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Lord Cunningham of Felling: My Lords, I begin by recording my great appreciation of the warm, friendly welcome that I have received since taking my place in this House from noble Lords in all parts and not least from the staff. It has been most helpful, if a little unnerving on occasion.
I also congratulate the noble Lord, Lord Jenkin of Roding, on his excellent introduction to a very important and timely debate, which he has initiated. We are of course old political adversaries from the other place. Nevertheless, I have a high personal regard for him. Despite the occasional rancour and asperity of the political debate, we have always remained good friends. Then, as now, we shared a broad agreement on the essential role of nuclear power in a diverse, balanced energy policy. I might reflect that it is just a little sad, given some of his comments, that this debate is not taking place on 14 February rather than 16 February.
It is a debate of huge importance and its importance cannot be underestimated. Future energy policy will directly affect the social and economic well-being of peopleof our country, our environment and our securityfor decades to come. We face a well defined, imminent energy supply gap converging with increasing demand and the vital importance of more effectively acting against those gaseous emissions driving climate change. These are formidable challenges indeed.
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There are, and always will be, conflicts between energy demand, emissions reduction, energy price relativities and the market. Such conflicts are not new, nor can they be wished away; so some compromises are not only inevitable but essential. The need urgently to consider options and decide on new policy directions should be clear to everyone. If we are to meet our climate change objectives and the other imperatives of controlling demand where possible, meeting affordability and security of supply, the status quo simply will not do. We are faced by some very hard choices. The movement of gas prices and the doubts about the security of supply are reminiscent of the oil price shocks of the 1970s, though not yet as severe or as threatening. At that time, I had the honour to be an energy Minister in the Administration of the late Lord Callaghan. Policy then was balanced on a mixture of coal, oil, gas and nuclear power. In addition, there was a vigorous energy conservation programme and broad political and industrial consensus about the direction that we should take in these policy areas.
At that time, in spite of the difficulties, most of the policy objectives were secured. Today, after years of dispute, I am pleased to say that there is again a growing consensus in favour of renewing a diverse policy in which nuclear power plays a significant part. I believe that we should encourage that trend and help to develop that growing consensus. Of course, much has changed since the 1970s, and the days of energy self-sufficiency are gone, but similar challenges face us now. We have the advantage of greater knowledge of the issues, of better technology and better engineering, and, increasingly, the availability of renewable sources of electricity generation.
In addition, we in Britain have demonstrated over many years that we can safely and successfully manage nuclear power and the nuclear industry generally. In 2003, the nuclear industry provided almost 22 per cent of the electricity generated in the United Kingdom, with an average load factor of 76 per cent for the generating stations. This year, 2006, is the 50th anniversary of the advent of civil nuclear power in our country. Calder Hall was commissioned then and we have been safely generating reliable, everyday outputs of nuclear power for 50 years. Some 2 million million kilowatt hoursI am not suffering from a speech impediment; I mean 2 million million kilowatt hours of electricity generationhas taken place in nuclear power stations with a negligible discharge of carbon dioxide. Indeed, that nuclear production has avoided the emission of 1.6 billion metric tonnes of carbon dioxide over the same period from the fossil fuels which otherwise would have been burnt if the nuclear option had not been available.
Yet, at the very moment when fundamental energy and environmental policy decisions must urgently be made, some advocate abandoning a very significant weapon in our industrial armour. To do so would simply be folly. It would disable our economy and our industry at the very time when we should be thinking
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of strengthening it. It would jeopardise our hopes and aspirations of sustainable development for decades to come.
It is clear that elsewhere in the world, nuclear power is seen as an essential part of energy policy. In Japan, China, India, France, Finland andsignificantly, especially since the Energy Bill last year of Senator Domeniciin the United States, the commitment to nuclear power is strengthening. I certainly share the view of the noble Lord, Lord Jenkin, that at the very least nuclear power should be given a level playing field, but subsidies are neither sought nor are they required if we are to build new nuclear power stations.
My own view, put simply, is that Britain, indeed the world, is not going to get by without nuclear power if we are to achieve sustainable development as one of our fundamental objectives. We can build all the renewable sources we can and take the most aggressive approach to energy efficiency and conservation while trying to manage millions of daily disaggregate demands for electricitywhich is what demand is made up ofbut those actions will never fill the gap. Indeed, by their very nature many of the renewable sources are interruptible supplies. Of course we should support more R&D on new and emerging technologies such as clean coal technology, and I welcome the Government's recognition of the need to do that. I also welcome the Government's production of this review, marking the urgency and fundamental importance of these issues as set out in the paper itself. The approach is refreshing and I wish the Government well.
Lord Chorley: My Lords, it is a privilege to be the first speaker to congratulate the noble Lord, Lord Cunningham of Felling. He comes to us after a career of great distinction in another place, and for me it is an added pleasure to follow someone who I hope I can regard as a fellow Cumbrian. He was the MP for Whitehaven and Copeland for 35 years. He has spoken to us with real authority and robustness, with just a touch of controversy that always adds a little spice to a maiden speech. I am sure we all look forward to his future contributions here, as we will to the maiden speech of my new noble friend Lord Turnbull, whom we will listen to shortly.
I add my thanks to the noble Lord, Lord Jenkin of Roding, for giving us an opportunity to discuss the Government's consultation document, and to do so explicitly in the nuclear context, for surely that is the key issue. It is an issue that the Government have consistently ducked. Nevertheless, one detects a wind of changeand not before time.
It seems sensible to start with the Government's four goals: first, to cut our carbon emissions by 60 per cent by 2050; secondly, to ensure reliability of supplies; thirdly, to promote competitive marketsI prefer the words "competitive energy supply", but I will leave that; and, fourthly, to ensure affordability. I go along with those goals except for "affordability", because that surely is a social issue and should be dealt with as such. We need to remind ourselves, however, that
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these goals are not independent of each other and how we weigh them is a matter of judgmentand so, by simple extension, is the importance of the different fuels, the fuel mix. Here I take exception to the statement in the consultation document that,
In the short time available, I shall restrict myself to renewables, gas, coal and nuclear. I do not think that we will get very far with renewables, notwithstanding the biomass lobby, the wave and tidal enthusiasts and the wind farm fan club. Even with the considerable implicit subsidythe Government put it at £30 billion by 2020we have made little progress. We all know the problems with wind: the need for back-up above 10 per cent; its dispersed nature; the environmental costs, not least the huge land take; and the huge cost of offshore. Of course renewables have a role to play, but I suggest that it will be of the second order.
Then there is gas, which is by far our major energy source today. We all know that we will have exhausted the North Sea by 2020. We may be prepared to rely on the Norwegian interconnector, but, as others have suggested, we should surely not rely on gas from the former USSR area. Moreover, the advent of China and India on to world energy markets makes it seem likely that gas prices have reached levels which will remain for some years to come. We also need to remind ourselves that gas has 50 times the carbon emission rate of wind or nuclear on a lifetime basis. Nevertheless, it is probably only realistic to assume that it will be our major energy source until at least 2030.
Thirdly, there is coal. One suspects that coal in cost terms will be as attractive as gas. But it produces twice as much carbon and so, surely, it is importantand one acknowledges the interest that the Government are beginning to taketo put considerable effort into tackling the costs of carbon sequestration and capture in coal. The same goes for gas, of course. It is surely also important that any new coal stations are designed to allow retrofitting in due course. Coal can, of course, be stored much more readily than gas, so I am sure that in due course it will become a major and reliable contributor.
Finally, there is nuclear. It seems generally agreed that the stations now being ordered and built around the world will score highly on reliability and are probably cost-comparable to gasnuclear has gained from the China factor. There is of course a caveat as to how they will be financed as the unit costs are sensitive to the discount rate. So there is the important question of what sort of regime would enable nuclear stations to be part of a commercial market.
Decommissioning and waste disposal is the controversial issue, and here we have to wait for the waste management committee's report. In the mean time we should remember that the new stations will produce only a fraction of the waste of the old ones, especially low-level waste, and that we have a large
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legacy of waste from both the old stations and military sources which in any case will have to be dealt with. I therefore conclude, from what has inevitably been a quick tour d'horizon, that a balanced, competitive and reliable UK industry would include a substantial nuclear share and that this will be the only way of achieving our carbon emissions target.
The White Paper asked five questions which I hope I have answered adequately. In return, and in the two minutes left to me, perhaps I could pose a few questions which relate to what the Government envisage will be the institutional framework to carry forward their policya policy that will have to ensure that the appropriate levels and timing of investment take place. Where will the boundaries between the state and the commercial sector be drawn? How, for example, will the nuclear licensing process be dealt with? Here one must put in a plea for the choice of a single standard design so that new stations will save time and uncertainty by being pre-licensed. That is being done in America, as the noble Lord, Lord Jenkin, reminded us. Equally, of course, in the significant savings from serial production there is surely a lesson to be learnt from the successful French programme.
Then again, thought will have to be given to the contractual arrangements on the revenue side, as this will affect the financing arrangements, and so forth. What will be the future of the renewables obligation? Will it apply to nuclear? As the noble Lord, Lord Jenkin, said, it is absurd that it does not get the same subsidy as renewables. Is thought being given to revisiting carbon taxes? There are a large number of difficult technical, economic and administrative issues and one wonders whether the DTI has the expertise and the manpower to tackle the subject. One wonders whether it would be best to proceed by way of an energy agency responsible for nuclear licensing, overseeing the investment in general terms and acting as the price regulatorin other words, to do away with Ofgem, and so on.
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