Small Modular Reactors and Energy Security

(Limited Text - Ministerial Extracts only)

Wednesday 19th January 2022 Westminster Hall

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I congratulate the hon. Member for Ynys Môn (Virginia Crosbie) on securing this important debate. She made a fantastic speech. It was a real tour de force around the whole sector. I thank her for her hard work in setting up the all-party parliamentary group on small modular reactors, which has already been an effective voice in Parliament. The hon. Member for Ynys Môn is one of the two original atomic kittens, along with my hon. Friend the Member for Copeland (Trudy Harrison). It is good to see other new members of the group, including my hon. Friend the Member for Hartlepool (Jill Mortimer), here today.

I was delighted to take on responsibility for the nuclear sector when I was appointed as Energy Minister in September, having been a champion for investment in nuclear energy during my time at the Department for International Trade, as I was before that. You and I, Mr Bone, during the 2005 to 2010 Parliament, were recorded as being part of a group called the atomic eight—a group who voted more strongly in favour of nuclear than the parliamentary Conservative party as a whole. I am looking forward to visiting my hon. Friend the Member for Ynys Môn’s constituency later this year—hopefully sooner—as the home of the former Wylfa nuclear power station and the site of the proposed Wylfa Newydd plant. Before getting into my hon. Friend’s excellently made points, I will address some other points mentioned.

My hon. Friend the Member for Copeland is not here in person but is very much here in spirit. My hon. Friend the Member for Stone (Sir William Cash) gave a very supportive intervention. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) made very strong points on the importance of both nuclear and renewables in producing hydrogen; I ask him to have a word with his hon. Friends, who are still opposing the Nuclear Energy (Financing) Bill, which will cheapen the cost of nuclear, and ask the Liberal Democrats to reconsider and vote for it. We heard from my hon. Friend the Member for Aberconwy (Robin Millar) on the important role that nuclear could play in reducing bills. The Nuclear Energy (Financing) Bill will reduce the cost of a gigawatt nuclear power station by in excess of £30 billion overall. On a present-value basis, that is about £10 per bill payer—a very significant reduction.

Two months ago, the UK hosted the COP26 summit in Glasgow, which focused the world’s minds on the role of clean energy in tackling climate change. It was there that I had the privilege of opening a nuclear innovation event at the UK’s presidency pavilion, highlighting the largest ever nuclear presence at COP. It is great to be joined by the Exchequer Secretary to the Treasury, my hon. Friend the Member for Faversham and Mid Kent (Helen Whately), who I know has just come back from a visit to Hinkley Point C, and is also an enthusiast for the sector.

In April last year, the UK Government set into law the world’s most ambitious climate change target, through our carbon budget 6, in which we aim to achieve a 78% reduction in our emissions by 2035 compared to 1990 levels. In order to achieve this commitment, the UK will need to use a wide range of green technologies, of which nuclear is undoubtedly going to play a key role. The recently published net zero strategy sets out how the UK will deliver our commitment to reach net zero emissions by 2050, and it is clear that nuclear is an important part of our plans to achieve that.

I welcome the enthusiasm of my hon. Friend the Member for Ynys Môn for new nuclear. We will aim to bring at least one large-scale nuclear project to the point of final investment decision by the end of this Parliament, and we will take measures to inform investment decisions on further nuclear projects. SMRs will be important in delivering new nuclear for the UK. The smaller size of SMRs and their factory-based modular build potentially allows for more flexible deployment options—that is stating the obvious. My hon. Friend the Member for Hartlepool put in a bid for not just one, but two SMRs, and made the strong point that nuclear always goes down best in communities that are used to hosting nuclear. That has always been the case in our country, and Hartlepool is very much in that category.

[Damian Collins (Folkestone and Hythe) (Con)]

On that point, the Dungeness A power station in my constituency is in advanced decommissioning. The site is owned by the Nuclear Decommissioning Authority. I reinforce the point made by my hon. Friend the Member for Ynys Môn (Virginia Crosbie) that it would be helpful for the Department for Business, Energy and Industrial Strategy to give direction to the NDA that it can enter into negotiations with Rolls-Royce about the use of sites like Dungeness A, which may well be very suitable—indeed, ideal—for small modular reactors.

[Greg Hands]

I am always happy to meet the hon. Gentleman to discuss that. It is important at this stage that we are not too prescriptive about sites for SMRs; it would be too early for us to do that. I am very happy to meet him and discuss what might be done about the general position of Dungeness.

[Jamie Stone]

In the same spirit, I extend an invitation to the Minister: if he would care to come north to Caithness, he would receive a cordial welcome from the trade council and civic leaders.

[Greg Hands]

I welcome that intervention. I am very happy to offer the hon. Gentleman a deal: if he can persuade his party to become more pro-nuclear, he will ease the path of a visit to the very northernmost part of mainland Scotland. If the Liberal Democrats will vote for the Nuclear Energy (Financing) Bill when it returns to the House of Commons, I will come to Caithness and Sutherland in due course.

Good points about the exportability of this technology were also raised by the former Secretary of State for Wales, my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns), and by my hon. Friend the Member for Ynys Môn—points that are very much true. As my hon. Friend said, in November last year, the Government announced £210 million for Rolls-Royce SMR Ltd to further develop the design for one of the world’s first small modular reactor designs. Funding for that project is matched by private investment, with the design potentially capable of deployment in the UK in the early 2030s. We recognise the significant export potential of the Rolls-Royce SMR technology, which has already generated considerable overseas interest.

My Department and my former Department, the Department for International Trade, are working closely with the company to support it into overseas markets, and UK Export Finance has indicated its willingness to provide cover to Rolls-Royce, subject to the normal lending criteria being met. As my hon. Friend the Member for Ynys Môn pointed out, this funding is part of the advanced nuclear fund—a significant Government investment of up to £385 million to develop a domestic SMR design and demonstrate innovative advanced modular reactors, also by the early 2030s.

In addition to investment in SMRs, the Government plan to invest in the advanced modular reactor research, development and demonstration programme, which aims to enable an AMR demonstration by the early 2030s. Based on our own analysis as well as other public reports, the focus of the programme is on high-temperature gas reactors, which I announced at the Nuclear Industry Association’s conference in November. In addition to low-carbon electricity generation, HTGRs have the potential to produce very high-temperature heat, which could be used for increasingly efficient production of low-carbon hydrogen—as has already been referred to by various Members—to help decarbonise industrial processed heat, or even for synthetic fuel production.

Furthermore, the Government have recently launched the £120 million future nuclear enabling fund, which has already been referred to, as virtually everything else has, by my hon. Friend the Member for Ynys Môn. She is so on top of nuclear—so well versed—that I sometimes worry about my own job: my hon. Friend knows as much about nuclear as I do. The FNEF aims to address barriers to future new nuclear and help companies to reduce project risks, so that they are better positioned for future investment decisions.

In answer to my hon. Friend’s question about allowing the licensing and siting of the Rolls-Royce SMR to proceed in parallel, while there are some steps that logically must be completed before others can begin in a nuclear deployment project, companies are not, of course, prevented by law or policy from—for example—applying for a nuclear site licence and development consent order in parallel. Those are commercial decisions, as companies are best placed to decide how and when to enter regulatory projects to best support their project.

I was pleased that Parliament voted to back the Nuclear Energy (Financing) Bill last week. As my hon. Friend has pointed out, classifying nuclear as green investment in the UK taxonomy would allow billions to flow into this essential technology. That is the basis behind the Nuclear Energy (Financing) Bill—to bring in private sector institutional financing. As the Prime Minister set out to the CBI, we intend to consult on including nuclear in the draft technical standards for our own UK green taxonomy. Further details will be released when the consultation is published.

To conclude, the Government fully support the development of small modular reactors and the exciting opportunities, both in terms of energy security and of reaching net zero, that new nuclear can offer the UK. We have demonstrated our serious interest in building nuclear capacity in the UK, and over the past year we have made decisions that boost investors’ and businesses’ confidence in investing in UK nuclear. From the energy White Paper to our landmark net zero strategy and funding for small modular reactors, we have shown our dedication to net zero and nuclear. I once again congratulate my hon. Friend the Member for Ynys Môn on an excellent debate.

Question put and agreed to.