Energy: Civil Nuclear Power

Lord Oates Excerpts

Thursday 9th December 2021 Lords Chamber

[Lord Oates (LD)]

My Lords, I declare my interest as chair of the advisory board of Weber Shandwick UK, as set out in the register. I thank the Library and the Nuclear Consulting Group for their briefing material and the various industry representatives, including from the nuclear industry and NGOs, who I have discussed these matters with previously.

I commend all noble Lords for their valuable contributions to what I think I would describe as a fascinating discussion of mutual agreement, rather than as a debate. Perhaps I can provide a service by giving another side of this argument. I do so with some trepidation as the only person to speak in this debate on that side and in light of the eminent people who have spoken already. But when I joined the Liberal Party, as it was then, I did not do so because it was necessarily the popular path to follow but because I thought I had important beliefs that should be articulated, so I shall follow that vein.

I also draw strength from the fact that, in the late 2000s, in the run-up to the 2010 election and during the coalition, Liberal Democrats were derided as fantasists when we talked about a policy of net zero. We were told that this could never happen and that it was ridiculous and unworkable. It was introduced by a Conservative Government, as it happened, and I commend them for that. We were also rubbished on our belief that, through contracts for difference, we could really drive renewables forward. That was constantly obstructed by George Osborne in the Treasury, who was an absolute disaster as far as climate change was concerned. I take heart that those people have not always been right.

I wonder sometimes, with all this focus on the nuclear industry, whether the fantasy is still there. There is this idea that it could deliver, like some magic bullet, all that people have talked about. The promises of the nuclear industry may be many, and its advocates are undoubtedly articulate, but at the heart of their argument today lies the same fantasy that has shaped the argument around nuclear power generation since its inception: that it will be a source of cheap, clean and almost limitless electricity.

Of course the reality recorded by history is rather different. Instead of cheap power, we got eye-wateringly expensive electricity; instead of clean energy, the nuclear industry delivered deadly waste which, 70 years from the start of the civil nuclear programme, we have yet to find a solution for. I note the comments of the noble Lord, Lord Broers, but the fact is that this deep repository has not been built. It has been talked about for decades but, despite that talk, it has not provided the solution but has burdened the taxpayer with staggeringly enormous decommissioning costs. If you want to descend into the world of fiscal nightmares, just pick up a copy of the Nuclear Decommissioning Authority’s annual report; it will give you a few sleepless nights.

New nuclear, we were told, would be different. I remember being reassured during the days of the coalition that, this time, the industry had come up with new reactor designs which could be more easily built, would avoid catastrophic project overruns and ruinously expensive electricity prices, and would provide a model which would not leave the taxpayer carrying the same enormous decommissioning costs as last time. As to the morality of creating yet more high-level nuclear waste with no solution for the existing waste, we were told by the industry—we have heard the same argument again today—that the solution is nearly there. It is just over the horizon, where it has been for the last few decades and more.

Let me deal with three of the principal issues raised in this discussion: cost and practicality, baseload support, and safety. During the coalition Government, funding for nuclear power was placed within the contracts for difference framework pioneered by my right honourable friend Ed Davey as Secretary of State for Energy and Climate Change—a policy which, it should be noted, has led to a quadrupling of renewables and massively driven down their costs. Sadly, despite the nuclear industry’s many promises, it could not deliver the same. Nuclear is about the only form of energy that has not been able to deliver these sorts of cost reductions. Despite a strike price set at what some thought was an extremely high level, the nuclear industry could not even deliver on that.

In coalition, the Liberal Democrats insisted on the principle of no subsidy for the capital cost of construction for nuclear which, as far as I am aware, remained government policy until the Government decided to introduce the Nuclear Energy (Financing) Bill, which was put before the House of Commons last month. As the noble Viscount, Lord Hanworth, said, this Bill offers the nuclear industry the supposed lifeline of a “regulated asset base” model of funding, which effectively passes on much of the risk of nuclear construction directly to the public and consumers. This is necessary because the private sector, having looked into these things more closely than the public are obviously able to, has decided that it has no intention of shouldering the risks itself. In effect, if these plants are to be built, the Government have to intervene to rig the market.

During the Second Reading of the nuclear energy Bill, the Minister, Greg Hands, told the House of Commons that RAB is a “tried and tested method” of funding major infrastructure projects. It is true that it is used to fund monopoly infrastructure assets such as water, gas and electricity networks. However, first of all, power generation is not a monopoly activity, and the construction of nuclear power plants is fraught with far more risks.

The United States, which made a similar attempt to rig its market in favour of nuclear through a version of RAB known as early cost recovery, has found that it has proved an abject failure. At its peak in 2009, the US so-called nuclear renaissance consisted of applications to build 31 plants. Despite spending more than $20 billion, no new plants have gone into service. The plants in the states that did not have ECR, the RAB equivalent, were cancelled before too much money had been wasted, but in the states that had the RAB equivalent, owners were far more willing to incur risks. For example, in South Carolina, $9 billion was spent before Westinghouse went bankrupt, causing the project to be cancelled. In Florida, also an ECR state, more than $1 billion was spent. In total, US electricity customers are burdened with paying more than $10 billion for cancelled nuclear plants and another $13.5 billion in cost overruns. RAB is likely to have similar consequences for consumers here in the UK.

The Labour manifesto of 1997—one of its better ones, if I may say so—concluded:

“We see no economic case for the building of any new nuclear power stations”.


Nearly a quarter of a century on, the economic case is, if anything, weaker. In the absence of an economic case, a Conservative Government are, as I said, rigging the market at the cost of the consumer. Sadly, it appears —although we will hear from the noble Lord, Lord Grantchester, in a minute—that this is with the support of the official Opposition, who seem to have lost their good sense on this matter.

The nuclear industry is smart enough to know that it cannot win on cost, so it is reinventing itself as the new superhero which will save us from climate change by providing the baseload capacity to underpin renewable generation. The problem is that the billions that we seem to be intent on spending to provide excruciatingly expensive nuclear energy could be much more effectively deployed.

That could first be done through demand reduction. For the price of Hinkley Point C, you could retrofit enough homes to save all the energy that that plant will produce, not just for its 60 operational years but for all time. That would make much more sense than spending billions to generate electricity which will then escape from our homes. Secondly, we could reduce the capacity required in the energy system through much smarter use of demand management technologies. Thirdly, we need a much more thought-through policy on energy storage and release. The Minister can perhaps tell us in his winding up how much we spent on abating renewable energy in the last year—I think it was in the region of £1 billion. If we had a coherent plan for the storage of excess energy, we could stop paying people to cease generating and start paying them to store it instead.

My time has gone. I conclude by saying that the issue of safety is not about nuclear weapons; it is about the waste that is created. How is it that we are engaged in the construction of new plants that will create yet more deadly waste, when we have no solution to the deadly waste that we have already recklessly generated? In her response, I hope that the Minister will try to give us a morally coherent answer to that question.

--- Later in debate ---

[Lord Oates (LD)]

In the light of what the Minister has said about the RAB model, what assessment have the Government made of the example of the United States’ ECR model? Have they learned any lessons from that and can they explain why we will not suffer from the same problems they had in the States?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I apologise for not having answered that point. I was coming on to say that I would write to the noble Lord on that specific issue because I do not have enough details to hand to give him a satisfactory answer. I will share that answer with other noble Lords.