Baroness Verma
Main Page: Baroness Verma (Conservative - Life peer)
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, I thank the noble Viscount, Lord Hanworth, for raising this debate today. I know that he has a long-standing interest in this subject. I agree that this is a very timely debate. I hope that when I go through my speaking notes I will be able to answer some of the questions that have been raised by noble Lords today. Those that I cannot answer in the short period that we have for the debate I will write to noble Lords about and place a copy in the Library.
I do not approach this debate as the noble Viscount, Lord Hanworth, did, with pessimism. My endeavour today will be to lift his spirits a little. Noble Lords have asked searching questions. I may have to give better, detailed responses to many of them, so it would be prudent of me not to give half-baked responses now.
We are aware that one-fifth of our power generation will be coming off within the decade and therefore it is vital for our nation’s energy security that we work towards long-term certainty and investment. That is why I am pleased to say that this Government, in recognising that, have introduced the Energy Bill, which will bring forward the biggest electricity market reform that we have seen for a very long time.
Nuclear power has a part to play in the UK’s energy mix. For more than 50 years it has been part and parcel of a route for electricity supply to this country and it contributes more than 19% of all electricity generated in the UK. We are committed to seeing nuclear as a part of the energy mix, alongside renewable energy and carbon capture and storage from fossil fuels. A new generation of nuclear power stations will help to ensure that we have secure, affordable and low carbon energy.
Towards the end of last year we saw the successful sale of Horizon Nuclear Power to Hitachi, and EDF was granted the first nuclear site licence in 25 years at Hinkley Point C. Regulatory approval of the EPR reactor has been given. This March, the Secretary of State gave planning consent for a multibillion pound project planned at Hinkley Point in Somerset. This project alone could enable the generation of enough low carbon electricity to power around 5 million households, making it one of the largest power stations in the UK. The noble Viscount, Lord Hanworth, specifically focuses his Question on our assessment of how nuclear power will help the UK to meet its climate change goals. As he is aware, we see a new generation of nuclear power stations alongside other low carbon forms of electricity as being the most cost-effective as well as energy-secure way to meet our legally binding carbon targets.
The life cycle of carbon emissions from new nuclear plants will be similar to that of emissions from wind power and, of course, much less than those from fossil-fuelled plants. It is competitive with other generation technologies and is expected to be one of the cheapest sources of low carbon electricity in the future. New nuclear can contribute significantly to our economic growth, creating long-term employment and supply chain opportunities. The Energy Bill currently going through the other place is bringing in some of the largest changes in reforming electricity that the UK has ever seen. The Bill will put into place measures to attract the £110 billion investment that is needed to replace current generating capacity and upgrade the grid by 2020 as we see a rising demand for electricity. The Bill puts into place the certainty that generators have looked for in investing in large projects and, through our capacity market, is also building in a mechanism to ensure energy supply. These measures are intended to try to shield us better from price hikes that occur on the international markets and over which we have little or no control.
Last month we published the Nuclear Industrial Strategy, which provides us with essential bridges between our shorter-term policy for the next tranche of new build and the research and development needed for nuclear to play its part up to 2050 and beyond. The strategy’s key actions are to have a new nuclear council that brings together relevant players from across the nuclear supply chain. The strategy will better co-ordinate research and development and innovation through the new bodies—the Nuclear Innovation and Research Advisory Board and the Nuclear Innovation Research Office. It will ensure a long-term plan to meet skills in the sector and will look at how to reduce costs across the industry.
The strategy was in response to the House of Lords Science and Technology Committee’s insightful 2011 report, when the Government undertook a number of actions, along with the findings and recommendations from Sir John Beddington’s advisory board, which formed the basis of the strategy. Government and industry will be working together to drive economic growth and job creation. As noble Lords are aware, we are currently in negotiations with NNB GenCo regarding the contract for Hinkley Point C. The Government are determined to work for a deal that delivers a fair, affordable and value-for-money deal for consumers. Should an agreement be reached, it will be laid before Parliament, and it will include details of the strike price.
Before concluding, I have a number of questions to which to respond, and I will try to whizz through them as quickly as possible. The noble Viscount, Lord Hanworth, asked about our response to the Energy and Climate Change Select Committee’s report on new nuclear. Of course, we welcome the report. It recognises the important role that new nuclear will play in meeting the UK’s energy security, but we will put forward a proper response to the report some time in the coming days.
My noble friend Lord Jenkin asked about investment. I think I laid out clearly to noble Lords that the Government have announced increased investment. Over £45 million-worth of additional investment is going into nuclear research and development, alongside the publication of the Nuclear Industrial Strategy, which was published in March this year. I could give a breakdown, but if noble Lords would like me to do so, I will write to them about that.
My noble friend also asked about EURENCO. The Nuclear Industrial Vision Statement sets out the industry’s own ambitions for the future. The Government intend to work with our partners in EURENCO to move forward preparations for the sale of all or part of our one-third of the shareholding. It is government policy not to continue to hold shares in companies where the shareholding does not deliver any policy objective.
My noble friend Lady Parminter asked whether current electricity market reform proposals are in line with European state aid rules. We are working with the European Commission to ensure that our policies—particularly contracts for difference and the capacity market—are compliant with state aid rules. It is important to ensure that we have a stable and certain regime that has the confidence of industry and provides best value for consumers.
My noble friend also asked about our long-time approach to the management of nuclear waste, as did the noble Lord, Lord Judd. We remain fixed to the idea of GDF being the best way to ensure that nuclear waste is dealt with properly, but we recognise that we need to have communities that come to the process voluntarily. Therefore, when west Cumbria decided in January this year not to go ahead, we began the process of looking at the lessons to be learnt. We recognise that an approach has to be voluntary because in places where voluntarism was not taken forward the process faulted there too.
My noble friend Lord Jenkin asked about the role and structure of NNL. The Government recently announced changes to the management structure of NNL when the current contract expires. We are working with the company to ensure that it is at the centre of our future programme of research and development through the operation of the Nuclear Innovation Research Office.
The noble Lord, Lord Giddens, asked about subsidies in relation to nuclear. The coalition has agreed that there will be no public subsidy for new nuclear power unless similar support is available more widely for other types of low carbon generation. However, it is for the private sector energy companies to construct, operate and decommission nuclear power stations and for the Government and independent regulators to ensure that appropriate levels of safety, security and environmental regulations are met.
The noble Lord also spoke about the experience in France and China. We are already looking at lessons learnt around the generic design assessment, and mitigating risk by making sure that our requirements are understood and that designs are completed on time. But, again, it is for us to work and engage closely with industry and regulators to ensure that early build programmes applied in the UK are built to the UK context.
Both my noble friend Lady Parminter and the noble Lord, Lord Giddens, asked about electricity market reform proposals in relation to nuclear and, in particular, in relation to the minimum price agreement with EDF. We have not yet come to an agreement. We are still in negotiations. These are commercial negotiations and therefore it would not be right for me to discuss here and now where we are with those negotiations. All we can say is that this Government are determined that, whatever price is agreed, it will allow for fairness and provide value for money for the consumer.
I am rapidly running out of time and I still have quite a number of notes to go through. Therefore, I shall conclude and will write to all noble Lords on the questions to which I have not been able to respond. I thank all noble Lords for their valuable contributions to this important debate. We have made, and will continue to make, great progress in ensuring that new nuclear can contribute as much as possible to the UK’s future energy mix. This Government are fully committed to cost-effective new nuclear power contributing alongside other technologies. This is not about ideology; it is about the need to ensure that the UK has a secure and cost-effective low carbon energy supply.