Nuclear Safeguards Bill (First sitting)
Lord Harrington of Watford ExcerptsTuesday 31st October 2017
(7 years ago)
Public Bill CommitteesRead Full debate Nuclear Safeguards Act 2018 View all Nuclear Safeguards Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 31 October 2017 - (31 Oct 2017)
The Chair
Q
Dr Golshan: Thank you for that introduction. I am director and deputy chief inspector at the Office for Nuclear Regulation. My main responsibilities are Sellafield, decommissioning fuel and waste, but I am also senior responsible owner for ONR’s work in relation to establishing a state system of nuclear materials accounting and control.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
Q
Dr Golshan: Establishing a domestic safeguards regime, now that the policy decision has been made that the UK will be leaving the Euratom treaty, is fundamental to the industry in the UK. It is the cornerstone of establishing nuclear co-operation agreements. It is essential for the industry to operate. Without a domestic safeguards regime in the UK that works in line with the International Atomic Energy Agency requirements, the industry simply will not be able to operate.
Paul Blomfield
Q
Dr Golshan: Perhaps I should start by saying that, given our membership of Euratom, it has not been necessary for the UK and ONR to build capacity and resilience in this area. Now that we are in a different position, we have started to recruit. The first phase of recruitment is complete. We successfully recruited four individuals, three of whom have already started with us. An area of shortage for us was subject matter expertise. That was a worry for me, but I am pleased to say that we will hopefully be in a position to rectify that by the middle of this month.
Broadly, we need to continue with our recruitment if we are to staff ourselves in order to deliver the new safeguards function. In the first instance we need an additional 10 to 12 inspectors, which will bring us to a level that allows the UK to fulfil its international obligations, but we have already heard from the Secretary of State that the intention is to put in place a regime that is equivalent to Euratom. That will require ONR to recruit further and will mean around 20 additional inspectors. We know that we are dealing with a limited pool of expertise, and our success so far, although encouraging, is by no means the end of the story.
The Chair
I welcome the next panel to give evidence, and—without meaning any disrespect to the other two gentlemen—I particularly welcome back our former colleague, Tom Greatrex. Good to see you back here. You probably remember the tough time that you gave me at various times—you are going to get a tough time, too. Welcome to the other members of the panel, from Prospect Law. We have until 11.25 am, which is a reasonable time; but we will have to stop at 11.25 even if we are speaking, so I will try to wrap up a little bit before. First, I ask the three witnesses to introduce yourselves and, if you wish, to give a brief introduction to your thoughts on the Bill.
Rupert Cowan: I am Rupert Cowan, with Prospect Law. My background is advising, as a lawyer, the nuclear industry, providers of services, operators and generators. I am a very worried lawyer at the moment, having seen the Second Reading debate, and I am concerned that, despite the obvious excellent progress that ONR is making towards introducing a safeguards regime, that regime on its own will not enable the industry to continue to operate without interruption.
Jonathan Leech: I am also a lawyer specialising in nuclear law and regulation, working with industry. In terms of my initial views on the Bill, as far as it goes it is, of course, merely an enabling power. One thing I did want to lay out, though, is that it is emphatically not a contingency. Unless we have a radical change in direction of travel now, we will need it; it is not something that can be set aside. I am sure we will come back to discuss that in further detail. I also have some views on the scope of the powers that the Bill confers. But the real task will lie in the secondary legislation, how that is implemented, and how that relates to the nuclear co-operation agreements that we will need before any exit from Euratom, if we are not to disrupt the industry.
Tom Greatrex: Tom Greatrex. I am not a lawyer; I am the chief executive of the Nuclear Industry Association, which is the trade body for the UK civil nuclear industry, representing 260-plus companies across the supply chain. The industry concern is very similar to that just expressed by my two colleagues—namely, that the Bill does one small part of a whole range of things that need to be done to ensure there is not disruption as a process of leaving Euratom. I am, similarly, intrigued by the ministerial comments in the Second Reading debate, particularly around this being a contingency, because that is something different from what we have been discussing to date. My overall concern is that we need to do a whole range of different things, not just what is in the Bill, to ensure that we have a position that avoids any disruption to activity in the civil nuclear industry.
Richard Harrington
Q
Tom Greatrex: If we are to have a domestic safeguarding arrangement and system, we will need to have the power conveyed to the ONR to undertake that role. I have described the Bill before as being a necessary legislative step. It is; but obviously, a whole range of other steps need to come after that, which are contingent upon it. That is where the majority of the concern lies.
Rupert Cowan: May I add to that? Emphatically yes, it is necessary to pass a Bill that puts in place a domestic safeguards regime. The Bill is a step towards achieving that. But what needs not to be lost is that the terms of that Bill, and the secondary legislation that it creates the opportunity to provide, must also be in terms that do not prevent those that we currently have nuclear co-operation agreements with courtesy of Euratom, continuing to co-operate with us. There is a very substantial concern among those that want to be our friends and continue to co-operate with us, and those that may not—who, for slightly more opaque reasons, do not want to make it easy to continue to co-operate with us—that the Bill, as it stands, will not allow a safeguards regime that is neutral in its application to the commercial parties that are participating in the industry. We have given you a note; if you read the end of it you will see that, although we are not entitled to, we are suggesting a possible amendment that you might consider to achieve that neutrality. It is in paragraph 4.
The Chair
Q
Jonathan Leech: Obviously, the Government’s stated intent appears to be to replicate, as far as possible, the current safeguarding regulatory regime that we have in place with Euratom. In a sense, all we should be looking for in the Bill, as a piece of enabling legislation, is to see wording that allows that to happen. Our concern around the way that power is expressed is that it appears currently to be written more from the perspective of the IAEA voluntary offer safeguarding agreement text than the Euratom treaty text. You might argue it is a fairly subtle distinction, but if we are seeking to replicate what we have, I would suggest that a good place to start is the high-level requirements of the treaty, which talk in terms of not diverting from declared use, and those at least should be considered as an additional scope that would be brought within the power, rather than purely focusing on material being diverted from civil activities. Hence the wording that we have proposed in the note is rooted in the treaty and would not take anything away from current scope, but would merely ensure that it is within the power to replicate.
Richard Harrington
Q
Rupert Cowan: We support the Bill completely. We suggest the amendments for the reasons described.
Paul Blomfield
Q
Tom Greatrex: As the ONR said earlier this morning, it will not be possible to replicate the safeguarding regime on day one. If the Government have said that they intend to replicate the standards that we currently have as a member of Euratom, there is obviously a concern that we will not be in the position where we will be meeting the same standards at the point at which we leave Euratom. That is the crucial point about the need for a transitional arrangement or parallel working—there are different ways of describing what is broadly the same thing—which is to avoid that gap.
If you do not have the correct arrangements in place, as you have heard from others on the panel, the series of other arrangements that are effectively contingent on the safeguarding regime will not be able to be in place. That is why it affects absolutely everything to do with the functioning of the industry as it currently functions and has functioned for the past 40 years or more.
We can take a practical example. Because of the international nature of the nuclear industry, the Sizewell reactor currently generating power in Suffolk is based on Westinghouse technology. That technology is therefore US technology. Because of the legal requirement to have a nuclear co-operation agreement in place, there are very real—these are not scare stories—and legitimate concerns that even the ability to exchange information between the operators of the site, EDF and where the technology originates from will potentially be illegal at the point when we come out of Euratom, if we do not have successor arrangements in place or a period of time to enable the transition to be finalised and for the new regime to be put in the place.
It is not about being against the Bill. The Bill does the first step, but there are many more subsequent steps that have to be taken. The ability to do that in a very limited timeframe is the cause of the majority of the concern.
Nuclear Safeguards Bill (Second sitting)
Lord Harrington of Watford ExcerptsTuesday 31st October 2017
(7 years ago)
Public Bill CommitteesRead Full debate Nuclear Safeguards Act 2018 View all Nuclear Safeguards Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 31 October 2017 - (31 Oct 2017)
The Chair
I welcome our witness for the first session this afternoon, which can last for half an hour. Angela Hepworth is the corporate policy and regulation director at EDF. Perhaps, for the record, you would be kind enough to introduce yourself. If you want to say anything about the Bill by way of introductory remarks, please do so.
Angela Hepworth: I am Angela Hepworth. I am the corporate policy and regulation director for EDF Energy. I look after our interaction with Government and with regulators in the UK, and I am also managing the company’s work on Brexit, and in particular Euratom.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
Q
Angela Hepworth: I do agree. Maybe I can say something about our industrial perspective and what it means to us in the UK.
As I am sure you know, we own and operate the eight existing nuclear power stations in the UK, which provide 20% of the UK’s electricity-generating capacity. We also have plans to build a new nuclear power station at Hinkley Point C and then follow-on nuclear power stations. As part of that, it is vital for the existing nuclear fleet and for our new build projects that we are able to import fuel, components, services and information for the nuclear power stations. That is absolutely essential. We have a supply chain that depends on having access to those things from Europe and further afield.
In order to do that, it is essential that there is a functioning safeguards regime in place that is approved by the International Atomic Energy Agency. At the moment, as you know, that is provided by Euratom. When Euratom is no longer providing that, it is essential that we have a domestic regime that will support our ability to import those things. We see it as essential to have a safeguarding regime and therefore essential to have the Bill, to give the necessary powers to put that regime in place.
Alex Norris (Nottingham North) (Lab/Co-op)
Q
Angela Hepworth: In terms of our UK operations, we will be operating within a UK safeguarding regime. We understand that the Government’s intention is to keep the arrangements from an industry perspective quite similar to the existing arrangements that apply with Euratom. The Bill provides powers to put that regime in place. We have not seen the detail of how those arrangements will operate, but we are very keen to. We are happy, in principle, working under a domestic safeguards regime in the UK, as we have been happy working under a Euratom safeguards regime.
The Chair
Q
Kevin Coyne: What a pity. I am Kevin Coyne, national officer for Unite. Unite represents skilled workers in the nuclear industry, from decommissioning and generation to huge swathes of the electricity industry. Our position on the Bill, and I understand that you will be asking supplementary questions about whether we support it, is that we have concerns, principally about the impact on workers in the industry, as you would expect from us. We also have concerns about the timescale, and whether that will be in place and have ramifications for jobs in the future. We have concerns about JET in particular, the jobs based at JET, and the freedom of movement of those jobs throughout Europe and the attention to detail in the Bill about that. Those are our three main concerns.
Richard Harrington
Welcome this afternoon. I accept your point, Kevin, and the Chair has quite rightly ruled about our discussing what is in the Bill, but my door is always open to both you and Sue to discuss other matters on another occasion.
Kevin Coyne: That is very kind of you.
Richard Harrington
Q
I would like to ask you a leading question—something which of course we do. I understand your views on Euratom and what Sue said about associate membership. She is quite right that there is no actual definition of associate membership. However, given that the Government decided to serve the article 50 notice on Euratom and we are leaving subject to negotiations, which is a statement of fact, would you accept that we are doing the right thing in having nuclear safeguards built? I accept that you do not think that the Bill covers everything, but would you still support it?
Kevin Coyne: The important point is that there is a safeguarding mechanism in place by 2019. You have seen my paper, in which we indicate as a union that we wished that Euratom had been left in place for a series of reasons, including the continuity of various bits at a high level. We do not believe that we can hope to progress to that level by 2019, so we believe that the safeguarding mechanisms outlined in the Bill are important to safeguard the industry as it goes into a phase which we do not yet know about.
Sue Ferns: Just to add to that, having read the Second Reading debate, there was a lot of talk about this being a contingency measure. I would agree; it is an essential contingency measure. It is not our first preference, but it needs to be there as a contingency.
Trudy Harrison
Q
Kevin Coyne: I think that is an area which is of serious consequence. I think it is generally not well known—the fact that Euratom covers the transportation of materials—or that isotopes that are used in the NHS, for instance, come from Holland and other countries. We do not have the reactors in this country to produce them. I understand what you say about the registration. We highlighted that as a concern because there is a two-day, three-day shelf-life; this comes from us as a union that operates within the NHS at quite an extensive level. In terms of the delivery and transportation of that, there are sometimes delays. So our point is that the change of regimes and the difference in what might occur may cause that to be delayed even further and therefore impact upon the NHS itself. We make no stronger point than that we ought to look at the impact upon isotopes in hospitals.
Richard Harrington
Q
Kevin Coyne: A Euratom point—and you think I am mistaken about that?
Richard Harrington
Well, because I can quite understand the point that they have got to be overnight, or very quickly, and all that kind of thing—would that be affected by a change of law when we Brexit. My advice, though, is very clear; I have asked a lot of people, as you might imagine. It is very much Trudy’s point, which is that, whatever one thinks about Euratom and so on, the medical isotopes are not covered within the fissile definition of Euratom. Do you feel that we are wrong on that, or was your point, “Yes, we’ve got to get them quickly and without paperwork and all that kind of delay”—which may or may not happen afterwards?
Kevin Coyne: Our information, as I said, was simply that upon the basis of the delays in transportation, due to the change in regime, we thought we ought to have in place a cast-iron security, as we do now, to make sure that those delays do not unnecessarily happen.
The Chair
It is most kind of you. The Minister may want to clarify the difference between inspectors and safeguarders.
Richard Harrington
I do not feel able fully to clarify the point at this juncture, Mr Gray. Usually the mistake is made—not that Professor Matthews would—between safety and safeguarders, but we are looking at the safeguards regime here, which includes physical inspection, mentioned today by quite a few of the people giving evidence, and, though I do not quite know how to use the expression, remote inspection by cameras and other sets of kit, which at the moment belong to Euratom but I am sure will be part of the new safeguards regime.
Professor Matthews: There are three components in nuclear safeguards. One is nuclear materials accountancy— that is, keeping track of nuclear materials. Then there are two skills that go along with that. One is assaying, determining the amount of nuclear materials—
Richard Harrington
That is laboratory testing the quality and the content.
Professor Matthews: And observing and recording movements of nuclear materials, without both of which you cannot do the accountancy.
Richard Harrington
I would accept that.
Professor Matthews: That is quite different from proving a safety case for the operation of a nuclear installation.
The Chair
Exceeding my role as Chairman, it might be something you would ask your officials to look into for later consideration during the Bill?
Trudy Harrison
Q
Richard Harrington
Why not? I am quite happy to. That function, currently done by Euratom, will be done by the new safeguards regime. It will be responsible for examination and testing and making sure there are suitably qualified inspectors, in the same way that Euratom does now.
Dr Whitehead
Q
Professor Matthews: Clearly, the operation of the Office for Nuclear Regulation requires a range of different roles. I would see no problem with adding an additional role to the range of roles that are already in the organisation. It is just the physical people are different people who do these different things. Indeed, nuclear inspectors themselves have different backgrounds and specialisations, and diverse education as well. I suppose it is extending the range of what the Office for Nuclear Regulation does.
Paul Blomfield
Q
Professor Matthews: Springfields, which produces nuclear fuel, will stop working. The Urenco plant at Capenhurst, which is part of three plants in the Netherlands, Germany and the UK, will stop working because it will not be able to move uranium around. We in the UK no longer do conversion, which is changing uranium into uranium hexafluoride, which then goes to the enrichment plant and is converted back to oxide or metal for application. That requires movement, and all of that would stop.
It would be difficult for Sellafield and other decommissioning sites, such as the old research sites at Dounreay, Harwell or Winfrith; some of the work there would grind to a halt as well. Eventually, when the fuel charges were removed from reactors operating in EDF Energy’s plant, those would all stop, which would take something like 9 GW of power out of our network at a time when we are perilously close to blackouts. It would be a very serious measure indeed if there was a hiatus.
Richard Harrington
Thank you for that, Professor Matthews. You are of course using my argument for why we need the Bill; thank you for supporting it. Dr Mina Golshan, whose organisation is responsible for recruiting the 15 people we are talking about, said that recruitment had already started. Once the Bill proceeded beyond Second Reading—I thank everyone, including Opposition Members, for voting for that—it meant that the financial resources needed for the IT and recruitment are provided. We are very well aware of that.
I thank you for your de facto support for the Bill. I have of course noted the points you have made, and I will be very happy to chat about them on another occasion. The purpose of the Bill is precisely to get over some of the obstacles that you are talking about and prevent what you have explained would happen—as we accept would happen—if we did not have a safeguards regime in place.
Dr Whitehead
Q
Secondly, I understand that the Torus fusion project at Culham will be a subject of safeguarding inspection. Will that be financed, subsequent to our leaving Euratom, in a way that is commensurate with its present level of assistance, which largely comes, as you are aware, from EU funding? Do you have any comment on that?
Professor Matthews: There is a difficulty here and I do not know if it is recognised in the Bill; it perhaps needs scrutinising. The only mention in the Bill and in these discussions is of our fissile materials. We are talking about uranium, plutonium and other axinite isotopes, and precursors such as thorium, which can be converted into fissile materials. In the case of Culham and the fusion programme, they use tritium. Tritium is a material that comes under safeguards, which is not a fissile material. It is a material that is a component in hydrogen bombs, and it is controlled. I remember getting into trouble as a young scientist. I was asked to assess the use of lithium-6 as an absorber for a fast reactor project. I phoned up a French supplier of lithium-6, and next thing I had security down on me, because tritium is produced from lithium-6 and is a controlled material. I do not know whether any consideration is being made of the control of tritium with respect to Culham and nuclear safeguards.
Richard Harrington
That is beyond the scope of the Bill, but perhaps we could discuss it, although not necessarily now, in the evidence session. I am happy to discuss it, but I suspect that your interpretation is correct, Mr Gray, and it is beyond the narrower scope of the Bill. I am happy to discuss it with the Shadow Minister.
Dr Whitehead
One might argue that the scope of the Bill is too narrow for the safeguarding that we need to undertake.
Smart Meters Bill
Lord Harrington of Watford ExcerptsTuesday 24th October 2017
(7 years, 1 month ago)
Commons ChamberRead Full debate Smart Meters Act 2018 View all Smart Meters Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
Earlier this year when I decided I was going to switch my supplier, I found myself on my hands and knees with a torch and a duster, clearing cobwebs away. That is no way to go on. The purpose of this Bill is to give us all a way of changing supplier and put us in control of our destiny when it comes to our power.
I thank hon. Members from both sides of the House for their contributions, none of which I take lightly. I look forward to the Bill Committee, and I will be delighted when we have agreed with the Opposition the time needed to go through the Bill in great detail. I will not go into as much detail in this speech as I will do in the Committee, because I am delighted that everything has been agreed. I remind Members on both sides of the House that the Bill is not about money saving, modernisation for the sake of it or replacing old kit; it is the platform for a new smart and flexible energy system that gives control to all customers—vulnerable customers and others alike. That is absolutely necessary, which is why we are doing it.
Of all the points made by hon. Members on both sides of the House, I particularly want to clear up one first made by my hon. Friend the Member for Rugby (Mark Pawsey). The SMETS 1 and SMETS 2 meters have been much discussed, and I can confirm that a software programme is being developed that will allow full conversion between the two. That will be done remotely, so customers who have had the meters installed will not have to worry about people coming to their house and changing them again. That conversion programme will start within a year.
Richard Harrington
I am very sorry, but there is not time. The smart meter programme is the foundation of this whole system of freedom. It is one of the most significant engineering projects that has been undertaken in our country, and I am delighted to report that about 370,000 smart meters are being installed each month. I have met the suppliers, and they have all made arrangements to double or triple that in the next few months. I thank hon. Members on both sides of the House for their contributions today, and I look forward to the agreed scrutiny of this Bill. I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Smart Meters Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Smart Meters Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 30 November.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Proceedings on Consideration and up to and including Third Reading
(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.
Other proceedings
(7) Any other proceedings on the Bill may be programmed.—(Rebecca Harris.)
Draft Electricity Capacity (Amendment) Regulations 2017
Lord Harrington of Watford Excerpts(7 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
I beg to move,
That the Committee has considered the draft Electricity Capacity (Amendment) Regulations 2017.
It is a great pleasure to serve under your chairmanship, Mr Davies, and to see the shadow Minister, the hon. Member for Southampton, Test. The Opposition Whip and I were texting him, but I knew he would be here. I am sure I will face a reasoned and thought-out speech, which we Ministers do not like, but which will be a pleasure to hear in his case.
The draft regulations will amend two secondary legislation packages for the capacity market. The powers to make and implement the secondary legislation are found in the Energy Act 2013, which received Royal Assent in December 2013 with, I am pleased to say, cross-party support following scrutiny in the House and the other place. I will explain the changes in detail, but first, for hon. Members who are less familiar with the capacity market, I will explain it in terms as I understand them.
The capacity market is an insurance policy to ensure that the necessary supply is always available. The money is used to ensure that power is available as demand from the grid goes up and down, perhaps because a particularly interesting horse race or an episode of “EastEnders” is on the television, or more typically because of a good cold snap—or a bad cold snap, depending on how one looks at it. In many cases, suppliers are paid when supply is not needed, but the market has allowed us to have a consistent and readily available source of capacity for all contingencies. That main purpose received cross-party support. It is for Members on both sides and for the Government to secure that capacity, and they have done it pretty well.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
This stuff will be quite difficult to digest not just for the Committee but for our constituents, who have to pay a hell of a lot of money for their electricity. I hope the Minister will go into some detail about risk finance schemes and applicant credit cover, because I cannot go back to my constituents in Huddersfield, who are highly intelligent people, without an explanation.
Richard Harrington
I agree with the hon. Gentleman’s analysis of the good burghers of Huddersfield, because I come from Leeds—
Richard Harrington
I could not possibly comment, but we are all Yorkshiremen, including you, Mr Davies—not that that would affect your chairing of the Committee.
From memory, the actual cost of the capacity for our constituents is about £2 a year on their bill. I am not making light of it, but for what we get from it as a country and for what suppliers get for their customers, I think it is good value for money. There have been power cuts in other countries—even in quite developed places such as California and Australia—where they did not have such a sophisticated system, so there is a risk. When I said it was for hon. Members on both sides to ensure capacity, I did not mean just members of this Committee; the whole of Parliament in 2013 realised that this was a good thing to do.
I will go into more detail, and if the hon. Gentleman then feels that I have not answered his questions I will be able to do so—it will be nearer lunch time, and he may feel that I have covered most of it.
Sir Oliver Heald (North East Hertfordshire) (Con)
Does the Minister agree that it is one of the Government’s duties to ensure security for citizens? Energy security is a vital part of that, and if it costs £2, it is probably £2 well spent.
Richard Harrington
I agree, as I think most other people would, because generally the system works. To use the layman’s language I always use—being a Yorkshireman, I try to simplify things in a way so that I understand them; I cannot claim to have the technical expertise of the shadow Minister on this—the regulations propose a tweaking of something that works, rather than radical and complete change. I will make some progress, and if hon. Members would like to ask questions or intervene, they should obviously do so, subject to your largesse, Mr Davies.
The five changes in the draft instrument are essentially technical. They will improve fairness, ensure the competitiveness of auctions and provide important clarifications to scheme operations. The Department held a fairly lengthy public consultation on the changes and the majority of respondents agreed with them—more than 75%. I agree that it is important that people know how much the market costs, but if we did not have a capacity market and every individual had the choice of paying £2 or x pounds to make sure they do not have blackout periods, I am sure that most people would probably pay it anyway. It is not like that, but thinking about it in terms of what it means to customers and our constituents is right, as the hon. Member for Huddersfield mentioned. All the technical stuff we are here to discuss does not matter if in the end it boils down to continuity of supply at that price. He was absolutely right to mention that, as was my right hon. and learned Friend the Member for North East Hertfordshire.
We have the capacity market to ensure—as is the Government’s job—that we always have sufficient electricity capacity in Britain for the winter periods and for periods of exceptional demand. We need to give generators the confidence that they will receive the revenues they need to maintain, upgrade and refurbish their existing plants, and to finance and build new plants to come on stream as and when existing assets retire. They have to think ahead, and knowing that they are going to get these funds is part of their planning.
The capacity market also ensures that those who are able to shift demand for electricity away from periods of greater scarcity, without detriment to themselves and the wider economy, are incentivised to do so. It does so by offering capacity providers who are successful in these competitive auctions—there are two types; some bid for one year ahead and some for four years ahead—a steady, predictable revenue stream on which they can base their future investments. In return for those capacity payments, providers must meet their obligations to deliver electricity at times of system stress, or not deliver it if it is not needed, or face penalties.
Mr Sheerman
On the longer four-year period, we have a rapidly changing energy market, and many of us are delighted with the diversity of more sustainable energy providers coming on and providing a lot of our energy needs. Will the four-year period allow us to have that more flexible, diverse energy market?
Richard Harrington
That is a valid question, as I would expect from the hon. Gentleman. Having both four years and one year takes care of that. Four years is needed because of the investment cycle; suppliers have to plan and have some consistency. Things change a lot, and there is a lot of uncertainty when predicting four years ahead.
Richard Harrington
I believe that is extremely unlikely, but we all have our views on that subject; certainly, if this measure is voted down today, I am sure the Prime Minister will have no choice. In all seriousness, the hon. Gentleman makes a valid point, but if it were left only to the shorter, one-year cycle, I cannot see people taking the kind of investment decisions needed. Of course, it is arguable—some might say they want 10 years. When the rest of the electricity supply market—not the capacity market but the normal supply market—starts to build huge wind turbine farms and gets planning permission to build nuclear power stations and all those other things, those are all judged on 20 to 30-year cycles, so it is difficult.
The officials think that four years and one year are right, but it is always up for review, and if the market changed completely we would want the flexibility to be able to act. For the moment, it works. It sounds arrogant for Government to say it, but I think most people think the capacity market is working. Self-evidently, it is working.
Richard Harrington
I notice with fear and trepidation the shadow Minister shaking his head. I will try to make some progress, then keep quiet while he makes his comments, and then I will do my best to counter them.
The capacity market is working and there is fierce competition. We have the required capacity at prices significantly lower than many detractors of the scheme expected. I hope the shadow Minister agrees that it is working from a competitive point of view. As the hon. Member for Huddersfield said, that is good for consumers because it has translated to lower costs on bills. Whatever one’s view of bills generally, this is not a big chunk of bills.
The capacity market is driving investment in new and flexible capacity. The most recent four-years-ahead auction secured more than 3.4 GW of new build generating capacity, including combined-cycle gas turbines, open-cycle gas turbines, small flexible engines and battery storage, as well as 1.4 GW of demand-side response. The clear message from industry and investors is that the mechanism retains their confidence and is the best available approach for ensuring our long-term security of supply.
Industry and investors stress that regulatory stability is crucial, but also that the scheme, which is operating in a rapidly changing environment, must be reviewed regularly to ensure it remains fit for purpose. That goes back to the four year, one year point. The changes set out in the instrument are the latest in a series of amendments that ensure the scheme is kept relevant and workable. If the Committee bears with me, I will briefly expand on the amendments made by the draft regulations.
First, the instrument amends the method by which the costs of the capacity market are recouped from suppliers. It was felt that the current supplier charge arrangements potentially gave an unfair advantage to embedded generators—the smaller generators connected to the lower voltage distribution network—and could distort the outcome of the capacity auctions. I had better explain what that means. That arises because, under the current arrangements, suppliers are charged according to their share of demand at peak times, measured by the demand they place on the transmission grid. That is called the net demand.
By contracting with embedded generators to run over winter peaks, some suppliers are able to reduce their net demand and therefore their share of capacity market costs, which means others have to pay more. With some of the savings inevitably being passed on to the embedded generators, such arrangements unintentionally risk giving them a double payment for what is essentially only one contribution to security of supply. Nobody is operating illegally, but it is basically a loophole that needs shutting off. As my great hero Basil Fawlty said in another context,
“that particular avenue of pleasure has been closed off.”
We need to shut that off.
The instrument addresses the issue by amending the basis of the capacity market supplier charge and settlement cost levy from net to gross demand. That is a fairer way of sharing costs between suppliers. It ensures that suppliers’ costs reflect their overall demand and helps to ensure a level playing field between different generators in the auction. That is the first of what I hope are non-contentious amendments—although, looking at my shadow, perhaps that is a victory of hope over logic.
Secondly—I will be as quick I can—the instrument seeks to prevent new and refurbishing plants from being overcompensated within the capacity market when they are also in receipt of aid through risk finance schemes such as the enterprise investment scheme, the seed enterprise investment scheme and venture capital trusts. We do not want to have a double subsidy, whereby plants can get this payment and tax breaks as well, because that would distort the outcome of capacity auctions.
To ensure fair competition and value for money for consumers, the regulations assert that where a capacity provider has accessed investment through one of these risk finance schemes to provide or help to fund their capital expenditure, their capacity payments must be reduced until that has been offset. They can switch systems, but only after they have used up the original tax breaks. These offsetting arrangements ensure that the total amount of aid is capped at the amount awarded in the capacity market auction.
Thirdly, the regulations will remove an inconsistency between how demand-side response capacity and other capacity types are de-rated. For hon. Members who are less familiar with de-rating than we are in the Department, I should explain that it is the process by which the volume of a provider’s capacity is adjusted to reflect the reliability of the technologies being used. Unlike other participants, demand-side response providers can nominate a lower amount of capacity to bid in an auction than the capacity that they estimated at the pre-qualification stage, but that nominated amount is not currently subject to de-rating. The regulations will address that inconsistency by ensuring that the nominated value is de-rated, thus improving the overall reliability of the capacity procured and enabling us to know more exactly what we are getting. Again, it is about closing a loophole.
Fourthly, the regulations clarify the requirement for capacity market participants to maintain credit cover until they have fully discharged all the requirements against which it has been lodged. Additionally, they put it beyond doubt that a party’s credit cover will not be drawn down where a termination fee is due, unless the termination fee is unpaid.
Finally, the regulations will amend the name, though not the substance, of the capacity market warning—the statutory notification that has to be issued under the scheme in specific circumstances. We believe that “capacity market notice” will better reflect the nature of the notification and be clearer for all participants.
My Department published two consultations on our proposals in September and October 2016 and received 38 responses. Significant support was expressed for the majority of the proposals. I look forward to hearing what hon. Members have to say about them.
Richard Harrington
I am extremely grateful to the shadow Minister for his speech. He has provided food for thought on a lot of points. I thank him for his support for most of these technical tweaks or arrangements. I greatly appreciate it.
I have listened carefully to the hon. Gentleman’s views on the capacity market. You, Mr Davies, and others may get rather impatient if I go into great detail about the market itself, but I am happy to meet the hon. Member for Southampton, Test—I think I am seeing him on Monday anyway—to talk about it in the detail it deserves, rather than occupying the Committee now. If it is acceptable, I will stick to talking about the technical arrangements themselves.
The hon. Gentleman raised some specific issues that I should mention to get them on the record, if Members will bear with me. I did not actually mention the 15-year agreement in my opening remarks, but what he said was correct. The capacity market selects plant at auction simply by price. It is a safe assumption that an existing plant, because it has probably written off its investment, will be cheaper than a new plant, which faces significant up-front investment costs.
Some of the nuclear plants that the hon. Gentleman referred to are near the end of their life. They could be turned off, and in fact that was the intention with many of them, subject to the great safety requirements necessary. The operator, EDF, is extending the life of those plants, but for a short period. He is right about turn-on and turn-off—it cannot be done instantly—but the plants can be kept going within a safe limit for comparatively short periods, compared with their full life.
The majority of resources are able to access only one-year agreements. An exception was made for new and refurbished plant because investors required more certainty to invest in large capital projects. Where not necessary, longer-term agreements risk needlessly locking consumers into paying a long-term price. That goes against the valid point that was made about things moving quickly in the energy market. What seems like a good deal in year one could seem absolutely ridiculous in four years. The Government, as usual, have to try to strike a balance. The hon. Gentleman may feel and is perfectly entitled to feel that the balance has not been struck properly, and I look forward to discussing that with him.
The capacity market is technology-neutral. The types of energy or technology are not decided in advance, because all types are eligible to participate. That is correct, and it includes coal and other fossil fuels. Broadly, those get Government subsidies in the same way so as to comply with state aid rules. Value for money is very important for energy. For those less familiar with the energy market, there are other auctions, such as contracts for difference and other systems. We could discuss those at length. Members will be delighted to hear that I will not do that now, but those systems take care of the point that the hon. Gentleman raised.
Should we pay to keep new and existing plant going through the capacity market? The Government think there are good reasons to do so, but there are arguments to the contrary. I fully accept the hon. Gentleman’s point that the Government have a popular policy—popular in most parts of the country—of removing fossil fuels as soon as possible. We are doing that, as hon. Members know, but it does means that there might be some fossil fuel use in the short term, because fossil fuels can be turned on and off quite easily. I suppose that gas is the easiest to turn on and off, with coal just behind, but that is nothing to do with the Government’s strategy, which we are sticking to, of removing fossil fuels in the next few years. It is a well publicised strategy, and the owners of the power stations know about it and are on track for it.
Rather than going into more detail now, I would love to debate the more technical points that the hon. Gentleman has made with him later. Having worn the patience of the Committee significantly by going into more detail than some Members on both sides might have wanted, I am happy to speak to anybody individually. Obviously, I have regular meetings with the shadow Minister and the Scottish nationalist party spokesman, the hon. Member for Inverness, Nairn, Badenoch and Strathspey, and if they would like me to put this matter at the top of the agenda, I will happily do so, in a meeting with officials if they would prefer to go into those details.
Dr Whitehead
Before the Minister resumes his seat, would he say for the record whether a further view will be taken on the question of embedded generation and gross payments and, secondly, whether the review of the capacity market might be expedited over the coming period?
Richard Harrington
I listened carefully to the hon. Gentleman’s points on that subject. He asked me to give some thought to those options before we decided that we were not going to pursue them. I am giving thought to them both, and I look forward to discussing them with him.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Electricity Capacity (Amendment) Regulations 2017.
Nuclear Safeguards Bill
Lord Harrington of Watford ExcerptsMonday 16th October 2017
(7 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
I apologise, Mr Speaker, because I nearly called you Madam Deputy Speaker. I turned around and you were there, and I feel a lot better knowing that you are at the helm.
I have listened carefully to the arguments in this debate about our country’s future nuclear safeguards regime. I thank Members from all parties for their contributions, but particularly my right hon. and hon. Friends, so many of whom spoke. I am encouraged by the general consensus in the House on one fundamental point: the UK nuclear industry and nuclear research community—both of which have an excellent global reputation—are key assets and must be supported. I promise that we will do nothing to endanger that.
Regardless of where Members stand on membership, associate membership, transition or departure from Euratom—people have used various pronunciations today—I hope we can all agree that it is sensible and prudent to take the powers contained in the Bill, as they are necessary to set up our domestic nuclear safeguards regime. However, there has been a lot of scaremongering—that word has been used. I hope that Opposition Members did not intend to frighten people unnecessarily with certain comments, because I would have to call that “Project Fear”.
I can state categorically that, first, the Bill is nothing to do with medical isotopes and fissile materials are excluded; secondly, we are not going to crash out with no arrangements; and thirdly, important though nuclear safety is, it is nothing to do with nuclear safeguards. The Bill is the Nuclear Safeguards Bill. We have consistently repeated that, but unfortunately—[Interruption.] I was going to say that unfortunately the shadow Minister is nodding, but I know he is nodding because he knows. Other Members, particularly those on the SNP Benches, have confused the two.
On the triggering of article 50—this has been mentioned several times—the European Commission stated very clearly to the European Parliament:
“It is recalled that in accordance with Article 106(a) of the Treaty establishing the European Atomic Energy Community, Article 50 of the Treaty on European Union applies also to the European Atomic Energy Community.”
Given that article 50 has been triggered and that the European Commission has said that that was the right decision, we believe that it is absolutely essential that we have a constructive and co-operative relationship with our European partners.
Richard Harrington
I would love to give way to the Chair of the BEIS Select Committee, but I have very little time. I do hope that she will understand—[Interruption.] Oh, all right.
Rachel Reeves
What a gentleman! Thank you very much.
The Minister is setting out two alternatives: the ONR taking responsibility or our staying in Euratom. However, there is a third way forward—a third way—which is to seek a transition period in which we remain in Euratom and then go for some sort of associate membership of Euratom. Are the Government exploring that opportunity, which would best serve our industry and those jobs?
Richard Harrington
Well, I do know that the Chair of the Select Committee is a well-known Blairite, but actually to quote Mr Blair is very impressive. We leave Euratom at the same time as we leave the European Union.
Richard Harrington
I really must make some progress.
As we have heard, there are other issues of great importance, such as access to skilled workers and continued R and D collaboration, on which we are focused as we seek to establish our new relationship with Europe’s nuclear community. The shadow Minister, the hon. Member for Sheffield Central (Paul Blomfield), asked me why those points are not included in the Bill. It was a fair question, but let me tell him that they are part of Euratom’s activities that are subject to negotiation but do not require legislation.
I was not surprised to hear all of the concerns expressed today—I would be astonished if the House did not have concerns and questions given the novel circumstances that we now find ourselves in. No country has ever left the EU or Euratom before. Let me explain for the avoidance of doubt that this is not an alternative. This is not because we do not want to maintain our successful civil nuclear co-operation with Euratom. We must set our own nuclear safeguards regime. It would be irresponsible for us not to do so. We are using the body that already regulates nuclear security and safety—the ONR. The shadow Minister said that it has only eight suitable employees at the moment. That is why we are here today—we need to ensure that the Bill has all the provisions both in terms of IT and infrastructure, and we need to recruit all the necessary people. That is why we are taking the powers, why they are so important and why the Bill is so vital and deserves support from across the House. We want to have—and we will have—a domestic nuclear safeguards regime that will enable the UK to meet international safeguards and nuclear non-proliferation standards after we withdraw from Euratom.
The intention is for the new domestic regime to exceed the standard that the international community would expect from the UK as a member of the IAEA. As my right hon. Friend the Secretary of State pointed out, we are aiming to establish a robust regime as comprehensive as that currently provided by Euratom.
Some hon. Members have asked why the Bill has been introduced and brought to its Second Reading so quickly—in fact, within a few days. That is because we know how important it is to have a nuclear safeguards regime for the UK. The ONR is key to that, and it needs the time to carry out both the recruitment and the planning. The international community, which we deal with all the time, wants to know that the safeguards regime will be established well before March 2019. I wish to thank EDF Energy, which is constructing our new Hinkley Point nuclear power station, and all of the other people in the nuclear industry, whom I briefed just before introducing this Bill last week, for their support in what we are doing here. The Bill is absolutely critical.
The Opposition have raised some issues about the powers in the Bill and the way in which we have approached the measures. The shadow Secretary of State said that there were too many delegated powers, Henry VIII provisions and all those sorts of thing. In fact, there is one Henry VIII power, which is limited and necessary because it enables us to alter references to the United Kingdom’s agreements with the IAEA. We would not be able to license the inspectors, for example, without concluding these negotiations, which are currently trilateral between the UK, Euratom and the agency.
The bulk of discussions with the European Union are ongoing. We are exploring a number of options for smooth transition from the currently regime to a domestic one. The negotiations are going well. We have found a spirit of co-operation because the officials in Europe and ourselves have a big mutuality of interests, but we have to plan just in case suitable arrangements are not worked out. Shared interests are important and we know that we will provide the best possible basis for continued close co-operation with Euratom, although we cannot say exactly how that will be. It will be similar when we negotiate our bilateral nuclear co-operation agreements, about which my right hon. Friend the Member for Wantage (Mr Vaizey) made a rather excellent speech. He actually thanked me for harassing him in the Tea Room, which I will now always try to do. He mentioned the importance of and concerns about the bilateral nuclear co-operation agreements, which are already in place with several countries and will continue. My officials have been to the other countries concerned and I am certain that talks will progress well.
I am happy to meet the representative from the Royal College of Radiologists to discuss the concerns of the hon. Member for Oxford West and Abingdon (Layla Moran). I had hoped that I had reassured her, but I perfectly understand her point and am happy to meet the relevant people. My hon. Friend the Member for Copeland (Trudy Harrison) made an excellent speech. The ONR has already started building processes and systems and recruiting inspectors, and the essential funding will be in place to do that.
I have heard many considered views from both sides of the House, but I hope that the House will unite in recognition of the special contribution of the nuclear industry. The Opposition have said that they will not vote against Second Reading, which is responsible, but I look forward to a lengthy and constructive discussion in Committee and on Report. I can tell from the polite smiles from the Opposition Front Benchers that they will be raring to go and I welcome that. Quite apart from in Committee, I am happy to sit down and discuss the Bill with anybody on an individual basis. I am passionate about it because we really need this domestic nuclear safeguards regime, regulated by the regulator here. It should be as robust and comprehensive as that provided by Euratom or by any international operation. I am sorry that I have not been able to take every intervention, but my door is always open. I very much look forward to the remaining stages of the Bill.
Question put and agreed to.
Bill accordingly read a Second time.
Oral Answers to Questions
Lord Harrington of Watford Excerpts(7 years, 2 months ago)
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Maria Eagle (Garston and Halewood) (Lab)
8. What steps he is taking to ensure the security of the UK’s energy supply after the UK leaves the EU.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
The British energy market is one of the most liquid and developed markets in the world, and it provides security through diversity of supply. We enjoy cordial links with the EU in this field and expect that to continue after EU exit.
Maria Eagle
Does the Minister accept that it is vital that we stay in the European internal energy market after Brexit in order to facilitate tariff-free trading of gas and electricity across borders, which we currently have? I know that the Department has been busy trying to find out why 20% of its staff have left without telling it why, according to a report in The Times, but when will the Government reply to the report by the Business, Energy and Industrial Strategy Committee, and when will they announce policy options in this crucial area?
Richard Harrington
As the hon. Lady will be aware, the Government are considering all aspects of their future relationship with the EU, including the arrangements for trading energy. Our priority is maintaining affordable, clean and secure energy supplies for businesses and households.
Colin Clark (Gordon) (Con)
23. Two thirds of our energy will still come from oil and gas in 2035, so will the Minister join me in congratulating the economic report from Oil & Gas UK highlighting the renewed vote of confidence in the North sea shelf? Will he also make sure that the oil industry is at the heart of the Government’s industrial strategy?
Richard Harrington
I fully agree with my hon. Friend about the importance of the oil and gas industry, which supports more than 300,000 highly skilled jobs in regional centres of excellence across the UK. I understand from my recent visit to Aberdeen, where I was joined by him, that the sector is working on a compelling proposal for a deal, building on the unprecedented support we have already given to the industry, and I look forward to receiving it in the near future.
Alan Brown (Kilmarnock and Loudoun) (SNP)
20. The UK is already a net importer of electricity. Post-Brexit, for the security of energy, the UK needs to maintain access to interconnectors and to remain part of the integrated energy market, as this provides tariff-free access to gas and electricity. Will the Minister confirm whether the UK will remain in the internal energy market post-Brexit?
Richard Harrington
I absolutely can confirm that maximum continuity of supply is very important to us. We have an excellent relationship with the EU on this, and it is the Government’s responsibility to make sure that it continues. I am sure that that will satisfy the hon. Gentleman.
James Heappey (Wells) (Con)
It looks like membership of the internal energy market is not connected to single market membership but that membership of a couple of key industry and regulatory bodies, such as the Agency for the Co-operation of Energy Regulators and European Network Transmission Systems Operators and Council of European Energy Regulators, comes as a prerequisite. Has the Minister had any discussions with those organisations to see whether the UK can be a member when not a member of the EU?
Richard Harrington
As I am sure my hon. Friend is aware from his former membership of the then Energy and Climate Change Select Committee, we are talking all the time to these organisations, and our priority is to maintain the maximum continuity of supply that everyone in this country has been used to and will continue to enjoy.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Until now, the Government have put nuclear at the heart of their energy strategy, but their decision to leave Euratom puts at risk the security of markets, businesses and workers in the sector. Could this mean that the Secretary of State is finally wavering over his support for the over-budget and very late Hinkley Point?
Richard Harrington
I can confirm that the Secretary of State is very much in favour of the arrangements at Hinkley Point and that the Government are in favour of a mix of energy that includes nuclear and all its other sources. This has been very successful and ensured energy security and the continuity of supply that everybody enjoys.
Drew Hendry
The Minister will be aware that energy from nuclear plants will cost £92.50 per megawatt hour but that the new strike price for offshore wind is only £57.50—nearly half. Is he happy for people to pay higher bills for his Government’s nuclear obsession?
Richard Harrington
I thank the hon. Gentleman for effectively congratulating the Government on the results of the recent auction for energy prices—I, too, was delighted that the cost of offshore wind effectively dropped by half. I also remind him, however, that energy has to remain a mix. Nuclear is part of that mix, and as with all mixes aimed at maintaining continuity of supply, some are more expensive and some are cheaper. What matters is the average price paid, and I think that Hinkley will turn out to be a really good deal for the taxpayer, as it involves no public funds upfront, which is very unusual for this kind of massive development.
Dr Alan Whitehead (Southampton, Test) (Lab)
I am a little concerned by the Minister’s reply to my hon. Friend the Member for Garston and Halewood (Maria Eagle). The Secretary of State specifically told the BEIS Select Committee in the spring that it was very much in Britain’s energy security interest to continue to participate in the internal energy market. Does the Minister agree with his own Secretary of State on this matter? If so, what action has he been taking to ensure that we can participate in that market after Brexit?
Richard Harrington
It is the job of the hon. Gentleman—the Opposition spokesman—to be concerned about everything that the Minister says. I fully accept that. In this particular case, however, I can but reiterate that maintaining continuity of supply is our first priority. That is what my right hon. Friend the Secretary of State says we must do, and that is what we shall do.
John Stevenson (Carlisle) (Con)
As the Minister knows, nuclear is an important industry in Cumbria. As well as being a security issue, energy is an industrial issue. Can the Minister confirm that a nuclear sector deal is one of the Government’s main priorities?
Richard Harrington
Yes, I can. Having met Lord Hutton and other members of the Nuclear Industry Association, I am delighted to say that the sector deal is at an advanced stage, and we hope it will be one of the first that we are able to announce.
Jo Swinson (East Dunbartonshire) (LD)
9. What steps he is taking to encourage long-term decision-making in corporate governance.
Bill Grant (Ayr, Carrick and Cumnock) (Con)
T4. Although wind turbines play an important part in the nation’s energy mix, it is alleged that the quality of life and health of some rural residents is adversely affected by noise emissions. Are the current noise limits and recording methodologies sufficient—I am referring to low-frequency noise and infrasound—or should the methodologies be reviewed?
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
Interestingly, the overall balance of the existing peer-reviewed studies suggests that low-frequency sound and infrasound produced by wind turbines is not likely to affect human health significantly. I do, however, accept my hon. Friend’s premise that the potential impact on human health of these turbines is a topical issue, so it will attract further study, both in the UK and abroad, and we are monitoring that carefully.
Grahame Morris (Easington) (Lab)
T9. Will the Minister review the current arrangements for the distribution of the mineworkers pension surplus? I am sure it was never envisaged that the surplus would be so high, so is it not time to re-examine that, and seek to give more money to pensioners and beneficiaries?
Martin Vickers (Cleethorpes) (Con)
T7. The results of yesterday’s renewables sector auction were very beneficial for my constituency. Will the Minister outline what further developments he has in mind to encourage and support the construction of turbines in the UK? How will we ensure, particularly in northern Lincolnshire, that the skills are there to meet the demands?
Richard Harrington
I congratulate my hon. Friend on the news about the funding for the offshore wind farm in his constituency. I assure him that it is our ambition to have a strong industrialised supply chain. We have had great progress in attracting investment—for example, the UK’s first offshore tower manufacturing facility in Scotland is providing the UK’s first towers. I am pleased to say that we are working well with the sector to deliver a sustainable UK-based supply chain under the industrial strategy.
Euratom Membership
Lord Harrington of Watford Excerpts(7 years, 4 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
My apprehension before this debate was not about the content of it, which has been first class and very constructive, but about having to pronounce in front of you, Mr Gray, the constituency of the hon. Member for Ynys Môn (Albert Owen), who introduced it. I thank him and other right hon. and hon. Members from both sides of the House for their constructive comments.
The hon. Gentleman said that he wants constructive comments and debate, he wants certainty and he wants world-class arrangements for the future of the nuclear industry in the UK and our relationship with other countries. I absolutely agree. His suggestion for a working group was very interesting. My door is certainly always open to right hon. and hon. Members on both sides of the House, either collectively or individually. I have taken that approach in every job I have had and I will be pleased to continue with it—particularly in this case, since you have had to curtail Members’ contributions today because of time, Mr Gray. You did it very well, but I will not have as much time to answer them as I would have liked.
Liz Saville Roberts
It is good to hear that the Minister’s door is always open. I have already contacted him on matters relating to Trawsfynydd and have been refused a meeting. Would it be possible to arrange a meeting now?
Richard Harrington
I have never refused a meeting with anybody on any subject that I have ever been involved in, and I certainly have no intention of doing so to the hon. Lady. I really must make progress, but I am happy to arrange that meeting as soon as I possibly can.
The Government are determined that the nuclear industry in this country should continue to flourish in trade, regulation and innovative nuclear research. We are determined to have a constructive, collaborative relationship with Euratom. The UK is a great supporter of it and will continue to be so. There have recently been some alarmist stories in the press about what leaving Euratom might mean for safety and for health, but I must make it clear that we remain committed to the highest standards of nuclear safety and support for the industry. We will continue to apply international standards on nuclear safeguards.
We do not believe that leaving Euratom will have any adverse effect on the supply of medical radioisotopes. Contrary to what has been in the press, they are not classed as special fissile material and are not subject to nuclear safeguards, so they are not part of the nuclear non-proliferation treaty, which is the driver of our nuclear safeguards regime. They are covered by the Euratom treaty, as the hon. Member for Oxford West and Abingdon (Layla Moran) said, but Euratom places no restriction on the export of medical isotopes outside the EU. After leaving Euratom, our ability to access medical isotopes produced in Europe will not be affected.
Since time is pressing, I will say just a little more about safeguards, a subject that hon. Members are rightly concerned about. It is clear that we need continuity; we must avoid any break in our safeguards regime. We currently meet our safeguards standards through our membership of Euratom. The Government’s aim is clear: we want to maintain our mutually successful civil nuclear co-operation with Euratom. We can do so while establishing our own nuclear safeguards regime, using the body that already regulates nuclear security and safety: the Office for Nuclear Regulation. In order to do so, we need legislation, which is why the Queen’s Speech on 21 June outlined our intention to take powers to set up a domestic nuclear safeguards regime in partnership with the ONR to enable us to meet international standards and nuclear non-proliferation obligations. Regardless of where hon. Members stand on the question of membership, associate membership, transition or departure from Euratom, I hope we can all agree that it is sensible and prudent to take such powers. I do not think anyone could disagree with that.
Richard Harrington
I really cannot, but only because of time; I normally would. Instead, let me say a little about what my Department has been doing to advance the UK’s interests.
We are pleased that engagement with the EU is about to begin in earnest. EU directives note that a suitable agreement will need to be reached in relation to the ownership of special fissile materials and safeguards equipment in the UK that are currently Euratom’s property—I note the contribution from my hon. Friend the Member for Copeland (Trudy Harrison) on that issue. The outcome of such an agreement, like the rest of the UK’s future relationship with Euratom, will be subject to negotiations with the EU and Euratom, throughout which our primary aim will be to maintain our mutually successful civil nuclear co-operation with Euratom and the rest of the world. I reiterate that we are strong supporters of Euratom, and that is not going to change. The first phase of negotiations will commence next week, on 17 July, following the publication of the European Commission’s position paper on Euratom. Our own position paper will be published imminently.
Albert Owen
Will that be before the recess? Will it be a written statement, or will it come to the House?
Richard Harrington
Imminently means imminently. [Interruption.]
That was quite a good line, actually.
We are ready and confident that we can find common ground as officials enter the first phase of negotiations, because there is a clear mutual interest in maintaining close and effective co-operation.
We are also keen to ensure minimal disruption to civil nuclear trade and co-operation with non-European partners. To that end, we are negotiating with the US, Canada, Australia and Japan so that we have the appropriate co-operation agreements in place. I reinforce that point because hon. Members may have read or heard that everything has to be done in a painfully long sequence that takes years and years. I can tell them not only that it is possible to do these things in parallel, but that we are doing so.
We will avoid the cliff edge feared by the hon. Member for Ynys Môn. We are preparing the domestic Nuclear Safeguards Bill, we are opening negotiations with the EU, we are talking to third countries about bilateral agreements, and we are talking to the International Atomic Energy Agency. Nobody doubts the UK’s credentials as a responsible nuclear state, and everyone in the UK and elsewhere is keen to see that continue. The UK has been in the forefront of nuclear non-proliferation for 60 years. I have no doubt that we can bring these discussions to a satisfactory conclusion.
I am sure hon. Members will be quick to remind me that I have not yet mentioned nuclear research and development. I will have to cover this quickly, but I want them to know that it is another strand of work that we are taking seriously and acting on swiftly. My right hon. Friend the Secretary of State announced on 27 June that we would underwrite the UK’s share of the EU joint European torus fusion project. We are totally committed to R and D collaboration, in particular to Oxfordshire’s world-leading Culham Centre for Fusion Energy, which my hon. Friend the Member for Henley (John Howell) mentioned. The Secretary of State described JET in his announcement as a “prized facility”. I assure all hon. Members that this is a top priority for us.
There is no question of lack of support for Euratom. There has been discussion today of whether we need to leave it at all. There was clear advice at the time about the unique nature of the legal relationship between the separate treaties and about their inseparability. My right hon. Friend the Secretary of State was asked by the Business, Energy and Industrial Strategy Committee whether it would be possible to leave the EU but remain in Euratom. He said:
“Essentially, the interleaving of various aspects of the treaties in practice could have meant that it was defective. The article 50 notification would have been defective had we not served it for Euratom as well. Therefore, we served it, but at the outset we said that we want to have continuity of co-operation and collaboration, and that is what we intend to achieve.”
Renewable Energy Generation: Island Communities
Lord Harrington of Watford Excerpts(7 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
Sir David, it is as ever a great pleasure to serve under your constituency—under your chairmanship; I am sure your constituents feel the same about your activities on constituency days. In my first Westminster Hall debate, you were a mere Mr Amess. I am delighted you are here.
The right hon. Member for Orkney and Shetland (Mr Carmichael)—I remember when he was my right hon. Friend—is a gentleman in the true sense. The way he has conducted the debate, on a subject in which he has a lot of interest and expertise, and the way he speaks up for renewable energy generation in island communities, is truly commendable. As he is fully aware, he has me at a little disadvantage, as I have been in the job for precisely three weeks. I am not yet the expert he is, but I would like to make it clear to him and other Members that I have listened carefully to every word and intend to set out the Government’s position in what I hope he will accept is the right way at this stage.
We know that the islands have long been a hotbed for innovations in renewable energy generation. The Burgar Hill wind turbine site in Orkney, for example, hosted some of the most innovative experimental turbines in the ’80s and early ’90s. As has been said, the European Marine Energy Centre, which is also located on Orkney in the right hon. Gentleman’s constituency, has since its creation more than 10 years ago maintained its position as the world’s leading wave and tidal stream testing facility. The fact that it has hosted the prototypes for almost all the world’s leading devices, including the Atlantis turbines deployed in the Pentland Firth last summer, is a testament to its premier global status.
I also understand that the grid infrastructure necessary to support the proposed wind farms on the remote islands of Scotland could, if built, act as a springboard for further development of our wave and tidal sector and give this emerging industry a further boost towards commercialisation, helping to maintain the UK’s leading position in these technologies. The challenge for the wave and tidal sector will be to innovate and to reduce its costs sufficiently that it can compete with other renewable technologies. Those costs have fallen significantly during the past few years, and we fully expect that downward trajectory to continue. This is now a very competitive market, and developers will need to respond to that challenge; the sector can no longer take high subsidies for granted.
As the right hon. Gentleman is aware, my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy visited the Western Isles this year to learn about this issue at first hand. The hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) kindly hosted the Secretary of State’s visit, and I shall take this opportunity to thank him again for what my right hon. Friend described as a productive and informative trip. I know that it will not help or please the right hon. Gentleman unless some action is taken, as he has pointed out to me.
The issues are clear, and we know what the gains are. I shall go through the issues in no particular order. The first is ensuring healthy competition to support the best projects and get the best value for the consumer, while recognising that it may take a certain volume of projects to justify building the all-important new island-to-mainland links. I am aware that those are a vital piece of the overall picture, with their own timeframes and set of complex decisions, so there are really two areas of decision.
The second issue, as the Secretary of State made clear, is ensuring that local communities, which have been enthusiastic about this industry, receive appropriate benefits for hosting these projects.
Mr Bob Seely (Isle of Wight) (Con)
Excuse me, Sir David, if I do not quite get some of the etiquette right.
I thank my hon. Friend the Minister for what he has said about the importance of the popularity of tidal and other energy-efficient projects. It is right to say that islanders can play an important role, but does he agree that energy policies should take into account other policies such as regard for the landscape? Wind turbines were very unpopular with many of my constituents, because of the damage that they did to the landscape in areas of outstanding natural beauty, but solar panels are more popular. Should wave and tidal power take off, there would be, again, an aesthetic element as well. It is wonderful to have these things, but that should not be at the expense of a tourism economy in a place such as the Isle of Wight.
Richard Harrington
I thank my hon. Friend for his intervention. Time does not permit me to answer in full, but I would be happy to meet and discuss this subject with him on behalf of his constituents.
Thirdly, we have to define what is meant by “island wind projects” in a legal context, and that is being done; we are working through the issues. The right hon. Member for Orkney and Shetland is very aware of that matter.
Last but not least, we need to give clarity to the developers of island projects while being fair to developers of other projects elsewhere and to consumers across the UK.
Brendan O’Hara (Argyll and Bute) (SNP)
This issue is also very dear to my hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil), who has been unavoidably delayed while travelling here today. He is very concerned, as I am. Given the promises made in the Tory manifesto and by Tory candidates at the general election, when will the Government act to introduce an island CfD? The lack of a CfD and the locational pricing model are severely hampering the industry on the islands, and this is a vital sector that we need to survive.
Richard Harrington
I can assure the hon. Gentleman that we are aware of that issue and we are fully on it. I am happy to meet him if he would like to discuss it separately, but I have only five minutes left now and I do not want to break into the time for the key points that I need to raise.
There is a range of options for overcoming the issues that I have outlined, and I hope that by taking a pragmatic approach we can do so quickly. We need to understand the costs of the projects and the impacts on consumers’ bills. My officials have begun the process of updating the evidence base to set an appropriate strike price—the maximum that these projects could get paid for each unit of electricity that they produce. We must not forget that any additional costs that arise as a result of awarding support contracts are ultimately paid by households and businesses in their electricity bills.
Our approach to supporting new renewables, of competitive auctions with limits on the maximum price that we will allow, ensures that we support only the more cost-effective projects. That approach is not new but has been applied very successfully to other technologies, such as offshore wind. The industry is confident that the renewables support auction currently under way, whose outcome is expected in the coming months, should lead to a significant further drop in price. Whatever approach we take will need to work in this context of quite rapid price changes, and we want to see the outcome of our current auction before making decisions regarding the remote Scottish islands.
We have been through very clearly the importance of local support. Not everyone in the islands will support the development of the wind farms, but I am told that the majority of residents do. I understand that a poll of 1,000 Isle of Lewis adults commissioned by Lewis Wind Power found that seven in 10 supported having wind farms on their island. That is encouraging, but such support should not be taken for granted. It needs to be rewarded in the way that has been discussed—through community benefit funds and other systems. The Scottish Government have informed my officials that all the developers on the islands have committed to pay at least £5,000 per megawatt of capacity per year into such funds for the lifetime of a wind farm. That means that the Viking wind farm on Shetland, for example, could provide up to £1.85 million every year to the community. That money could be used for all sorts of projects: schools, local support groups, scout groups—the list is endless. Developers are also offering communities the opportunity to own a stake in projects, which is something that the UK and Scottish Governments are keen to see more of. Beyond direct income, we should also acknowledge the other benefits that these projects could bring. For example, jobs will be created not just during construction but throughout the lifetime of the projects.
Wind energy can play an important role for the country as a whole in producing the electricity we all need to support the running of our economy and our daily lives and in helping to reduce the harmful emissions associated with our energy systems. We all appreciate the commitment that island communities will have to make to ensure that we have access to long-term clean power. That is why it is absolutely right that they should benefit from hosting the projects.
We recognise that there are different ways of delivering the benefits, but of course it is important that any commitments that developers make are real and go beyond warm words. The Scottish Government are considering this issue closely, and I very much welcome that work. I look forward to meeting the right hon. Member for Orkney and Shetland and a group of developers, which we discussed outside the Chamber. That is a very good idea, which I am keen to progress as soon as possible.
I hope that my response today, in the short time that I have had, provides some reassurance to Members, as well as to the constituents we all represent, that the Government will support the development of onshore wind projects in the remote islands of Scotland, where they will directly benefit local communities.
Another very good point made by the right hon. Member for Orkney and Shetland is that we are not starting from scratch. We know that, and I do not mean just the manifesto commitment, but everything that went before.
Mr Carmichael
I understood the Minister to say earlier that the Government would not come forward with firm proposals until after the conclusion of the current round of contract for difference auctions. Is that indeed the case? May I ask him to take that away and consider whether it is really necessary? At the very least, given the pressures of time on us here, we should have everything ready to go once we reach that point.
Richard Harrington
I am very prepared to consider that point as the right hon. Gentleman has asked me to do. I hope that hon. Members will bear with us as I and my officials tackle the issues that I have outlined. I hope to come back very shortly with a decision. I say “very shortly” because I want that on the record and because of the respect in which I hold the right hon. Member for Orkney and Shetland. In the meantime, I will shortly be meeting the hon. Member for Na h-Eileanan an Iar to discuss these issues further, and I would be happy to meet any other Members of this House.
Question put and agreed to.
Energy Post-Council Statement
Lord Harrington of Watford Excerpts(7 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
The second Energy Council of the Maltese presidency took place in Luxembourg on 26 June. I represented the UK.
The Council began with the Commission (Vice President Šefčovič) presenting the recommendation for a mandate to commence negotiations with the Russian Federation on the Nord Stream 2 pipeline. It reiterated its commitment to ensuring energy supply routes to the EU complied with the rules of the third energy package, including diversification and security of supply, which was supported by the member states that intervened. The presidency noted the legal and political concerns raised by the Council.
The Council then discussed the energy efficiency directive on which the main outstanding issues were whether the EU-level energy efficiency target should be binding or indicative, and whether early efforts generating long-term savings could be counted towards the 2030 energy-saving obligation. Some member states supported maximum ambition; others called for more flexibility so that ambitious targets could be met.
The presidency made further efforts to find a compromise that could command a sufficient majority but texts which might have been acceptable to the UK were blocked by a group of member states demanding a more ambitious target yet less flexibility for member states to be able to meet them. Ultimately a general approach was adopted that included a higher EU-level energy efficiency target of 30% and some limited flexibilities for member states to achieve their binding national energy savings target. Eight member states voted against the proposal, on the basis that it ran counter to the position of the European Council in 2014. Although the balance of the proposal would have been acceptable to the UK, we were unable to support the text because the Commission refused to confirm the joint understanding reached with the UK in 2013 on what could be counted towards our 2020 binding national energy savings target. This could materially impact on our ability to meet our 2020 target.
Next, the presidency presented its compromise proposal on the energy performance of buildings directive, emphasising the uptake of electric vehicle charging points as the centrepiece of the revisions, and the increased flexibility for member states compared to the Commission’s initial proposal. The Commission (Commissioner Cañete) highlighted what it saw as a loss of ambition. Member states supported the balance of the presidency’s proposal and the Council agreed on a general approach, although some member states, including the UK, noted the need for measures to be economically and technically feasible.
The Council then discussed energy interconnectors at the request of Spain and Portugal, who sought binding targets for interconnection and funding for the required infrastructure. The Commission reiterated its commitment to the 2015 Madrid declaration on developing interconnectors, and highlighted the future discussion of this issue at the high-level group in September.
Finally, the presidency noted the intention of working groups to move forward on the six remaining legislative files that comprise the clean energy package; the Commission updated Council on a number of external energy relations issues over the past six months, including discussions on energy co-operation with China, Japan, Africa and Iran, and the development of the Eastern Mediterranean as a gas supplier, in order further to improve diversification of supply, The Estonian delegation presented the priorities for its upcoming presidency, which focused on electricity market design but also included negotiations on other elements of the clean energy package and the mandate for Nord Stream 2.
[HCWS20]
Oral Answers to Questions
Lord Harrington of Watford Excerpts(7 years, 5 months ago)
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Kirsty Blackman (Aberdeen North) (SNP)
1. What recent discussions he has had with trade bodies and companies involved in extracting oil and gas from the North sea.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
My Department is in regular contact with the oil and gas industry. As hon. Members will be aware, my predecessor, my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), met industry representatives regularly, both in London and in Aberdeen. On 23 March the Oil and Gas Authority awarded licences for 111 blocks to enable exploration and production across frontier areas—the first licensing round to focus on frontier areas in two decades. I look forward to continuing this relationship, which is very important for jobs and the wider economy. Indeed, in my first week in post I attended a reception at Imperial College London and met several companies and trade bodies in the field.
Kirsty Blackman
I thank the Minister for that answer and warmly welcome him to his new post. In 2016 the Chancellor announced that action would be taken to improve the tax regime for late-life asset transfers. In the 2017 Budget he re-announced the same policy, but now an expert panel is to be set up. Can the Minister let me know how many times the expert panel has met so far, and when we can expect the outcomes of its deliberations to be made public, as it says they will be on the gov.uk website?
Richard Harrington
I thank the hon. Lady for that question. She and I have worked together in previous roles, and I look forward to visiting Aberdeen, where hopefully she will be able to explain this further. As far as late-life assets are concerned, we realise how important it is to get this right, and not just for the jobs and tax revenue, but for generating further investment. The discussion paper and the panel of experts are considering this. We look forward to hearing a wide range of views and will report our findings at the autumn Budget.
Stephen Crabb (Preseli Pembrokeshire) (Con)
The Minister will be aware that over the past decade Qatar has become an increasingly important source of gas for the UK, not least from imports of liquefied natural gas through my constituency. What steps is he taking to ensure that the current diplomatic crisis in the Gulf affecting Qatar does not lead to any disruption of energy supply into the UK?
Richard Harrington
As my right hon. Friend will be aware, the Government are monitoring the situation very carefully, and we do not believe that it will make any difference whatsoever to liquefied gas supplies.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I welcome the Minister to his new post. Getting back to the North sea, the kind of action described by my hon. Friend the Member for Aberdeen North (Kirsty Blackman) is vital, especially to help along the return optimism. The Scottish Government have invested £5 million to explore decommissioning opportunities in oil and gas that could grow many new jobs. When will we get action from the UK Government, and when will we see a robust and comprehensive future energy strategy from the UK Government?
Richard Harrington
As the hon. Gentleman will be aware, the Government have been very actively involved in funding seismic surveys and the 3D visualisation centre at Heriot-Watt University. I am looking forward to the next licensing round and to dealing with the strategy he mentioned. I should mention the Kraken development, which the Government have supported, because the first barrels of oil were produced last week, and we look forward to there being 50,000 barrels a day at peak.
Drew Hendry
The fact is that the UK Government have been slow to realise the potential of decommissioning, pulled funding from vital carbon capture and storage pipeline projects, failed adequately to address the drop in renewable energy investment and plunged public funds into risky and poor-value nuclear power projects against the advice of experts. When will this Government wake up and take our energy opportunities seriously?
Richard Harrington
I am afraid that I must completely disagree with the hon. Gentleman’s view of things. We are committed to supporting the development of a decommissioning industry. I think that there are significant opportunities. We are currently considering options for the delivery of a port and yard, and we will continue to engage closely with all relevant stakeholders as we develop our options.
Jo Churchill (Bury St Edmunds) (Con)
2. What steps he has taken to consult businesses on the process of the UK leaving the EU.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
6. What estimate his Department has made of the future level of investment required in the UK’s gas storage facilities.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
There has been significant investment in the UK’s natural gas supply infrastructure over the past decade. It is highly complex, because we benefit from highly diverse and flexible sources of natural gas. They include: indigenous production from the North sea; six international gas pipelines with Norway, Belgium and the Netherlands; three liquefied natural gas terminals that can bring supply from anywhere in the world; and a number of modern, responsive gas storage facilities. We are confident that market-led investment will continue to deliver secure gas supplies, but I will continue to monitor the position.
Gareth Snell
I thank the Minister for his answer. The ceramics industry is a major employer in my constituency. It is very energy-intensive and heavily reliant on a secure supply of gas for business continuity. In the light of the announcement that the Rough gas storage facility is to close, what assurances can the Minister give the ceramics industry that the gas it needs will not run out or become unaffordable?
Richard Harrington
As I explained in my answer to the hon. Gentleman’s first question, we have a very diverse range of sources. Analysis conducted by the National Grid and others confirms that the closure of Rough will not cause a problem with security. I give the hon. Gentleman an undertaking to monitor this, with my Department, on a weekly basis.
Kirsty Blackman (Aberdeen North) (SNP)
T4. The National Audit Office recently published a report on Hinkley Point C that is nothing short of damning, describing it as “risky and expensive”. When will the Government listen to the experts and scrap this costly expenditure, and when will they invest instead in carbon capture and storage?
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
If ever you decided not to be Mr Speaker, a career as chairman of the BBC Radio 4 programme “Just a Minute” would be appropriate. In answering the hon. Lady’s question, I will try to keep to your one sentence rule.
The Hinkley Point contract is entirely designed so as not to get the Government involved in expensive capital expenditure, and the nuclear power produced by Hinkley Point will be an excellent part of a mix of power for decades to come.
Justin Tomlinson (North Swindon) (Con)
Having access to the next generation of skilled workers is vital for business confidence and growth. Will the Minister consider promoting the opportunities of our ambitious apprenticeship programme through the annual business rate mailer to increase awareness?
Richard Graham (Gloucester) (Con)
Earlier this year, 116 MPs signed a letter I wrote to the Secretary of State urging him to implement the recommendations of the Hendry review for the world’s first ever tidal lagoon. When will a decision be taken?
Richard Harrington
The Hendry review also said that there are significant questions as to whether tidal lagoons can be cost-effective, and very complex issues are involved. We are fully aware that a Government decision is needed in order for anything to proceed, but it is absolutely right that we take the necessary time to consider this carefully.
Several hon. Members rose—