Draft Nuclear Installations (Compensation for Nuclear Damage) (Amendment) Regulations 2025
(1 day, 19 hours ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
I beg to move,
That the Committee has considered the draft Nuclear Installations (Compensation for Nuclear Damage) (Amendment) Regulations 2025.
It is a pleasure to serve under your chairship, Mr Betts. The draft regulations, which were laid before the House on 19 May, make technical changes to the way in which the convention on supplementary compensation for nuclear damage, known as the CSC, will operate in the UK on accession to the treaty. The changes streamline the operation of the different conventions, as well as the domestic implementing legislation.
Nuclear power is central to the Government’s mission to become a clean energy superpower, and a key part of our industrial strategy to revive Britain’s industrial heartlands. It provides clean, home-grown energy, creates thousands of well-paid, skilled jobs, and complements other technologies by providing stable and reliable electricity to the grid.
To drive forward new nuclear and deliver on our mission, the Government made a series of bold commitments in the recent spending review. A £14.2 billion investment was announced to build Sizewell C, ending years of delay and uncertainty and creating 10,000 jobs, and we pledged £2.5 billion for small modular reactors, or SMRs, over the spending review period. Rolls-Royce SMR has been selected as the preferred bidder to partner with Great British Energy—Nuclear to develop the reactors. Together with Hinkley Point C, those announcements represent the biggest nuclear roll-out for a generation, delivering more nuclear to the grid than in the past 50 years.
Participation in nuclear third-party liability—or NTPL—treaties are important for supporting nuclear development, while also safeguarding the interests of potential victims in the highly unlikely event of a nuclear incident. NTPL treaties ensure that: minimum levels of compensation are available to victims of a nuclear incident; claims are channelled exclusively to the operator of a nuclear installation; and claims are channelled to the jurisdiction in which the nuclear incident occurred. The UK is party to the Paris convention on third-party liability in the field of nuclear energy and to the Brussels convention supplementary to the Paris convention on third-party liability in the field of nuclear energy, known as the Brussels supplementary convention. They are implemented domestically in the Nuclear Installations Act 1965.
The Paris convention sets a minimum operator liability amount of €700 million, with an additional €500 million of compensation available above that to compensate victims in a Brussels supplementary convention country. Finally, there is a shared international fund of €300 million made up of contributions from Brussels convention members, again used to compensate damage in Brussels states.
To remove some potential barriers for investors and the nuclear supply chain, and to support exports, we are now pursuing accession to another treaty, the convention on supplementary compensation for nuclear damage. The CSC is another international nuclear third-party liability treaty, under the auspices of the International Atomic Energy Agency. The UK is the first Paris convention member to seek to accede to the CSC.
Accession to the CSC will expand the number of countries that the UK has NTPL treaty relations with by 11. The expansion will remove some potential barriers to inward investment, and support UK exports in the future. Accession will enhance the UK’s attractiveness as a destination for nuclear investment and support the successful delivery of future projects. That is because the mutual respect of the principles of NTPL treaties will apply to more countries.
In the highly unlikely event of a nuclear incident, accession to the CSC will also increase the amount of compensation available for potential victims. The CSC establishes a shared international fund made up from contributions of the contracting parties to compensate victims of a nuclear incident. A country’s contributions are calculated based on installed nuclear capacity and UN contribution rates, expressed in special drawing rights. At present, with the UK as a member, the shared international fund would be approximately £120 million, with the UK’s contribution set at £7 million. To date, there have been no calls on this fund.
As the first Paris convention country to seek accession to the CSC, there is no established path for countries seeking participation in both conventions, and the UK is therefore a pioneer in this respect. To enable CSC accession, provisions were included in the Energy Act 2023 to amend the Nuclear Installations Act 1965, which provides for the UK’s participation in various NTPL regimes. Our initial approach had been to reflect the minimum national compensation amount required for claims at 300 million special drawing rights, equivalent to €370 million, by setting this as the liability limit for operators. This was to come out of operators’ existing financial security provision.
This instrument makes a technical change to the way the CSC will operate in the UK upon accession to the treaty. The technical amendment will align the compensation available under the CSC with that of the Paris convention, which is to say it creates a single first tier of compensation available under both conventions with a limit of €700 million. This remains within the existing financial security provided by operators, meaning no increase in the liability burden for operators. For sites with lower liability levels, namely low-level and intermediate sites, their financial security requirements will also remain unchanged.
This approach will simplify the operation of the different conventions and the classification of claims in domestic legislation. It will benefit the administration of funds by ensuring that the CSC shared international fund comes into operation only once operator financial security limits under the Paris convention are exhausted. It will continue to ensure the additional funds available under the Brussels supplementary convention and the CSC go only to those entitled to make a claim under these conventions.
In conclusion, the instrument makes a technical change to the way the CSC will operate in the UK. We continue to work towards CSC accession, which will support the delivery of new nuclear projects and exports while continuing to safeguard the interests of victims in the highly unlikely event of a nuclear incident. The Government have been clear on our support for nuclear, and these measures contribute to creating the best possible investment climate. I commend the regulations to the Committee.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
It is a pleasure to serve under your chairmanship, Mr Betts. It is an unusual experience to be in full agreement with most of what the Minister has said. [Hon. Members: “Hear, hear!”] Do not get used to it.
I took the Energy Act through the last Parliament, and it is under section 22 of the Act in which the amendments necessary to implement the convention on supplementary compensation for nuclear damage are contained. Section 306 of the Act outlines the powers of the Secretary of State to make regulations concerning the CSC. The regulation before us today seeks to amend the classification of claims for compensation in respect of the convention on supplementary compensation, as set out under section 22 of the Energy Act/Nuclear Installations Act 1965.
Under the Nuclear Installations Act 1965, if compensation claims, excluding CSC-only claims, reach an aggregate of €700 million from the responsible person, the appropriate authority may be required to satisfy further claims, including CSC claims up to the equivalent of the aggregate €700 million and the value of the CSC international pooled funds. For CSC-only claims, the responsible person’s liability limit is 300 million special drawing rights, after which the appropriate authority’s liability is limited to the aggregate of 300 million special drawing rights and the value of the CSC international pooled funds.
Regulation 2(3)(b) will omit section 16(1ZAA) of the Nuclear Installations Act. Subsection (1ZAA) sets a financial limit on the compensation payable by a responsible person for CSC-only claims. Thereby, this regulation seeks to remove the lower liability cap for claims that relate only to the CSC, which is in place for claims arising under the convention on third-party liability in the field of nuclear energy: the Paris convention. As a result, the liability for claims under either convention is brought to €700 million. Any claim brought under the CSC, or under the CSC and the Paris convention, would have a cap on liability of €700 million plus the value of the CSC international pooled funds.
As a nation seeking to build a golden age of new nuclear—not quite as golden as it might have been had the Government stuck to our plans, but a golden age none the less—and to implement a revival of civil nuclear in the UK as part of our secure, affordable, clean energy ambitions, it is incumbent on us to put in place the necessary mechanisms to ensure consistent liabilities in the event of damages. That is what the draft regulations seek to do. I am in violent agreement with the Minister on this point, and we do not oppose any of these changes today.
Question put and agreed to.