 House of Commons |
Session 2007 - 08 Publications on the internet General Committee Debates Energy |
Energy Bill |
The Committee consisted of the following Members:Chris Shaw, Committee
Clerk
† attended the
Committee
Public Bill CommitteeTuesday 4 March 2008(Morning)[Mr. David Amess in the Chair]Energy Bill10.30
am
Charles
Hendry (Wealden) (Con): On a point of order,
Mr. Amess. The Committee will remember that last week we had
a debate on feed-in tariffs. In the course of that debate, the Minister
gave a robust defence of why the Government were not looking at feed-in
tariffs and said that they would consult on that, among other issues,
in the summer. However, it was suggested in the press over the weekend
that the Chancellor is planning to announce feed-in tariffs as part of
his Budget submission. I wonder whether the Minister has indicated to
you, Mr. Amess, any desire to clarify the
Government’s position, as it now appears from the press reports
that we were inadvertently misled in our discussions last
week.
The
Chairman:
I have listened carefully to what the hon.
Gentleman has said. The Minister has not indicated that he wishes to
make any specific statement, so we shall let the matter rest there.
Perhaps the Minister will reflect on what the hon. Gentleman has
said.
Clause 41Duty
to submit a funded decommissioning
programme
Question
proposed [28 February], That the clause, as amended, stand part of
the Bill.
Question
again
proposed.
The
Chairman:
I remind the Committee that with this we are
taking the following: New clause 23—Nuclear Decommissioning
Authority Funding—
‘(1)
Section 22 of the Energy Act 2004 (expenditure and receipts of NDA) is
amended as follows.
(2) After
subsection (5)
insert—
“(6) The
Secretary of State may make regulations to include the value of grant
payments made by him to the NDA under this section in ‘funded
decommissioning programmes’, as defined in section 41 of the
Energy Act
2008.”’.
Martin
Horwood (Cheltenham) (LD): The purpose behind the new
clause is to address a general issue with clause 41. I am not sure
whether we have yet had the stand part debate, so if I am permitted,
Mr. Amess, I will make some more general remarks about
funded decommissioning programmes.
Some of the
subsidies to the nuclear industry are astonishing. Many are not clearly
designated at the moment and many are certainly not designated in the
Bill. The purpose of the new clause is simply to make an
example of the most spectacularly expensive of them all, but the general
principle could apply to many others. We have already
discussed—I am sure that we will discuss it again—the
long-term storage of nuclear waste and whether funded decommissioning
programmes will take account of the full cost of not only bringing a
truck to the front door of a storage facility, but the long-term
maintenance of the facility. If it is to be an accessible storage
facility, as Committee on Radioactive Waste Management considers that
it might be, it will have to be maintained in some way for a long
time.
The Minister
has already referred to the gap between funded decommissioning and the
capping of any long-term storage facility, and he mentioned in our
earlier deliberations that that might happen in the next
century—the 22nd century. That would be equivalent to Asquith
and Lloyd George making policy for today, as we are talking about very
long periods of time. It is difficult to predict the cost of those
plans, and I am sure that Asquith and Lloyd George, being good
Liberals, would never have taken on such risky liabilities in their
day.
Mr.
Jamie Reed (Copeland) (Lab): The hon. Gentleman is making
an interesting point about the long-term costs and predictability of
waste management, but does he agree that the liabilities produced by
our military nuclear programme are not in fact a subsidy to responsible
action by responsible Government? Furthermore, does he not believe that
the economic and environmental consequences of long-term waste
management and the issues involved are much simpler than those relating
to carbon capture and
storage?
Martin
Horwood:
I am grateful for the hon. Gentleman’s
intervention, and think that we might find common ground on many things
during the debates on the clause, as we have a common interest in
making the Conservative party honest over this issue. He is an
unapologetic supporter of the nuclear industry and I am an unapologetic
opponent of it, and neither of us believe in fudging the issue. He is
right that long-term storage and the management of that storage
involves responsible action by responsible Government—I think
that that was the term he used. That is clearly true. We have the waste
now, so we clearly have to address the issue. However, I am clear that
we should avoid the nuclear industry becoming a special burden on the
taxpayer, and we have to be clear on whether that subsidy is being
given. We heard evidence from the nuclear installations
inspectorate.
Dr.
Stephen Ladyman (South Thanet) (Lab): I cannot help
pointing out that the hon. Gentleman favours the carbon storage
industry being a special liability on the taxpayer. Therefore, as an
indirect consequence, the people who produce that carbon in the first
place are a special liability on the taxpayer. His attitude seems
completely
contrary.
Martin
Horwood:
The hon. Gentleman makes a reasonable point.
First, carbon storage is a good thing, while nuclear waste is a bad
thing, so I do not pretend to see why we should have a level playing
field between the two. Secondly, the Bill does not pretend to meet the
cost of carbon capture and storage. It is open, as we
have been on both sides of the Chamber, about the need to subsidise
carbon capture and storage in order to provide incentives. That is part
of saving the planet. The nuclear industry certainly is
not.
Dr.
Ladyman:
Carbon storage may be a good thing; carbon
production is not. We do not need carbon storage if we do not produce
the carbon in the first place. By proposing a system whereby the state
takes the liability in the long term for carbon storage, the hon.
Gentleman will be subsidising the production of carbon. The nuclear
industry will not produce any
carbon.
Martin
Horwood:
I absolutely deny that allegation. We have
already tabled an amendment to try to ensure that no new fossil fuel
fired power stations are built without a commitment to bearing the cost
of installing carbon capture and storage at a later date. We are
applying the same principle to the production of carbon, if not to the
storage. The hon. Gentleman is simply wrong. However, we are not on the
carbon capture and storage part of the
Bill.
Mr.
Reed:
I am exceptionally grateful to the hon. Gentleman
for being extremely generous with his time. Does he remember from the
evidence session that the Carbon Capture and Storage Association
believed that it was unreasonable for the private sector to maintain
and carry the costs of long-term carbon capture management—the
management of stored carbon. That, as a matter of principle in the
association’s opinion, should be a cost held and burdened by the
taxpayer.
Martin
Horwood:
That is broadly true. However, returning to the
subject of the clause—the funded decommissioning
programmes—there is a second area on which I would like
clarification from the Minister. In considering whether there is any
intention for the costs to be met by the taxpayer or through the funded
decommissioning programmes, what about the nuclear installations
inspectorate? That will continue after the active life of a power
station and is involved in the safe decommissioning, over a long
period, of the nuclear power stations. From my research, it appears
slightly difficult to establish exactly what the net cost of the
nuclear installations inspectorate is. Perhaps the Minister will
confirm that?
I can
see that the Health and Safety Executive has an overall budget of
£59 million, which includes major hazard outcomes that I
understand, in turn, include the nuclear installations inspectorate.
The income from nuclear installations is the HSE’s major source
of income and yielded £24.2 million, but I am not clear whether
there is still a subsidy hidden in there, because the details are not
clear. The HSE has a net cost of £35 million a year, so I would
be interested to know how much of that is a hidden subsidy to the
nuclear industry.
Then we have
the Committee on Radioactive Waste Management, which gives vital advice
on the long-term decommissioning. The estimated running costs of CoRWM
are £2.3 million in 2006-07. There is continuing expenditure for
that body as well. Then we have Nirex, the figures for which I do not
have to hand. Can the Minister also clarify how much we spend on Nirex
and whether there is any intention to recover any of those costs from
the funded decommissioning programmes?
We then have the major accident
costs, the subject of a statutory instrument only the other week.
Discussion of the instrument left us unclear whether there was another
long-term subsidy by the taxpayer—for those costs above which
the nuclear industry could not get insurance—and whether that
long-term liability was yet again being picked up by the
taxpayer.
Finally, we
have the big daddy of them all, the Nuclear Decommissioning Authority.
I was stunned when I realised the scale of the public spending. The
NDA’s own action plan says that in
2007-08
“the cost of
delivering our remit is expected to be approximately £2.79
billion”,
with a total
anticipated income of some £1.37 billion. Within that budget,
the cost of running the NDA—the headquarters and administration
costs—will amount to no more than £60 million. That
leaves an enormous public subsidy of more than £1 billion a
year, and I had not realised that that is the largest part of the
Minister’s departmental budget. In relation to the settlement
that will allow the NDA to increase its budget in a year, a spokesman
for the NDA said
that
“this is a good
settlement”.
I am sure
that many local authorities would agree. Many of the programmes that
are being cut—for instance, the business resource efficiency and
waste programme in recycling and waste production—would agree
that that is a good settlement for the nuclear
industry.
The
Minister for Energy (Malcolm Wicks):
Does the hon.
Gentleman accept that, as nuclear reactors were built during a period
of public ownership, we have a duty now in terms of the nuclear legacy?
The Government recognise that duty but is it the position of the
Liberal Democrats that we should do nothing about the legacy of nuclear
waste?
Martin
Horwood:
We can categorise that as the Northern Rock
defence. It is clear that decommissioning and the work of the Nuclear
Decommissioning Authority are important. Since the country has got
itself into the situation of having that huge nuclear legacy to clean
up—Liberal Democrats would not have got ourselves into that
situation—clearly we have to fund it, and it would be
unrealistic at this stage in the old nuclear industry’s lifespan
to try to retrieve any of the vast public funds spent on it. The
question is whether the funded nuclear commissioning programmes expect
that mistake to be repeated, or will we take the opportunity to avoid
having yet more billions of public money poured into decommissioning
costs in the distant future, after the current generation of nuclear
power stations is long gone? Will we take the opportunity to give the
Minister powers to recover those costs from the nuclear industry? That
there should be no subsidy to the nuclear
industry is, after all, the principle that the Conservative party
certainly has espoused, and it is part of the public debate. That is a
crucial
matter.
Dr.
Ladyman:
I am sure that the hon. Gentleman did not mean to
mislead the Committee, but he said that the Liberal Democrats would not
have got into that position. May I remind him that the Liberal
Democrats were in favour of a state-controlled nuclear
industry?
Martin
Horwood:
I am intrigued by that—I will have to
check previous manifestos. I have never been in favour of nuclear power
and have never been a member of a party that has. I think that the hon.
Gentleman might be playing with words on the subject of state control
in that, given that one has the industry, it might be a good idea to
have it under state control. Liberal Democrat policy is not the subject
of the clause and I will not give way further to the hon. Gentleman on
that point.
We must
conclude that we are talking about a vast part of Government
expenditure. The Department for Business, Enterprise and Regulatory
Reform’s website has some core statistics about the
Department:
“We
employ around 2,500 staff, plus 4,000 in our executive agencies. Our
annual budget is just over £3 billion. Half of this is spent on
nuclear decommissioning; the rest on a range of issues from trade
promotion to energy security
supply”.
I
think that Department for Business, Enterprise and Regulatory Reform is
a bit of a mouthful and perhaps the Department ought to be more
accurately described as the Department for nuclear subsidy, since that
is what it is providing from the largest part of its
budget.
Martin
Horwood:
The Minister says that it is a legacy but the
point of new clause 23 in particular is to enable the Minister not to
repeat the mistake that has landed us with that legacy from the old
nuclear industry. It will not land us with future billions of public
subsidy from the new nuclear
industry.
Mr.
Reed:
I am exceedingly grateful for the generosity that
the hon. Gentleman has shown. It is important, despite our obvious
differences of opinion which have been pointed out, that we deal in the
facts in the Committee. The overwhelming majority of the costs that he
is taking about, which are the responsibility of the NDA, are due to
our military nuclear programme. Does he accept that what we are dealing
with is the bill from the cold
war?
10.45
am
Martin
Horwood:
I would like to hear the Minister’s
precise take on this: if we can separate the costs between the military
programme costs and the costs of civil nuclear power industry, that
might be an interesting debate to have.
New clause 23 sets out
generously to give the Secretary of State an enabling power
to
“make regulations to
include the value of grant payments made by him to the NDA under this
section in ‘funded decommissioning programmes’, as
defined in section 41 of the Energy Act 2008.”
The original section in the Energy Act
2004 made it clear that the proper terminology for the public subsidy
of the NDA was in the form of grants. This same principle could be
applied to the nuclear installations inspectorate and to any future
nuclear liabilities financing assurance board, which, as suggested in
the energy White Paper, would look after the funding liabilities of the
nuclear industry. It could be applied to Nirex but the NDA is by far
and away the most expensive part of this whole exercise.
The reason we are suggesting
this new clause is to allow the Minister not to repeat the mistakes of
the past, but to recover some of the vast public cost of
decommissioning the new generation of nuclear power stations. I hope
that he will look kindly on what is an obviously sensible
suggestion.
John
Robertson (Glasgow, North-West) (Lab): I was not intending
to speak on this new clause, but I decided I had to put the record
straight. The hon. Gentleman has been, to say the least, selective in
what he has been saying in relation to energy in its entirety. His new
clause sets out enabling powers, but only in a selective way. I would
say that if he were going to put forward new clause, it should have
been all encompassing. Anything to do with decommissioning should
relate to all types of energy, and not just to the one he particularly
dislikes. Therefore, I advise my hon. Friend the Minister that the new
clause is not necessary because everything is in the Bill and all the
angles are
covered.
The hon.
Gentleman has on many occasions invoked the California system for
energy—a system that relies on its neighbouring states to
provide its energy—and that results in that state occasionally
getting itself into bother with its lack of energy. People in Nevada
are getting very upset that they are supplying California with a lot of
energy from its nuclear power stations. They take great exception to
California using its clean attitude to say that everything to do with
nuclear power is bad and, therefore, implying that its neighbouring
state is bad. Again, California has a selective way of looking at
things, just as the hon. Gentleman and his party have been so
selective.
The hon.
Gentleman talked about the nuclear industry and its special burden on
the taxpayer, yet all types of energy present some kind of problems to
taxpayers. Back in the old days of coal bings, there were problems with
mud slides throughout the country. That was a cost to taxpayers, who
had to pay money to make sure the bings were safe. If we had known at
the time they were going to be as unsafe as they were, we would have
done something about it, but, in the case of nuclear, we have learned a
great deal.
I invite
the hon. Gentleman and his colleagues to the all-party group on nuclear
energy, which will have the chairman of CoRWM at its meeting tomorrow
morning. The hon. Gentleman should come along and listen and ask
questions because, unlike him, we are not blinkered and are quite happy
to listen to other people’s
ideas.
Martin
Horwood:
I thank the hon. Gentleman for that generous
invitation to breakfast. Will he answer one question if he has more
detailed knowledge of
CoRWM than I do? Is the latest thinking from CoRWM that any long-term
storage facility will have an ongoing accessibility into the next
century?
John
Robertson:
That is a very good question. I suggest that
the hon. Gentleman comes along to the meeting and asks it. I hope that
he will get the answer that he is looking for. He might not, but he
will get an answer and that, in itself, is a step
forward.
The hon.
Gentleman talked about the capping of nuclear waste. A gentleman
described to me that today’s nuclear waste could be
tomorrow’s fuel. If that is the case, I stress to the Minister
that we should not look at capping nuclear waste, but should store it
so that it is retrievable because one day we may be able to use
it.
The hon. Gentleman
talks about years and years and I think that he is talking about
centuries and about the stories about nuclear fuel. Thinking back to
where we were 100 years ago in relation to energy, with the best will
in the world, I cannot imagine where we will be in 100 years. We may
not even need nuclear fuel, but we need it today and we have to look at
the problems that we have with
energy.
The hon.
Gentleman’s argument falls down because he is not willing to
look at the big picture. He wants to look at a picture and he is happy
as long as the part at the end is not in it. The new clause should not
be passed because it is so selective. I recommend that my colleagues do
not support it.
Mr.
Brian Binley (Northampton, South) (Con): I apologise for
my rather throaty vocal approach. On one occasion in the Chamber, I
said that I am sometimes on another planet. I have not yet touched down
on planet Liberal, but it seems that we are being invited to do so in
debating the new clause. I am not attracted to that
planet.
I am a
committed supporter of the nuclear industry and think that we need to
send out a robust message to it so that we can close the gap that the
hon. Member for Glasgow, North-West referred to. The problem that we
are facing is that the lights may go out; it is not very difficult to
conceive of that. Incidentally, in the daytime, our light is provided
by a nuclear reactor and I wonder why the Liberals never bring that to
the public’s attention. They might think about that fact a
little. We call it the sun, but it is a nuclear
reactor.
I have a
specific question for the Minister, which he might refer to when
summing up. As I said, I want to give as robust a message as possible
to the industry and to help it as much as possible because we need its
help. This is an issue of mutual interest. I must therefore clear up a
small matter. Under subsection (8), a person who submits a
decommissioning programme will have to pay the fee determined by the
Secretary of State for the Ministry to do that work. Will the Minister
give us some idea of the size of that fee so that the industry can have
a little understanding of the matter? It will not be a massive amount
in the great scheme of things, but I think that it will be of interest
to the
industry.
Charles
Hendry:
I welcome the fact that the first time we have
come to discuss nuclear policy under the Bill is when talking about
issues of decommissioning. That
shows that the two matters must go hand in hand. We have debated a new
generation of nuclear plants many times. I was rummaging through my
collection of old copies of The Guardian the other
day.
Charles
Hendry:
As I do. I came across the issue of Friday 10 June
1983. The other 4,500 copies in my collection seem to have been lost,
but for some reason I kept that one. The front page says, “Seven
nuclear plants planned”. One can tell that it is The
Guardian because that is the lead story and the second story is
that the Tories won the general election. It was being said in those
days that Sizewell B would be the first of a tranche of seven new
reactor and it was said that it would be up and running by 1990. What
wishful thinking that was. Nevertheless, we have discussed many of
those questions before, and it is good that the House has had the
chance to look at them again.
Charles
Hendry:
I wish to reassure the Minister that the days when
people say, “Tories on course for a landslide” are on the
way back. History is on the verge of repeating
itself.
We wished also
to celebrate the Minister’s personal journey from being an
anti-nuclear campaigner. As he mentioned, he used to go around the
country saying, “Och, och, och, there’s a monster in the
loch”. Now he walks up the coast of Suffolk saying,
“Look, look, look, we want another nuke”. Throughout his
journey, we have seen how we must address these
issues.
We must
consider decommissioning and waste in the context of the general
approach to nuclear policy. The Government’s role in energy
policy should be to seek energy security and as much energy as possible
from no or low-carbon sources. That means that the Government should
set the framework, and business should decide where to invest. The
Government should not micro-manage or decide exactly where that
investment should go. We have seen that the Government cannot readily
build a dome or a football stadium, so what hope would they have of
putting in place and constructing an entire national energy
policy?
Within the
national energy policy, the Government should seek to be
technology-neutral. Our view is that if people wish to invest in
nuclear energy, they should be free to do so. There should be no
principled objections to it. Nevertheless, new build projects must be
subject to certain criteria. There should be no subsidy; the full
running, building, decommissioning and waste costs must be covered by
the companies that
are seeking to build the new reactors. My understanding is that we and
the Government are essentially at one on that
consideration.
Of
course, there will some debate about what “no subsidy”
means. Liberal Democrat Members have referred to it this morning. No
subsidy does not mean that contractors cannot agree contracts with
Government bodies to buy the energy that they produce. That is how the
new-build programme was partially funded in Finland, and it is a
legitimate commercial arrangement. It does not mean that those
businesses must be responsible for the waste-management costs for the
next 100,000 years. Certainly, they should be responsible for the
management of the waste when it is on site, and for the cost of
disposal. However, after a given period, it is right that the
Government should take on the management of that programme, but with
the companies that have created the new waste covering the costs of
their portion of that
waste.
Martin
Horwood:
I was merely seeking to clarify the point of who
would be responsible for the very long-term storage of waste if the
contractors were not to be. However, the hon. Gentleman may have
answered my
question.
Charles
Hendry:
The approach that the contractors would take out a
bond that would contribute towards any additional costs of the residual
management of that waste over a longer period is the right one. It
should not fall on the taxpayer; it must be covered by the companies
themselves. However, the hon. Member for Copeland was absolutely right
to try to separate the matters of legacy waste and new-build waste. It
would be nonsensical to have a deep repository for the long-term
storage of legacy waste, funded by the taxpayer, and to build a new
repository for the much smaller amount of new waste. It is inevitable
that they will be stored in the same place. The Government make that
point in the White Paper, in which they also state that there will
therefore be incremental costs for storing that additional waste in the
repository and for the infrastructure implications. Those are the costs
that the industry should bear.
We also think
that there should be a level playing field for new-build nuclear
projects. That means addressing the issues of site and type approval
and also having a streamlined planning approach. We are not happy with
the Government’s approach to the infrastructure planning
commission, but that is obviously a matter for a different Bill. In
order for a streamlined planning approach to happen, various things
must be recognised. First, the nuclear installations inspectorate needs
to have the necessary resources. Unfortunately, it looks likely that it
will not now be able to evaluate the different types of reactor before
it. In the next few weeks, we expect that it will have to narrow it
down from four reactor types to three and it is unfortunate that it
does not have the skills base
available.
11
am
Steve
Webb: Northavon (LD)
Clearly, the cost to the NII of inspecting
potential new sites falls into the category of the incremental costs of
the new generation, which the
hon. Gentleman mentioned. Given that it is incremental, should not that
cost be met by the industry to avoid public
subsidy?
Charles
Hendry:
The work that the NII does at this stage when it
evaluates different reactor types is essentially work on behalf of the
Government in assessing which ones should be allowed to go forward.
That work would not be done if there were not a new build programme in
place and I think that it would be right for contributions to be made
from the industry towards the cost of the NII’s work in that
area. However, I also hope that the NII will be given the staffing
levels that it requires because it cannot cope with its current
workload.
We must
build several reactors of a single type. If we go down the path that we
have taken before—having one of this type, two of that one and
one more of something different—the whole new programme will
become completely unaffordable and unimaginable. We must recognise that
we will probably end up with a fleet of a number of reactors to the
same design type. We must also ensure that not too many add-on extras
are included during that process. During the evaluation of different
reactor types, I hope that the Minister will urge the NII not to say
that every possible bell and whistle must be added on. That is what
happened with Sizewell B—it added £1 billion of extra
costs and some of the elements that were included have never been used
in over 10 years of operation. That is an important matter.
We are more generally concerned
about the skills base within the nuclear sector. It is encouraging to
look at places like the university of Central Lancashire and the
courses that it wishes to lay on and develop, and at Southampton
university, which is keen to develop expertise in those areas. I hope
that the Minister will tell us how the Government plan to build up the
skills base in this area, and how he will keep Parliament informed
about that.
My own
approach has been greatly influenced by what I have seen. The various
journeys that I have made are covered in the Register of
Members’ Interests and include visits to not only nuclear but
wind, oil and gas facilities. I had the opportunity to go to Sizewell
B, which is an absolutely extraordinary plant. It has been operating
for a year and half at full tilt, and for those who have concerns about
the security of modern nuclear plants, bearing in mind that it is over
10 years old, it is an incredibly safe facility and a great credit to
the industry.
I also had
the opportunity to go to Oskarshamn in Sweden, where a model is being
built for the sort of repository that is thought appropriate for deep
disposal. I urge all those who are sceptical about nuclear waste
disposal to go to look at that facility. It is 500 m underground and
they take 10,000 people a year down there. Because of its
communications programme, it has managed to get 80 per cent. support
within the local community for the burying of nuclear waste in that
location. When Nirex appeared in the 1980s, there was 100 per cent.
objection to nuclear waste being buried in those communities. However,
if we look at how the Swedes have done it, with the thoroughness of
their technology, their scientific approach and their approach to
involving the local community in trying to persuade
it about the right approach to deep disposal, we could learn some
significant lessons. I came away convinced that we could manage the
long-term deep disposal of waste in a constructive and safe
way.
I was also
struck by the way in which waste is stored on site; in that nuclear
facility, it is kept in pools of water. Somebody on the edge of the
pool is a little further away from it than from where I am to where the
Minister is, but not by much. If someone stands on the side of the pool
with a millisievert counter that measures how much radiation there is,
the counter does not move. I did not get any radiation. I was rather
disappointed as I had hoped to get a small amount—0.1 or 0.2
millisievert—to know that I had genuinely been there. I got much
more radiation in the course of the aeroplane flight on the way, not to
mention the carbon issues that will have gone with that. It is
fascinating to see how that waste is stored safely on site. If we have
doubts about the programme, we should investigate how it is done so
that we can be reassured.
We are told by those in the
industry that they are happy to invest on that basis of being
responsible for their full-term costs and not having a subsidy.
Clearly, the greatest issue of concern to the public is how the waste
would be handled in the longer term. On Second Reading, I said that I
would table an amendment whereby that the industry could not start to
operate a new plant unless a site had been identified. We wanted at
that point to drive forward the Government’s work in identifying
a suitable long-term repository. We have not tabled that amendment
because on further reflection we felt that it was not the right way
forward. I was persuaded that it would be possible for a site to be
found which, on further geological investigation, proved to be
inappropriate, so that people would have gone ahead with their
investment plans only to have the carpet pulled from underneath them as
they got close to it. That would be unacceptable. I was also persuaded
that it would give an incredible power to local authorities. If a site
was identified and it seemed to be going ahead, an authority could say,
on the day before the announcement was due to be made, “Hang on
guys, we need another £50 million on this if we are going to do
it.” That would give them an unacceptable amount of
influence.
I was also
concerned that we should not give a signal to the industry that we were
seeking to obstruct its investment. We understand that boards around
the world are looking with great care at the United Kingdom market, but
they are also looking at other markets where they could invest. If we
want them to feel that the UK is a suitable place, they have to feel
that a potential alternative Government would not put additional
hurdles in their way or obstruct the investments that they are seeking
to make. It behoves us above all to take a responsible approach to
this. We aspire to be a Government. There will be different views on
both sides of the Committee about this, but we have to be realistic in
our approach.
We are
encouraged by the approach taken in the Government’s White Paper
on nuclear power published in January. The conclusion on page 99 bears
repeating:
“The
Government considers that it would be technically possible and
desirable to dispose of both new and legacy waste in the same
geological disposal facilities and that this should be explored through
the Managing Radioactive Waste Safely
programme. The Government considers that waste can and should be stored
in safe and secure interim storage facilities until a geological
facility becomes
available.
Our policy
is that before development consents for new nuclear power stations are
granted, the Government will need to be satisfied that effective
arrangements exist or will exist to manage and dispose of the waste
they will produce.”
That
strikes the right balance in this equation, and we are looking to move
things forward with the Government on that
basis.
I have a couple
of specific questions. Clause 41(3)(a) refers to “written
notice”. What does that mean? Does it just mean an e-mail to the
Secretary of State saying that this is what is being considered? Is
there a standard form that will be expected to be filled out? Can the
Minister give us some more information about that? Subsection (7)
concerns decommissioning standards and processes. Who will set those?
There seems to be a chicken and egg situation. Should not the
Government first set the standards for decommissioning so that industry
knows what it is estimating the costs for, instead of expecting the
industry to come forward with its own estimates which may then prove to
be unacceptable to the Government? The Government should take the lead
here. The Minister may intend that that is what the Government would
do, but otherwise industry will try to guess what is in their mind.
That would be an unacceptable way forward. This may be covered in
clause 50 on the regulations and guidance, but it would be useful to
have some clarity.
More generally, how can costs
be estimated, given how construction prices will change?
Decommissioning will be carried out in 60 or 70 years’ time, and
if there is 10 years or so before the first plant is going to be
operational, they will then have worked for 40 or 50 years. We are
looking a tremendously long time ahead. What mechanism does the
Minister propose to build in to ensure that the funds will be available
to reflect the actual costs at the time when decommissioning takes
place? What would happen if there was a fundamental shift away from
nuclear in that time scale ? For example, what if there was a massive
advance in carbon capture and storage technology, renewables or fusion,
which my hon. Friend the Member for Northampton, South often talks
about, and that made nuclear no longer economically viable? How is
decommissioning going to be carried out, if the plant is not going to
be operated for its full cycle, and how would we ensure that the fund
had enough in it to look after the waste that had been generated during
that time?
I hope
that the Minister will see from the comments that have been made that
we are seeking to work with him in as constructive a way as possible. I
know that some people have deep concerns about nuclear power and how it
goes forward. Our obligation is to try to ensure that if people decide
to invest in it, they do so in a way that fully takes account of the
costs involved in the programme but, above all, provides safety for the
nuclear waste and decommissioning regime.
Mr.
Reed:
There is a welcome outbreak of cross-party consensus
on the issues that we are facing and discussing, particularly those
which the shadow Minister raised about regulation and the burden on the
NII. In recent months, considerable movement has been made to help the
NII with its staffing structures
and systems to meet the new nuclear challenge. He also talked about the
four reactors being whittled down to three. I would advocate going for
this now and looking at only two.
The hon. Member for Wealden
also talked about the need to have only one reactor type licence in the
UK to make the new nuclear project work. I would like to dissuade him
on that. We need more than one reactor type. Of those that I believe
are likely to be licensed and operated in the UK, the Westinghouse
AP1000 and the Areva EPR are the most likely types that we should be
considering. In fact, if we are looking at costs, expediency and
bringing generation to the marketplace quickly, it may be that we
should look only at EPRs, given that they are much bigger than AP1000s
and we would need fewer of them. These are obviously costs for the NIII
and the Department.
On
skills, we now have the National Nuclear Laboratory, coincidentally
based in my constituency. I should declare an interest as a former
employee of Nirex and because the NDA’s headquarters are in my
constituency. We have heard a lot of talk from Opposition Members of
both parties about Nirex and the costs associated with it. Nirex no
longer exists or has any legal responsibilities at all—the NDA
subsumed those at the end of 2006, and I was active in ensuring that
that took place. We are are developing a skills base in the UK, with
the national skills academy for nuclear, based just outside my
constituency in that of the hon. Member for Workington (Tony
Cunningham)—a £35 million project supported by the NDA,
the North West Development Agency and the industry. In addition, there
are the courses that are going to be undertaken by the university of
Central Lancashire, the nuclear decommissioning courses and nuclear
skills and training courses that are going to be provided by the
fledgling university of Cumbria, the National Nuclear Laboratory, and
the establishment of the university of Manchester’s Dalton
nuclear institute in Cumbria and the Wesklake science park in my
constituency. Those developments mean that the industry’s skills
base is set fair not only for the foreseeable future but for its
long-term needs and interests.
Steve
Webb:
I want to add a few observations on new clause 23.
In the well-informed and thoughtful contributions that we have heard
from around the Committee, I am yet to hear an argument against it. The
principle that the new clause is getting at concerns incremental costs.
When I intervened on the hon. Member for Wealden, he said that the
incremental costs of the NII, for example in relation to the next
generation, might legitimately be regarded as an incremental cost and
therefore that the industry should bear it. I did not hear during his
interesting remarks whether he supported the new clause. Presumably, to
the extent that there are incremental costs of the NDA, over and above
the legacy costs, why should not the industry bear them? It may turn
out that these costs are not that great. The costs of setting up new
generation nuclear power in the period that we are talking about may
not involve very large sums of money, which makes it all the harder to
see why the principle is being resisted.
It has been suggested that we
are being inconsistent with carbon capture and storage and long-term
nuclear waste. That is an interesting question that I want to respond
to. The fundamental difference between the two is that we cannot, in
any foreseeable future, avoid using more carbon and generating more
CO2 that we want to capture and may have to store. That is
not a choice variable for us now. We will be burning carbon for the
foreseeable future, so we are going to have to do something with it. We
want the carbon captured and stored, and we want to make that happen.
On the other hand, we have a choice about whether to generate new
nuclear waste. That is the fundamental difference. We know we have a
problem with carbon; as the hon. Member for South Thanet said, we do
not want it but we are lumbered with it. We therefore want to encourage
industry to generate carbon capture
technology.
11.15
am
The
Government’s position is not to incentivise new nuclear but to
be hands off. As the Secretary of State said in his statement to the
House on nuclear, they are not mandating new nuclear but simply saying
that they will let it happen, but who should bear any incremental cost?
New clause 23 says simply that the industry should bear it. We have
given the NDA as an example, and the NII would be another
one.
The new clause
is relatively simple, and to return to what one might call planet
Conservative, the hon. Member for Northampton, South made a point which
would, I think, go further than his Front-Bench colleagues. I have
observed that he is a free spirit. He may well want to incentivise new
nuclear energy. He wants to send a very positive signal, and might be
willing to say, “Look, we will pay a few of these on-costs if
that sends the right signals.” That is not the position of his
Front Bench colleagues at the moment. I have heard the shadow Secretary
of State say “No subsidies.”
NDA, NII and other incremental
costs are subsidies in a way that some of the other things that the
hon. Gentleman mentioned probably are not. I accept that public sector
purchase of nuclear energy—if we have got it—at the
market price is not a subsidy. However, such additional costs are
incremental, and the industry should therefore meet them. It seems an
entirely reasonable and rational proposition that, if new nuclear comes
forward, whatever one’s views about it may be, the industry
should meet the incremental costs. That is all we are trying to
ensure.
Malcolm
Wicks:
Good morning, Mr. Amess. This has been a
very interesting and full debate, and I am afraid that I may need to
take a few minutes to answer the rich array of questions. I will try
first to set out our arguments about the new clause and then go on to
answer some of the more specific and sometimes quite technical, but
important, questions that have been asked.
As I mentioned during the last
sitting, we are creating a framework to ensure that the operator of a
new nuclear power station is responsible for and makes prudent
provision to meet the full costs of decommissioning and its full share
of waste management costs. That objective was stated in our
nuclear White Paper, published in January. The effect of the framework
is to ensure that, once a new nuclear power station has been
decommissioned, the operators of that station, having made provision
for the back-end costs throughout its generating life, return the site
to a state agreed with the regulators and the planning
authority—it is likely to be similar to
greenfield.
The new
clause would allow the Secretary of State to make regulations to
include the value of grant payments made by the Secretary of State to
the NDA for the purposes of new build waste and decommissioning costs.
That would allow Parliament to scrutinise payments related to new build
made by the Secretary of State to the NDA for the disposal of
intermediate-level waste and spent fuel. Although the proposed effect
of the new clause is not completely clear, I believe that the intention
of the hon. Member for Northavon in tabling it is to allow the
Government to set out now, in legislation, the costs that will be
charged to operators for waste disposal, and how those costs will be
calculated and allocated to the Government and the NDA.
Before I go on to speak in more
detail about the new clause, let me clarify that the Government
anticipate no statutory role for the NDA in relation to the
decommissioning and on-site waste management of new nuclear power
stations. Those activities will be carried out by the operator or by
contractors working for the operator and will not be covered by the
fixed price the Government intend to set for the disposal of
intermediate-level waste and spent fuel.
The
Government are currently considering the best approach to scheduling
when and how funds to cover the fixed unit price for waste disposal
should be paid by new nuclear operators. As we made clear in the White
Paper and in the consultation on the guidance published on 22 February,
the Government intend transparently to set a fixed price for the
disposal of intermediate-level waste and spent fuel. The Government
also intend, again transparently, to agree a schedule of payments with
new nuclear power station operators in advance of the construction of a
new nuclear power station.
In so far as it concerns
regulating the way in which the fixed price is set, the new clause is
therefore unnecessary. The method that the Government will use to
calculate waste and decommissioning costs was published as part of the
draft guidance consultation. We also set out a road map that contained
an indicative timetable for publishing projected waste disposal and
decommissioning costs based on the technical guidance and the
methodology set out in the consultation.
A fixed price for waste
disposal would have to be agreed for each new station to ensure that
the sum is based on the most up-to-date information available. That sum
would have to be set out in the operator’s funded
decommissioning programme since it will impact on the target amount for
the independent fund. Those who are responsible for the fund will
measure the performance of the fund against that sum regularly
throughout its life. Taken together, we believe that those steps should
ensure adequate transparency about the way in which the sum is
calculated and charged. The Government have not yet determined how
moneys payable by the operator in relation to the waste disposal
service will be paid into public funds. Some of
those matters are touched on in the consultation. The new clause is
therefore not only unnecessary, but premature.
It is clear that the Committee
has a keen interest in what role is envisaged for the NDA in relation
to new nuclear build. The NDA has clear primary objectives, which are
to clean up legacy stations and waste under the Energy Act 2004, to
develop low-level waste solutions and to implement the geological
disposal for higher activity wastes. The work that the NDA is doing to
develop a parametric cost model for a geological disposal facility will
continue to feed into work to establish a fixed unit price for the
disposal of intermediate-level waste and spent fuel. In addition, in
the past, the NDA has provided expert advice on British Energy’s
decommissioning plans. There could be a role for the NDA, with its
expertise in decommissioning and radioactive waste management, in
providing similar advice for new build operators, the managers of the
independent funds or the new advisory body that the Government will set
up— namely, the nuclear liabilities financing assurance
board.
The Government
and the NDA will need to take a view on whether it is appropriate for
the NDA to play such a role in providing such advice for new build in
the light of the NDA’s primary objectives. I reiterate that we
have no intention of subsidising new nuclear. With the Bill, we are
taking steps to ensure that the risk of costs falling to Government is
remote at all times. We have already said that operators will be
required to pay their full costs of decommissioning and their full
share of waste management costs.
By full decommissioning
costs—we had a useful exchange on this during our last
sitting—we mean dismantling the plant at the end of its
operational life and returning the site to a condition agreed with the
regulators, which is likely to be a state similar to greenfield,
depending on the state of the site before the construction of the
station. By full share of waste costs, we mean the costs that are
directly attributable to disposing of new build waste in a geological
disposal facility; a contribution towards the fixed costs of building a
geological disposal facility, which is a very important provision; a
significant risk premium over and above those costs to take account of
uncertainties about the cost of constructing a geological disposal
facility and the time when it will be able to accept new build waste;
and the costs of managing that waste pending disposal or pending
transfer for disposal. I put it to the Committee that that very full
list shows our ambition and, indeed, determination that a full share of
costs will be
met.
Martin
Horwood:
The Minister is saying many encouraging things,
but he is not saying explicitly—perhaps he could do so
now—whether the sum total of what he has said amounts to the
whole work currently provided for the legacy nuclear power stations by
the NDA being wholly funded by the private sector with respect to new
nuclear. Is that what he is saying in crystal clear
terms?
Malcolm
Wicks:
I have explained that the primary objective of the
NDA is to clear up our legacy of nuclear waste. What I am at pains to
say is that we are
doing our utmost to ensure that, as new waste is produced from new
nuclear power stations, the full cost will be met by the private
companies. I do not know whether that has clarified the point for the
hon. Gentleman, but I shall continue, because a number of specific
points will come up soon.
We are committed to ensuring
that we have a robust framework in place that will enable the private
sector to make proposals for building new stations, while minimising
the risk to the taxpayer. Such a framework will provide certainty on
the operator’s waste disposal liabilities. We will reflect
carefully in the coming weeks on the debates in Committee and take into
account representations and responses from the guidance consultation to
see whether we need sensibly to make any further provision to secure
our goals.
I shall
deal with some of the questions that were asked. The hon. Member for
Cheltenham asked who covers the cost of the NII. The costs of the NII
will be recovered from operators, as is currently the case with its
costs for regulating existing nuclear installations, and operators will
be expected to make provision in their independent funds to meet those
costs. I hope that I have satisfied the hon. Gentleman on that
point.
The hon. Member
for Wealden asked about the related but slightly different matter of
staffing requirements, which has been of concern to us. The Health and
Safety Executive estimates that, in the current circumstances, around
230 full-time equivalent nuclear safety inspectors will be required at
the peak of its programme of nuclear regulatory work. Following the pay
agreement in November, the HSE launched a recruitment campaign for new
inspectors in December, and I understand that it has had a good
response. Interviews will be held by the end of March and a new
campaign will be launched shortly in the light of the
Government’s January announcement supporting new
build.
The hon.
Member for Cheltenham asked about the costs of Nirex, which is subsumed
within the NDA. We believe that it is right and proper that the
Government are finally taking responsibility for cleaning up public
sector legacy waste. Nirex no longer exists, but in any event, its
costs were met by the industry. He also asked who funds the NDA and
whether new operators will pay towards those costs. I hope that I have
partly answered that, but I emphasise that the NDA is funded by public
funds and the income that it generates. Operators of new nuclear power
stations will cover their full decommissioning costs and their full
share of waste management costs. The NDA’s primary function
relates to the legacy, as we have said. In so far as it will be
involved in new build, the costs will be met by operators—for
example, through the fixed unit price that they will pay for the
disposal of intermediate-level waste and spent
fuel.
The hon. Member
for Cheltenham asked about insurance for major incidents. I remind the
Committee that the Paris and Brussels conventions set a financial limit
for operator liability in the event of a nuclear incident, above which
public finds may be used to meet third-party liability. They are set
out in European Union law, and we have no option but to follow them. In
exchange for that, the operator accepts strict
no-fault liability for personal injury and third-party property damage
caused by nuclear matters for which the operator is responsible up to
the cap. That provides legal certainty not only for operators, but for
potential claimants who, in the event of a nuclear incident, would know
against whom to make their claim. It will also ensure that claims are
not unduly complicated or lengthened by having to prove fault or having
multiple defendants and cross-claims. Operators are required to have
insurance or other financial security to cover the costs of any claim
up to the cap.
The
Government do not provide any insurance to cover such damages. It is
possible that they may do so in the future, because the Paris
convention has been amended to cover types of damage for which
commercial insurance is not currently available. If the Government do
provide insurance, we would charge the operators a premium for
it.
11.30
am
Again, the hon.
Member for Cheltenham asked about the costs of the new advisory board
that we are setting up on nuclear financial liabilities. Let me
reassure him that we intend to recover costs, such as those for
independent advice provided to the board by nuclear power station
operators. The operating costs of the board should be recoverable under
the Bill. In other words, we want to ensure that the operators will pay
those costs. That will include any independent advice that they seek.
As a non-statutory body, there will be no ongoing financial commitment
created by the formation of the
board.
The hon.
Gentleman asked a question, which was taken up by my hon. Friend the
Member for Copeland, about military nuclear costs vis-Ã -vis
civil nuclear power costs. I understand that an inventory of the
radioactive waste that the UK has to dispose of is produced and updated
by the NDA. That inventory identifies the amounts and types of waste
that have been produced by different nuclear installations, including
military waste and waste from civil nuclear plants. Based on that
inventory, it should be possible to estimate the proportion of the
costs for dealing with legacy waste that is attributable to military
activity and that which is attributable to civil nuclear power
stations.
Malcolm
Wicks:
I am saying that it should be possible to do that.
As I understand it, we do not currently have data on that matter. Does
the hon. Gentleman not accept that we have a legacy commitment? It is
not at all clear to me whether the Liberal Democrat party understands
that there is a problem to be dealt with and whether it supports the
Government in dealing with it. Would it rather—I hope, not
literally but perhaps metaphorically—brush it under a carpet
somewhere? I am not clear whether the Liberals understand the legacy
that we have and the Government’s determination to tackle
it.
Mr.
Reed:
May I try to shed some light on this issue? After
the Committee finished last week, I studiously went to the National
Audit Office hearing, which
discussed the NDA’s accounts. I listened with real interest and
it was explained to that committee that the cost of decommissioning
historic reactors in this country is approximately £16 million
out of the current £73 billion liability cost from the NDA. The
remainder relates to the military
programme.
The hon.
Member for Northampton, South asked about the fees that will be charged
by the Secretary of State. As is the case with the NII, the Secretary
of State will look to recover costs incurred through fees charged for
assessing funded decommissioning programmes. We will lay regulations in
due course to set out those fees. I cannot give a figure, because we
will not know it until we have established the nuclear liabilities
financing assurance
board.
The hon. Member
for Northavon asked who will pay for generic design assessment. The
regulators will recover the costs of the GDA process from the
requesting parties—the vendors of nuclear reactor designs who
have applied to have their designs
assessed.
Dr.
Alan Whitehead (Southampton, Test) (Lab): I have a genuine
question that I do not know the answer to. Will any requester of
generic assessment, whose submission is not assessed during the
process, have new rights to recover any costs from their submission or
to legal redress on the grounds that their submission has not been
assessed?
Malcolm
Wicks:
We have something in common: I agree that that is
an interesting question but nor do I have a precise answer. If an
answer arrives, I will let my hon. Friend
know.
I
was about to say, however, that we believe it right that the
regulator’s resources should be focused on those designs that
have the greatest chance of being built in the UK. It is right that the
generic design assessment process should be carried out in a reasonable
time frame. The Government are keen to ensure that a competitive number
of designs is assessed. Given those objectives and the resources
involved, reducing the number of designs assessed from four to three is
sensible, and we expect to hold a prioritisation process shortly. The
hon. Gentleman raised an important question. If I can help him with an
answer later, I
will.
Dr.
Ladyman:
To what extent are we expecting the inspectorate
to reinvent the wheel? Those designs have been approved in other
countries, which are every bit as clever and as experienced as us at
nuclear matters. Much of the information will be in the public domain
already and will have been considered by the inspectorates of other
countries. To what extent are we reinventing the wheel and to what
extent are we adding value to the
process?
Malcolm
Wicks:
I understand that question, which raises an
important issue. I need to be careful, as a layperson, because of the
independence of the assessors. It is important that professionals in
the HSE and the nuclear inspectorates do their work. However, my hon.
Friend raised an important question. As a
layperson, I would have thought that we should avoid the danger of, as
he puts it, reinventing the wheel. I am sure that our inspectorate
would take into account whether a reactor or piece of kit has been
assessed elsewhere in the world, by people whom we respect and whose
professional integrity we accept. The process is complex and will take
some time, but it should not be elongated for the sake of it. That is
the point that my hon. Friend
raised.
The hon.
Member for Wealden raised the important matter of skills, which is of
concern to us and across industry. We need the skills base to develop
for Britain’s industrial and business base in the 21st century.
As the hon. Gentleman knows, the National Skills Academy for Nuclear
has now been established. It was developed with industry and the sector
skills council, Cogent. I was fortunate enough to be asked to speak at
the academy’s launch, in the Science museum, only a few weeks
ago. The academy will help recruit and develop skills. In its first
three years of operation, it aims to start in training 1,000
apprentices and 150 foundation degree students and to retrain 4,000
existing workers. The academy is part of the answer—it is good
news.
My hon.
Friend the Member for Copeland has already talked about the work of the
national nuclear laboratory. The hon. Member for Wealden acknowledged
that many universities, encouraged by the Government’s decision,
are now tooling up with courses of different kinds. That is important.
Outside the immediate nuclear industry, my Department is assisting
Energy and Utility Skills, the sector skills council for electricity,
gas, water and waste management, together with relevant employers, to
develop a skills strategy for the electricity
sector.
The hon.
Member for Wealden asked how we could get the costs right. Our cost
estimates are being built using the best available information and
data—more importantly, tested by external experts. We are
working closely with the NDA in that exercise and will update the cost
estimates as new information becomes available. The NDA is producing,
as I said, a parametric cost model: the parameters can be changed to
examine the cost implications of different scenarios. For example, the
model can vary parameters such as rock type, depth of repository and
waste inventories to reflect the impact on costs. The fixed unit price
offered to operators will be set on a case-by-case basis and not agreed
until such time as an operator comes forward with investment
proposals.
The risk
premium added to the fixed unit price will reflect what certainty we
have in the cost estimates at the time an operator requests a firm
fixed unit price. Over time, we will develop a greater understanding of
the costs of disposing of intermediate-level waste and spent fuel,
which might enable the Government to reduce the risk premium required.
However, in the early stages, we expect that risk premium to be
significant, to reflect our level of certainty in the cost estimates.
For decommissioning and waste management costs, there will be a fixed
price. Those costs will be calculated on the basis of risk, uncertainty
and inflation-adjusted estimates and will be regularly reviewed.
Contributions to the fund will be modified
accordingly.
Charles
Hendry:
I am grateful to the Minister; his response is
helpful. In the event that the risk premium were not
used—because the Government’s initial
costing was incorrect and the premium was therefore not
required—would that money be returned to the companies involved
or would it be kept by the
Government?
Malcolm
Wicks:
I am pretty sure that it would not be returned. It
is a premium that will be paid and is part of the commercial costs. The
hon. Gentleman asked me who would set the decommissioning standards. In
the consultation that we published on 22 February, we set out guidance
to operators on the technical steps that the Secretary of State will
expect them to include and cost in their funded decommissioning
programmes. Those steps are called the base case. It is based on
existing policy and regulatory requirements, with some additional
assumptions to ensure that it represents a comprehensive means of
estimating the costs. Operators will be able to propose alternatives to
the base case in their funded decommissioning programme, and the
Secretary of State will consider those on a case-by-case basis. It is
right to encourage innovation in safe and efficient decommissioning
techniques. Operators will always be required to satisfy the
requirements of the
regulators.
Mr.
Hugo Swire (East Devon) (Con): When the Minister and his
Department were updating the base case and the criteria surrounding
that, did he or his officials look at other cases for decommissioning
in Europe and other parts of the world? We have heard from my hon.
Friend the shadow Minister about Sweden, for instance. Clearly there
are lessons to be learned from other countries. When the Minister
updated the base case, did he look at those other
countries?
Malcolm
Wicks:
Yes. It might be helpful if later, or in writing, I
gave the hon. Gentleman more information. We are aware of international
experience. Colleagues and I visited the site in Finland where they are
building a geological repository. I will give the hon. Gentleman more
detail if I
can.
The
hon. Member for Wealden asked what would happen if changes in
technology meant that nuclear were no longer financially viable. We
would expect an operator’s funded decommissioning programme to
have financial security in place, so that in the event of early
closure, the operator could meet full decommissioning costs and its
full share of waste management costs. The cost profile of
nuclear—high fixed costs but low running costs—will make
it unlikely that, once operational, developers will chose to stop
generating
electricity.
I
might have to return to one or two other points in due course. The hon.
Gentleman asked me what “written notice” in clause
41(3)(a) meant. We expect discussions to be initiated by the operator
long before a programme is submitted. We will give an indication of
that process on pages 38 and 39 of the draft guidance. Formal
submission would take place before construction. Written notice would
form part of the submission of the funded decommissioning
programme.
My hon.
Friend the Member for Southampton, Test asked whether a vendor whose
submission was not assessed would be able to recover costs. I am
advised
that if the number of designs to be assessed is reduced from four to
three—I have said that that is likely—the costs already
incurred by the vendor whose design will no longer be assessed will not
be refunded by the NII. The NII must recover its costs for work carried
out: all the vendors currently going through generic design assessment
were made aware before the process started that the number of designs
was likely to be reduced before the detailed assessment began and that
payments made to NII would not be refunded. All four vendors chose to
proceed on that basis; I guess that it comes down to commercial
risk.
11.45
am
I was asked by
my hon. Friend the Member for South Thanet about the extent of the
NII’s work on the standard design. There are obviously
advantages to having standard designs that have been deployed overseas,
but it is also important that reactor designs satisfy the regulatory
requirements here in the UK. I want to assure my hon. Friend at this
stage that the inspectorate is working closely with overseas regulators
to take advantage of their knowledge and
expertise.
Martin
Horwood:
I thank the Minister and all hon. Members for
their comments. The hon. Member for Glasgow, North-West suggested that
our new clause did not go far enough in seeking to establish the
liabilities of the nuclear industry. I would be happy, therefore, to
contemplate supporting any amendment he wants to table to make it more
comprehensive. That would be perfectly
welcome.
The
contribution of the hon. Member for Northampton, South was very
refreshing. It is good to see someone who is a nuclear Tory and proud
of it. I had begun to think that the right hon. Member for Witney
(Mr. Cameron) had turned the entire Conservative party into
readers of The
Guardian. Now I discover only the hon.
Member for Wealden is still in that category.
The hon. Member for Wealden
made an important contribution, producing a nostalgically yellowing
newspaper from the long lost days when the Conservatives used to win
general elections. He was very robust in some of his statements. He
said absolutely that the Conservatives wanted no subsidy, and he raised
the legitimate question of what will happen if technology changes and
the nuclear industry becomes a dying industry, with many companies
facing insolvency. We discussed that important issue at some of the
evidence sessions.
The
hon. Gentleman seems to be trying to stick to his robust line of no
subsidy, yet it was also a virtuoso performance in demonstrating his
party’s flip-flopping on the nuclear issue—because, at
the same time, he seemed very concerned not to put too many hurdles or
barriers in the path of people wanting to invest in the nuclear
industry, even to the extent of asking for them to have the right to
have their insurance premiums back. He must have entertaining
discussions with his house insurers if he ever tries that argument with
them.
Clearly, the
reality is that, if those of us who really are arguing for a policy of
no subsidy actually succeed—and I think we have made great
progress on this today—and if all the possible liabilities and
costs of decommissioning that at the moment run into
billions of pounds per year are taken on board, I doubt that any sane
investor would touch this industry with a barge pole. If that is the
consequence of this policy of no subsidy, Liberal Democrat Members are
certainly willing to accept that. We would have to find alternative
ways of filling the energy gap described by hon.
Members.
The hon.
Member for Northampton, South said that the lights might go out if we
did not make progress on this issue, but that is not true. The truth is
that neither nuclear nor renewables are likely to be fully on stream
within the decade or so required to fill the so-called energy gap. That
gap will almost inevitably be filled by coal or gas-fired power
stations, and that is why carbon capture and storage is so vital and
why we place so much emphasis on it in other parts of the Bill. That
transitional technology will eventually lead to a different kind of
energy future.
The hon.
Member for Glasgow, North-West talked about the kind of energy policy
we might have in 100 years’ time and whether we could predict
it. He suggested that we could not, and that is the whole problem with
nuclear—it raises risks and policy questions for hundreds of
years, probably millennia, into the future.
John
Robertson:
The hon. Gentleman is being selective yet
again. That does not apply just to one form of energy; it applies to
them all.
Martin
Horwood:
I am grateful to the hon. Gentleman for his
intervention, but I will resist the temptation to enter into a
discussion on the unique nature of radioactivity and why I believe
there is a particular problem with nuclear
energy.
Mr.
Reed:
I think today has been listed, “Why not be
generous at Committee day?”, and I thank the hon. Gentleman
profoundly for giving way. In Norway, whose economy is based upon oil
and gas exploration, and throughout the European Union, it is widely
recognised by scientists that the extrapolation of those materials
produces radioactive discharges that would not ordinarily be brought
into the environment. Backed by their Government and facilitated by
their oil and gas companies, the Norwegians retain the radioactivity
produced as a result of oil and gas exploration and store it in a
repository in Himdalen. Does the hon. Gentleman think that that is a
potential way forward for the oil and gas industry in
Britain?
Martin
Horwood:
I am grateful for the hon. Gentleman’s
intervention and particularly for the crucial words, “Backed by
the Norwegian Government.” That is the common theme to most of
the nuclear storage and decommissioning proposals and policies that we
are discussing. I would happily entertain any technical suggestions
from Norway that he would care to communicate to
me.
The Minister
answered many of the issues that I addressed. He was comprehensive in
his comments, looking at the legacy of Nirex and the NDA, the
equivalent decommissioning costs for new nuclear, and the proposed
NLFAB. He was clear that, under his policy, in all those cases along
with the nuclear installations inspectorate, the operators were
intended to pay. However, in his genial and reassuring manner, he was
still very careful with his use of language, which I noted down. The
record will show that he said that
there was no intention of subsidising new nuclear and that the
Government would do their utmost to ensure that operators take up the
full cost. That falls short of a complete reassurance, and the debate
on the issue will continue. There is a great deal to be said about the
need to provide the taxpayer with an absolute assurance that the
billions of pounds of wasted public money, which was part of the legacy
of the first generation of nuclear power stations, will not be repeated
with the second.
Malcolm
Wicks:
First, I take the opportunity to return to the
question raised by the hon. Member for East Devon. He asked whether we
had looked at the experiences of some other countries when developing
the base case, and I briefly assured him that we had. However, let me
say in a little more detail that the base case is built on existing
policy and standards. Much of it has been built following the
consideration of a number of factors, including international
experience. As we have said, the base case assumes that higher activity
waste will be disposed of in a geological disposal facility. All
countries with a nuclear programme that have decided what to do about
the waste in the long term, have adopted a strategy of interim storage
followed by geological disposal. I hope that that reassures the hon.
Gentleman that we have looked carefully at the evidence.
I am advised
that earlier I accidentally said—and it was an accident if I
said it—that decommissioning would be subject to a fixed price.
I meant to say disposal, so for the sake of getting the record
straight, let me say that decommissioning and waste management will not
be subject to a fixed price. Operators will be required regularly to
reassess cost estimates for decommissioning and waste management, and
to modify contributions to the fund accordingly. Only the cost of
disposal of intermediate waste and spent fuel will be covered by a
fixed unit price. That is my understanding of the situation, but I
apologise to the Committee if I slipped up over some words. I hope that
sets the record straight.
The hon. Member for Cheltenham
was generous in his remarks. The Government and I are at pains to make
sure that the principle that there should be no subsidy by the taxpayer
be put into practice in the long term. We have looked very hard at
that. By establishing the advisory board, we have put in place the
potential for a good organisation to help ensure that we are on track.
I think I have reassured the hon. Gentleman on a number of issues, such
as the cost of the inspectorate, and would like to think that, despite
his scepticism about new nuclear, he understands our good intentions.
We have tried to ensure that the principle will be put into practice.
Nevertheless, I expect he is right to say that the debate will
continue.
Question
put and agreed to.
Clause
41, as
amended,
ordered to stand part of the
Bill.
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