Energy Bill

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The Chairman: Would any of our other witnesses like to comment?
Robin Webster: Yes, certainly. The question is an extremely good one, because nuclear power is not an article of faith. Climate change represents such an overwhelming challenge to us that we should consider all options. It is something that should frighten us all, but the evidence is that nuclear power will not provide the answer.
I certainly back up everything that my colleague said. We can look at how Minister Hutton presented the Bill, so much of which is about nuclear power, in the House of Commons. He spoke for some 12 minutes about nuclear and for about two or three minutes about renewables. Our fear is that nuclear power provides a political distraction. Political energy, political debate, and the minds of our civil servants and engineers go down one route, and that does not give us a chance to think about the root-and-branch change to our energy system that might be needed, and how that will be achieved. That is our real fear.
Benet Northcote: I think that that is exactly right. The only thing that I would add in terms of the actual impacts that a domestic new-build programme would have, is the figures from the Sustainable Development Commission, the Government’s own advisory body on climate change. It says that if Britain built 10 new reactors, nuclear power could deliver only a 4 per cent. cut in CO2 emissions some time after 2025. That is the most optimistic build programme, which, as we all know, is very optimistic indeed.
The Chairman: Mr. Marsh, did you have a view?
Russell Marsh: I want only to say two quick things. One is that I fully support everything that my colleagues have said. The other is to highlight the focus on nuclear. There is a focus on nuclear to the detriment of other technologies, but if we are to get to where we need to be by 2015 or 2020, we need other technologies. At the moment, our sense is that the focus is very much on nuclear, which is not part of the solution. We need to focus on other solutions.
The Chairman: Can I say at this point that everyone wants to ask a question? If we are going to be fair, we must try to make the questions and answers brief.
Q 132Charles Hendry: Thank you, Mr. Amess. I shall be guided by our guests and move the discussion off nuclear, although I suspect that it will come back. In your submissions, you talked about the measures on heat wastage and inefficiency. What specific measures would you like to see in the Bill, and what sort of amendments should be pressed?
Russell Marsh: If I pick that up first, in terms of heat we have a market with no support for renewable or low-carbon heat. There is a renewable electricity obligation and a renewable transport fuel obligation, but there is not the same support for renewable heat, let alone low-carbon heat. We want the Energy Bill to have a power that enables the introduction of a feed-in-type mechanism, particularly for heat, although we also need a feed-in-type mechanism for smaller-scale electricity.
Benet Northcote: I think that is right. The importance of heat to climate change and to our energy security cannot be underestimated. Something like 47 per cent. of our total emissions come from heat. We talk about gas security. I do not know about you, but my most immediate relationship with gas is in my boiler at home, which is where the gas is being burned. The idea that you can somehow have a coherent energy policy and not have a heat policy beggars belief. The current energy White Paper has a mere four pages on heat; I cannot remember how many pages there were, but I attempted to read them all. That is a key part of the matter, and the Bill does very little or nothing to address it.
To reiterate on feed-in tariffs, they are also tremendously important. You must look at the success of countries that have adopted feed-in tariffs, notably Germany, where they are massively outstripping our delivery of renewables in terms of solar power and wind. It is acknowledged that the changes that the Bill makes to the ROCs and the current framework will not get us to the necessary targets. The Government admit that a new renewables Bill will be needed in about 2009 to meet the EU target. There is a lot that the Bill does not do that it needs to do.
Q 133Charles Hendry: What about energy efficiency?
Benet Northcote: It is easy to overstate energy efficiency, and to make it out to be a simple, single bullet. We see it as a culture of energy efficiency that runs all the way through the supply chain. Traditional power stations throw away two thirds of the energy before it gets to your house to be wasted at home in the form of wasted heat. The culture should run through to appliances and ensure that we have the most energy-efficient appliances. Waste avoidance needs to go all the way through the system from generation to domestic light bulbs.
Q 134Paddy Tipping: There is a lot in the Bill about carbon capture and storage. The first issue is that in Greenpeace’s evidence you point out that the technology is not yet proven. The second is, as a matter of principle, do you as a group feel that there is a place for coal that is burned cleanly? Are the measures in the Bill, and the Government’s other measures, sufficient to bring forward new, clean-coal power stations?
Benet Northcote: We drew attention to the comments of the former Secretary of State, now Chancellor Darling, and his views on the role of coal. He said when giving evidence to, I think, the Business, Enterprise and Regulatory Reform Committee, that
“it is commercially untried and untested. It is not being developed anywhere else in the world.”—[Official Report, 6 June 2007; Vol. 461, c. 338.]
Whether that is BERR’s view of the potential for CCSs is a valid question.
The way in which we will tackle climate changes is about trajectories, so it is not about saying that we can bet the house on a technology that may deliver commercially in 20 or 30 years. We need to explore the potentials, and if CCS has the potential to deliver, we should push it as hard as we can at every opportunity, notably the application that is sitting on the Secretary of State’s desk for a new coal-fired power station at Kingsnorth in Kent, which may be built without any carbon capture technology whatever specified. We believe firmly that if it is to be built, it should be built with carbon capture installed and working from the outset.
The issue is about trajectories, and what we can do between now and 2020. I do not think anyone credibly thinks that CCS will be there between now and 2020. We must get ourselves into an energy system that can deliver what we need by 2020, and see us on to 2050.
Tom Burke: I do not agree. Whether we have CCS by 2020 is entirely a function of how much effort we want to put into it. If we put enough effort in, we can have it much sooner than that. We are not currently putting enough effort in, and the Bill does not do very much to increase it.
To set that in context, CCS is an imperative, not an option, if you want to avoid even more dangerous climate change. The reason for that is that, although you can come up with all kinds of theoretical trajectories that are both economically and technologically available to arrive at a carbon-neutral energy system by the middle of the century that does not involve coal, I have not seen anybody come up with a politically deliverable system. You have to face up to that reality. The coal is there, and for perfectly legitimate energy security reasons it will be burned, so we have to deal with CCS as an existential problem, not as an optional problem. If we do not solve that problem, we will be in considerable trouble on the climate.
I do not know what the Bill really does to make a difference to nuclear power, because anybody who wanted to could have applied for a facility anyway. A really tough decision—this is the one Benet did mention—would have been to spend the money needed to make Kingsnorth carbon neutral whatever that cost us, as a way of demonstrating to the world two things. First, that it can be done, which we know technically but not operationally, and secondly that we are serious when we say that is the way the western world has to go, because if they do not believe we are serious, why should they do it, and if they do not do it, we cannot deliver for 60 million Britons a stable climate.
Robin Webster: I have just one thing to add. The Bill provides certainty through the Government’s competition on CCS, which is a good thing, but the competition on CCS will be testing only the least efficient way of doing CCS—post-combustion. It is not testing pre-combustion. We are seeing permission being given to build coal stations—we are seeing Kingsnorth. We are seeing them go ahead under the moniker of capture ready; they are going to be clean coal. We do not yet know what clean coal is and we are testing the least efficient form of clean coal. We do not know when that testing will finish or when CCS will be in place. That needs to happen pretty fast.
Q 135Paddy Tipping: Would you give us a view on a high price for carbon as a driver of technological change?
Tom Burke: I do not think that there will be a high enough price for carbon to deliver the technology changes that we need. It is extremely important to have a price for carbon—it has a role to play—but are you talking about the kind of technology shift that we must make to arrive at what is essentially a carbon-neutral energy system globally by 2050? That is what a 60 or 80 per cent. cut means. Because of the nature of the climate system, a cut in total emissions of 60 to 80 per cent. is in effect a carbon-neutral energy system because of emissions from deforestation, agriculture and so on. If you want to arrive at that, you will certainly have to use the carbon price, but in terms of both magnitude and time, we are going to have to think much more about both the regulatory and the fiscal measures.
In particular, the idea that the infrastructure for CCS—the pipelines, the storage facilities and so on—any more than the infrastructure for offshore wind that we need to bring onshore, will be built by the market responding to some signal that is pretty imprecise with the volatile price of carbon is, frankly, a fantasy. Building that infrastructure is the equivalent, for a competitive low-carbon economy in the 21st century, of building the motorways in the 20th century. Nobody would have suggested that we leave the building of the motorways to the wisdom of the market.
My question for Professor Burke is on waste. The argument is that we are not starting from a position of no nuclear waste; we have dirty great piles of the stuff and all we are doing is dealing with a bit more. Given that we will need a big hole in the ground somewhere, why is it so bad to put a bit more into that big hole in the ground? There is no issue of principle here and it is quite cheap to put a bit more in a big hole; it is just a bigger hole. So why is it so substantively problematic? Perhaps we can deal with the issues in that sequence.
Robin Webster: I think that the question of political tension is not as ephemeral as it may seem, having seen with my own eyes the leaked Government document that said we are not sure whether we want to hit the renewables target at EU level because it might not give us enough space to develop nuclear. You could see there was some political thinking behind that. On the question about the political thinking that is going on inside our Ministries, I think that quite a lot of us recognise that within DBERR there is an attitude of “grown-ups build power stations”. We see the Government coming out with quite a lot of iconic announcements, saying, “We going to have nuclear power. We're going to do the Severn barrage. It's all going to be fine. Please stop presenting us with this problem.” Actually, what they are not doing is looking at the energy system.
We are looking at whether we can make a more decentralised energy system, what kind of mechanisms can exist to develop renewable power and what barriers there are to renewable power within the UK. These are the kinds of questions that need to be answered. The question of political attention is a key one.
I think that Benet is probably better qualified than me to speak on the finances and the financial fears that there might be around nuclear, but that could be another very large part of that equation.
Tom Burke: We have to solve the problem exactly because it is there. It does not make very much difference adding an extra cost and I do not think that that is a core issue. There is obviously an issue about the balance of risk that falls to the private and public sectors that needs to be properly debated and worked out. However, I'm much more worried about the fact that, this year, we will spend £2.8 billion on cleaning up the problem with radioactive waste from the past, but nothing, effectively, on carbon capture and storage, which is really important to the future prosperity and security of 60 million Britons.
I cannot see how it makes any sense to argue that we should create more of a problem—we are already having to spend too much money on solving the problems of the past—when we are not spending enough on the problem we have really got to address, which is guaranteeing the well-being of our citizens. That is a hard argument to make.
Personally, I do not think that waste is the core issue. I think that the core issue is what is going to contribute to energy security and climate security.
Benet Northcote: I am not sure that I agree with anything that Tom says on the waste issue. There is a substantive difference between legacy and new-build waste. We do not need to create new-build waste. We have to deal with the legacy waste. There is an essential ethical difference between the two bits of waste, which has been clearly identified by CoRWM—the Committee on Radioactive Waste Management. The new chairman of CoRWM has been very clear that all of its recommendations and proposals are for legacy waste and absolutely cannot be applied to new-build waste, and that a new process would need to be undertaken for new-build waste.
There are many issues associated with a repository for new build and the associated costs for that. For example, there are issues as simple as how the cost for the repository for new build is apportioned or whether all the transport links and the infrastructure links will be properly apportioned into new build? How do you do that when you do not know how many power stations there are going to be, if the market is coming into things? Will it be four or 10? How do you apportion costs to one? Will the first one take all the costs, as opposed to all 10 of them? There are an awful lot of issues here.
Our primary concern, just to talk about the detail for a second, is that we see the Bill in terms of back-end costs. I agree with everything that Tom says about up-front costs and all the up-front subsidies. British Energy was not prepared to say that it was prepared to invest immediately; it wants to wait for yet more years, because the subsidies right now are not there. In terms of back-end costs, the Bill essentially cedes power for protecting the taxpayer from Parliament and gives it to the Secretary of State. So the Secretary of State has complete power to set up all the funding mechanisms and all the requirements on the new-build companies, leaving absolutely no way for Parliament to come in and check that. That is our reading of the Bill. There is massively undue haste in respect of new power stations when there is massive uncertainty about what these costs might be. So why not wait until the base-case consultation is finished and, at least, wait until there is clarity on where the repository will be, what are the geological criteria and what are the costs associated with making it work, and then look at how you might put together the financing programme?
Russell Marsh: I just want to pick up on the crowding-out point and to highlight the fact that the evidence is already there to show that, at the moment, we are seeing a lot of attention and almost all the focus on nuclear and much less attention is being paid to some of the other single reactors, particularly CCS, to which Tom referred. We will have one demonstration project in the UK that may or may not have CCS fitted at some point in future and at the moment we may get nothing else. There is a lot of focus on nuclear to deliver 20 per cent. of our electricity. However, although we have to get 40 per cent. from renewables, there is a lot less attention paid to that. We can already see that the nuclear debate is crowding out the time for a debate and a policy discussion about how we bring on all the other technologies at the same time.
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