CHAPTER 3: the energy mix |
51. Throughout our inquiry, witnesses recognised
the provision in the Lisbon Treaty (see Box 1) that the energy
mixthat is, the choice of energy sourcesremains
a national competence and for Member States to decide.
It was noted, however, that there is EU legislation relating to
renewable energy, market liberalisation and emissions reductions
which do, as highlighted by Mr Froggatt, "affect the
choice of Member States".
For example, the Renewable Energy Directive
sets a minimum level of energy to be derived from renewable sources.
52. The European Commission emphasised that the
purpose of European policy is not to divide competence, but to
"add value to what is a national energy policy" and
see what "can be done in common". This common interest
in relation to energy, the Commission explained, is the mutual
challenge of "providing safe and secure energy at affordable
is no longer possible, the Commission observed, to talk about
a national electricity generation policy, without taking into
account what is happening elsewhere and in neighbouring countries.
This extended to considerations of whether support by Member States
to certain sectors constituted unacceptable state aid.
53. It was generally accepted that the decisions
taken by one Member Statesuch as pursuing renewable energycan
have significant implications for neighbouring countries. Some
witnesses focused on Germany and its decision to phase out nuclear
energy in favour of renewable energy and more coal-fired power,
and the impact this can have on its neighbours in terms of unplanned
surges of electricity through neighbouring countries at times
of high wind energy production.
As a potential step forward, the Office of Gas and Electricity
Markets (Ofgem) supported the proposition that some form of mechanism
be introduced that would require governments to hold discussions
with neighbouring countries before going ahead with national policies.
Ms Niki Tzavela MEP advocated a stronger "pan-European governance"
on energy so that, at the very least, Member States are held accountable
for the policy decisions they make.
54. There is an inherent tension between EU-level
environmental and competition goals, its renewable energy and
internal energy market policies, on the one hand, and maintenance
by Member States of responsibility for the energy mix on the other
hand. If Member States do not all adopt secure and responsible
generation policies, there is a danger that the EU may fail to
meet the objectives not only of its energy policy, but also of
its environmental policy. We recommend that consideration should
be given to annual obligatory reporting by Member States to the
Commission on their national energy policies, with assessments
conducted by the Commission on the implications of emerging policies
for neighbouring countries and the EU as a whole. This must extend
to assessment of the compatibility of national policies with EU
rules on state aid, on which we recommend the Commission provides
Carbon capture and storage
55. Carbon capture and storage (CCS) (see Box
3) is seen by many as an important technology in the decarbonisation
process. As noted in the UK Government's Gas Generation Strategy,
CCS has the potential to decarbonise power and industrial sectors
in "economies worldwide".
According to the IEA, fossil fuels (including oil) met 81% of
total global energy demand in 2009. The IEA emphasised that the
only way to burn fossil fuels without adding more CO2 to
the atmosphere is through the use of CCS.
Carbon capture and storage
CCS involves capturing carbon dioxide from fossil
fuel power stations (or large industrial sources), transporting
it mainly via pipelines and then storing it safely onshore or
offshore in deep underground structures such as depleted oil and
gas reservoirs or deep saline aquifers. It is estimated that the
total reduction in emissions per unit of electricity from the
use of CCS is around 70%.
56. Although generally agreed that CCS applied
to fossil fuel combustion is likely to be of critical worldwide
importance, there has been a regrettable lack of progress, as
was emphasised by the Commission in its recent Communication on
the future of CCS in the EU.
The IPPR said that, whilst CCS is technically workable and environmentally
acceptable, it has proved challenging to make it commercially
viable. WWF stressed
that CCS is still only at the pre-demonstration stage, with repeated
delays resulting in uncertainty.
The Secretary of State noted the importance of calculating how
everyone involved in the supply chain could get a return on their
UK Government announced in their March 2013 Budget that two CCS
projects had been
selected to go forward to a detailed design phase (known as Front
End Engineering Design)
of the CCS competition, which the Secretary of State claimed was
a significant step closer to a viable CCS industry. The intention
of the UK competition is to make available £1 billion of
funding to the preferred bidder.
57. Divergence of views among Member States is
another reason for lack of investment. German projects to apply
CCS have been restricted due to public concerns about onshore
CO2 storage. The Commission's own NER-300
facility to support CCS demonstration projects has declined massively
in value as the EU Emissions Trading System (ETS) price has collapsed,
and this has been compounded by the unwillingness of Member States
to support the bids. As a result, no CCS projects were supported
within the original competition and a portion of the finance was
held back to reopen the competition in mid 2013. A number of witnesses
considered that insufficient progress on CCS was being made, and
much of this criticism was directed at Member States.
The Commission noted its additional concern about the exclusive
focus on coal, with no gas in the possible demonstration projects
considered thus far for NER-300 support.
58. As for how CCS might be encouraged, suggestions
included: an EU-level Emissions Performance Standard (EPS), which
would prevent the operations of coal-fired power stations unless
they were equipped with sufficient CCS to meet the required standard;
the mandatory application of CCS at some point in the future;
and improved collaboration between Member States, perhaps through
a credit system allowing Member States or industry to invest where
there was the least public resistance. Mr Chris Davies MEP,
who articulated the latter suggestion, observed that an EPS at
the levels currently being proposed in the UK would simply be
a mechanism to favour gas over coal and would not necessarily
encourage the use of CCS.
The Commission agreed in its recent Communication on CCS in the
EU. Mr Tindale,
though, argued that an EU-wide EPS set at a sufficiently low level
would rule out "cheap, highly polluting forms of energy",
as it would cap their emissions intensity (greenhouse gas per
unit of output).
From the UK perspective, National Grid highlighted how CCS has
a crucial role to play in meeting carbon targets affordably.
The European Climate Foundation (ECF) suggested that the focus
should be on the application of CCS to gas and industry, particularly
given the likely reduction in coal capacity. It was noted that
such a concentration might be easier if there was a focus on industrial
clusters so that the by-products of CCS can be used.
59. The Secretary of State noted that the development
of CCS in the EU could allow itand the UK in particular,
given its huge offshore storage potentialto take a lead
in developing the technology.
This position was supported by National Grid who noted that the
combination of EU programmes, along with UK support through the
DECC commercialisation programme has "ensured that the UK
and Europe are at the forefront of this technological development"
and are thus well-placed to take advantage of the resulting opportunities.
60. In terms of worldwide electricity generation,
CCS could make a larger contribution than anything else to reducing
greenhouse gas emissions. The EU has
a common interest in the development of CCS because of its common
decarbonisation target and availability of significant carbon
61. We consider that, in relation to both
coal and gas, CCS is technically feasible, but faces both financial
and political obstacles. We urge the UK Government to deliver
and build on its commitments to support pilot projects and stress
the importance of an EU CCS portfolio including at least one CCS
project applied to gas.
62. Where possible, CCS should be developed
in industrial clusters so that it can be applied to industry as
well as the power sector, thereby allowing its by-products to
be used for industrial purposes.
63. It is particularly disturbing that as
the need for CCS has increased, the effort to deliver it appears
to have diminished. The slow progress of CCS thus far and its
importance to EU energy policy suggest that a stronger incentive
needs to be developed at EU and Member State level. This requires
a stable source of national and EU funding and a credible carbon
price or regulatory approach. Such an approach should include
a provisional target date for requiring CCS to be applied to any
new fossil fuel power stations, based on the results of pilot
64. There was a strong view among witnesses that
gas is important as a transitional fuel
for two reasons: to complement the intermittency
of renewable sources; and to provide capacity of lower carbon
content than coal while renewables are being developed. The IEA
has also recommended gas as a substitute for coal.
65. Highlighting the importance of gas as a transitional
fuel, Professor Dieter Helm noted that gas provides "one
short-term option to do less damage than coal" (see Box 4),
but is "not a permanent solution", and might therefore
require strong regulation to ensure that industry moves away from
gas. The European
Economic and Social Committee (EESC) also suggested that gas should
be considered as a temporary substitute for the most polluting
sources of energy, but noted it should play a limited role as
a transition fuel.
Professor Helm highlighted the concern that prolonged use
of gas could result in a 'lock-in' to carbon-based plant and infrastructure.
He suggested that regulations in the form of "emissions performance
standards", for example, could be employed to prevent this
Comparative greenhouse gas emissions of
Greenhouse gas emissions: gas vs. coal
Gas 300-350 gCO2/KWh
Coal 600-800 gCO2/KWh
Lignite 800-1,000 gCO2/KWh
These figures clearly demonstrate how coal and lignite
are both far more carbon emitting than gas (with lignite being
worse than coal). It is because of the high carbon emitting nature
of coal and lignite that there is a high preference for the alternative
use of gas. Furthermore, if CCS was applied to the use of gas,
this would help reduce its greenhouse gas emissions even further.
66. Dr Gross supported these views when
he stated that in the short-to medium term it is important that
we have gas as a back-up, but in a similar attempt to avoid a
gas 'lock-in', we would "need to make sure that the inbuilt
incentive to use that plant more than our carbon targets would
suggest is overcome".
67. The role of gas in energy security was also
emphasised by witnesses, but this will be discussed in greater
detail in Chapter 6.
68. Gas has an important role as a transitional
fuel, in moderating the cost of energy while larger renewable
resources are further developed, and in balancing the system as
the scale of intermittent inputs rises. However, further gas investment
also carries a risk of 'lock-in' to carbon-based plant and infrastructure.
Regulation, indicated well in advance, may be required in order
to manage the transition to further decarbonisation, whether by
CCS or by moving beyond gas.
UNCONVENTIONAL GAS-SHALE GAS
The term unconventional refers to the source rather
than the nature of the gas itself. Shale gas and coal-bed methane
are examples of unconventional gas.
Gases are extracted directly from shale (a sedimentary
rock). This has a low permeability and so does not release gas
easily. To overcome this, the rock is fractured ('stimulated')
to yield commercial volumes of gas. In the UK, there are several
layers of shale that have potential for exploitation. The largest
resources are estimated to be in the Upper Bowland Shale of the
Pennine Basin (underlying Lancashire and Yorkshire), with further
resources in the Wessex and Weald Basins (underlying Sussex, Hampshire
Deposits of shale gas can be found elsewhere throughout
Europe. In particular, there is a notable concentration of shale
gas basins in eastern Europe.
69. Shale gas (see Box 5) was described as a
"global game changer"
and an "unexpected revolution".
In considering this energy source, several witnesses were open-minded
about the development of shale gas in the EU but emphasised the
need for clear regulation. Mr Tindale, for example, noted
that whilst the use of shale gas in the short-term is a possibility,
it is "not low carbon enough without CCS", suggesting
that CCS might be introduced alongside the exploitation of shale
gas to reduce carbon emissions.
Others, however, raised concerns over the exploitation of shale
gas in the EU compared to elsewhere in the world. Mr Froggatt
suggested that shale gas may be difficult to develop in the EU
as, first, it does not have the infrastructure and, second, "the
licensing process will be different".
For Ms Fiona Hall MEP, it would be controversial to extract shale
gas in Europe due to the continent's high population density,
suggesting that the global competitive advantage for the EU lay
in renewable energy.
70. Some witnesses, such as Professor Helm,
took a more positive approach, emphasising that the discussion
of the regulatory issues relating to shale gas should be set against
the alternative of coal. He argued that, while there were environmental
problems associated with shale gas, it was still "phenomenally
better" than coal, particularly given that coal leaks methane,
leaches heavy metals, pollutes the water table, requires an intensive
amount of energy and damages the health of coalminers.
71. Ms Tzavela MEP called specifically on the
UK to take a lead in the exploitation of shale gas. Whilst accepting
that shale gas presented a challenge for the EU, she argued that
it could be developed enough to allow the EU to exploit its own
shale gas resources. Ms Tzavela MEP claimed, however, that shale
gas would be "a success story in Europe" if it was led
by the UK, which she attributed to the UK's well-established business
and regulatory environments.
72. We were told by the Commission that a framework
proposal regarding shale gas is due late in 2013, which will consider
how the exploration and exploitation of shale gas "from the
point of view of the environment, climate and energy policies"
can be conducted sensibly.
The Commission accepted that there were still a number of issues
to be resolvedsuch as the environmental impact of shale
gas extractionbut were clear that Member States should
"definitely not close the door" on the possibility of
future shale gas extraction if these issues can be resolved.
The Commission also put forward the option of importing shale
gas in the form of liquid natural gas (LNG) (see Chapter 6) from
the US, rather than exploiting it in the EU, and holding on to
indigenous EU reserves until a future date.
73. Witnesses said that obstacles to the exploration
of shale gas included high population density and "the likelihood
of local objections", with notable scepticism on whether
these obstacles could be overcome.
In particular, Professor Jonathan Stern warned that people
in the EU do not understand the sheer scale on which drilling
would need to take place for shale gas. He cited the US, for example,
which drills over 45,000 wells per year, whereas not even 100
wells have been drilled across the entire EU.
According to Professor Stern, and supported by evidence received
from EDF, the "environmental intolerance to the scale of
the drilling that needs to be done" in order to develop shale
gas is likely to prevent significant exploitation of shale gas
in the EU until after 2020.
74. A further potential problem with the use
of shale gas is that it is nowhere near as developed in the EU
as it is in the US. Whilst further regulated developments might
be welcome, much more research is still required. The EU is unlikely
to recreate a similar US 'shale gas revolution', and should not
assume it can. The amount of shale gas resource and reserves are
still largely unknown and can vary by study.
The Parliamentary Office of Science and Technology's paper on
UK shale gas potential states that "Estimates of UK shale
gas are at an early stage of development", and that there
is "uncertainty in resource estimates".
One estimate from the British Geological Survey puts UK potential
at approximately 150 billion cubic metres (bcm), and another from
the US Energy Information Administration suggests around 570 bcm.
Neighbouring regions, such as North Africa, may also have shale
gas reserves that, if exploited, could be utilised by the EU.
75. We agree that a regulatory structure for
the exploitation of shale gas in the EU should be developed. We
caution, however, that fundamental structural differences (including
population density, geology, planning and legal factors) make
it highly questionable that the EU could repeat the US experience.
The EU is unlikely to compete on the basis of cheap fossil fuels.
Creation of such a false hope would undermine the policy stability
required to attract investment. We therefore conclude that there
is some uncertainty about the likely extent of EU-produced shale
gas. The EU must take into account the further exploitation of
shale gas in neighbouring regions and the implications of this
for EU energy policy.
Coal and lignite
is the lowest rank of coal with the lowest energy content. Lignite
coal deposits tend to be relatively young coal deposits that were
not subjected to extreme heat or pressure, containing 25%-35%
can also contain high sulphur content.
76. There appears to be a revival in the demand
for coal and lignite (see Box 6) in the EU, which Professor Helm
referred to as a "dash for coal".
Coal represents 25% of EU electricity generation, and 40% of UK
generation. The Scientific Alliance drew attention to the fact
that coal is presently "the most economic fuel to burn in
Various witnesses cautioned against dramatisation of this phenomenon,
which has been driven partly by the low carbon price under the
ETS, partly by cheap coal prices in the US due to the shale gas
revolution, partly (in Germany) by the move away from nuclear
energy and partly by the UK carbon floor price and closures under
EU environmental regulations.
77. In exploring coal and lignite development
in Germany, it became clear that, while many projects have been
planned, very few are reaching the commercialisation stage. Dr Neuhoff
pointed out that, of eight new plants that had been expected to
be operational in Germany by 2013/2014, technical difficulties
have delayed investment. Six were still expected to be completed
but two projects had been stalled due to legal reasons, and may
not be built. Of all the other planned projects, only three remain
possible. Mr Froggatt
expressed his view that "there is a significant difference
between what is under proposal or planning and what will actually
be built in Germany", believing that "what will be built
will be significantly less".
78. For the whole of the EU, the ECF reported
a similar situation, and of 112 announced projects (since the
early 2000s), only two or three have reached construction stage.
Despite these somewhat faltering figures, witnesses nevertheless
conceded the continued importance of coal: there still remains
the prospect of 20 new, largely lignite, plants; coal still represents
around 25% of all EU electricity generation; and subsidies are
still available in Poland and Romania for new coal plants.
79. The apparent surge in coal is linked to generation,
not capacitythat is, there has been an increase in coal
usage as opposed to capacity change. The Confederation of UK Coal
Producers (CoalPro) said that the "scandalously high"
price of gas (which is more than double the cost for coal) has
resulted in an increase in the burning of coal.
In the UK, for example, coal burn was up 40% from 28 million tonnes
to 39 million tonnes in the first 9 months of 2012, which was
similar to the situation in Germany.
A low carbon price under the ETS has also been cited as a contributing
factor, as is, in Germany, the phasing out of nuclear energy.
80. WWF claimed that we are not seeing "a
and the Commission argued that there will be a "rebirth of
investment in gas rather than coal as a complement to renewables".
Additionally, the ECF observed that this surge in coal is unlikely
to be sustained given the national policies in place to disincentivise
the use of coal. For example, Denmark has opted to establish a
tax on coal, and Finland has made a similar pledge to phase out
the use of all coal.
81. Moreover, the capacity of the EU's coal fleet
is likely to be hit by application of the EU Large Combustion
Plant Directive (LCPD) and the Industrial Emissions Directive
(IED) (see Appendix 6), which will lead to the closures of some
coal plants. The
ECF estimated closures following the LCPD at 20 GW
across the EU,
with 8 GW of closure in the UK (including 5 GW by March 2013).
ECF referenced BNEF figures, which identified that, of 207 GW
of coal capacity across the entire EU, 124 GW is not compliant
with IED. Whilst
closures following the IED are unclear, only one UK plant has
thus far taken the decision to invest to meet the IED requirements,
suggesting that all other remaining plants may choose to shut
down. This would have significant consequences given that coal
currently provides nearly 40% of UK power.
82. We note with concern the resurgence of
coal in the EU. While significant closures are expected to take
place as a result of EU environmental Directives, we observe that
new plants compliant with those Directives are in preparation.
We warn that, if the price of carbon under the ETS languishes
for long, its credibility as a deterrent to new coal investment
will be lost. The further development of coal in circumstances
where CCS is not a proven technology would carry a high risk,
not only in terms of climate change (and EU credibility), but
also economic risk of stranded assets.
EU legislation defines renewable energy as energy
from renewable non-fossil sources, namely: wind, solar, geothermal,
wave, tidal, hydropower, biomass, landfill gas, sewage treatment
plant gas and biogases.
83. The Committee heard that renewable energies
(see Box 7) represented 6% of total EU power generation in 2011,
and were evolving swiftly.
According to WWF, in 2012, 77% of the increase in EU energy capacity
additions came from renewable sources.
WWF also referred to a report from the European Wind Energy Association,
which showed that there were 1.1 GW of offshore wind added in
2012, with figures of 1.4 GW and 1.9 GW anticipated for 2013 and
Taking Germany as an example, Mr Froggatt pointed out that,
over the past three years, approximately 7 GW per annum of solar
energy has come online, with a solar capacity now standing at
around 30 GW.
ABB Limited identified that the renewable energy sector in the
UK alone currently accounts for 110,000 jobs, with an expected
growth to 400,000 by 2020.
These clearly indicate rapid growth rates. At the same time, the
costs of renewable energy are coming down. While they are still
all more expensive than fossil fuels, renewable sources such as
onshore wind, for example, were highlighted by Mr Tindale
as only a little more expensive than gas.
As is evident from the table of levelised costs in Appendix 7,
this does assume, however, the existence of a robust carbon price.
84. All the scenarios in the Commission's Energy
2050 Roadmap find that renewable energy must play a part in the
future of EU energy. In particular, Mr Tindale emphasised
that renewable energies have an important role to play in energy
security by reducing reliance on imported fossil fuels with their
volatile prices and potential political dependency.
There are, however, concerns relating to public acceptance, which
render some renewable energies, such as onshore wind, challenging
85. Renewable energy support schemes are already
in place across the EU. There has been a recognition, echoed by
the Secretary of State, that subsidies under those schemes were
initially set at unsustainably high levels.
The Commission indicated that support schemes are national and
of varying quality in terms of their effectiveness. The Commission
suggested that there was an emerging view that feed-in premia
(a fixed premium (£/MWh) paid to the generator for each unit
of electricity in addition to the market price) have been more
successful than other support systems.
We heard that support should be temporary and should, wherever
possible, be phased outincluding for expensive technologies,
such as offshore wind, which are moving closer to market viability
(the target price for offshore wind is £100 per MWh by 2020
at 2011 prices).
It was also argued that the harmonisation of support schemes might
be helpful. Professor Helm argued against support schemes
for expensive but relatively mature technologies, such as offshore
wind. We explore this argument further in Chapter 5.
86. A particular challenge facing some renewable
energies is that of tackling intermittency. Dr Gross noted
that there are "very real electrical engineering issues"
surrounding intermittency that must be considered, particularly
relating to system balancing and responsethat is, the speed
of change. For example, if the wind output is dropping very quickly
in the opposite direction to increasing demand, one needs to be
able to manage the lull.
It was argued that intermittency can be tackled in four ways:
by improving interconnection; boosting the strategic use of electricity
through smart technologies (such as smart meters, grids and appliances);
developing electricity storage; and through capacity payments,
which would encourage investment in gas power.
In discussing the issue of intermittency, RenewableUK stressed
the importance of physical interconnection, to allow the trading
of resources across borders, and regulatory interventionmarket
coupling and market integration. It claimed that being able to
trade across borders will "dampen the volatility and equalise
the prices more across Europe".
As discussed in paragraph 62, it was suggested that gas could
be used as a short-term mechanism to cope with intermittency,
whereas ENTSO-E stressed the importance of grid development.
There are some renewable energysuch as tidal power and
biomassthat are not subject to intermittency. As an increasing
amount of wind power comes on to the grid, the challenge will
be greater and demand-side response will become more important.
We explore interconnection in greater detail in Chapter 6.
87. The Commission expressed its view that the
integration of variable sources of energy is technically feasiblepointing
to Spain, Germany and Denmark as examples. However, this would
require significant development of the grid infrastructure. It
warned that, otherwise, there could be a repeat of the problem
experienced in connection with Germany, where neighbouring countries
were flooded with surplus electricity.
88. There are a range of renewable energy
technologies at various stages of development. A number of onshore
renewable resources, including wind, could be close to cost-competitive
with present fossil fuel prices if the carbon price was more robust,
but they are impeded in particular by public opposition as well
as strategic uncertainties about energy prices and policy.
89. For much of northern Europe, including
the UK, offshore renewable energy will require sustained investment,
including by way of support schemes, to bring down costs. We would
not support harmonisation of national support schemes but welcome
work by the Commission to identify examples of best practice.
We agree that support schemes should be temporary and phased out
as a technology progresses towards commercial viability.
90. We accept that the increasing development
of renewable energy has implications for the continuity of supply
due to the intermittent nature of some renewable energy generation.
This challenge should not be underestimated, but nor need it be
an obstacle to the further development of renewable energy. It
can be overcome through demand-side response, interconnection,
storage and gas generation, although the necessity for gas to
play this role should recede over the medium- to long-term.
91. We conclude from the German energy transformation
thus far that, in practice, the safe and reliable introduction
of high levels of renewable power requires coordination with neighbouring
92. We received limited evidence on nuclear power.
Most of those who commented were not overly optimistic about its
role in future EU energy policy. Mr Tindale supported it
as a bridge technology, given that it is expected to take "several
decades" to achieve 100% renewable energy.
The CBI similarly suggested that nuclear power could be part of
a balanced energy mix.
93. We were warned by witnesses such as Mr Froggatt
that nuclear power remains politically divisive among Member States,
highlighting the fact that there is no EU consensus on the role
of nuclear power. For example, whereas Germany has declared its
intention to move away from nuclear power entirely, France relies
quite significantly on nuclear, and Belgium has reversed its previous
decision to phase out nuclear power.
94. Professor Helm was similarly cautious
about the prospect of nuclear new builds. He noted that the costs
involved at present are very uncertain and also drew attention
to the German situation where nuclear reduction has led to coal
growthsomething we have already identified as undesirable.
Professor Stern considered substantial new nuclear build
in Europe to be unlikely, largely due to the negative environmental
and financial costs, but also due to cautious attitudes in the
aftermath of the Fukushima nuclear incident in Japan.
We were also informed about the uncertainties in financing nuclear
projects across Europe. It was concluded by WWF that, even setting
aside its environmental concerns relating to nuclear power, current
economic difficulties make it "extremely unlikely" that
much nuclear capacity will be built in the UK or the EU over the
next 20 years.
WWF cited a paper which argued that the complexity and continually
rising costsas well as making appropriate safety, waste
management and decommissioning arrangementsassociated with
nuclear energy would always limit its role in the power sector
BNEF identified recent examples of such difficulties in Europe,
noting that an "unfortunate characteristic" of recent
nuclear projects such as the Olkiluoto EPR in Finland and the
Flamanville EPR in France were cost overruns and delays.
WWF claimed that issues surrounding insurance and liability further
exacerbate the large financial costs associated to nuclear power.
Whilst corporate liability for any nuclear accident is capped
at around £1 billion by European law, the "taxpayer
would pay for the clean-up of any major accident". WWF cited
the example of the Fukushima incident, in which compensation costs
are estimated to be £35 billion, with the total clean-up
costs likely to exceed £160 billion. Therefore, it concluded,
if the nuclear industry were to insure itself properly, the electricity
would be unaffordable.
95. It was also argued that, from a UK perspective,
similar construction delays and cost overruns would be expected.
For example, Centrica (who own British Gas), had the option of
taking a 20% stake in the UK's nuclear new build programme in
a partnership with EDF. Centrica, however, now appears to have
opted out of nuclear in the UK and may write off £200 million.
BNEF noted that Centrica had reportedly spent £1 billion
in upfront costs through to the end of 2012, but feared that the
cost escalation of the proposed Hinkley Point projects from £4.5
billion to £7 billion each suggests there may be better investment
Whilst the UK Government announced that they were granting planning
permission to EDF to construct Hinkley Point C on 19 March 2013,
questions still remain over the electricity price required to
fund its construction.
96. WWF warned that there may be additional political
and legal barriers to the construction of new nuclear plants.
It argued that the UK's current Electricity Market Reform (EMR)
proposals on nuclear were "a clear breach of the Coalition
Agreement's commitment not to subsidise nuclear power".
Furthermore, WWF claimed that the EMR proposals would constitute
illegal state aid under EU law as tendering for nuclear energy
does not correspond with the legal requirements of the internal
97. The House of Commons Energy and Climate Change
Committee's recent report on nuclear power in the UK concluded
that, although the UK has failed to deliver nuclear new build,
this does not pose a significant threat to energy security. There
could, however, be increased indirect security threats, such as
an increased reliance on imported gas.
98. There is not, and there never has been,
consensus among Member States with regard to the role of nuclear
energy. In the UK and elsewhere, financing remains problematic,
both in terms of securing investment and with costs overrunning.
Nuclear remains a low carbon option, but its future is uncertain
in the EU. Important issues relating to state aid, liability and
waste remain to be resolved and must be addressed by Member States
and the Commission. Failure to agree the terms of significant
new nuclear investment will inevitably increase reliance on alternative
92 Q 60, Q 81, Q 235, Q 239, Q 309, Q 353, Q 366, FSR Back
Q 45 Back
Directive 2009/28 Back
Q 60 Back
Q 61 Back
Q 263 Back
ibid., Dr Karsten Neuhoff supplementary evidence Back
Q 339 Back
Q 239 Back
Q 190 Back
Gas Generation Strategy, Department of Energy and Climate
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CCS is a necessity for a world hooked on fossil fuels,
IEA.com, 1 January 2013 Back
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of CCS chains-Lessons learned and limitations from Life Cycle
Analysis literature, International Journal of Greenhouse Gas
Control, Vol. 13, March 2013 Back
Q 12, Q 104, Q 250, Q 369, COM(2013) 180 Back
Q 371 Back
Peterhead Project in Aberdeenshire, Scotland, and the White Rose
Project in Yorkshire, England Back
Front End Engineering and Design (FEED) studies are best practice
for complex projects in the engineering and construction industry.
FEED studies typically follow on from initial high-level plans,
and allow project developers to refine designs and, for example,
source quotes from suppliers Back
Preferred bidders announced in UK's £1bn CCS Competition,
GOV.uk, 20 March 2013 Back
The NER-300 was launched by the Commission in 2008. It is intended
to provide financial support for the development of innovative low-carbon
technologies, at commercial scale, across the EU. Funding
derives from selling 300 million allowances (or rights to emit
one tonne of CO2) in the New Entrants' Reserve
of the ETS Back
Q 38, Q 63, Q 104, Q 161, Q 225, Q 250 Back
Q 251 Back
COM(2013) 180 Back
National Grid Back
Q 122 Back
Q 369 Back
op. cit. Back
Transitional fuels are temporary energy sources used in the move
from fossil fuels to low carbon emitting energy sources Back
Intermittency refers to the variability of output according to
changes in weather Back
Q 119 Back
Q 119 Back
Q 53 Back
Grammes of carbon dioxide per kilowatt hour Back
QQ 99-100 Back
Unconventional Gas, Parliamentary Office of Science and
Technology (PostNote 374, April 2011) Back
Unconventional Gas in Europe, The Economist, 2 February
Q 47 Back
Q 81 Back
Q 2 Back
Q 47 Back
Fiona Hall MEP Back
Q 119 Back
QQ 241-242 Back
Q 267 Back
Q 267 Back
Q 171 Back
Q 146 Back
ibid., EDF Back
UK Shale Gas Potential, Parliamentary Office of Science
and Technology (PostBox, January 2013) Back
Europe's Shale Boom lies in North Africa as Algeria woos Exxon,
Bloomberg News, 26 November 2012 Back
Coal explained, US Energy Information Administration Back
Q 121 Back
Scientific Alliance Back
Q 35, Q 104, Q 106, Q 110, Q 119, Q 336 Back
Dr Karsten Neuhoff supplementary evidence Back
Q 35 Back
Q 104 Back
Q 104, Q 106, Q 110 Back
Q 104 Back
Q 104 Back
Q 336 Back
Q 63 Back
Q 109 Back
Q 202, Oil & Gas UK Back
Total available EU generation capacity is around 800 GW, with
around 80 GW in the UK (Eurelectic) Back
Q 104 Back
Q 107 Back
Q 105 Back
Q 107 Back
Directive 2003/54 Back
Q 171: This figure represents renewable energies excluding large
hydro, and only includes hydro up to 50MW Back
Q 318 Back
Q 35 Back
ABB Limited Back
Q 5 Back
Q 11 Back
QQ 60, 283 Back
Q 88, Q 138, Q 173, Q 174 Back
Q 261 Back
Q 98, Offshore Wind Cost Reduction, The Crown Estate, May
Q 99 Back
Q 37 Back
Q 97 Back
Q 295 Back
Q 37, Q 97, Q 99, Q 152, Q 295, Q 333, European Commission Back
European Commission supplementary evidence Back
Q 10 Back
Q 322 Back
Q 45 Back
Q 136 Back
Q 151 Back
WWF supplementary evidence Back
The Dream That Failed, The Economist, 10 March 2012 Back
BNEF supplementary evidence Back
WWF supplementary evidence Back
Centrica unplugs UK nuclear plants, The Times, 4 February
WWF supplementary evidence Back
Hinkley Point C: Building challenges, BBC News, 19 March
WWF supplementary evidence Back
Energy and Climate Change Committee, 6th Report (2012-13): Building
New Nuclear: the challenges ahead (HC 117) Back