Keith Parker: I do not believe there should be delay to the new build programme for that reason, but if there were, it could have a damaging effect. One difficulty for nuclear vendors—actually, it is not a difficulty; it is a luxury—is that there is worldwide demand for new nuclear power stations. If there were difficulties with the UK moving forward with new build, they would not have any difficulty in going elsewhere. That may well push the UK further back in the queue for new reactors, which could have an impact on our ability to meet the climate change and energy security challenges that are set out so graphically in the White Paper.
Q 123Paddy Tipping: May I follow up the investment point? The Government have made it clear that there will be no public subsidy, which means that you, Mr. Parker, and you, Mr. Spence, will have to borrow substantial sums from the market. Are you confident that the price of carbon—carbon trading is still in its infancy—is robust and secure enough to bring comfort to investors?
Secondly, we have spent a lot of time talking to you about the decommissioning programmes and processes set out in the Bill, but at this stage, the actual costs are not known, because we do not know the ultimate way forward. Those are big issues for potential investors. Are you confident that the investors are there?
Paul Spence: On the first question, it is for us as a private company to ask ourselves whether we are sufficiently confident today to spend the money that we need to spend today on early-stage work on our sites. The answer to that is yes. Today, I look at where things are with the European emissions trading scheme and with the market price for alternative fuels, and I say that it looks like a good proposition for our shareholders to take forward and to spend the not trivial but not huge amount of cash at this stage to develop the option for new build. I expect that over the next three or four years, we will need to examine how the carbon market has evolved and the costs that the reactor vendors quote, once we have decided on the vendors that we wish to go for, and ask whether there is a sensible investment proposition. If it looks sensible for us as a company, having considered the rest of the framework, including the back-end liabilities, I suspect and am confident that funding sources will be available either from company balance sheets or from the financial markets to allow us to fund what we want to do.
Q 124Paddy Tipping: Is that your view, Mr. Parker?
Keith Parker: Yes, it is. If you consider the public statements of other potential investors, they have all said that given greater clarity about planning, licensing, the carbon price and the cost of waste and decommissioning, they would be prepared to invest. The Government, in their White Paper, have gone a long way to delivering that clarity, and it will encourage investors to move forward on new build.
Q 125Dr. Nick Palmer (Broxtowe) (Lab): My question is mostly for Mr. Spence. You mentioned a review of the lifespan of existing reactors, and in at least one case, you have found that an extension of 10 years is appropriate. The other extension was also significant. You appreciate that regardless of new build, the lifespan of current reactors is important for our planning. Was that substantial extension a surprise, and can we expect similar pleasant surprises when you review the next ones? If so, should we not get on with the reviews so that we have more certainty?
Paul Spence: For Dungeness, which was the station that had a 10-year extension, it was the first time that we had assessed its life. The other stations have already had an extension to their original accounting lives, so I am hopeful and expect that when we examine the other stations, we will consider the prospect of further 10-year extensions. However, we will be dealing with a slightly different situation at that point. Could we do it now? Part of what we must consider is the real-world experience and results of our inspection work on those stations, as components are irradiated and age. We believe that the best time is as near as possible to the point at which we must make a decision. That allows us to take those decisions on the basis of best understanding, knowledge and data. That is why we do it three years in advance of closure. To return to what Dr. Weightman said, that fits with the programme of periodic safety reviews required to confirm that it continues to be safe to operate those stations.
Q 126Dr. Palmer: On a slightly different point, the panel unanimously decided that it would be good to have a single design for reasons of economy, safety and so on. To play devil’s advocate, one could apply that to many walks of life, such as making all office buildings essentially the same design, but we tend not to do so, because it is felt unwise to put all one’s eggs in one basket. There might be yet further generations who would benefit from having two different designs to compare. In view of that, is the panel sure that it is a good idea to go for just one design?
Paul Spence: If I can respond on that one, from our perspective competition is very attractive. It helps both to create innovation and to ensure that the vendors do not extract rent that you do not want. So, in our view, you have a trade-off: whether the UK is a sufficiently large market to support competition among reactor designs as against the benefits that come from economies of scale and the safety benefits associated with having one standard design. That is a truth in respect of pretty much every market, from office buildings through to motorcars: it is a question of how many the market can sustain.
Q 127Dr. Palmer: On balance, is a single design probably better?
Paul Spence: On balance, one or two, rather than multiple.
Dr. Mike Weightman: May I add that, for us, we are not getting into the commercial, availability or diversity of electricity supply routes argument? It is just about concentrating on how we secure safety in the most effective way. That was the issue.
Clearly, if you went for two different designs, you might have a fleet of both, for instance, which would give some of that commonality and would provide learning opportunities. Also, from our point of view, it would be looked at on a worldwide basis, because we do not just look at the UK aspects, but at what can be learned from similar designs internationally. Unfortunately, with the advanced gas-cooled reactors and the old Magnox reactors we do not have that luxury. For whatever reason, every power reactor seemed to be designed differently in some way or another.
Q 128Dr. Iddon: There are two different parts to this. Does the panel have a view on the siting of the new fleet of stations? Are the present sites adequate or, as in the case of Dungeness, perhaps, not adequate? I think that Dungeness was taken up there partly for safety reasons but mainly to provide some jobs up there. Would you be looking for alternative sites, do you think?
Paul Spence: I will answer for our company. We have eight sites around the country adjacent, in most cases, to our existing stations and, in one case, next to a decommissioned Magnox station. We believe that, from a technical standpoint, all those sites are suitable for new build. The factors we look at in considering which become the most desirable sites include grid connections, access to cooling, the engineering specifics of the particular sites and, in some cases, the politics around the acceptability of nuclear north of the border. They will all be factors that we will need to take into account. We will also need to see what the Government identify as the criteria as part of their strategic siting process. That will allow us to identify which of those sites look good.
Keith Parker: From the industry’s point of view, we have made the assumption that the new build is likely to take place adjacent to existing sites, for all sorts of reasons that Paul has already described.
Q 129Dr. Iddon: The second question is about the moneys that will be set aside for future decommissioning way down the line. Are you all satisfied that the build adequately protects those moneys and do you have a view on how those moneys should be invested, or will you be giving the Government a view?
Keith Parker: I understand that there will be more detailed guidance coming out about the way in which both the funded decommissioning programme and the funding arrangements for it will need to be taken forward. But in general the proposals in the Bill for an independent segregated fund controlled by an independent body provide for a sensible way forward and should ensure that the moneys are dedicated to the purpose of decommissioning and waste management. We certainly advocated that in our responses to the various consultations and believe that it is the correct way forward.
The Chairman: That is the end of our evidence session. Thank you very much, gentlemen, for your attendance this afternoon. Will our next and final set of witnesses please come forward?
Welcome to our final set of witnesses. I hope that you can invigorate the Committee in our final hour. Will you all introduce yourselves, starting with Mr. Marsh?
Russell Marsh: I am Russell Marsh, head of policy at Green Alliance.
Robin Webster: I am Robin Webster, head of the energy and climate team at Friends of the Earth.
Benet Northcote: I am Benet Northcote, chief policy adviser at Greenpeace.
Tom Burke: I am Tom Burke. I have a wide range of affiliations with non-governmental organisations, academic bodies, commercial companies and public authorities. I am not representing any of them. I would like to make it very clear that I am here in my own right. I am not speaking for any of the organisations with which I have an affiliation.
The Chairman: Again, our Minister will kick off this session.
Q 130Malcolm Wicks: Given what I think is your stance on nuclear energy, is it a stance that can be tempered or even changed by evidence, experience and perhaps even the state of public opinion? Or, is it a fundamentalist article of faith that you are opposed to it for ever?
Tom Burke: It is certainly not my stance. I do not know how you can take a fundamental stance on technology. What matters is how relevant the technology is to the problems that it seeks to address. Therefore, my stance is evidence-based. I would like to say—and my colleagues can speak for themselves—that the proposition that any addition to nuclear power in Britain can contribute significantly either to our energy or climate security is not supported by the evidence.
Benet Northcote: I would agree with that. There are clear and evident dangers to nuclear power. There are great risks and massive issues of cost associated with waste and potential risks to future generations. I would agree with Tom that essentially the argument is pragmatic. Here is a technology that will do nothing, or very little, to reduce our CO2 emissions at vast cost, and which will not help us to meet our renewable energy targets.
Q 131Malcolm Wicks: Can I just ask—are our two very distinguished visitors saying that civil nuclear power would not reduce CO2 emissions? What is the scientific evidence for that extraordinary proposition?
Tom Burke: Yes, as a matter of practice—either globally or in this country—it contributes very little. Let me take you through the rationale for that. The Chinese have the world’s most ambitious nuclear power programme. They propose to build 40 reactors by 2030 and, being the Chinese, there is some good prospect that they will do that. If they succeed, nuclear power will contribute 4 per cent. to China’s electricity production by 2030. The rest will come from coal. The point that we both made is that it cannot contribute significantly at that scale. If you take the broader global picture, and you look at the number of reactors that have to be built between now and 2030 in order to keep the current level of nuclear contribution, you have to build 42 GW between now and 2015 and 168 GW in the 10 years after that. That is what you have to do to maintain the current contribution of nuclear power. If you look at our current rate of build, which is about 1 GW a year, even if you scale that up dramatically—and there are good reasons to believe that that might be quite difficult—the best that you can hope for is a slow decline in the contribution of nuclear power to meeting our emissions reductions targets. Meanwhile, a large number of coal-fired power stations will be constructed. If they operate over their 50-year lifetime, they will make it extremely difficult for us to meet global and national goals for reducing our emissions to the point at which the climate is secure and stable. There is a strong evidence base that nuclear power cannot contribute very much.
Were you magically to overcome all the extraordinary difficulties of rate and magnitude of building new nuclear power stations, of course they could contribute. In the specific context of the United Kingdom, there is a need to replace existing nuclear and some coal-fired power stations that are coming offline, as I think you, Minister, and others have pointed out. The emerging problem arises some time in the period between 2012 and 2015—estimates vary—but the most optimistic assessment of when new nuclear can contribute to meeting the generation gap is 2017, and that is EDF’s estimate. I think that the Government’s own consultation paper suggested that it might actually be a bit later than that, at around 2020.
In the meantime, we will fill the gap with fossil fuels, so the issue becomes one of priorities. What do you think it is most important to concentrate public policy on doing? I suspect that my view is shared by my colleagues, although they will speak for themselves. It is that it is most important to concentrate on the fact that if we do not do something very quickly to make fossil-fuel-fired electricity generation carbon neutral, we will have made commitments that will be extremely expensive and possibly impossible to unravel.
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