Euratom

Lord Teverson Excerpts

Thursday 20th July 2017 Lords Chamber

Asked by

[Lord Teverson]

To ask Her Majesty’s Government, in the light of their intention to leave Euratom, how they intend to ensure the continued uninterrupted cross-border supply of nuclear materials, including for medical use, post-Brexit.

[Lord Teverson (LD)]

My Lords, this is a short debate and I shall be direct and to the point.

Euratom is not a European Union organisation. It is effective and low key, and perhaps one of its greatest successes is that unless you deal with it you have probably never heard of it. I suspect that, until the past few weeks, that was true of a number of senior members of the Government as well.

The important area of Euratom is as the safeguarding authority under the International Atomic Energy Authority, which is the global authority that ensures that non-proliferation, and all the regimes and regulations around it, are implemented and effective. Effectively, Euratom is the one-stop shop for all its 28 members—the same 28 members as those of the European Union. Its safeguarding role includes trade in fissile and other nuclear materials, fuel, reactors, knowledge and expertise. Under the Euratom treaty there is a nuclear common market, which deals with the transfer of nuclear materials and other areas around freedom of movement of scientists and technicians. On a practical basis, it has a Euratom supply agency that looks after and ensures the supply of nuclear fuels and radioactive isotopes for the medical area of the whole Euratom community—all 28 of its member states.

Importantly, it is the counterparty to the nuclear co-operation agreements with third-party supply countries around the world, including, importantly, the United States, Australia, Canada, Kazakhstan and South Korea. It also includes agreements with Japan in other areas of nuclear co-operation. It is also—this is particularly important for the United Kingdom—a key provider of research and development funding, not least for the UK; it provides some €56 million per annum to support the Joint European Torus—the JET—programme in Culham, Oxfordshire. So that is Euratom.

The United Kingdom has no International Atomic Energy Authority-approved safeguarding body at this time. That is done by Euratom. We have no indigenous nuclear fuel supply, no native source of radio isotopes and no bilateral nuclear co-operation agreements. However, we have an existing nuclear fleet of power stations which provides one-fifth of our energy and relies on imported nuclear fuel. We have a new generation of power stations being built—the first one is at Hinkley Point—which will rely very largely on foreign parts and technology, and some 45 nuclear agreements will need to be replaced once we exit Euratom.

The issue is this: just like the Brexit clock, the atomic clock is ticking. We have 20 months left, and if there is no agreement with Euratom and no International Atomic Energy Authority safeguarding regime in the United Kingdom, literally all that cross-border trade stops—it ceases. This is not a WTO situation where, after exiting the EU, we undertake trade under WTO terms; in many legislatures—particularly in the United States—it will become a criminal offence to trade with us on these materials. That is where we will be potentially in 20 months’ time. I hope that will not be the case and I look forward to the Minister explaining why it will not be.

Radioactive isotopes identify and treat cancers. In the United Kingdom, some 500,000 procedures use these materials each year. Again, we have no domestic supply. They are very perishable. In fact, the half-life of some is as little as hours, and for the most important ones it is days—and that means that they are perishable. We import the vast majority of them from France, Belgium and the Netherlands, all of which are Euratom member states at the present time. That supply chain is fragile.

I was concerned that the Minister in the other place, when it had a debate on Euratom, said that there was no issue about medical isotopes because they were not fissile material. I do not want to think that Ministers’ Statements can no longer be trusted, but this is an easy soundbite around a much more complex situation.

Radioactive medical isotopes are specifically listed in annex IV of chapter 9 of the Euratom treaty, along with other items such as nuclear reactors. Indeed, chapter 9 is all about the nuclear common market which in turn is all about movement. It involves not only the isotopes themselves but the containers in which and methods by which they are transported. The perishability of isotopes means that their inability to travel large distances becomes particular important. In fact, there is form in this area. In 2008 the technical issues that created delays and difficulties in the Eurotunnel at the time meant that the isotopes could not be transported quickly and efficiently from other parts of western Europe. That led to a number of cancer procedures being delayed and cancelled here in UK hospitals.

That was followed in 2009 by a world shortage of these isotopes and difficulties in the supply chain. As a result, the Euratom Supply Agency set up the European Observatory on the Supply of Medical Radioisotopes to help the whole of the community solve the long-term problem of ensuring the supply of medical isotopes. That vital work is still continuing and covers all 28 member states. So I ask the Minister: from that point of view, is it really worth putting 500,000 cancer procedures each year at some risk just because Euratom itself uses the ECJ as its legal arbiter?

I have a number of questions. Have the Government initiated their discussions with the International Atomic Energy Authority on the UK having its own safeguarding regime—and one that has any chance of being approved within 20 months? What discussions have we had with our supply countries, on which we are totally dependent, including the United States, Canada and Australia? Can we get serious about the isotopes question and move beyond the soundbites? I ask that because there are some real issues which I believe are far more complex than perhaps Ministers have said and agreed so far. Are the Government open to a transition agreement between Britain and Euratom, and indeed is the Euratom community likely to agree to such an agreement? Most importantly, when it comes to security of supply, will the UK apply to remain a member of the European Observatory on the Supply of Medical Radioisotopes, which is at the core of ensuring that the supply chain survives into the future?

It is said that Ministers did not really want to come out of Euratom. They recognised that it was efficient, effective and a good one-stop shop for all 28 member states. I would ask them to have the courage of their convictions and remind them that there is still time to change.

Green Investment Bank

Lord Teverson Excerpts

Thursday 12th January 2017 Lords Chamber

[Lord Prior of Brampton]

My Lords, I think the Green Investment Bank has spent just over £2.5 billion so far and has brought in about £8 billion of private investment to complement that, so it has committed a total investment of about £10 billion. Clearly anyone who buys the Green Investment Bank will want to see that investment grow. That will be very much part of the negotiated discussions that we are having with interested parties.

[Lord Teverson (LD)]

My Lords, I declare an interest as a trustee-designate of the Green Purposes Company. Given Nick Hurd’s very strong statement in the House of Commons yesterday that the Government’s number one priority was to obtain the right value for the Green Investment Bank—which we get—surely the integrity of the bank going forward should at least be an equal priority. Can the Minister confirm that please?

Brexit: Consumer Rights Policy

Lord Teverson Excerpts

Monday 12th December 2016 Lords Chamber

[Baroness Neville-Rolfe]

In general, consumers enjoy strong protections in this country, and we want to seek to preserve those. But where markets fail—the noble Lord has given an example—and competition is not as strong as it needs to be, they may not get a good deal, and the Government will not hesitate to take steps where we need to. We are bringing forward a Green Paper in the spring of next year that will closely examine markets that are not working fairly for consumers. It will look at both specific markets and cross-cutting items, and I look forward to hearing more on those sorts of issues so we can ensure that they are properly looked at as part of that process.

[Lord Teverson (LD)]

My Lords, British holiday- makers have a history of being ripped off by mobile phone companies while on holiday abroad through communication and data charges. Europe has thankfully sorted this out over the past couple of years, and the charges will be the same. Will the Government insist that British communications and mobile telephone companies keep to that agreement in future so that the rip-off stops and the service remains equitable for British consumers?

[Baroness Neville-Rolfe]

I am glad that the noble Lord mentioned roaming, because it is one of the key advances that general EU effort has achieved in recent times. When you go to Europe now, depending on your provider, you can sometimes get your calls within your contract, which I have been fortunate enough to experience. In general, consumer regulations in the area of telecoms will not be affected by EU exit—and, of course, as I have said, the market is changing. However, I assure the noble Lord that roaming, and the benefits of that, will be an important ingredient in influencing our thinking in our exit negotiations.

Green Investment Bank

Lord Teverson Excerpts

Tuesday 1st November 2016 Lords Chamber

Asked by

[Lord Teverson]

To ask Her Majesty’s Government what progress they have made in their sale of the Green Investment Bank.

[The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)]

My Lords, on 3 March this year the Government launched the Green Investment Bank sale process and it is currently ongoing. I can inform the House that good progress is being made. In particular, yesterday the GIB announced the names of the special share trustees appointed to be the custodians of its green purposes, and I congratulate the noble Lord on his selection as a trustee. The Government will provide a full report to Parliament once the sale is completed.

[Lord Teverson (LD)]

I thank the Minister for her reply and for the good work she has done in this area. Will the Government put additional conditions into the contract for sale to ensure not just that the green purposes are kept for the bank, but that it does not become a shell company with those investments placed elsewhere to avoid such constraints, and that the bank will continue to invest in the UK green economy so that it can continue to thrive?

[Baroness Neville-Rolfe]

In addition to the special share, which will protect GIB’s green mission, the Government have asked potential investors to confirm their commitment to the GIB’s green values and its investment principles, and explain how they propose to protect them. Green investment is, of course, what the GIB does—it is in its DNA. Investors will buy into its reputation, its green business plan and forward pipeline of projects, all of which are focused on the UK, although there could be international potential as well.

Hinkley Point C

Lord Teverson Excerpts

Thursday 15th September 2016 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for repeating the Statement in your Lordships’ House today. I also thank her for contacting me this morning to let me know that she would be making this Statement.

I say at the outset that Labour supports the development of new nuclear power as part of the UK’s energy mix, to ensure the country’s energy security, to deliver thousands of high-skilled jobs across the country and to deliver clean energy in compliance with our legal obligations on meeting climate change targets. Labour has always been critical of the strike price being set at £92.50 per megawatt hour; we have called for a price in the mid-£80 per megawatt hour range.

Critically, this investment must be delivered on time and on budget—two features that all Governments seem to be unable to improve on. Being on time is critical, as old energy plant is phased out, leaving a vulnerable period in the nation’s security of supply in the 2020s. The Government’s Statement today makes no mention of amendments on this following the review. This side of the House has argued that any future delays, which have already added five years to the project at a cost of £6 billion, should result in a penalty clause with a taper being applied to the price. While we may all be second-guessing whether the deal will be a good one in relation to future energy pricing, the country’s need for a new low-carbon energy supply coming on stream is well documented. Any cost overruns should be recognised and welcomed as a cost to EDF, and any underruns are to be shared.

Although the price at £92.50 per megawatt hour may well reduce to £89.50 if Sizewell C is built, nevertheless this is above the price agreed in France for Flamanville. It can be stated with a certain amount of confidence that the technical issues around the developments in light water reactors will find innovative solutions. We do not have a particular issue with this.

The Government were right to subject Hinkley Point to review, but the review should have taken place far earlier than at the 11th hour, when the room for renegotiation and manoeuvre is severely limited. This deal will set a precedent and benchmark for the future. Key review dates should also be set along the way to ensure that this project delivers to plan. The quality mark of having received approval from the globally recognised gold standard of the ONR will be much prized.

I am also wondering why the Government are rushing the Statement out today, the last day of this September sitting, with three weeks’ interval before Parliament returns in October.

I learned that, last night, as energy supplies through solar came to an end around sunset, a price hike occurred with an interconnector to the continent also being unavailable pushing pricing up well over £120 per megawatt. Will the Minister ask Ofgem to monitor and investigate price volatility through the winter months to guard against any possibility of manipulation for whatever reason?

On the Statement, I have a few questions that I would be grateful if the Minister could clarify. The review has concluded with a few alterations around the issue of control. The Government will now be able to prevent the sale of EDF’s controlling stake prior to completion. This is being done via an exchange of letters. Will the Minister clarify what is the legal form or basis under which this agreement by exchange of letters is enforceable? What would the implications of non-compliance be? Will the letters be made public? I would be most grateful to understand better the legal context to this agreement.

After completion the Statement refers to the new legal framework under which the Government will be able to intervene in any sale of EDF’s stake. Can the Minister give any further indication what form this intervention may take and how? Will this intervention be limited to ownership issues only?

The Statement continues with reforms to future foreign investment in British critical infrastructure and highlights three elements: namely, a golden share; reports to the Office for Nuclear Regulation regarding changes in ownership; and new processes within government to scrutinise foreign ownership for national security reasons. In the context of comments made by Mrs May on her appointment as the new Prime Minister, the position of foreign control in takeovers of important British companies was identified as a key issue for the new Government. Given her position within the wider business department that now includes energy and climate change, can the Minister clarify what the next steps and milestones will be and whether this scrutiny will be limited to investment in critical infrastructure only? What will be the parliamentary oversight of these new powers?

Regarding future investments, can the Minister clarify whether the contract includes assurances and guarantees that Bradwell and other plants are committed to the same investors? Does this also include commitments that key personnel and skills will be available to British companies throughout the British economy? Can the Minister give precise terms and details of any link between this and any future investments?

On the wider issues regarding the Statement, why have the Government refused in this review to demand a better deal for bill payers, who will be funding this for decades—at a cost of up to £30 billion according to the National Audit Office?

This investment will result in 25,000 high-skilled jobs with possibly 550 apprenticeships, which should be widely welcomed. It is vital that this contract fulfils in delivering high-skilled jobs and key positions within the organisation for British companies. Will the Minister give the House assurances regarding the timetable and transparency over the contract to ensure job security as well as the security of energy supplies that this country so desperately needs?

I am grateful to the Minister for the Statement and look forward to receiving this vital further information.

[Lord Teverson (LD)]

My Lords, I, too, thank the Minister, but I have a different take on the pricing side. Some time ago, we had the resignation of the finance director of EDF. I have looked at the share price since the announcement was made, and it is going down. Does the Minister expect EDF to be solvent by the time this project is due to be delivered? That is a real risk, given the other problems at Flamanville and—I am not brave enough to pronounce the town in Finland—the Finnish nuclear station. Will EDF survive this? What are the contingency plans?

This decision was originally made some three years ago, and we have had this soap opera ever since, but time and technology have moved on. Given the assessments on smart grids, energy storage and the Government’s brave and correct interconnector plan, is this nuclear power station—and fleet of nuclear power stations—necessary? I for one am not against nuclear technology as such, but is this the right technology to go forward? The previous Minister in the House of Commons, the Secretary of State for DECC, Amber Rudd, was very keen on small nuclear reactors. I would be interested to know whether the Minister is still pursuing that area.

I accept and welcome the various measures put in place to protect taxpayers and the public sector against the future costs of decommissioning, but I am concerned about the nuclear waste issue. I cannot see that there has been any movement by the Government in terms of their nuclear waste strategy or where we are going to put even old nuclear waste, let alone new nuclear waste. How can we be sure that the funding that will be put in place for decommissioning will reflect such an undefined nuclear waste strategy for the future?

Now that we have got through this period of constipation on energy decision-making, when can we expect a decision on the Swansea tidal lagoon?

I want to take up another major element in the Statement that is really interesting and that I have debated with the Minister on previous occasions. The Government are saying that they will take a golden share in future nuclear and other critical energy projects. The Minister will not be surprised if I ask her whether the Government have consulted with the Office for National Statistics about this strategy. She is quite right to be sensitive about the issue and wanting to make sure that, in having even slight government control over a company or a project, it does not become part of the public sector and go on to the public sector balance sheet. However, this seems quite incautious in comparison with previous government policy, and it is quite likely that at some point this project, which is worth £18 billion, will be put on to the public balance sheet. If that is the case, surely we should have put our own public money into it, at a more or less zero long-term interest rate, rather than bother with Chinese and French investment because it is going to be on the public sector balance sheet anyway.

I shall leave my questions at that. Again, I thank the Minister for repeating the Statement.

[Baroness Neville-Rolfe]

I thank the noble Lord, Lord Grantchester, for his support. I agree that we do not want any further delays, although I take comfort from the fact that the costs are borne by the developer. Under the contract for difference, if the plant is not generating by 2029, the period in which the developer has increased price security will decrease and the Government have an option to cancel if it is not generating in good time.

I shall try to answer some of the noble Lord’s testing questions on the legalities. He asked about the legal basis of letters. Clearly, letters are not legally binding in the same way as the contract for difference, but they provide a clear political reassurance that we trust EDF will stick to. We have a mutual interest in this important project.

Perhaps I might go through the protections and thus respond both to the questions of the noble Lord, Lord Grantchester, and to those of the noble Lord, Lord Teverson. We will have a special share which would allow the special shareholder to intervene in any transaction where there were national grounds for doing so. That will not apply to Hinkley, which is being dealt with by an exchange of letters, but it will apply to future reactors. We have the Office for Nuclear Regulation which is a world-class, independent regulator that has a range of existing powers to intervene in developments. Under our proposals, we will require notice from developers or operators of any change of ownership or part-ownership. Most significantly, we will make proposals to establish a legal regime that allows us to consider the national security implications of all significant investment into our critical infrastructure, including nuclear. That will be the subject of widespread consultation on the details and will require legislation, so there will be opportunities to consider the proposals as we go forward.

For the Hinkley arrangement, we have tried to reach an agreement with EDF which—subject to its agreement to the project going forward—puts us in an improved position compared with where we were in July. That is what the Government have now decided, in part also because of the benefits in terms of security and reliability of supply. With a nuclear baseload—this will provide 7% of the UK’s energy needs—the advantage is that the energy continues to be produced whether the sun is shining or the wind is blowing.

As has been said, 26,000 jobs is a lot. The £30 billion figure that was mentioned is an NAO construction which used a different discount rate of 0.7%, which is much lower than our own 3.5% and is equivalent to the top end of our projections, which of course I covered in the Statement.

The noble Lord, Lord Grantchester, compared this proposal to the French situation. Perhaps he would like to know that the French figure is a regulated price for electricity generated by all the power stations; there is a mix of both new and old in the French nuclear fleet, so it is not just Flamanville. The British price is a CFD for a specific new-build project, and furthermore it reflects the fact that the construction risks in Hinkley are borne by the developer alone and not the British consumer. I very much agree that the ONR is well respected and we are lucky to have that body.

The noble Lord also asked why the Statement is being made today. I thought that noble Lords would welcome the fact that, having said that we would make an announcement in the early autumn and then that we would do so in September, we have been able to get to the line today, so that it is possible for us to have a short debate on this ahead of the Conference Recess.

The noble Lord, Lord Teverson, in his inimitable way, made a lot of interesting points. I can confirm that we are looking at the small nuclear reactors he mentioned. He will recall that we are looking at an innovation competition in that area, with funding having been earmarked.

The noble Lord was right to say that the decommissioning of nuclear waste is an important issue, but he is wrong in that we do have a good system in this country. One of my earliest visits was to Sellafield, and I was impressed by the progress that is being made there. We are making a large public commitment—£2 billion at Sellafield alone—and of course we have built decommissioning into Hinkley, and we will do the same with the new nuclear fleet so that we do not get landed with a large legacy of decommissioning for which the public sector has to pick up the tab. However, a lot of good work is going on at Sellafield on nuclear waste from 30, 40 and 50 years ago, including defence waste as well as civil waste.

Carbon Budget Order 2016

Lord Teverson Excerpts

Tuesday 19th July 2016 Lords Chamber

[Lord Teverson (LD)]

My Lords, I, too, congratulate the Minister, who is very diligent in all her work, particularly in areas such as this. I welcome very much her appointment and look forward to working with her in this area, not least as chair of the House’s EU Energy and Environment Sub-Committee. In fact, the country was so pleased about me being appointed as chair of that committee that it voted for Brexit a month afterward—but never mind. I think we are still working out where those committees are going to go.

More seriously, I reflect the sentiment of my noble friend in saying that I, too, am concerned that DECC has just been wiped off the face of government. Climate change, whichever way we look at it—either because it is totally misguided, as the noble Viscount might say, or because we think it is incredibly important and precious—is an important part of government. That it is not there on the brass plate is of concern.

As the noble Viscount would expect, I celebrate the fact that we are moving forward and accepting the recommendation of the Energy and Climate Change Committee on the fifth carbon budget. In fact, the green sector of business and industry, not least the energy part of it, was one of the few areas to show economic growth post-2008, despite the financial crisis at that time. Rather than taking the scenario and explanation given by the noble Viscount—rather than making the equivalent step back from iPads to the typewriter—let us move forward into clean energy, create jobs and make that work. I agree that the externality cost to consumers needs to be taken into account, but we could always do it through taxation if we wished, rather than through energy prices. Perhaps that is the way forward.

I have just looked at the Sandbag app, and coal generation is still below 10%, on which I congratulate the Government, who I am sure have been instrumental in that. We are doing very well.

The Brexit point is important. Part of these orders relate to the EU emissions trading scheme, which is where the credits come from. I would be very interested to hear from the Minister whether the Government have begun to think about our future role—in, out or whatever—in the emissions trading system, and how that might be dealt with. However long it might take to implement Article 50, I presume that the situation will be resolved by 2028, and we need to think forward. The Minister may have news for me there, too.

I regret the fact that we still have the third carbon budget and the allowances as a comfort blanket. I do not get excited or annoyed about it, but it would be good to have enough confidence in ourselves not to need that. However, that is not a fundamental point in any way. What is fundamental—the noble Baroness, Lady Worthington, may bring this up if she speaks this evening—is that carbon budgets account for only some 50% of carbon emissions that are dealt with from the non-EU ETS sector. That means that we do not take full responsibility for our carbon emissions in the United Kingdom. It would be much better if we were able to tweak the Climate Change Act so that the carbon budgets and accounting meant the actual emissions from UK business, industry, households, transport and commerce, rather than a mix of actuals and the trade of the major emitters in the European Emissions Trading Scheme.

I welcome both these orders, although not so much the second one. We are moving forward positively. I have a question about where we go with the EUTS. It is great to create targets—we know this from business and other areas—but we must meet them. An updated carbon plan showing how we will achieve them would give all of us who wish this project well a lot more confidence than we have had over the past couple of years.

[Lord Lawson of Blaby (Con)]

My Lords, as a former Secretary of State for Energy, I, too, congratulate my noble friend on her appointment as Minister for Energy. I realise that she is so early in her job that she is not a great authority on the issue, but bearing in mind how well she has performed in her previous role, I am sure that it will not be long before she is very well-versed. She will come to realise that the speech she made introducing this debate, which was obviously written for her by her officials, contained numerous blatant, glaring errors of fact. I shall refer to only one.

She mentioned, in particular, flooding. I draw her attention and the attention of the House to the latest issue of Science in Parliament. It includes an article from Professor Paul Bates of the School of Geographical Sciences at the University of Bristol, entitled “Flooding: What is Normal?”. He finishes:

“In conclusion, in terms of national scale annual losses we can see that, contrary to the standard media narrative, flooding during winter 2015/6 was, by recent experience, entirely normal”.

All the myths that are trotted out have been demonstrated to be false by experts such as Professor Roger Pielke of the United States, who is not a climate sceptic but has shown clearly that there has been no increase in extreme weather events.

I am not going to take too much of the House’s time because, as my noble friend Lord Ridley pointed out, the Climate Change Act, of which these orders are a derivative, is an Act of manifest, acute self-harm, very particularly for the poorest among us and for much of British industry. It does no good to anybody. I do not want to repeat his points, but I hope that when she winds up my noble friend will refer to all the points that he made because they are very important. There is no case for this. It is bizarre that we are doing this.

At this point, I warmly welcome my right honourable friend Theresa May, the new Prime Minister. At the start of her time as Prime Minister, she has made an excellent beginning with the abolition of the Department of Energy and Climate Change. That will not transform everything overnight, but it is clearly an important step in the right direction and signals her recognition that what matters is getting affordable and reliable energy, which is what the people of this country want—the people she said she cares about most in her opening statement of her position. That is what they are calling for: affordable and reliable energy.

The Minister also said something about the reduction we have achieved in carbon emissions in this country. What I think she may not yet be aware of is that the main reason we have achieved it is that energy-intensive industry has gone abroad. This has become particularly topical in the case of the steel industry. There has been no reduction in global emissions; it is just that the emissions are coming from China, India or wherever, and not from the United Kingdom. This boasting about the United Kingdom’s reduction in global emissions is completely meaningless.

I encourage my noble friend, for whom I have a very high regard, not to be caught up in any of this nonsense and to look at the thing afresh in a rational way, as she is well able to do, looking at the effect of this legislation on the poor and on British business and industry; and I encourage her department to do a lot of things in a lot of policy areas which need to be reviewed in the light of Brexit. My noble friend Lord Ridley drew attention to energy policy, and I hope the Minister will instruct her department to have a complete review of the United Kingdom’s energy policy in the light of Brexit. It is perfectly true that European Union legislation, although harmful, is not nearly as harmful as our indigenous Climate Change Act; nevertheless, an overall review is clearly called for, and I hope she will undertake one as soon as possible and realise that the signal she should be responding to is the abolition of DECC. That should be the end of a miserable chapter.