Energy: Civil Nuclear Power
Lord Howell of Guildford
That this House takes note of the role of civil nuclear power in meeting the United Kingdom’s electricity needs and energy security.
Lord Howell of Guildford (Con)
My Lords, I begin by declaring interests advising energy-related companies, as detailed in the register, and as chair of Windsor Energy Group, as former president of the Energy Industries Association and the British Institute of Energy Economists, and—rather a long time ago—as a former UK Energy Secretary, although I must say in very different times from those we now face.
I am going to start with the civil nuclear future rather than the present, because I do think it is possible to strike a very positive note there. In fact, I do not disagree totally with those who say that the whole civil nuclear power industry could be on the verge of a spectacular new birth. I shall come later to the immediate state of nuclear power in the UK where, I am afraid, the situation is far from positive and some very serious issues demand extremely urgent government attention.
However, further ahead, we can see the outlines of two important advances. First, there is the prospect of building smaller modular reactors in place of or supplementing the giant plants that we know today. This has long been talked about but is now becoming genuinely within reach. Smaller modular reactors, as we all know, can be built far quicker, fabricated in the factory and, because of the speed of construction, are, importantly, far more attractive to private finance, which is one of the keys to progress. Rolls-Royce tells us that commercial models are now in sight, will deliver about 470 megawatts each and cost around £2 billion—starting higher than that but ending lower. This compares with the giant EPR nuclear station being built here in Britain at Hinkley Point C, with a capacity of 3,260 megawatts and at a cost—still climbing, I fear—of around £23 billion. The new, smaller machines would be located on present or older mothballed nuclear station sites.
Obviously, we are not the only people pursuing this avenue. China, America and France all have working models, and Japan is ahead on its new high-temperature gas-cooled advanced reactor, which is also smaller but not quite as small as the Rolls-Royce models. But, with considerable renewed government support, Rolls-Royce now has a war chest of about £490 million with which to build its business case, and that is what it is doing with some vigour.
The second new prospect for nuclear power is fusion, or
“putting the sun in a bottle”,
as the late Walter Marshall described it to me when he was mentoring me in these areas. I know that this has always been a sort of holy grail, just out of reach tomorrow and never quite there, but things are changing there, too. Just outside Oxford at the Culham Centre for Fusion Energy, they are getting to that crucial point where the fusion process, which requires unimaginably large amounts of electricity to make it work at all, may nevertheless be producing more power than it drinks in, thus making it a net, completely clean and mercifully waste-free electricity source on a vast and cheap scale. It is a truly international operation called ITER, in which France, America and, indeed, Russia are playing a role, along with 32 other countries. In fact, the original design of the fusion machine—the so-called Tokamak fusion reactor—was Russian.
So all this is quite promising for the future of nuclear, and it is cleaner in every way. But when we scroll back to the present situation here in the UK, I am afraid that it is an entirely different story and the negatives really begin into appear. First, we need to face the fact that we are all going to need a lot more electricity in a cleaner, greener world ahead. The best estimate is that by 2050 the world will be needing about 12 times the present flow of clean electric power. Even by 2030 to 2035, the increase will be enormous.
Secondly, if we want to curb climate extremes and emissions growth as hoped and planned, there is not the slightest hope of doing so without a solid base of renewable, firm, low-carbon nuclear power serving as both a back-up and a baseload. However efficient we are at conserving power and insulating homes, our now entirely computerised world and our capacity to feed 7.5 billion or 8 billion people rests on secure electric power supply. Quite aside from that, nuclear power will be a major source of clean electricity for hydrogen.
Thirdly, if we want an orderly energy transition without wild instability in the system, a substantial nuclear section of reliable 24/7 electricity is vital. Strong renewable flows demand strong nuclear back-up if they are to deliver without vast disruption and hardship. It is not just that the wind sometimes drops for long periods; there are always events, sometimes quite unforeseen or related to faraway distant disorder or conflict, that can hit any energy system, where strong back-up and swing supply sources are absolutely essential to maintain the current.
Here in the UK, our old original fleet of nuclear power stations is wearing out. They will all be closed by the mid-2020s, except the one that I had the privilege of authorising, along with eight other pressurised water reactors, in October 1979, at Sizewell B. That finally began operating in 1995—quite a long time later. The only new replacement since then has been the 3,260 megawatt giant at Hinkley Point, built by the French and the Chinese, with EDF and the China General Nuclear Power Group having the major shares in it. The EPR design they are building now, which is a sort of great-grandchild of PWR, might well encounter faults. Indeed, it has encountered quite a few already, as has every other EPR built around the world, including the one in China, which has very recently gone wrong.
Of course, we should have planned a replacement fleet much earlier, but the mood turned against nuclear in the 1990s. My personal dream was to follow part of the amazing French example. They built 58 PWRs in the 1970s. To get on that track, my first task was to get the quarrelling nuclear scientific establishment to agree on a single design after years of CP Snow-like back-room bickering outside the corridors of power. Eventually, after some difficulty, we chose the PWR route as well. I sought advice from the formidable French Industry and Energy Minister, André Giraud, but it was too late. The eight more I hoped for were never built. Cheaper oil and gas undermined the economic case completely, and long-term national security was not considered worth the enormous cost.
We had to wait another 20 years until the Labour Government, having been totally against nuclear, gradually came round to it and started talks with the French and the Chinese, which led to the 2008 agreement for CGN to take a third interest in Hinkley C. But this is where geopolitics and technology collided. The original new plan was to build one large twin reactor at Hinkley, another at Wylfa in north Wales, another at Moorside in Lancashire, another still at Sizewell as a replica of Hinkley, and possibly one at Oldbury. To this end, Chinese participation—mainly financial—was invited at Hinkley and Sizewell, but with the enticement of a further all-Chinese project at Bradwell in Essex, which would be the springboard for world sales of the Chinese model.
That was the plan, but it is not how things worked out all. Toshiba withdrew from Moorside, Hitachi withdrew from Wylfa over difficulties on pricing, and of course the mood towards China changed through 180 degrees, from a love of everything Chinese 10 years ago to dislike and suspicion towards everything Chinese now. Having invited the Chinese in, the Government now seem determined to get them out, withdrawing the precious offer to the Chinese of their new station at Bradwell and keeping them out of Sizewell C as well.
The obvious danger is that CGN will get the message of being unwelcome and pull out of the one station that we are actually constructing at Hinkley. That would bring our great replacement programme to a sickening halt. We would like to know from the Minister this evening about the state of play on that delicate and difficult front. We would also like to know whether anything can be revived at Wylfa—this time with Westinghouse, with perhaps a set of small reactors on the same site.
Meanwhile, our own nuclear supply has shrunk from a peak of 30% of our total electricity to 22%, and now 17%, and it is heading for 7%. Of course, gas has swollen to fill the gap, from 1% in the 1980s to 43% now—actually, last month, it was as much as 55% of all our electricity. This of course creates its own problems, as overdependence on any one fuel and power source always does, and as we have seen from the current astronomical rise in gas prices. When the cap is lifted in April, this will strike home with deadly force and torpedo millions of household budgets. We simply cannot afford to conduct our energy policy in this way, as a great high-tech, modern nation.
We are not the only ones in trouble: the Germans are in a fix because Mrs Merkel—so wise in some areas—decided to drop nuclear power but forgot to fill the gap. It ended up being filled by coal and Russian gas—the two very worst solutions on climate and security grounds. This explains why, today, German carbon emissions are 8.4 tonnes per head, compared to 5.4 tonnes here and 5 tonnes in France. That is what you get if you reject nuclear power altogether. We must escape from this quagmire, and we can do if we act firmly and decisively now.
I end by putting two key questions to my noble friend the Minister. Who pays if the Chinese go? If CGN takes its support away not just from Sizewell C but perhaps even from Hinkley, who fills the hole of £20 billion or so in each case? Secondly, are we still committed to giant plants, or will we wait for the SMRs, which are cheaper and quicker and have lower waste? Will we still depend on public finance and enormously heavy and complex charge burdens on consumers, who are already paying some of the highest energy bills in Europe, or can we shift to smaller plants financed by private investors? Decisions on both these central questions cannot be escaped much longer.
Lessons from the current experience of chaos in the energy markets is that orderly energy transition to a low-carbon world must have back-up, and a large part of that—if it is to be low carbon and in line with climate goals—has to be nuclear. Without that, and with more delay—you cannot just demand a close-down overnight of investment in all fossil fuels at speed—we will end up with horrendous spikes, blackouts, outages, suffering and political revolt, which of course ends up undermining all popular support for the very climate policies that we are trying to achieve. That is the nuclear power dilemma of the age, and it must now be resolved.
Viscount Hanworth (Lab)
My Lords, the Government believe, despite compelling evidence to the contrary, that private investors can be relied on to create and maintain our industrial infrastructure. This delusion is threatening our energy security and it may subvert the attempt to staunch our emissions of carbon dioxide. The belief is due, in part, to the Government’s political ideology, which favours private enterprise and is averse to state interventions in industry. It is also due to a misinterpretation of the recent history of the electricity supply industry. The successful investment of private companies in gas-fired power stations, which have largely replaced coal-fired power stations, has encouraged the belief in private investment, and the faith in the electricity industry has been strengthened by its ability to invest, subsequently, in wind-powered electricity generation.
No more than three years were required for the construction of gas-fired power stations. Such power stations were able to exploit a cheap and plentiful supply of North Sea gas. Nowadays, the available gas is expensive and its supply is insecure. The replacement of coal by gas has been responsible for a considerable reduction in our carbon emissions. An accompanying process of deindustrialisation has also reduced the energy demands of the economy and its use of fossil fuels. From 1990 to 2020, the UK’s emissions of carbon dioxide fell from 800 million to 420 million tonnes per annum, a two-thirds reduction of its former amount. These reductions cannot be expected to continue. Nevertheless, they have provided the basis for a proud assertion that Britain is leading the way in its process of decarbonisation.
The Climate Change Committee has warned repeatedly and with increasing urgency that we are liable to miss the targets that we have set to decarbonise the economy. This reflects the realisation that we have no adequate means of supplying the power that could sustain a green industrial revolution. Abundant electricity will be required to power our transport and heat our buildings. It will also be required to replace the fossil fuels used in the production of such basic materials as steel, bricks, glass and cement and in the manufacture of chemicals. The list can be extended. It seems that the Government have greatly underestimated the magnitude of this demand. There is a growing realisation that nuclear power is the only appropriate means of satisfying the need for a secure and abundant supply of electricity.
Britain’s original nuclear power stations relied on finance from the Government. The present Government have insisted that a new generation of nuclear power stations must be financed by private capital. The demand has been difficult to meet and there has been a succession of failed projects. A problem affecting private sector projects to build nuclear power stations is that no revenue will be forthcoming for as long as it takes to complete the construction, which may be as long as 10 years. The firms and the consortia that have been proposing the projects have been unable to raise the necessary capital from the financial markets to supplement their own limited resources. The high rates of interest charged for borrowing the funds are liable to make the projects to build nuclear power stations unsustainable. The capital funds that are borrowed from the financial markets must be repaid eventually, and the repayments are burdened by surcharges comprised within the rate of interest.
The first of these arises from a discount factor that is applied to future repayments that are valued at less than present payments. The second surcharge is a risk premium that is charged by lenders as an insurance against the eventuality that the repayments will not materialise. Finally, to encourage the funds to be forthcoming, it may be necessary to pay a scarcity premium. These three surcharges can be reduced, if not eliminated, if the Government undertake to finance the project. The Government will be able to borrow the funds without paying a risk premium, under the supposition that they do not default on their debts. If the funds are not readily forthcoming from the financial markets, the Government may resort to creating the money to pre-empt the resources that will be demanded by the project. Finally, a Government who are intent on an enduring social investment may wish to discount future benefits, if at all, to a far lesser extent than lenders within a financial market would discount them.
The only project to build a nuclear power station that is currently under way in Britain is Hinkley C. It has been undertaken jointly by EDF and CGN, which, as we have been told, is the Chinese General Nuclear Power Group. CGN can rely on the Chinese state to provide its funds, whereas EDF has to supplement its funds with money raised from the financial markets.
It is commonly supposed that the markets are charging EDF a 9% interest rate. Borrowing £100 at this rate of interest will require a repayment in 10 years’ time of £236. Conversely, a discounted present value of £100 to be received in 10 years’ time is just £42. It is not possible on this basis to finance a large-scale infrastructure project with a lengthy gestation period via private capital. If such projects were to be financed by the Government, both the scarcity premium and the risk premium could be stripped away, leaving only the discount factor to affect the present value of the future benefits.
The Green Book, which is the Government’s manual for cost-benefit analysis, declares the social rate of time preference, which is the rate of interest to be used in their project appraisals, to be 3.5%. On this basis, the present value of £100 to be received in 10 years’ time would be £71. Borrowing £100 at this rate of interest will require a repayment in 10 years’ time of £141. This implies that a nuclear power plant financed by the Government should be eminently affordable.
However, one is inclined to ask why a discount rate should be applied to the future benefits of a nuclear power station, which will constitute a carbon-neutral source of electricity. If the Government are to be seen as a custodian of our future, they should not be discounting the benefits of a project that might be safeguarding us against the discomforts of global warming, if not against a future catastrophe. An implication of applying a discount rate corresponding to the commercial rate of interest of 9% might be that it is too expensive to undertake measures to save the planet. There are surely times when such commercial logic should go into abeyance.
Nevertheless, the Government have tried to create sufficient inducements to encourage the private sector to undertake investments in nuclear power. A first attempt at creating the necessary inducements was via a system of so-called contracts for difference, which promised sufficient payments to the constructors and operators of nuclear power plants to cover their costs. Guaranteed payments were entailed in the so-called strike price. Any returns to the investment below the strike price would be supplemented, and any returns that were above it would be taxed.
The system of contracts for difference has failed to bring forth sufficient investments and is due to be replaced by another system, known as a regulated asset base. This new regime, which has yet to be enacted in law, will allow the constructors of nuclear power plants to impose a levy on consumers of electricity during the period of construction, when there will be no other returns. Under such a regime, the capital funds would be supplied by the financial markets. The charge levied on consumers would represent a subsidy paid to the providers of capital, and would serve to alleviate the debts of the contractor. It remains to be seen whether this inducement will be sufficient to provide the funds for the construction of a nuclear reactor at Sizewell, which has been proposed by EDF.
Alternative ways to finance the projects that do not appear to have been considered by the Government are either to issue designated bonds, backed by the security of the Government, or to create a supply of funds to enable the projects to pre-empt the necessary resources by increasing the supply of money. Now is the time to adopt one or other of these recourses.
Lord Broers (CB)
My Lords, I congratulate the noble Lord, Lord Howell, and the noble Viscount, Lord Hanworth, on their excellent speeches.
It is now accepted that the relentless increase of CO2 in the atmosphere is a serious problem that needs urgently to be stopped because the greenhouse heating effect that it causes results in sea-level rise and climate changes that are intolerable. To do this, we must reduce and, preferably, eliminate man-made CO2. The only way to do this, at present, without making major changes to our way of life or reducing the world’s population, is to use truly carbon-free means of generating power and heat. Unfortunately, at present, there are no such sources.
Wind, solar, and nuclear fission sources can be close to carbon-free once they are built and installed, but carbon is released in their construction and installation. Wind and solar sources are inherently intermittent in their output and must be backed up with continuous sources or used in conjunction with mass storage. The two leading options for backing them up are nuclear fission—the subject of this debate—and fossil fuel plants that capture and store the CO2 that results. The capture and storage of CO2 is yet to be demonstrated at scale, and its use continues the burning and consumption of fossil fuels, which I regard as unacceptable.
Many means of storage are being explored, such as batteries and pumped-water storage, but so far none has been demonstrated at scale; they will add significantly to the cost of the power produced. Hydroelectric sources are ideal but available only in certain geographical locations.
Nuclear fission has been used for generations. For example, it has allowed France to produce essentially carbon-free electricity for decades. However, it is thought by many to be unsafe and too expensive, and there are no practical ways to dispose of the radioactive waste it produces. I believe there are solutions to these three drawbacks that make nuclear the best option for backing up wind and solar power and allowing us to meet our 2050 obligations. I will treat them in turn.
First, on safety, the safety record of nuclear power in terms of fatalities has been orders of magnitude better than that of any fossil fuel sources, but several people died directly because of radiation illness in the accident at Chernobyl in 1986, and there is speculation that many may subsequently have died of cancer induced by the radiation. However, the plant at Chernobyl was regarded by nuclear engineers in the West as an accident waiting to happen. The design of the plant was known to be inherently flawed, and its operation should not have been allowed. Modern plants are designed to be proofed against such accidents.
The more recent flood damage to the Japanese nuclear plant at Fukushima caused by the giant tsunami has not yet resulted in any fatalities and would not have occurred if the flood barrier around the plant had been higher. The building of adequate flood protection is possible for all nuclear plants at a relatively modest cost, and is included in the design of modern plants.
Most recently, there has been a leak of radioactive gas at one of the new EPRs in Taishan, China. These reactors have been designed by EDF in France and are the same as those being built at Hinkley Point. Gas leaks from fuel rods have occurred at other nuclear plants around the world over the years, and the situation is handled by removing and replacing the rods. It is not a serious disaster as such. However, this process is expensive and time-consuming, and the situation in Taishan needs to be monitored carefully to make sure that similar leaks are avoided in other EPRs.
Despite these issues, the risk of accidents associated with nuclear plants is lower than that from other power sources. In 2020 there were 442 nuclear plants operating around the world, so the statistics are there to look at.
I will now discuss cost. The cost of modern full-scale nuclear plants has increased because of the extreme measures taken to avoid accidents and to take account of the perceived political and practical risks in their construction. The noble Viscount, Lord Hanworth, mentioned financing costs. The financing cost of the new reactors being built at Hinkley Point has been said to be almost half their total cost, with the result that the cost of the electricity they produce rose to more than £90 per megawatt hour. The Government have now proposed that the regulated asset base model be used for nuclear plants. Combined with the efficiencies associated with building identical plants, this should reduce the cost from large plants beyond Hinkley Point to about £60 per megawatt hour.
This is still 50% above the nominal cost of wind and solar power. However, when one considers the full cost of backing up and connecting these intermittent and distributed sources to the grid and that they have relatively short lifetimes—for example, wind turbines are currently expected to have 20-year lifetimes, compared with nuclear plants that are expected to last for 50 to 60 years—the cost difference is considerably reduced. This is especially the case for small modular reactors, as mentioned by the noble Lord, Lord Howell. These SMRs are based on reactors that have been used in nuclear-powered submarines for the last 60 years. It is pleasing that the Government recently announced the support they are providing to the consortium led by Rolls-Royce to build SMRs in the UK. It is estimated that SMRs should reduce the cost towards £40 per megawatt hour.
Finally, I come to the storage of radioactive waste. I declare an interest: I participated as a member of the House of Lords Select Committee on Science and Technology in the committee’s inquiries into the management of nuclear waste in 2004 and 2010 and chaired the committee’s inquiry in 2007. The committee’s first inquiry was in 1999.
The management of nuclear waste is a very large-scale task in the UK because of the huge quantities of waste produced by the early reactors in the late 1950s and 1960s. This waste was stored in water tanks at Sellafield and its extraction from the tanks, encapsulation in stainless steel containers and storage underground are going to take decades. This legacy waste will have to be managed whether or not new nuclear plants are built or whether or not we have nuclear power. Reactors today produce less waste and waste that is handled more easily. This is a long and complex subject with different methods being used for the various forms of waste, but there is general agreement that environmentally sound solutions can be found for the management of radioactive waste with deep geological disposal being used for the longer-term waste. There has been endless procrastination by Governments over the past 50 years in addressing this problem, but at last progress is being made towards identifying suitable deep geological sites in the UK.
I conclude that if we are to react quickly enough to avoid the imminent dangers of climate change we will have to use a combination of wind and solar power, backed up with, and the grid anchored, by nuclear power. If we do not follow this strategy we will have to continue to burn fossil fuels in the hope that we can find scalable methods for capturing and storing the CO2—or have the lights go out on nights when the wind does not blow or blows too hard.
Baroness Neville-Rolfe (Con)
My Lords, it is a great pleasure to follow the noble Lord, Lord Broers, with his lifetime contribution to engineering and his well-informed support for nuclear. I warmly thank my noble friend Lord Howell of Guildford for arranging this debate on a major economic issue. He has a distinguished background in the subject. I especially agree with him on the mood turning against nuclear in the 1990s, the growing demands for electricity that we face and on the intermittency of renewable energy.
I have learned a lot from my noble friend since my short spell as Energy Minister in 2016. Nuclear was my favourite part of that portfolio. It had the longest “to do” list of any policy area, and I tried to bring my business expertise to bear in order to progress matters. We got Hinkley Point C over the line and mapped out a plan for five further such reactors so that investment could be sought, and more research funds were allocated. We strengthened the regulator and worked up the consultation on the geological disposal of waste. My regret at leaving the portfolio behind was to not have added more to the “done” list. Little did I think in 2016 that so little would be delivered thereafter in such a vital period from the point of view of both energy security and climate change.
Sadly, this echoes decades of wasted opportunities and delay. Nuclear power started in this country in the 1950s at Calder Hall, so it was a British invention and innovation. Unforgivably, it was eventually sold off to foreign interests without due regard to its strategic importance. It is still responsible for 16% of UK electricity, down from 25% in the 1990s when the Kyoto targets were set.
Renewable energy has, overall, been a success story in the UK, especially offshore wind. However, as we know from the crisis this summer, it sometimes produces only tiny amounts of power. The right sort of electricity storage, probably durable batteries, is still a generation away, and we must build more nuclear, and build it faster, to tackle the intermittency problem. That has become more important, given that we now rely so heavily on electricity in both our commercial and our personal lives. During the recent north-east power crisis, wretched customers and householders were told to log in to get help, which was difficult since computers and mobile phones themselves require electricity to operate. So investment in nuclear and, indeed, in a more sophisticated grid able to deal effectively with variations in demand and different sources of energy is essential.
I welcome the emphasis on nuclear in the Government’s 10-point plan, and the Bill we expect shortly allowing the regulated asset base financing model, which the Government say will save consumers £30 billion, mainly by reducing the risk profile and associated financing costs. The noble Viscount, Lord Hanworth, has explained that point in much more detail to the benefit of all. I thank the Library for that figure of £30 billion, quite a telling figure, and for its comprehensive note.
I also welcome the commitment to SMRs and the market that they can open up, although they are sadly many years away. Again, many years appear to have been lost since the oft-maligned George Osborne backed them on the back of our expertise in nuclear submarine technology. I also welcome the further investment in fusion, but again the timeframes are very long, and it cannot contribute to the energy mix for decades.
We must introduce the same sense of urgency that we saw on vaccines. Sizewell must go ahead now. What plans has the Minister to ease the sale down of the EDF/CGN interest, which I understand is planned? When will the foundations of that new nuclear power station go in? How will she accelerate the new investment that we need at Wylfa, Sellafield, Oldbury, Hartlepool, or anywhere else, as the existing reactors wear out and are retired? We are at last rebuilding our skill base at Hinkley, which is most welcome. Construction-related skills is an area which has been highlighted as a problem by the Built Environment Committee, which I now have the honour to chair.
Let us avoid another disastrous decade of stop-start—especially stop—and get on with bringing about the nuclear change that we need.
Lord West of Spithead (Lab)
My Lords, I too thank the noble Lord, Lord Howell, for tabling this extremely important debate. It is a very important topic. For too many years, successive Governments have not taken the need for a comprehensive energy policy seriously enough. When I was heading the National Security Forum for Prime Minister Gordon Brown, I said that we needed a proper energy security policy. I had great difficulty because no one wanted one, and no one seems to have wanted one for years, which is unbelievable. To compound the problem, successive Governments were also opposed to the civil nuclear problem. Having led the world in power plant technology, as has been mentioned, our nation now does not have the ability to build a large nuclear power station. A number of key figures over the years should hang their heads in shame that we have ended up in this position.
As has been said, nuclear is crucial for the provision of round-the-clock, weather-independent, low-carbon electricity, as the demand for electricity soars. It is vital if our nation is to reach its net-zero target. National daytime electricity demand is forecast at least to double from 40 gigawatts to 80 gigawatts by 2050. Nuclear will have to provide, I believe, at least 30 gigawatts of that electrical power if we are to meet net zero. The impact of lack of electricity has been shown starkly by the impact of storms over the last few days. Goodness me, people who want the environment to be lovely do not like it when they have no electricity at all, so that has really been driven home.
The current total installed nuclear capacity in the UK is 8.9 gigawatts and, if all stations were fully operational, they could provide more than a fifth of UK electricity supplies. In 2020, they generated about 16% of the UK demand. However, decades of neglect and opposition to the nuclear industry have put it in a parlous state. There are currently 15 nuclear reactors operating at eight stations across the UK, all operated by EDF. All 14 of the advanced gas-cooled reactors will close by 2030. Only Sizewell B, with its pressurised water reactor, is planned to continue generation past 2030. I rather like PWRs. When I was commander-in-chief, I had 18 of them under my command, so I have a soft spot for them. The plan is for Hinkley Point C to be generating before 2030 although, as a number of speakers have said, there must be concerns about the implications of the recent problems with a similar plant in China. Can the Minister confirm that these problems will not delay Hinkley C from coming online?
Things are far more fragile than they appear, with many nuclear power stations closing well before their planned dates. EDF has announced that Hunterston B will end generation by January 2022 and Hinkley Point B by July 2022. Sizewell B is currently offline for refuelling and maintenance work, and Dungeness B is shutting seven years early. We are rapidly heading for a situation whereby we have only one major nuclear power station online with another building. As has been said by another speaker, the building and commissioning of Sizewell C is now a matter of national emergency.
The situation is further complicated by the National Security and Investment Act, which will inevitably lead to minimal and reducing Chinese involvement in Sizewell C and probably the cancellation of Bradwell B. Could the Minister tell us where we have got to in discussions with the Chinese, who saw the building of Bradwell B, as the noble Lord, Lord Howell, said, using their reactor design, as crucial for their future overseas sales? I have to say—although they did not say it—they also intended to dominate the nuclear supply chain in this country. As we reduce their levels of investment, is there a risk that they will pull out all their experts from Hinkley Point C? It would be useful if the Minister could tell us that.
The next question has to be whether Rolls-Royce is able to produce small modular reactors to the timescale that the Government have predicated and hoped for. As I have said, I am a strong supporter of SMRs and, indeed, AMRs. Indeed, if they were able to start producing them now, and Rolls-Royce said that it could do that today, I would have to say that I do not really want to go for any more big plants after Hinkley C. However, I think we are far from that. But with SMRs and AMRs, we have an opportunity, if we grasp it and invest sufficiently in training and recruiting scientists and technicians, to lead this revolution to become absolute world leaders. We can do this when we need to; we did it when we produced our own atom bomb—if we focus on something, our nation can do it—and this is worth doing. Does the Minister believe that Rolls-Royce will meet the timescales that the Government hope for, for SMRs?
The use of Wylfa Newydd—I never pronounce it correctly, but the noble Baroness will put me right on that—for a large small pressurised water reactor, as I understand it, from Westinghouse is good news. A large small reactor sounds lovely, and I am delighted, because that site is particularly good for nuclear. However, is there not some difficulty with Westinghouse and Toshiba? Is the Minister sure that the plan will come to fruition?
The noble Viscount, Lord Hanworth, covered the subject of costs in great detail, and I thank him very much. I think I almost understood it, which is remarkable for a simple sailor. It is often a contentious issue. Using the RAB model to finance new nuclear makes sense, and costs of nuclear plants are beginning to be competitive with other low-carbon technologies, including renewables. Energy prices have risen recently, as noble Lords have said, and the market rate for electricity is currently more than the strike price agreed for Hinkley Point C, so that should be even better for Sizewell C, which will be cheaper, because it is exactly the same build as Hinkley Point C.
I consider that nuclear power stations are essential for our country’s energy security, not just for low-carbon electricity. We must not rely on electricity from the continent or more gas, as has already been said. We absolutely need this as a strategic security measure for the nation; it has that benefit, as well as the ability to produce electricity, which our country will need, without increasing our carbon footprint.
Lord Goodlad (Con)
My Lords, I congratulate my noble friend Lord Howell on his persistence in securing this debate and on the clarity with which he has analysed the role of nuclear power in meeting the country’s electricity needs and energy security. It is a great pleasure to follow the noble Lord, Lord West of Spithead, who addressed us with his usual polymathic wisdom.
My first role in government as a junior Whip in 1981 involved my attending ministerial meetings at the then Department of Energy in Thames House, presided over by my noble friend Lord Howell. Electricity prices were always top of the agenda. The role of nuclear power was little questioned, other than the debate on the rival merits of the PWR and the AGR, which he successfully resolved.
My next job in government, as a junior Energy Minister when the late Peter Walker was Secretary of State, carried with it responsibility for nuclear power. Faced with the fact that the existing nuclear power stations and the thermal power stations were approaching the end of their working lives, great importance was placed on Sizewell B. The planning inquiry seemed endless. I remember visiting Flamanville in France with the late Walter Marshall––he was my mentor, as he was of my noble friend Lord Howell––when he was chairman of the CEGB, and marvelling at the speed with which France had developed its nuclear power stations and reprocessing capacity. I asked one of my French interlocutors how they had managed to deal with public inquiries, to which he replied, “When you are going to drain the swamp, you do not consult the frogs.” I am not sure whether that advice has wider implications for Her Majesty’s Government at the present time, but it certainly worked for Électricité de France.
Then came Chernobyl. Public support for civil nuclear power plummeted. A few months later, thanks largely to the work of then newly established Nuclear Energy Information Group, led by the late Dr Tom Margerison, public support climbed to previously unachieved heights. I believed then and I believe now that what people want and deserve are unvarnished facts about nuclear power and clear policy options openly stated.
My noble friend Lord Howell has given us both. The role of fossil fuels has diminished and they are being gradually phased out. Renewable sources have been brought on stream with remarkable rapidity, but we have seen their inevitable vulnerability to the weather. Sources such as hydrogen are at an early stage of experimentation. Energy efficiency is greatly improved, but there will always be further to go. There is in my view no viable alternative to increasing our nuclear capacity, particularly bearing in mind the increase in demand that will accompany greater use of electric cars and the replacement of gas boilers by electric heating.
In the late 1990s, as the noble Baroness, Lady Neville-Rolfe, has reminded us, 25% of our electricity came from nuclear power stations. Now it is 16% and falling. About half of our existing nuclear capacity is due to be decommissioned by 2025 and only one new plant, Hinkley Point, is currently under construction. If no new stations are built, the UK’s nuclear capacity in 2050 will be a third of what it is today.
As has been said, the Government have identified several possible sites for new nuclear power stations and are aiming to bring at least one large-scale nuclear project to the point of final decision by the end of this Parliament, subject to clear value for money and all relevant approvals. I hope that this aspiration is realised; it does not sound particularly ambitious. The Nuclear Energy (Financing) Bill is a welcome start and the regulated asset financing model a tried and tested way forward. Let us hope that the development of SMRs and AMRs will be successful and speedy—good luck to Rolls-Royce.
My noble friend Lord Howell has well described the present financing questions facing the Government and I shall not repeat or question what he has said. I merely support his plea that decisions be taken as a matter of urgency. We cannot wait for more wind capacity to come on stream or more new technologies to come to our rescue while importing more gas and abandoning our net-zero commitments. Decisions must be taken and taken very soon.
Lord Wigley (PC)
My Lords, I am delighted to follow the noble Lord, Lord Goodlad; that is the second speech of his that I have heard today. Like him, I warm to the memory of the late, great Walter Marshall.
I thank the noble Lord, Lord Howell, for introducing this debate and make it clear that I speak in a personal capacity. Like most parties, my party, Plaid Cymru, has divergent views within its ranks on the issue of nuclear power. Much of this emanates from horror at the thought of nuclear war and I, along with my party, am totally opposed to nuclear weapons. I understand the arguments about deterrence, but it has to go wrong only once and the world is roasted to a cinder. But to rule out the use of nuclear energy to replace carbon sources of electricity for that reason is like refusing to manufacture steel because it could be used for guns. The case for nuclear has to be made with conviction and confidence and with some urgency.
Nuclear physics was part of my degree at Manchester University. I worked on the construction site of Trawsfynydd power station and, as an MP in Gwynedd for almost three decades, I served a county that had two active nuclear power stations: Wylfa and Trawsfynydd. The experience of living with these power stations and the well-paid employment that they provided led a majority of the people of that area to support ongoing nuclear generation—subject, of course, to the necessary safeguards. Both Gwynedd and Anglesey councils currently support proposals for further nuclear power generation at those two sites.
To turn to the context of today’s debate, the UK devours huge amounts of energy. If that energy ceases to be available, there are dire consequences in economic loss and in human misery. That energy is needed to heat our homes, to provide industrial power and to transport food, raw materials, finished products and people, and it has to come from somewhere. Currently, it is provided mainly by oil, gas and electricity; 60% of our energy comes from the direct use of such fossil fuels. The balance of the other 40% of the energy that we consume is in the form of electricity, but half of this is also generated from fossil fuels, while 30% comes from renewable sources and the other 20% from nuclear sources.
In other words, if we are to replace fossil fuels entirely to avert global warming, the UK has to eliminate most, if not all, of our current fossil-based sources, which produce over 80% of our current total energy needs. This is a gigantic task. To put it into perspective, if Britain was to depend solely on wind energy, it would need a quarter of a million offshore wind turbines—a hundred times what we have today. Or to depend just on solar energy, solar panels would need to cover every blade of grass in an area the size of Wales. Both wind and solar have a contribution to make, but it is not enough to meet Britain’s carbon reduction goals.
Another dimension that cannot be ignored is the need to ensure that we have electricity available at the time we need it. While the sun and wind cannot guarantee a timely supply, tidal power, which is more predictable, has a role to play. I am delighted that the Severn estuary scheme is now being reconsidered and I hope that barrage schemes in Swansea and off the north Wales coast can also come into play. But these will not deliver enough dependable energy to eliminate Britain’s carbon footprint.
Mention has been made of the hydrogen economy. Hydrogen has a key function in storing and transporting energy, but to generate hydrogen we need huge amounts of energy. It is not of itself the basic source of energy. Hydrogen does not reduce the overall energy demand needed to eliminate our carbon footprint. Other sources of energy, such as nuclear fusion—it was mentioned earlier today—may become available in future. Throughout my lifetime, nuclear fusion has been the bright light just over the horizon which never actually arrives. It certainly will not make a major impact for several decades. To my mind, another generation of nuclear power stations is essential if we are to be serious about eliminating our carbon footprint.
Yes, nuclear energy is expensive, but there are no cut-price options if we are to overcome global warming. The quantities of energy we will need to replace fossil fuels are enormous and inevitably come at a price, whether in the use of toxic materials in wind turbines or scarce minerals for batteries. Whatever course we follow will be expensive.
So what are we to do to reach our carbon targets? Is there a role for us in Wales? I understand that further consideration is now being given to the Wylfa site, with possible American involvement. I stress the need to get proposals on the table and for their viability, including ongoing safety and end-of-life clean-up, to be addressed with urgency. Waiting for Wylfa Newydd has, in Anglesey, been like waiting for Godot: the Government must get their act together, for the problem is not going to disappear by sticking our heads in the sand.
More immediately, there is now action on the Trawsfynydd site, where the development company, Egino, has been established, with the Welsh Government’s help, to get on with the job of developing advance nuclear technology at Trawsfynydd. Initial discussions with the landowner, the NDA, are, I understand, positive. The extensive studies which have been undertaken indicate the potential of Trawsfynydd as a site for small modular reactors, advanced modular reactors and medical isotope research reactors. Trawsfynydd would be an ideal demonstrator site for a fleet of SMRs spread across the UK. Such an SMR initiative at Trawsfynydd could generate 2,300 well-paid jobs during the construction phase and up to 450 ongoing jobs thereafter.
The associated investment of £3 billion in the region, including advanced manufacturing with a strong focus on research and development and innovation, would give a much-needed boost to local services. Well-paid jobs would help retain many of our brightest young people for the benefit of local communities. It has been assessed that this would trigger an increase in GVA of £1.4 billion shared between north Wales and the north-west of England. Last but not least, rounding the circle, such a facility would provide a source of low-carbon electricity which could well be used in a cogeneration project for the production of green hydrogen.
I hope that, in responding, the Minister gives particular attention to the opportunities of both Wylfa and Trawsfynydd: they are not rivals but partners in re-establishing north-west Wales as a powerhouse of the economy, and doing so by methods that would underpin the drive for low-carbon electricity and contribute to the world-wide challenge of heading off climate change.
Finally, I draw the attention of the House to the words of one of the heroes of our time, the late Sir John Houghton, a native of Prestatyn who sadly died in the early days of the Covid pandemic. Sir John was one of the leading scientific thinkers of his era and a founding member of the Nobel Prize-winning Inter- governmental Panel on Climate Change. Like many other people appalled by the dangers of nuclear war, he was not initially attracted to nuclear power, but, like any good scientist, when the balance of evidence changed, he reconsidered his position. In his book In the Eye of the Storm, he wrote:
“Nuclear energy is, in principle, good because carbon emissions related to it are low … In the short term, it makes sense to buy time by prolonging the life of existing nuclear power stations and … making use of materials in nuclear weapon stockpiles that, under international agreement, are redundant.”
I urge the Government to consider expanding work on disposing of nuclear weapons in a safe manner, as suggested by Sir John Houghton. This should go hand in hand with a new programme on using atoms for peace. In line with the aspiration urged upon us by the Good Book to turn swords into ploughshares, let us turn the energy locked up in nuclear weapons into generating electricity and saving our planet.
Lord Lea of Crondall (Non-Afl)
My Lords, in following the noble Lord, Lord Wigley, I am very glad that he made such a deft connection between the underlying consciousness of the dangers of nuclear war and the debate about nuclear energy. In a strange way, it has been helpful that much of the debate in the last 30 years, going back to Chernobyl and so on, has been to make sure that people can see that there are many practical questions concerning the nature of nuclear power that are very instructive when it comes to understanding the effects of radiation and so on.
I led a delegation to Chernobyl in 1987, the year after the accident. At that time, I was chairman of the world trade union nuclear set-up—part of the consultative mechanism of Hans Blix of the IAEA. I commuted between Vienna and Moscow, meeting the Soviet—as they were then—trade unions to make sure that they were on board with the need to have mandatory safety inspections of the RBMK reactors. This was a time when it was all very difficult, and that period led—many people will be surprised to hear it put this way—to the collapse of the Soviet Union as we knew it and the resignation of Mr Gorbachev.
It is very interesting to take forward the idea that the whole nuclear debate has always been global. I noticed that the very timely debate introduced by the noble Lord, Lord Howell of Guildford, refers to the United Kingdom. I think that he would be the first to acknowledge that that may be putting the cart before the horse, in the sense that we have to see how we are going on a global basis and, in that connection, follow up on Glasgow and so on. I do not know whether Whitehall and Ministers have got their act together even now on how we annually monitor where we have got to on greenhouse gases—because that requires monitoring, and the nuclear debate can feed into that.
I will give noble Lords one sentence from the excellent House of Lords Library briefing, which rather shook me—but not the noble Lord, Lord West of Spithead, because it is more or less what he said:
“If no other new nuclear power stations are built”—
after Hinkley Point C—
“the UK’s nuclear capacity in 2050 will be a third of what it is today.”
So we are sitting here, talking as if we are on a nice road map going forward, but, frankly, we are not.
The other thing that has happened in the last few years is a gradual acceptance around the world that nuclear is a safe form of electricity generation. We learned to talk about epidemiology and loss of years from life expectancy in relation to cigarette smoking but, when we said that about nuclear and Chernobyl, people thought it was the most ludicrous piece of self-delusion. But it is an essential idea that we all have to understand. At Chernobyl, 20 people were killed, but, when people talk about thousands, they are talking about loss of years from life expectancy. Of course, many medical conditions are in the same position.
So there have been some very interesting changes of subconscious feeling around the world. The final one is that China will play an enormous role, and we have to somehow reconcile a lot of irreconcilables when it comes to the leading role of China in many of these matters.
Walter Marshall was mentioned. He was chairman of the World Association of Nuclear Operators when I was on that Chernobyl mission. I introduced him to all the Russians who made return visits London. He epitomised the fact that it is not just an intergovernmental thing that you have to look to here: the world’s nuclear operators themselves have a club, and that is very valuable. I introduced Walter Marshall to the Russians, including some politburo members when they came over here. I do not know how the World Association of Nuclear Operators fits into all these questions today but, as far as I know, it still straddles the East and the West.
In conclusion, the political dilemmas that we face include educating the public on the cost of electricity. I have forgotten who it was but, 100 years ago, someone said that electricity would be more or less free. I think that was the biggest piece of self-delusion that one can imagine. However, it is a fact that, with the strike price and so on, real money is involved; £100 billion here and there soon adds up to real money. There may have to be some sort of world understanding about how we subsidise nuclear energy or else we will get ourselves into a bit of a pickle over how dangerous it is for China to have this share of the market, the US to have that share of the market, and so on.
Although we have a huge debate before us in Britain, everywhere you turn, you cannot hide away from how it fits into the global debate. In the TUC and the Labour Party, these shocks in the 1980s transformed the policy on nuclear matters. That remains the case, just as it remains the case on Brexit—but that is another story. As I understand it, legislation on the question of financing is already going through the Commons, is it not? When will the Nuclear Energy (Financing) Bill come to this House? Will the Minister give some thought to how we could be better equipped to address the issues in it when it comes here?
Viscount Trenchard (Con)
My Lords, I am grateful to my noble friend Lord Howell of Guildford for introducing this timely debate. I declare my interest as a consultant to the Japan Bank for International Cooperation and a member of the advisory board of Penultimate Power UK Ltd.
Those of us who regret our surrender of the leading position we once held in nuclear energy technologies and had eagerly awaited the publication of the oft-delayed energy White Paper, Powering Our Net Zero Future, in December 2020 were disappointed at the rather reluctant and understated recognition of the part that nuclear energy needs to play in our future energy mix. It appeared almost as though the paper’s authors hoped that people would not notice that nuclear forms any part of our energy plans at all. Indeed, the ministerial foreword by my right honourable friend Alok Sharma, the Secretary of State at the time, does not mention nuclear even once. Nuclear is first mentioned on page 9 of the White Paper where, together with renewables and hydrogen, it is described as “clean”. At least nuclear power is mentioned as one point in the Prime Minister’s 10-point plan, which states:
“We are pursuing large-scale nuclear, whilst also looking to the future of nuclear power in the UK through further investment in Small Modular Reactors and Advanced Modular Reactors.”
However, the section headed “Transform Energy” on page 16 of the White Paper commits only
“to bring at least one large-scale nuclear project”,
beyond Hinkley Point C,
“to the point of Final Investment Decision”
within the current Parliament, as mentioned by my noble friend Lord Goodlad. The main section dealing with nuclear is on pages 48 to 50 of the White Paper, but the tone in which the strategy regarding nuclear is explained seems to lack enthusiasm and does not stress enough nuclear’s key advantage over other forms of green energy; namely, its reliability as a core part of a baseload energy supply.
Under the section “Advanced Nuclear Innovation”, the White Paper informs us that the Government will provide up to £385 million in an advanced nuclear fund for the next generation of nuclear technology, aiming by the early 2030s to develop an SMR design and to build an AMR demonstrator. By “SMRs”, I think the Government mean reactors employing generation 3 technologies based on pressurised water reactors, such as the UK SMR based on Rolls-Royce’s technology. Rolls-Royce’s long experience as the manufacturer of the nuclear reactors powering our Trident submarine fleet well qualifies it for the £210 million grant announced by the Secretary of State during the COP 26 conference. This grant will unlock a greater amount of private sector funding.
The Government’s approach to nuclear energy has moved in a positive direction since the White Paper. Besides the Rolls-Royce announcement, they deserve credit for the leadership on nuclear they displayed during COP 26, especially given the intransigent opposition to nuclear still deployed by Germany and some other countries. I ask my noble friend the Minister: are the Government now willing to reverse the specific exclusion of nuclear from their green financing framework published in June? This unfortunate decision raises the cost of financing nuclear energy projects and prevents developers accessing funds raised by the issuance of green gilts and green savings bonds. The Government need to show leadership on this matter, because the exclusion of nuclear does not encourage those investors who might otherwise be moved to change their ESG policies to include nuclear.
However, the speech made by my right honourable friend the Energy Minister on 2 December at the annual conference of the Nuclear Industry Association was most welcome. Mr Hands clearly stated that “net zero needs nuclear.” He explained that, following evaluation of the responses to the call for evidence on the AMR research, development and demonstration programme, the Government have decided to focus on high-temperature gas-cooled reactors as the technology choice moving forward, with the ambition for this to lead to a demonstration by the early 2030s.
This technology, which would be complementary to Rolls-Royce’s SMRs, has been operated safely and efficiently in Japan for some 10 years. This is the high- temperature gas-cooled reactor—or HTGR technology —developed by the Japan Atomic Energy Agency. The JAEA switched off its prototype reactor, called the high-temperature engineering test reactor, following the Fukushima incident in 2011, but was permitted to restart operations in July.
The National Nuclear Laboratory has had a technical collaboration agreement with the JAEA since 2001, and in October 2020 this was broadened specifically to cover the HTGR technology. This technology is categorised as a generation 4 technology but is already developed and walk-away safe. Does the Minister agree that, since it is already fully developed, it can be rolled out much sooner than the White Paper suggests? I understand that the Japanese Government are waiting for ministerial endorsement of the Government’s backing for the early introduction to the UK and commercialisation of this technology.
There are, of course, other HTGR-type technologies, but I think that JAEA’s is the most suitable, for a multitude of reasons. It is based on an early British design, the Dragon reactor, which was developed by the former United Kingdom Atomic Energy Authority at Winfrith in Dorset in 1965. As my noble friend Lord Howell explained, both major new nuclear power station projects on which we had intended to collaborate with Japanese companies—the NuGen project at Sellafield Moorside with Toshiba, and the Horizon project at Wylfa, Anglesey, with Hitachi—collapsed due to a failure to raise the large amounts of equity finance required. Does my noble friend the Minister not agree that it would be a very encouraging development if we could work with the Japanese on this HTGR project, which would mitigate the disappointing setback resulting from the cancellation of the two large nuclear projects?
Furthermore, this technology has several advantages, even over Rolls-Royce’s technology. The reactors are very much smaller—producing 50 megawatts thermal or 22 megawatts electric—and therefore much more flexible. They also should provide much better value for money. Importantly, their output is expected to produce industrial heat energy, now largely supplied by natural gas as well as electricity. Renewable energy cannot replace fossil-fuelled industrial heat. In the past, policy errors have arisen as a result of the incorrect assumption that energy and electricity mean the same thing. Energy describes the work and heat available from all energy carriers, from the point of supply to consumption, whereas electricity is only one of those carriers. Currently, electricity represents only around 20% of the UK’s energy demand. While laudable progress has been made with reducing electricity emissions, less than half of that 20% is low carbon. Energy, transport and industrial processes take up 80% of the UK’s energy demand and account for 50% of the UK’s emissions.
HTGRs have yet another advantage. They will produce large quantities of green hydrogen. As announced in the Prime Minister’s 10-point plan, the Government will work in partnership with industry to evaluate hydrogen as an option for heating our homes and workplaces. The rollout of HTGR reactors should assist the Government in their aim to create 5 gigawatts of low- carbon hydrogen production capacity by 2030.
I look forward to the Minister’s winding-up speech and very much hope she will agree with my suggestion that we should speed up our discussions with the Japanese on introducing this technology to our country, as it can play a very important part in achieving a clean energy strategy. Can she also tell the House how the Government will determine which HTGR technology will be supported and when? HTGRs can make a significant contribution to industrial decarbonisation, as long as timely decisions are made both on support and on an enabling policy framework.
Lord Oates (LD)
My Lords, I declare my interest as chair of the advisory board of Weber Shandwick UK, as set out in the register. I thank the Library and the Nuclear Consulting Group for their briefing material and the various industry representatives, including from the nuclear industry and NGOs, who I have discussed these matters with previously.
I commend all noble Lords for their valuable contributions to what I think I would describe as a fascinating discussion of mutual agreement, rather than as a debate. Perhaps I can provide a service by giving another side of this argument. I do so with some trepidation as the only person to speak in this debate on that side and in light of the eminent people who have spoken already. But when I joined the Liberal Party, as it was then, I did not do so because it was necessarily the popular path to follow but because I thought I had important beliefs that should be articulated, so I shall follow that vein.
I also draw strength from the fact that, in the late 2000s, in the run-up to the 2010 election and during the coalition, Liberal Democrats were derided as fantasists when we talked about a policy of net zero. We were told that this could never happen and that it was ridiculous and unworkable. It was introduced by a Conservative Government, as it happened, and I commend them for that. We were also rubbished on our belief that, through contracts for difference, we could really drive renewables forward. That was constantly obstructed by George Osborne in the Treasury, who was an absolute disaster as far as climate change was concerned. I take heart that those people have not always been right.
I wonder sometimes, with all this focus on the nuclear industry, whether the fantasy is still there. There is this idea that it could deliver, like some magic bullet, all that people have talked about. The promises of the nuclear industry may be many, and its advocates are undoubtedly articulate, but at the heart of their argument today lies the same fantasy that has shaped the argument around nuclear power generation since its inception: that it will be a source of cheap, clean and almost limitless electricity.
Of course the reality recorded by history is rather different. Instead of cheap power, we got eye-wateringly expensive electricity; instead of clean energy, the nuclear industry delivered deadly waste which, 70 years from the start of the civil nuclear programme, we have yet to find a solution for. I note the comments of the noble Lord, Lord Broers, but the fact is that this deep repository has not been built. It has been talked about for decades but, despite that talk, it has not provided the solution but has burdened the taxpayer with staggeringly enormous decommissioning costs. If you want to descend into the world of fiscal nightmares, just pick up a copy of the Nuclear Decommissioning Authority’s annual report; it will give you a few sleepless nights.
New nuclear, we were told, would be different. I remember being reassured during the days of the coalition that, this time, the industry had come up with new reactor designs which could be more easily built, would avoid catastrophic project overruns and ruinously expensive electricity prices, and would provide a model which would not leave the taxpayer carrying the same enormous decommissioning costs as last time. As to the morality of creating yet more high-level nuclear waste with no solution for the existing waste, we were told by the industry—we have heard the same argument again today—that the solution is nearly there. It is just over the horizon, where it has been for the last few decades and more.
Let me deal with three of the principal issues raised in this discussion: cost and practicality, baseload support, and safety. During the coalition Government, funding for nuclear power was placed within the contracts for difference framework pioneered by my right honourable friend Ed Davey as Secretary of State for Energy and Climate Change—a policy which, it should be noted, has led to a quadrupling of renewables and massively driven down their costs. Sadly, despite the nuclear industry’s many promises, it could not deliver the same. Nuclear is about the only form of energy that has not been able to deliver these sorts of cost reductions. Despite a strike price set at what some thought was an extremely high level, the nuclear industry could not even deliver on that.
In coalition, the Liberal Democrats insisted on the principle of no subsidy for the capital cost of construction for nuclear which, as far as I am aware, remained government policy until the Government decided to introduce the Nuclear Energy (Financing) Bill, which was put before the House of Commons last month. As the noble Viscount, Lord Hanworth, said, this Bill offers the nuclear industry the supposed lifeline of a “regulated asset base” model of funding, which effectively passes on much of the risk of nuclear construction directly to the public and consumers. This is necessary because the private sector, having looked into these things more closely than the public are obviously able to, has decided that it has no intention of shouldering the risks itself. In effect, if these plants are to be built, the Government have to intervene to rig the market.
During the Second Reading of the nuclear energy Bill, the Minister, Greg Hands, told the House of Commons that RAB is a “tried and tested method” of funding major infrastructure projects. It is true that it is used to fund monopoly infrastructure assets such as water, gas and electricity networks. However, first of all, power generation is not a monopoly activity, and the construction of nuclear power plants is fraught with far more risks.
The United States, which made a similar attempt to rig its market in favour of nuclear through a version of RAB known as early cost recovery, has found that it has proved an abject failure. At its peak in 2009, the US so-called nuclear renaissance consisted of applications to build 31 plants. Despite spending more than $20 billion, no new plants have gone into service. The plants in the states that did not have ECR, the RAB equivalent, were cancelled before too much money had been wasted, but in the states that had the RAB equivalent, owners were far more willing to incur risks. For example, in South Carolina, $9 billion was spent before Westinghouse went bankrupt, causing the project to be cancelled. In Florida, also an ECR state, more than $1 billion was spent. In total, US electricity customers are burdened with paying more than $10 billion for cancelled nuclear plants and another $13.5 billion in cost overruns. RAB is likely to have similar consequences for consumers here in the UK.
The Labour manifesto of 1997—one of its better ones, if I may say so—concluded:
“We see no economic case for the building of any new nuclear power stations”.
Nearly a quarter of a century on, the economic case is, if anything, weaker. In the absence of an economic case, a Conservative Government are, as I said, rigging the market at the cost of the consumer. Sadly, it appears —although we will hear from the noble Lord, Lord Grantchester, in a minute—that this is with the support of the official Opposition, who seem to have lost their good sense on this matter.
The nuclear industry is smart enough to know that it cannot win on cost, so it is reinventing itself as the new superhero which will save us from climate change by providing the baseload capacity to underpin renewable generation. The problem is that the billions that we seem to be intent on spending to provide excruciatingly expensive nuclear energy could be much more effectively deployed.
That could first be done through demand reduction. For the price of Hinkley Point C, you could retrofit enough homes to save all the energy that that plant will produce, not just for its 60 operational years but for all time. That would make much more sense than spending billions to generate electricity which will then escape from our homes. Secondly, we could reduce the capacity required in the energy system through much smarter use of demand management technologies. Thirdly, we need a much more thought-through policy on energy storage and release. The Minister can perhaps tell us in his winding up how much we spent on abating renewable energy in the last year—I think it was in the region of £1 billion. If we had a coherent plan for the storage of excess energy, we could stop paying people to cease generating and start paying them to store it instead.
My time has gone. I conclude by saying that the issue of safety is not about nuclear weapons; it is about the waste that is created. How is it that we are engaged in the construction of new plants that will create yet more deadly waste, when we have no solution to the deadly waste that we have already recklessly generated? In her response, I hope that the Minister will try to give us a morally coherent answer to that question.
Lord Grantchester (Lab)
I am grateful to the noble Lord, Lord Howell, for returning with this subject for debate after its postponement last month. It is a very important area of energy policy that has perhaps been in the too-difficult box for some time, due to its long timescales and expensive price tags. All speakers in the debate, with the notable exception of the noble Lord, Lord Oates, have underlined that new nuclear has an important role to play in the energy mix of the future, alongside the decisive shift to renewables that is needed, both to deliver a response to the climate emergency and to ensure the UK’s energy security. Both present threats such that no part of the UK can afford to reject viable zero-carbon sources of power.
I thank everyone who has contributed to the debate for their insights into how best to utilise the technology more effectively. The noble Lord, Lord Wigley, spoke about how difficult it is to get the balance right in the public’s consideration of the issue. Nuclear jobs are high skilled, well paid and effectively unionised, but without new investment will inevitably slip away, overseas, from the Government’s dither and delay, leaving the UK so exposed and vulnerable to energy price spikes hitting families and businesses.
The problems that result from the Government’s lack of commitment to necessary timescales stem from the reluctance to fund adequately the range of nuclear technologies that are mostly untried, untested and underresearched. This has understandably arisen from nervousness following notable disasters and a lack of nuclear waste answers. However, my noble friend Lord West underlined the case for nuclear as crucial for low-carbon power.
Your Lordships’ House will shortly consider the Nuclear Energy (Financing) Bill, presently in the other place, introducing the regulated asset base financing model, with cost sharing—consumers paying through their bills—to reduce the cost of capital and build time. If everything is successful, with accurate estimates of build cost and development time, this may seem attractive. However, the experience of the United States with its version, called early cost recovery, has not resulted in any new US nuclear plants coming into service. Consumer risk could not easily be contained in the event of failure or abandonment. Has the Minister any firm estimates of the size of the long-term levy on customer bills that will result from powers to be granted under this Bill, should there be no prospect of retrieval of costs from production?
Much of the debate focused on the proposed RAB system for financing Sizewell C. This raises the issue of critical national infrastructure and possible overseas threats. The noble Lord, Lord Howell, mentioned this in his opening remarks. The agreement drawn up in 2016 between the UK Government, the Chinese Government and EDF allocated China General Nuclear a 33% stake in Hinkley Point C, 20% in Sizewell C and permission to build its own nuclear reactor in Bradwell, Essex. China’s involvement no longer has general support. Can the Minister update the House with any proposals to renegotiate this contract to ensure that there is no Chinese involvement in new nuclear in the UK, with a particular focus on ensuring that Sizewell C does not go ahead with the projected amount of Chinese involvement in its construction?
These problems stem from a lack of ownership control of the present major sites. The ownership of various sites may not coincide with the technology proposals that suit the Government’s preferences and investment focus. Can the Minister say whether the Government are giving any thought to this, especially when it is understood that one of the sites may be becoming available?
The Government can be congratulated on their funding to advance their nuclear goals. In July, they stated their preference to explore high-temperature gas reactors for their advanced modular reactor programme. This, effectively selecting a technology and identifying it as a proposed winner, would appear a radical departure from the Government’s previous position of being technology neutral. While high-temperature operation and heat supply has game-changing commercial importance in efficiency and a much broader industrial use case, this choice by the Government would ignore other fourth-generation systems being developed by the international industry and effectively close down UK participation in other AMR systems. This may have extensive national nuclear establishment backing in the UK, but it may not have the best economic potential to meet competitive commercial energy market needs.
Are the Government concerned that they will be putting their support into one basket that would entail a state design competing against other technology developers and crowd out other capital investors engaged in other AMR technologies? The noble Viscount, Lord Trenchard, mentioned others. Do the Government have potential collaborators and partnerships in mind for UK AMR deployment if they are not to maintain a more level playing field for non-incumbent players? Could Japan Atomic Research provide the sort of partnership that they would be comfortable with?
Speakers in the debate also considered the potential long-term size of and requirement for new nuclear power. The ultimate backcloth to this consideration revolves around the size of the capacity margin. This has caused anxiety in the past, as the capacity margin has been shrinking—down to 27% in 2016-17. However, more recently, the success of the CFD scheme has brought forward more renewable generation capacity, rising to 43% before falling back to 32% in 2020-21, due to the closure of many coal-fired plants.
Have the Government become more relaxed towards the margin projections, so that they have confidence through interconnectors and renewable developments to determine the baseload requirement for new nuclear? The Climate Change Committee, in its balanced pathway to meet electricity demand, estimated that a nuclear capacity of 10 gigawatts would be required. Alternatively, it presented four other scenarios, and the National Infrastructure Commission has been sceptical that any further developments beyond Hinkley Point C would be needed or cost-effective against renewables, which are likely to continue to fall in cost against a nuclear trend of ever-increasing costs and timescales.
Can the Minister confirm the Government’s agreement to the Climate Change Committee’s balanced pathway and that further new nuclear power generation beyond Hinkley Point C will indeed go ahead, and provide assurance that the 60,000 highly skilled nuclear industry jobs will remain, as the pipeline of activity must continue at pace? Under the Government’s watch, three large-scale nuclear projects have been abandoned due to the lack of certainty about the Government’s commitment. There are other ways, in addition to the RAB funding system, to de-risk the costs of capital. Can the Minister today provide further certainty on the many anxieties and questions raised about Sizewell C and the replacement for China’s stake? The National Security and Investment Act now enables the Government to consider this carefully.
What plans do the Government have for future development of the Wylfa site and how to use it following the failure to come to an agreement with Hitachi? Do they include either the Bechtel proposals, or the hybrid plans for SMRs and a wind farm from Shearwater Energy?
Labour is determined to do much more to help keep energy bills down, tackle the cost of living crisis and help the more vulnerable, calling for VAT on fuel to be cut to 0% and the reinstatement of the £1,000 a year universal credit uplift, and putting forward a plan for £28 billion extra investment every year to 2030 to implement a green industrial revolution, locally led, house by house, street by street. This commitment is matched by the determination for action in this decisive decade towards decarbonisation and net zero. The danger is of more dither and delay. We need reliable, secure and affordable energy that includes nuclear power.
Are the Government satisfied that they have the institutional arrangements to enable swift, decisive decision-making and implementation? They have grand plans, often without substance or coherent policy. They have many regulators and advisory bodies. There was a Nuclear Development Authority. Now, with the same initials but with its name changed, there is a Nuclear Decommissioning Authority. Have the Government turned their mind towards that important aspect?
Should now not be the opportune time to get on with it, as the noble Baroness, Lady Neville-Rolfe, concluded, to make progress and to consider delivery and implementation? Can the Minister say what plans the Government have in this respect? Civil servants are not generally known for their delivery prowess. Does nuclear now need a delivery agent to meet the challenge for implementation? Could its role be extended, with considerations to make SMR into a leading UK industry, for example, following investment in Rolls-Royce?
This debate has been fascinating, and there are many aspects I have not addressed. However, the Minister now has the opportunity to address and answer the many fundamental questions concerning new nuclear today. Can she inject some urgency and action into the Government’s proposals?
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I am most grateful to my noble friend for securing this incredibly important and timely debate, and for his thoughtful and thought-provoking speech drawing on his wealth of experience in this sector, gained over so many years. I am also grateful to all noble Lords for adding to the excellence of this debate. We are fortunate indeed to have so much experience in this House; polymaths indeed. I say to the two noble Lords who were wrongfooted by the timings of today’s business that I will be happy to respond to their speeches if they will forward them to me in due course.
My noble friend Lord Howell and other noble Lords raised the important question of the role of nuclear power in this country’s energy system, at a most important time for energy policy—a time when people and businesses up and down the country are worrying about the cost of their energy and the health of the companies that they rely on to provide it. The debate is also timely for another reason that gives a crucial context for our deliberations. We recently published our Net Zero Strategy, a milestone document that sets out the UK’s path to net-zero greenhouse gas emissions by 2050. The UK was the first major economy to make net zero a target, enshrining it in legislation in 2019. There is no doubt that climate change is one of the greatest global challenges that we face, and that action and leadership are urgently needed in the UK and across the world. In committing to net zero, and now in publishing our plan of action to help us get there, the UK is showing global leadership in a battle that we simply must win.
Everybody acknowledges that net zero is an enormous challenge. To ensure that we are on track to meet that target, we have set the UK’s sixth carbon budget in line with recommendations from the Committee on Climate Change. We must reduce our emissions of harmful greenhouse gases by 78% against 1990 levels by 2035. This will require all areas of our economy to play their part.
The power sector’s effort share in this mission amounts to an 80% reduction in emissions by 2035, the mid-point of the carbon budget 6 period. This will require a range of low-carbon technologies to be deployed in large capacities, and quickly, not least because we estimate that our electricity system will need to double in size by 2050 to meet the increased demand as sectors such as heat and transport use electricity to achieve their own decarbonisation.
The Government have been clear that a significant proportion of the UK’s future electricity needs should come from renewables such as wind and solar, and flexible technologies, including energy storage and demand-side response. However, we have also been clear that the UK needs stable, firm, low-carbon power for when the wind does not blow and the sun does not shine.
It is in this context that we consider the value of nuclear power. We are already a nuclear nation. We built the world’s first commercial power station, at Calder Hall in Cumbria, in 1957. Since the mid-1990s, around 20% of the UK’s electricity supply has come from nuclear. After 1995, when we built Sizewell B in Suffolk, there was a hiatus on new nuclear build, but we broke that hiatus in 2016 when we gave the go-ahead to Hinkley Point C in Somerset. In 2020, nuclear provided around 16% of the country’s electricity supply and 27% of our overall low-carbon supply. Hinkley Point C will provide 3.2 gigawatts, meeting around 7% of GB’s current electricity requirements. However, over the next decade, as many noble Lords have pointed out, many of our existing plants will be coming to the end of their life. Therefore, we need more nuclear power, including large-scale gigawatt and advanced nuclear technologies, and the Net Zero Strategy, which highlights nuclear’s role in reaching net zero.
We have announced a £120 million future nuclear enabling fund, the details of which are being worked up following the spending review, and I look forward to updating noble Lords on how that money can help to support further nuclear research in the UK. Alongside more information on the fund, we will publish a road map for new nuclear in 2022. It will focus on what is needed to support all future new nuclear in the UK.
We continue to make progress on key issues such as nuclear financing. The Nuclear Energy (Financing) Bill will establish a new model for nuclear projects that will cut the cost of financing and, importantly, reduce costs to consumers. The Bill will also help us reduce our reliance on overseas developers for finance, and open opportunities for British companies in the nuclear industry and our closest partners to develop projects across the UK without compromising on our nuclear ambitions.
We have also invested £210 million, matched by Rolls-Royce, to develop its design for one of the world’s first small modular reactors. Each small reactor is potentially capable of powering a million homes. As well as providing energy for the UK, the project will also create high-quality jobs, helping us to level up as we drive emissions down.
Moving to AMRs, the Government have recently announced that we will focus on high-temperature gas reactors as the technology of choice for the AMR research, development and demonstration programme, with the ambition for this to lead to a HTGR demonstration by the early 2030s. That does not preclude the Government looking at other forms of advanced modular reactors, which I know the noble Lord, Lord Grantchester, was concerned about. However, we have to put our backs behind one technology in order to make it happen in the timescale available.
Alongside our efforts on nuclear fission, the UK is widely recognised as a world-leader in the most promising fusion energy technologies, with the Government committing £220 million towards the first five-year phase of the Spherical Tokamak for Energy Production programme—STEP. Fusion is no longer decades away, and recently I know that the programme managed to produce more output than input into the project, which highlights the fact that it may not take another 30 years. We might be talking more like 15 years.
The value of nuclear is not seen only in terms of energy generation but in the socioeconomic benefits that these projects will bring to the UK. Hinkley Point C is providing an enormous boost to both the local and national economy, providing 25,000 new jobs, with £3.5 billion spent with companies in the south-west to-date—figures that we hope to be replicated at Sizewell C in Suffolk. Hinkley has also trained more than 800 apprentices. I also know that the Culham fusion project also has an apprenticeship programme that takes in 120 graduate apprentices a year who learn all about nuclear fusion.
We are committed to levelling up. For example, there is the National College for Nuclear, with two hub campuses in Cumbria and the south-west delivering training on its behalf. We also recognise the potential to develop clusters of nuclear expertise in other nuclear communities such as those in the North West Nuclear Arc. The noble Lord, Lord Wigley, will know of my particular interest in developing this arc further into north-west Wales, using Trawsfynydd, Wylfa and Bangor University’s excellent nuclear department as part of that building-up exercise.
Energy security is also an absolute priority for this Government. We have highly diverse sources of gas and electricity that ensure that households, businesses and heavy industry get the energy they need. The Government are working closely with Ofgem, National Grid and industry to monitor supply and demand, and the gas and electricity system operators have the tools they need to manage operability requirements in all scenarios. We remain confident that Britain’s energy security will be maintained.
However, we recognise the pressures that businesses are facing due to the significant increases in global gas prices. We are continuing to engage constructively with industry to further understand and help mitigate the impacts of global gas prices. Our priority is to ensure that costs are managed and supplies of energy are maintained. We will work with industry to put it on a more stable footing in the longer-term. That includes continuing to build a robust domestic renewable energy sector so that we are not as exposed to global trends in natural gas supply and demand.
In just this past year, we have seen incredible progress in our ambition to deliver new nuclear, including a comprehensive net-zero strategy that sets a clear direction and unprecedented representation of nuclear on the world stage at COP 26. It is that momentum that we must now build on, as we look to secure our future energy needs, with nuclear playing a key role.
My noble friend Lord Howell of Guildford asked me two questions. First, who pays for Hinkley Point C? I can confirm that EDF and all investors are committed to the project. On his second question of whether we are committed to large plants or waiting for SMRs, we believe that a diverse mix of low-carbon generating technologies in the UK is the right answer. We will need to progress all forms of low-carbon generation if we are to meet our decarbonisation targets, including large-scale gigawatt and advanced nuclear technologies such as SMRs and AMRs.
In response to the noble Viscount, Lord Hanworth, and a number of other noble Lords who talked about nuclear financing, as previously mentioned we have recently introduced into Parliament the Nuclear Energy (Financing) Bill, which has passed its Second Reading and Committee in the House of Commons. I can reassure noble Lords that we will be holding a number of Peer engagement exercises before the Bill arrives in this House—I suspect before the end of January. We had hoped that that would happen in December, but I suspect that it will now be early in the new year. However, I encourage everyone who has spoken in this debate to get involved in this interesting Bill.
I know the noble Viscount, Lord Hanworth, was concerned about the intergenerational gap of financing for large nuclear projects. I direct him to Dieter Helm’s excellent work on this subject. The whole point of the RAB model is that it separates the risk of the construction phase from the rewards of the operational phase. We need to compensate the investor for the cost of capital at a rate in the construction phase that is derived through a market pricing discovery process, and it will then be set as part of the RAB licence. But when it comes to the operational phase, the regulator will set the cost of capital, balancing his financing duty with the duty to the consumer to help keep costs down. In this, it will mirror any other large-scale infrastructure projects, which use market mechanisms to set costs. In this way, investors will be incentivised to keep costs down. Therefore, it does not just de-risk the whole project but, because it reduces the amount of rolled-up interest that grows over many years in the construction, can reduce the cost of a Hinkley Point by up to £30 billion, as other noble Lords will have read in other briefing notes.
So the Nuclear Energy (Financing) Bill enables the use of the regulated asset base model for new nuclear projects, including both current technologies and potential advanced nuclear technologies and small modular reactors. This Bill will help to reduce the capital cost of nuclear projects, which is likely to be the key driver of the overall costs of a nuclear project, and it does this by sharing risk. Experience has shown that financing these sorts of projects through private capital can instil greater discipline than if they are done through government funds alone. This can help to ensure that the project is delivered on time and on budget, meaning that consumer costs are kept to a minimum.
Within the RAB model, we are creating incentives to encourage developers to deliver new projects in an effective way. To help protect consumers, we are creating a regulatory regime under which Ofgem will have full oversight and audit rights to the project activities throughout its construction.
I thank the noble Lord, Lord Broers, for his considered comments. I agree with him on the safety record of nuclear and the longevity of its operation compared to other technologies. I have already covered cost but, on his points on waste, the UK has in place an effective and robust regulatory regime to ensure that radioactive waste is managed safely, securely and in ways that minimise the impact to human health and the environment. That is why we believe that a geological disposal facility will allow the NDA to complete the decommissioning and clean-up of the nuclear estate. I should mention that I have read that some of the advanced nuclear technologies being worked on by some of the AMR designs may, over time, find the holy grail and be able to reuse some of the embedded energy in all that stored waste at Sellafield, which would mitigate the scale of the geological disposal facility that we might otherwise need.
I take issue with one of the noble Lord’s comments: we need to invest in all these technologies, because some of them will have a very long-term benefit for what we do with nuclear waste. I also remind him that the large-scale nuclear reactors have lasted so much longer than they were originally intended to that we have actually been gaining from the production of energy from them long after we financed them in the 1970s and 1980s.
As my noble friend Lady Neville-Rolfe mentioned when responding to the noble Lord, Lord Howell of Guildford, CGN currently has a 20% stake in Sizewell C up to the point of final investment decision. The final configuration of investors for constructing the plant is subject to negotiations. Our aim is to bring at least one large-scale nuclear plant to the point of FID by the end of this Parliament, subject to value for money and all relevant approvals. We announced up to £1.7 billion in the spending review to help deliver this objective. In the Net Zero Strategy, we announced up to £120 million for a new future nuclear enabling fund to provide targeted support to address barriers to entry, and will look to accelerate nuclear projects.
The noble Lord, Lord West of Spithead, mentioned CGN and Taishan. These issues are under investigation, and we do not want to prejudice the outcome of that. But the Bradwell B project is at such an early stage of development that the Government are not making any decision at the present time. He also mentioned Wylfa, as, of course, did the noble Lord, Lord Wigley. I agree that this remains an excellent site, if not the perfect site, for new nuclear. We regularly discuss a range of proposals with all interested and credible investors— of which there are a number—and discussions are progressing.
The noble Lord, Lord Goodlad, referenced the speed of decision-making. I hope I have given some reassurance. We are currently in negotiations with the developers of Sizewell C with the aim of reaching a financial investment decision in this Parliament.
Lord West of Spithead (Lab)
There was another question to do with Chinese involvement with these power stations, what discussions we have had with them and what threat we see in that.
Baroness Bloomfield of Hinton Waldrist (Con)
I cannot answer specifically on what discussions we have had. As the noble Lord will know, we welcome any investment by foreign investors, but the final decision about the future involvement of the Chinese in Sizewell C will be taken only at the point of the financial investment decision. I cannot speculate on the outcome, but the noble Lord will be well aware of all the talk about Chinese involvement in our nuclear fleet.
The noble Lord, Lord Wigley, referred to hydrogen. The Government believe that nuclear could have a role in low-carbon hydrogen production and have published the UK’s first hydrogen strategy, alongside policy detail on their support for low-carbon production across the UK. On his points regarding Trawsfynydd, the UK Government have noted the growing local and regional interest, and indeed support, for several sites for further nuclear development, including Trawsfynydd, and we welcome conversations with stakeholders who are considering whether their assets are potentially suitable for the deployment of nuclear facilities. With regard to Trawsfynydd, BEIS officials regularly engage with Cwmni Egino, the Welsh Government-supported company that is exploring options at the site. Indeed, yesterday I saw a letter from John Idris Jones to the Secretary of State for Wales and the Secretary of State for BEIS on that very subject. We recognise that siting policy is a key part of the enabling framework to bring advanced nuclear to the market.
I thank my noble friend Lord Trenchard for his interesting speech—I know he is extremely knowledgeable about advanced gas reactors. As he mentioned, we recently announced that we intend to consult on including nuclear in the green taxonomy. We are aware of the knowledge and experience that Japan can bring on high-temperature gas reactors because of conversations with the Japanese atomic energy authority about its test reactor. We are considering a range of options on how to design and deliver the UK’s AMR demonstration programme effectively, and continue to engage with other leading nuclear nations. Our ambition is to share next steps on the demonstration programme by next spring.
I am afraid I profoundly disagree with much of what the noble Lord, Lord Oates, said, but he raised points about waste and the solutions being over the horizon. I hope I have reassured him that we are slowly moving towards resolving that. I know that there are competitions out and various people bidding in the process to host one. I reassure him that the process is under way. Working groups are being formed and further announcements are expected in coming months.
The noble Lord talked about the cost and risk to consumers. I reassure him that any decisions will be fully cognisant of all the risks, as well as ensuring value for money for consumers and taxpayers. I believe that the RAB model will reduce the cost to consumers of future technologies. We cannot stop trying now. This Government are investing heavily in scientific research and development across the whole nuclear piece, and I remain strongly optimistic that, in 10 years’ time, we will look back and say thank goodness we resisted the blandishments of the noble Lord, Lord Oates.
Lord Oates (LD)
In the light of what the Minister has said about the RAB model, what assessment have the Government made of the example of the United States’ ECR model? Have they learned any lessons from that and can they explain why we will not suffer from the same problems they had in the States?
Baroness Bloomfield of Hinton Waldrist (Con)
I apologise for not having answered that point. I was coming on to say that I would write to the noble Lord on that specific issue because I do not have enough details to hand to give him a satisfactory answer. I will share that answer with other noble Lords.
Lord Lea of Crondall (Non-Afl)
My Lords, I raised the question of how we are going to produce annual reporting on progress towards meeting our Glasgow targets when nuclear, for example, comes in big chunks and it is hard to know how to do an annual metric. This is the only way of finding out how we are doing as we go along. Does the Minister agree that this should be studied in Whitehall, from the Treasury to the department for the environment and all the other departments, because it is the centrepiece of what we are committed to?
Baroness Bloomfield of Hinton Waldrist (Con)
It is a point well made and I take it seriously, but I think we will get much more information coming out much more regularly than just an annual report of progress as we move forward with all these projects.
I am conscious of the time and I want to respond to the comments of the noble Lord, Lord Grantchester, on foreign ownership. As I have said, we welcome the role of overseas investors: we would not have EDF had we not welcomed overseas investors into the UK’s nuclear sector, but all investment involving critical infrastructure is subject to thorough scrutiny, as he will well know. Having taken the NS&I Bill through this House, we are very careful to evaluate the input of foreign interests in such critical infrastructure as nuclear.
On the noble Lord’s question about the Government’s choice of high-temperature gas reactors crowding out other advanced modular reactors, I can again confirm that we are interested in seeing all types of advanced reactor being developed. He also asked about the long-term levy to consumers. This will be determined for each project as a result of negotiations. We will protect consumers through effective due diligence on the project and, as I have said, through the role of Ofgem, and by incentives on investors to manage costs and not to have time overruns. Ultimately, the lower cost of financing achieved through the RAB should lower overall project costs for consumers. With that, I undertake to look at Hansard and, if there are any specific questions I have not answered, I will of course write to noble Lords.
Lord Howell of Guildford (Con)
My Lords, it remains for me to thank all who have taken part in this debate for their very expert contributions from different points of view and to thank the Minister for her very patient and full reply, although she was not able to cover all our questions. In fact we have left a few things uncovered, such as decommissioning. We touched on finance, with the help of the noble Viscount, Lord Hanworth, but we will be facing that in the Bill. I cannot help reflecting that this regulated asset base sounds to me like very clever bureaucratic language for the simple proposition that the poor consumers are going to have to pay in advance, on top of the enormous sums they are paying already for various reasons.
Japanese co-operation is very important—Japan is our best friend in Asia and we should be building on that, as touched on by my noble friend Lord Trenchard, but the key question that fascinates is whether nuclear is green. Has the climate policy establishment accepted that this is part of the green energy story? I think wise experts have: I am not sure the message has quite reached the Liberal Democrat Benches yet, although I live in hope that they will come round to it. I was very glad that the noble Lord, Lord Oates, contributed to the debate from a different angle: it made it a good debate, so I thank him very much.
Two questions remain: is Bradwell on for the Chinese or not? The question hangs in the air. I see the Minister could not answer but we, the Chinese and everyone else are going to need answers pretty soon. The other question is, in 2031, will we be building large-scale reactors again, like Hinkley, or will we be building clever, small SMRs in quantity to replace them? Which way are we going? We are not quite sure on either of those things yet. We went too far in with the Chinese 10 years ago, and my personal fear would be that we will now, stupidly, go too far away from them too fast. There is always common ground to be found on these great, technical issues of the future but, in the meantime, I thank all noble Lords for their contributions.