Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Jenkin of Roding: My Lords, I notice that that provision is to apply only to network companies. Does it also deal with the problem of the hole in the buy-out fund following the passage into administration by companies such as TXU? Some 23 million is missing as a result. Is that to be covered?

Lord Whitty: No, my Lords, this provision deals with network companies which are in a monopoly position. It does not address generators or other companies which operate in the competitive sector.

Lord Jenkin of Roding: Perhaps it should.

Lord Whitty: No doubt the noble Lord will pursue that point both today and at later stages of the Bill, but as the legislation stands, it deals with protected monopoly situations and not the area open to competition.

The measure to ensure continuity of network operation represents prudent contingency planning to protect consumers, business and the wider economy. The insolvency of a protected energy company is very unlikely, but were it to occur or the threat of it to arise,

11 Dec 2003 : Column 834

leading to the normal administration process, then we need to have in place special administration procedures because the normal process might result in part of or, indeed, the whole of the network being closed down. I do not need to spell out the consequences of that. Under our proposals for energy administration, this remote but potentially very serious outcome will be prevented. The energy administrator will have an overriding duty to ensure that there is no interruption to the safe and efficient delivery of gas or electricity which might otherwise arise from insolvency. These measures were supported by responses to a DTI consultation conducted earlier this year. They are similar to existing provisions in the water and railway sectors.

Chapter 4 provides for an appeals mechanism to the Competition Commission against any GEMA decisions on modifications to the main energy Network Codes providing the detailed rules governing activities in the gas and electricity markets. This will increase the accountability of decisions with economic and commercial significance without unduly increasing regulatory uncertainty or delay. Again, respondents to the DTI consultation supported a proportionate appeals mechanism and the Bill intends to deliver just that. We have provided for a tightly constrained right of appeal to prevent trivial and vexatious appeals, and a tightly defined process to ensure a swift outcome.

The remaining clauses in Chapters 3 and 4 cover a number of smaller, market-related items including correcting an anomaly in the current definition of electricity supply by bringing electricity conveyed over the transmission network within the scope of the definition; streamlining the process for public inquiries in connection with applications for consent for power stations and overhead lines under Sections 36 and 37 of the Electricity Act 1989, allowing lead inspectors to be assisted by further inspectors to consider issues concurrently rather than the present system of considering them sequentially; enabling the Scottish Executive to provide additional support for renewables, corresponding to a similar power for England and Wales provided in the Sustainable Energy Act 2003; enabling the Secretary of State to charge a fee to recover the costs incurred in providing specific services to the oil, gas and electricity generating industries; and enabling modifications to the Petroleum Act 1998 to give effect to certain provisions in existing or future international bilateral agreements relating to offshore installations or pipelines.

This Bill provides sustainable solutions to a number of legislative problems related to parts of our energy strategy. It also provides the basis on which we can move forward on the clean up of the nuclear industry, on renewables and on the regulation of gas and electricity supply. It safeguards the reliability and security of energy supplies to business and household consumers alike, and provides the basis on which the objectives of the White Paper—economic, environmental and social—can be met. I commend the Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Whitty.)

11 Dec 2003 : Column 835

11.25 a.m.

Baroness Miller of Hendon: My Lords, perhaps I may begin by first thanking the noble Lord, Lord Whitty, for his explanation of this massive Bill and, secondly, say what a pleasure it is for me to face him for the first time across the Dispatch Box.

Although his brief includes, "Energy issues (including energy efficiency," hitherto I have dealt with such matters with his colleague, the noble Lord, Lord Sainsbury of Turville, from whose brief, according to a recent publication from the Cabinet Office, the subject of energy appears to have been removed. However, I note also that "energy and sustainable development" remain, as now, in the DTI brief of the Minister of State in the other place.

When he replies, I wonder if the Minister can tell us the reason for the division of this same responsibility between two different departments in the two Houses, and to which Secretary of State he has to report on the Bill before us if and when, as I am sure he will, he makes decisions and concessions as it progresses through the House. To whom will he go to check that such decisions are in order?

In asking that important question, I hasten to add that in no way do I have any doubts about the considerable ability of the noble Lord, Lord Whitty, or about our ability to work together on this Bill. Indeed, I look forward to it. We have no overriding objections to what is proposed in the Bill, subject to our examination of the detail, although we do have serious concerns about what has been left out.

Perhaps this is the appropriate place to mention that my noble friend Lady Byford will wind up this debate for the Conservative Opposition. I should also mention, by way of another prefatory observation, that although the noble Lord, Lord Whitty, has certified that this Bill is compatible with the European Convention on Human Rights, we believe that there are circumstances in which public rights of navigation may be "possessions" within the meaning of the First Protocol. For example, they may be crucial to the commercial success of a maritime enterprise that can obtain entry to and exit from its premises only by using such public rights. To the extent that compensation under Article 1 of the First Protocol is required to be paid to an individual as a consequence of the extinguishment of a public right of navigation, doubts must be raised about the adequacy of the procedure provided in Schedule 8 to the Electricity Act 1989 with respect to Article 6 of the European Convention on Human Rights. We may need to explore this much further during the course of the Bill.

I have just described this legislation as "massive", and indeed it is. It covers four different topics, each of which could have been the subject of a separate Bill. There is the civil nuclear industry, including the establishment of a Nuclear Decommissioning Authority. It addresses sources of renewable energy and I believe that I heard the Minister correctly when he referred to bringing forward amendments to that part. Although the noble Lord shakes his head, I was sure that I heard him refer to amendments. That is

11 Dec 2003 : Column 836

extraordinary. On the day after the Queen's Speech and just preceding the first day of the debate in reply, an announcement was made that there was to be another Bill. Further, on the very day that this Bill receives its Second Reading, we hear that an amendment is to be brought forward. A long time has passed between the publication of the White Paper and the production of the Bill. What is the matter with the Government that they need to bring forward amendments to their own legislation? They do not wait for us to do it; they bring forward amendments themselves.

The third part of the Bill concerns energy markets and regulation, including the creation of a single, national wholesale market for Britain, the British Electricity Trading and Transmission Arrangement, known by the acronym BETTA. The fourth topic, not highlighted in the excellent Explanatory Notes produced by the DTI but just mentioned by the Minister, is security and policing. My noble friend Lady Anelay will give us the benefit of her expertise in this field when we reach the appropriate part.

Although the Bill is intended to extend,

    "to the whole of the United Kingdom",

the Government will have to seek the approval of the Scottish Parliament to a number of functions devolved to Scotland. This highlights, if anything does, the problems caused by the Government's vote-catching exercise of devolving major legislative powers to Scotland. What happens if, for whatever reason, the Scottish Parliament does not agree with the parts of the Bill relating to functions devolved to it?

While on the subject of Scotland—although this has nothing to do with devolvement but with the word "Scotland"—I am sure I also heard that the energy Minister in another place, Stephen Timms, will be bringing forward amendments on that issue. I repeat, surely we are not really bringing forward amendments just as we begin.

I return to the West Lothian question: in the event of such a disagreement, will the Scottish Members of the other place vote with their democratically elected MSPs or in accordance with the instruction of their Westminster Whips?

We will need to examine carefully the provision for the reversal of proof in cases of certain alleged offences. This is another erosion by this authoritarian Government of the traditional position in criminal cases where the onus of proof is on the prosecution. Even though I acknowledge there have been instances of the reversal of the burden of proof by previous governments of both parties, the Government will need to provide convincing reasons for its application in this case. Similarly, we may wish to examine the need for the strict liability offences created by Part 2, Chapter 2, albeit with the defence of the exercise of due diligence.

Clause 106 gives the Secretary of State power to modify licences granted under the new trading and transmission arrangements. Again I inquire, which Secretary of State are we talking about? The Secretary

11 Dec 2003 : Column 837

of State at the DTI or the Secretary of State at Defra? Perhaps the definitions clause in the Bill should clarify this.

The Explanatory Notes airily dismiss this power as a mere "exercise of policy" and suggest that the remedy of judicial review is sufficient to comply with Article 6 of the European Convention on Human Rights. The Government are well aware of the huge mountain that a litigant has to climb to secure a hearing, let alone win a judicial review, to say nothing of the enormous costs involved. The availability of a judicial review is a longstop, not an excuse for the Government to avoid defining acceptable criteria for granting, refusing or amending licences, which can have a huge financial impact on the licensee.

If this were accepted as a precedent for future legislation it would be the means of the Government refusing to accept a defined liability to be responsible in any secondary legislation or licensing activity. The provision as drafted is an excuse for not defining the basis of the exercise of this very important economic power.

In the same clause, the Secretary of State is given power to modify standard conditions of licences or the specific conditions of particular licences. That is fair enough. However, subsection (5) authorises him to publish any modifications,

    "in such manner as he considers appropriate".

Here we go again. We went through this same exercise in the Employment Act, where the Government wanted power to legislate through primary or secondary legislation "or otherwise". It took the intervention of two Law Lords to persuade the Minister to drop "or otherwise". In this case, the Minister could decide that it is appropriate to publish a modification by posting details on a lamp-post in the Outer Hebrides. This provision will certainly need to be amended in the interests of what the Government frequently call "transparency".

The White Paper, Managing the Nuclear Legacy, commits the Government to improving the way in which the nuclear clean-up is managed but notes that many of the,

    "legacy facilities were built and used at a time when regulatory requirements and operational priorities were very different from those that apply today".

The White Paper also reported a consultation in 2001 about the responsibility for sealed sources and other radioactive wastes. Perhaps in his reply the Minister will inform the House about the outcome of that consultation and advise us of how and where the Government's conclusions are reflected in the present Bill and whether the Nuclear Decommissioning Authority will be given that responsibility.

The White Paper asks whether the creation of the Nuclear Decommissioning Authority is a kind of back-door route to more nuclear power stations. I can confidently endorse the White Paper's denial. I believe that the whole tenor of the Bill is to push the question of the development of new nuclear power stations to

11 Dec 2003 : Column 838

replace the existing ones into the background. This is borne out by a little phrase hidden away in the White Paper, where the Government state:

    "The NDA's focus will be squarely on the progressive reduction of liabilities".

Your Lordships will note that there is nothing about assuming responsibility for future liabilities.

The Government admit that the present contribution of 21 per cent of our power from nuclear generation will reduce to a mere 7 per cent by 2020. My noble friend Lord Peyton of Yeovil asked what the Government meant by their statement that they were,

    "keeping the nuclear energy option open".—[Official Report, 17/11/03; col. 1769.]

He received only the vaguest and uninformative of replies.

The Government claimed in the White Paper that,

    "The initiative [for any new nuclear build] lies with the market".

This is the most specious and disingenuous of suggestions. It is no more possible for the commercial market to decide to build a new nuclear power station, with all the attendant planning problems and so on, than it is for someone to commission a new aircraft carrier.

In fact, the Minister of State, Mr Stephen Timms, when speaking at the All-Party Nuclear Energy Group dinner as recently as 3rd December, said:

    "We need the possibility of new nuclear build".

I understand that he made the same remark elsewhere in the same week. Aside from the fact that that is not the kind of statement that should be made in an after-dinner speech as a throwaway line, the question is not whether we need the possibility of new nuclear build but whether or not the Government are going to grasp the nettle and do something about it.

There is a misconception held by the public that nuclear waste consists of spent fuel. In fact, one nuclear power station produces only about half a cubic yard of such material a year. It would fit under an ordinary card table. This compares with half a ton of ash a minute and the vast quantities of CO 2 that are produced by power stations powered by coal. The real problem lies in the large quantities of other waste, ranging from soiled clothing to the entire reactors and the buildings that house them. This is what the Nuclear Decommissioning Agency is being set up to deal with.

The decision about whether new nuclear power stations are to be built, with the attendant future decommissioning liabilities, rests with the Government as part of the national infrastructure to ensure diversity and continuity of the domestic supply of electricity without leaving Britain totally in the hands of foreign generators. This decision rests with the present Government, not any future one, because of the long lead time between the date when a project is planned and the date when the new station can join the grid. While the Government continue to dither and bury their heads in the sand, time is inexorably slipping away as the amount of nuclear power available steadily reduces.

11 Dec 2003 : Column 839

There would, of course, be a future cost of decommissioning any new nuclear power stations. Although it would be commercially uneconomic to include this in the generating costs, the Government have to make a decision whether strategically it ought to be charged to general taxation as a means of reducing our dependency on foreign fuel supplies. If site clean-up is charged to general taxation, this could be done by linking the cost directly with the half-life of the atomic material. At the moment, it is French taxpayers who enjoy the benefit of our maximising the use of their equally uneconomic power stations.

Can the Minister tell the House—if he cannot do so today, perhaps he will write to me—what assessment the Government have made of the situation in both France and Finland, where they take into account the benefits of less reliance on foreign, and not necessarily secure, sources of supply? If such studies have been made—as indeed they ought to have been—will the Government publish them, as they have done in the case of studies into higher education?

A great deal has been said in recent debates and Parliamentary Questions about renewable sources of energy, the Government definition of which excludes nuclear energy. I do not wish to detract from the renewable source that the Government are placing so much store by—wind power. At best, however, this is irregular and can serve only to reduce demands on other sources of power. Even then, it can provide only a minute fraction of our power needs. The environmental impact of the giant windmills, both on land and offshore, gives rise to no less controversy than do nuclear power stations. The first site in Wales was linked to the grid only two weeks ago.

The Government have extended their renewables obligation to 2015, as it is clear that their objective of reaching 10.4 per cent by 2010 was stretching it, to put it mildly.

The Bill creates a single wholesale electricity market for Britain—the British Electricity Trading and Transmission Arrangements, to be known by the acronym of BETTA. This joins the alphabet soup of organisations including NETA, Nirex and Ofgem, to name but three affecting the industry. However, BETTA, as the Bill points out, is only a trading market, and will not itself produce enough electricity to light a single bulb. It is to be hoped, however, that a single electricity market will ensure a consistency of supply.

I referred at the beginning of my remarks to our concerns about what is left out of this huge Bill. I have to ask why it does not include combined heat and power. The Government have admitted that their policies for delivering the United Kingdom target for the development of high efficiency combined heat and power schemes are failing.

Less than a year ago, the Government's energy White Paper reconfirmed the United Kingdom's combined heat and power targets of 10 gigawatts of electricity by 2010. Achieving this would deliver a large proportion of the UK's carbon reductions and boost the competitiveness of British industry. A few weeks

11 Dec 2003 : Column 840

ago, the Government published their latest modelling work by Cambridge Econometrics, which confirmed that Britain will be at least two gigawatts of electricity short of its 2010 target.

With the widespread job losses across the CHP sector since the introduction of NETA, Ofgem creating a legal challenge to the Government's long-awaited decision to exempt CHP from the climate change levy and new regulatory costs being imposed on the CHP sector by the extension of the renewables obligation, the Energy Bill should have given a unique opportunity to create a far more viable market for combined heat and power.

High level policy conflicts in the Government have sent the CHP industry into a downward spiral. The Bill can reverse that trend and ensure that CHP becomes the centrepiece of policy, not an afterthought. We will be introducing amendments to achieve that end.

I now turn briefly to the part of the Bill dealing with the new Civil Nuclear Police Authority. It is vital that our police and security services have the support they need to ensure that they are able to work to the highest standards to provide security for our communities throughout the United Kingdom. This is especially so at a time of heightened concern about terrorist activity. It is therefore appropriate that the new police authority should be accountable to the Home Secretary and the expertise of the Home Office. But in establishing this new police authority, the Government should reconsider our proposal that there should be a Minister for homeland defence so that all security services can be effectively co-ordinated.

I ask the Minister to confirm that the new police authority will cover not only UKAEA but also BNFL and URENCO. We would also like confirmation that, as I understand has been previously agreed, the DTI will fund the transition costs of the current, non-statutory police force when it turns into the Civil Nuclear Police Authority. I believe these costs will be in the region of 1 million.

An answer from the Minister, either during this debate or very soon after, is urgently needed, because the transition will take time to achieve, and BNFL will need to start spending money very soon. We shall be scrutinising this very important part of the Bill and my noble friends and I will be putting down some constructive amendments to make it more effective.

I would like to give your Lordships a few abbreviated quotations from experts in the industry regarding the energy supply. The Institution of Civil Engineers warns that,

    "the energy industry is at its lowest ebb since privatisation with many generators in serious financial difficulty and little new investment in new generation".

Dieter Helm of Oxford University says that we are extremely close to the margins. Professor Ian Fells, a former government adviser on energy, says that adequate spare capacity is essential, despite the expense, and that our current margin is inadequate. PowerGen has warned the Government of the possibility of power

11 Dec 2003 : Column 841

cuts. Transco also warns about a severe lack of generating capacity. There have been many more such views, but that is enough for now.

Finally, reverting to the question of the future of nuclear power, if there is to be one, both the White Paper and the Bill have ducked the issue—as, indeed, has the Minister when asked about it in your Lordships' House. If the Bill is very important—and it is—and if its principles are deserving of cross-party support—and they are—it is nevertheless only part of the picture. In the past few years, we have heard references in your Lordships' House, in a completely different context, to stage two, to follow stage one. The Bill is but stage one of dealing with the looming energy crisis. The Government must have the courage to produce a viable stage two before it is too late.

11.46 a.m.

Lord Ezra: My Lords, in speaking in this debate, I wish to declare that I have been actively and continuously involved in the energy sector since 1947 and am currently chairman of Micropower, which promotes the small-scale generation of electricity.

As we have heard from the Minister, the Bill deals with three major aspects of energy policy. While they are all of importance, they are by no means the most important issues raised in the energy White Paper of February 2003. In that connection, I consider that the short title of the Bill is somewhat misleading. It gives the impression that this is a much more wide-ranging piece of legislation than it really is. A more appropriate title would be the "Energy (Miscellaneous Provisions) Bill", which would leave room for the further Bill to which the noble Baroness, Lady Miller of Hendon, referred. Perhaps we can explore that at the next stage.

While the Bill is important and will command widespread support as far as it goes, my general reaction to it is one of sad disappointment. When reference was made in the Queen's Speech to the introduction of legislation on energy matters which would aim to,

    "promote secure, sustainable supplies and a safer environment",

I looked forward to the Bill with eager anticipation. I thought that here would be a statutory endorsement of the main courses of action and aspirations set out in the energy White Paper of February 2003. Instead, we have three disparate pieces of legislation rolled into one, which, although important and significant, are by no means the main issues raised in the White Paper.

Part 1 of the Bill deals primarily with nuclear decommissioning and the setting up of the Nuclear Decommissioning Authority. There will be widespread support for that. The full cost of decommissioning over time is enormous; it is estimated that it will be of the order of 50 billion during the next century. We need to know the likely costs over the next decade, bearing in mind that all but three of the existing nuclear power stations are due to close in that period. How are these large sums to be accounted for? In responding to that, perhaps the Minister can also enlighten us on the relationship which is likely to develop between the different nuclear

11 Dec 2003 : Column 842

agencies—the newly established NDA, Nirex, BNFL and the UKAEA. I know that my noble friend Lord Maclennan of Rogart will refer to that issue later.

The Bill does not deal with two matters of over-riding importance in the nuclear sector. First, there is the long-term management of nuclear waste, which is very relevant to the setting up of the NDA, has been under discussion for many years and is as yet unresolved. I asked a Question on that subject the other day. Secondly, there is the over-riding issue of the future of the nuclear industry itself, to which the noble Baroness, Lady Miller of Hendon, referred. That will have a substantial impact on energy policy as a whole. So long as it remains unresolved, it is difficult to see how a coherent and effective future energy policy can be devised.

Part 2 deals with renewable energy sources in a limited context. It covers the exploitation of renewable energy outside territorial waters, and the decommissioning of such offshore installations. Perhaps the Minister can advise us how many offshore renewable energy installations beyond territorial waters the Government anticipate and what the cost will be, bearing in mind the long transmission distance that will have to be covered.

The Bill deals, too, with the mutual recognition of the renewables obligation regime in Northern Ireland. While that is a desirable measure, the opportunity has surely been lost of dealing with a root problem in the renewables issue. I refer to the relatively slow progress so far made in the development and use of renewable energy, and the need to widen the range of eligible fuels and processes that can contribute to carbon abatement. At present, the Government's target of 10 per cent of electricity generated from renewable sources by 2010 is unlikely to be reached, despite what the Minister told us. The aspirations beyond that date are even more in doubt, so it is regrettable that the Bill does not cover the urgent issues that are now called for.

First, further measures should be taken to stimulate the production and use of renewables as presently defined, and, secondly, there is a need to extend the principle of the renewables obligation to fuels and processes that can significantly reduce the amount of carbon going into the atmosphere. For example, as the noble Baroness, Lady Miller of Hendon, rightly said, combined heat and power, the principle of which the Government fully support, is going through a very difficult period and is likely to be at least 20 per cent short of the 2010 target. Measures to relaunch that proven energy-saving process need urgently to be taken. Perhaps we could suggest some of those measures in Committee.

A variant of CHP, called micro-CHP or micropower, in which I have declared an interest, is a newly emerging process that takes electricity generation right into the home. That would increase efficiency, eliminate transmission and distribution losses and reduce carbon emissions. The process needs to be vigorously supported in its build-up period.

The Government have also given insufficient support to the recovery and treatment of the methane from coal mines and have refused to apply to it the

11 Dec 2003 : Column 843

renewables obligation principle. In Germany, coal-mine methane has been treated as a renewable energy source and is making much more vigorous headway than in the UK. Indeed, some leading companies involved in that process have extended their operations to Germany because of the more favourable inducements. That is hardly a good reflection of the way in which British industry is being supported.

We do not yet have in the UK a clean coal technology plant, even though the process is now well established and can be associated with carbon extraction, thus virtually entirely eliminating the CO 2 emissions from the use of coal. The construction of such plants could be substantially assisted if the process came within the terms of the renewables obligation or its equivalent.

The third part of the Bill extends the new electricity trading arrangements—NETA—to include Scotland as well as England and Wales. Indeed, it is desirable that there should be a competitive wholesale electricity market based on the same rules throughout England, Scotland and Wales, bearing in mind the interpenetration of the power companies across borders. However, why has the opportunity not been taken to remedy the defects of the existing NETA system in dealing with renewables and CHP, which continue to suffer under the balancing and settlement procedure? It is for the simple reason that they cannot precisely predict their electricity output in any given period and are penalised accordingly. While some steps have been taken to lessen the adverse impact of the settlement procedure on smaller generators, it remains an obstacle that could surely have been dealt with in the Bill.

My conclusion is that the Bill covers important issues of energy policy arising from the energy White Paper. However, in spite of its excessive size, it is limited in its scope and does not deal with the major unresolved issues of energy policy. It is a Bill of missed opportunities.

11.56 a.m.

Lord Christopher: My Lords, like the noble Lord, Lord Ezra, whose measured contributions are always well worth listening to, I must declare an interest. Since before I came into your Lordships' House, I have been a consultant for BNFL plc. However, I wish the House to know that the speech is mine and that BNFL did not ask me to make it. I shall have to face the music from the latter if I say things that it does not like.

I am also in the unusual position, in speaking so early, of having to edit what I say as I go along, when all that we have heard so far has come from the Benches opposite. I have to say that I found much of it agreeable, so I shall do my best not to weary noble Lords by too much repetition.

As the noble Baroness, Lady Miller of Hendon, said, central to the criticisms that many of us would make about the Bill is that it does not take a long enough view about energy security supplies for

11 Dec 2003 : Column 844

Britain. If a long view is taken, it is illogical that nuclear does not in fact face a more positive approach in the paper. I believe that to be somewhat dangerous.

I do not know whether my noble friend the Minister will be able to tell us what security risk assessments have been made with regard to energy, but it would be fascinating to know whether they have been made and, if so, what they say. I have always been a staunch supporter, as has the Trades Union Congress, of a balanced energy policy. Notwithstanding the historical sentiments about coal, there was support for renewables and nuclear. Yet we are taking serious risks with UK supplies ahead, although perhaps not immediately. We must not overlook the fact that the newer forms of energy have a long lead time—a much longer lead time than the older forms.

We can all here remember the problems of shortages of supply of a wide range of goods during the war. I put it to noble Lords that the current situation with energy is not so significantly different, although the causes may be. There will certainly be aggressive competition for energy across the world, and prices will rise. Indeed, we learned only this week that wholesale gas prices rose 15 per cent in 2003, and forward pricing increases are signalled at between 17 per cent and 21 per cent. British Gas domestic supplies of electricity and gas are scheduled to rise by around 6 per cent.

Stating the obvious, we live on an island, or two islands. We are a serious distance offshore of mainland Europe and far, far away from the energy sources that we shall be seeking. The solutions that Europe may find will not necessarily meet the issues which we shall face. It is foolish to neglect the possibility of sabotage of pipelines if you do not have a balanced policy. Energy supplies are affected by weather. France, indeed, is facing that at the present time, first due to heat and latterly to flood.

There is a risk that the energy flow from renewables may not be on the scale that we plan and hope for. Experience from Denmark, which at 18 per cent of electricity production has the highest percentage of wind power of any EU country, is that load factors have generally been well below the UK estimate of 35 per cent. Hugh Sharman of Danish company, Ecoteco, made that point recently. In fact, a figure of around 25 per cent is closer to the Danish average. This means that installed capacity would have to be four times that of the desired output, always assuming that the wind is blowing somewhere in the United Kingdom! To be sure of avoiding power cuts, equivalent generating capacity, probably utilising gas, would have to be provided on standby at considerable expense. I am not sure that relying on that is a sensible policy.

Danish experience also shows that at any one time roughly 13 per cent of wind turbines are out of commission. On the basis of that experience the Danish Government recently announced that they were ending subsidies to new wind power installations. The Times quoted on 9th December that UK wind power is two-and-a-half times the cost of conventional power.

11 Dec 2003 : Column 845

My anxiety about all this arose a long time back when an elderly professor from Korea forecast China's future energy requirements. I am still endeavouring to obtain an authoritative assessment of the energy demands of China, India, Russia and South America when their energy requirements in terms of use per capita match those of OECD countries. That, I believe, is the time scale involved in the planning that we need to carry out over the next few years.

I wonder whether noble Lords are aware of the current position in China, which has one of the fastest-growing, if not the fastest-growing, economies in the world. It presently has 11 per cent less generating capacity than it needs, and its capacity is based on only 1 per cent of nuclear, although I believe that it is building another four power stations, partly supported by France and, I believe, by Japan. Today electricity is rationed in China. Coca-Cola and China National Cereals, Oils and Foodstuffs Import and Export Corporation Company have no electricity on one in four working days a week. Hunan Province, which relies for 50 per cent of its power on hydro electricity, has serious shortages following drought. If ever there was an example of the folly of not having a fully balanced mixed energy policy, Hunan Province provides it. Shanghai's major shipyards are now working only at night and at weekends because of energy shortages.

I turn to the issue of jobs and to Cumbria in particular. Refocusing sites such as Sellafield on decommissioning is all very well but that type of work will inevitably employ significantly fewer and less skilled workers than the current reprocessing operations. In remote areas such as west Cumbria it will be extremely difficult to re-employ those redundant skills locally, having a massive effect on the region's economy. What provision will the Government make for retraining and redeploying the workers who will be thus affected?

I feel that I must ask the Minister the following question. Given that we shall have government-owned companies on both sides of the table, how will they ensure that BNFL will not be disadvantaged in the competitive tendering for a variety of operations? There will be conflicting objectives and a longer-term strategy should not be based exclusively on cost but on future purposes.

In my opinion we need to create a climate, particularly, but not exclusively, in Cumbria, for long-term storage as I do not believe that the relevant material will go anywhere else. Unless and until the Government buy into "compensation"—financial inducements to make people love nuclear—Cumbria is the only location that would be likely cheerfully to accept a waste disposal storage unit. Exactly the same considerations should be addressed right across the nuclear game board. We are most likely to find sites for new nuclear power stations where there is clean-up.

The Bill's focus on decommissioning and reassigning the associated liabilities is necessary but in my judgment misses the point that new nuclear build is essential if, as the Government would have it, the nuclear option is to

11 Dec 2003 : Column 846

remain fully open. In contrast, the United States administration are streamlining their regulatory processes and encouraging investment in preparation for the replacement of their nuclear fleet—something which was forecast to me when I asked the American energy Secretary a few years ago a tongue-in-cheek, cheeky question regarding when a new nuclear power station would be built. Instead of saying, "Never", he took the question seriously and said, "Before too long".

Finland and France have announced that they will not permit themselves to become ever more dependent on unreliable external sources of fossil fuels and are engaging in new nuclear construction. Moreover, they have shown conclusively that nuclear power represents a very cheap option.

Since the present Government, and previous governments, have signally failed to make progress on the thorny issue of where and how to dispose of the nation's high and medium level radioactive waste—which, as has been stated, is not a terribly large problem in volume terms, and will be less so in the future as the new stations will produce only about 10 per cent of the waste of the older stations—will the Government undertake to support the new NDA by accelerating the essential process of consultation and decision-making? We in this country are falling a long way behind countries such as Finland, Sweden and France which have taken the difficult decisions and are embarking on national programmes of research and demonstration that will lead to operational repositories within a generation.

I hope that I have not been overlong in seeking to make these points but I believe it is important that they are made. I hope that the Government—which I fully expect to be in power in 2020, when all these problems are likely to arise—will take what I have said seriously.

12.8 p.m.

Lord Jenkin of Roding: My Lords, it is almost 20 years to the day that I had to stand up in the House of Commons and make a Statement about a very serious discharge of radioactive effluent from the Sellafield works into the Irish Sea. I had to announce the closure of the beaches along the coast for 20 miles on either side of that factory. It was many weeks before they were declared safe for public access.

Every week I made a series of Statements in the House of Commons—I see the noble Lord, Lord Campbell-Savours, nodding—to report progress on the clean-up. Eventually a report on the accident was published and was given very wide circulation.

I mention that for three reasons, all of which are of great significance to the Bill. First—this is not generally known—I came under pressure at that time from my colleagues in the DTI, who complained that I was undermining confidence in the nuclear industry by my frequent Statements. My reply was that, on the contrary, by seeking to be open and transparent I was trying to restore confidence in an industry that had a notorious reputation for being far too secretive. In the event, the dispute had to be referred to the Prime Minister—informally, I have to say. She ruled in my

11 Dec 2003 : Column 847

favour, and in favour of openness. That was a turning point. Much more importantly, openness is an integral part of the Bill. I think that the industry and successive governments have recognised since that day the huge importance of openness and transparency.

The second reason why I mention that episode is again something not widely known. Over the past 20 to 30 years, the polluting discharges from Sellafield have been reduced to one thousandth of what they were in the 1970s—0.1 per cent. That is a remarkable achievement. The company has never been given the proper credit for what it has succeeded in doing. As a result of that and the experience of various other firms in the industry, the issues of safety are now part of the culture and deeply embedded in how they conduct their businesses. I hope that the Bill reflects that, but we may need to pursue it.

The third reason is that at the heart of that culture of safety lies the recruitment, training and retention of the scientists, engineers, technicians and other skilled staff that both that industry and its regulators will need to do their jobs. At this stage, there are very serious concerns about that. That is directly relevant to the duties placed on the NDA in the Bill. I shall return to that matter in a few moments.

I want to make two comments on the speeches made so far. The noble Lord, Lord Christopher, was a little unfair to the governments of whom I was a member. My right honourable friend John Gummer brought forward a perfectly respectable proposal for a rock characterisation facility at Sellafield, only to have it rejected by a public inquiry about which there have been a good many criticisms. For goodness' sake, he was trying. By comparison, last night I heard a very distinguished member of the Cross Benches say that the present Government had taken the question of nuclear waste and kicked it into the long grass, and then gone looking for it in order to kick it into still deeper grass. I fear that that is what has happened, and I hope that the noble Lord, Lord Christopher, will recognise the contrast.

My noble friend on the Front Bench made an absolutely outstanding speech. As a result, mine may be a little shorter than it otherwise would have been, as she made some of the points that I would have made.

Before I discuss the Bill itself, we deserve an answer to one question. Why is the Bill being introduced into this House? I ask that because Ministers have made much of the intention that the Bill should be through by July, and that the NDA should be up and running by April 2005. The noble Lord, Lord Whitty, will have to appoint chairmen and directors, who will have to appoint staff, and a great deal of work is to be done. He will be aware of the Treasury convention that Ministers may not spend a single penny under a new Bill until it has received a Second Reading in another place. By introducing the Bill to this House, Ministers have pushed back that timetable by several months. Why? I put that to Mr Timms the other day, and did not get a very clear answer. Clearly it was not his decision. The noble Lord may be able to give us an answer.

11 Dec 2003 : Column 848

I shall move straightaway to the Bill. I share the disappointment of the noble Lord, Lord Ezra, that it does not contain much of what it should. As will become apparent, and like other noble Lords, I shall ask many questions about matters that are not in the Bill but ought to be. I welcome the Bill, although it will require careful debate and a good many additions during its passage through the House. Indeed, the Minister has already announced this morning that there will be several additions.

A Statement is being made in another place today, and a paper has been placed in the Library today. That is treating this House with contempt. If we are to debate the Second Reading, why is it not possible to have the documents at least a day before? I have searched for the reply to the report of the Commons Select Committee in the Library and on the web, but it does not exist. Why? It has not been issued yet. We are told that it will be issued before Christmas. At least we will have it for Committee, but that is not good enough. If the noble Lord is to get collaboration and co-operation on the Bill, he has to treat this House with more respect.

I should like to follow other noble Lords and say that the Bill does not stand alone but is only part of a whole. Therefore, I shall say a word or two about the context of the overall energy "policy". I put that word in quotation marks because very many people would not regard the White Paper as a statement of policy, but as a whole series of aspirations. As the noble Lord, Lord Christopher, pointed out, the UK has enjoyed near self-sufficiency in energy for several decades, but that comes to an end shortly. In three years, we will be a net importer of gas, and in seven years a net importer of oil. By 2020, we will be dependent on imported energy, mostly gas, from distant and unreliable sources for three quarters of our primary energy needs.

As the Institution of Civil Engineers stated in its recent report, the situation is about to change "dramatically" with profound implications, not least for the security and continuity of power generation. Perhaps I can add to what the noble Lord, Lord Christopher, said. He did not make the point that, on the eastern seaboard of the United States, several terminals to import liquefied natural gas are being built, for which there will be competition for gas in exactly the same markets as those in which we shall be seeking supplies. That is bound to have an overall impact on the price of natural gas.

Another point that has not so far been made is what happens if one becomes dependent on other countries for one's primary energy supply. Go and ask the Italians. They had a massive blackout all over Italy. Why? Someone talked about trees falling on transmission lines, but it was rubbish. The French turned them off. They needed their energy. The French are huge exporters of energy based on nuclear power, and they needed to use it all so they turned the Italians' supplies off. Ministers need to pay more attention to such issues.

11 Dec 2003 : Column 849

Then there is the Government's policy at the heart of their White Paper concerning the large reductions in greenhouse gas emissions—20 per cent CO 2 reduction by 2010 and, in that lambent phrase, "on a path to" 60 per cent CO 2 reduction by 2050. It is not the moment for a detailed analysis of that, because it could be quite lengthy. However, I am extremely doubtful about those aspirations—that is what they are. A very general view is that there is little prospect, despite what the Minister said, of hitting the 2010 CO 2 target. Moreover, it is my view, and that of many well informed people outside, that the 60 per cent target will be unattainable if the existing carbon-free sources of power are closed down and not replaced by new nuclear build.

It is pure fantasy to imagine that the renewables of wind, wave and tidal can possibly fill the gap as the existing nuclear stations reach the end of their lives. In any event, as the noble Lord, Lord Christopher, pointed out, there has to be back-up for wind power. As he said, that is extremely expensive. It will be very difficult for the power companies to raise the capital to build back-up gas-fired plants that will come into operation only if the wind stops blowing.

Wind is not reliable, sustainable or controllable. I agree that it has a part to play, but it is pure fantasy to imagine that it can replace other energy sources. The other energy source that is mentioned in the White Paper is biomass: coppicing. Is the House aware that if one wanted to replace Dungeness B nuclear power station in Kent, one would have to cover the entire area of Kent, other than the built-up areas, in short-term willow coppicing? That is fantasy. It adds nothing to the question of keeping the lights on. There are huge gaps in the Government's overall energy policy, with real risks ahead for the security of supply to homes, offices and factories.

Like other noble Lords who have spoken, most of my questions will be about what is not in the Bill. The Government have said that they "will keep the nuclear option open". Therefore, my first question to the Minister—and I echo other noble Lords—is: what is there in the Bill to help to keep the nuclear option open? That phrase was used in the Government's White Paper last February. This is the first major Bill intended to implement the policy of the White Paper, as we heard this morning. What is there in the Bill to deal with that? The answer is nothing.

When Ministers gave evidence to the Select Committee in another place, they fell over backwards to appease the anti-nuclear lobby and to convince them that there was nothing in the Bill about new nuclear build. I find that almost incredible. One would have thought, to use a nautical metaphor, that they would at least have tried to have some kind of anchor out to windward, so that if it does become necessary to build—and many of the Minister's colleagues think that it will be—they will be able to go ahead with it quickly. That raises the question of research and so on, which I do not have time to address today.

I shall stay for a moment with the Select Committee report. I know that we should receive the Government's response before Christmas, but today is 11th December

11 Dec 2003 : Column 850

and we are entitled to answers in this debate. The Select Committee made the following recommendation in paragraph 8 of its report:

    "We recommend that the Department produce a fuller estimate of the cost implications of this Bill before its presentation to Parliament".

It also referred to the need for the usual regulatory impact statement. When will we receive that? Will we receive it before Committee? Will we able to debate it when we debate the Bill in Committee? The report continued thus in paragraph 13:

    "We consider that a clear and unambiguous statement of the overarching principles with which the NDA will work would be a useful addition to the draft Bill. Such a statement would have most force if it were given in the main body of the Bill".

It is not there. Will the Government accept that and amend the Bill appropriately? We deserve an answer.

I return briefly to the question of the disposal of radioactive waste. I cannot add much to what was said by the noble Lord, Lord Christopher. There is a definition of "treatment" and "hazardous material" in the definition clause of the Bill. There is no definition of "disposing", yet it speaks about "disposing" of long-term nuclear waste in a depository. The Explanatory Notes revealingly state that Clause 3(1)(d) also covers the Drigg low-level waste depository. If it covers Drigg, does the Bill intend to cover the disposal of medium-level and high-level waste?

That leads to another question. Will the NDA be the body that eventually takes forward the process, if it can find the ball in the long grass, of moving towards long-term disposal of waste? I sat on the Science and Technology Select Committee that looked at the matter five years ago. We are still waiting for progress on that front. Or do the Government envisage yet another authority? The Bill has been published for several days. I have spoken to people in the industry, such as those at BNFL, and they do not know the answer to that question. They have not been told whether the NDA will be the authority for long-term waste. We must have an answer when the noble Lord replies this evening. I recognise that a considerable process of gaining public acceptability must be embarked on, but we need to know whether that authority will carry out that role.

Next Section Back to Table of Contents Lords Hansard Home Page