Nuclear Energy (Financing) Bill

Baroness Worthington Excerpts

Committee stage
Tuesday 8th March 2022 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

Well, on many issues, such as the climate emergency, the nature crisis, concern about air pollution and whether we should have a living wage, we have won all those arguments over time, and I fully expect that we will make the same progress here.

The noble Viscount said, “Don’t worry, the costs won’t be borne immediately.” I point to your Lordships’ House having recently passed the Wellbeing of Future Generations Bill—an acknowledgment that we have already laid huge costs on future generations in terms of the destruction of the earth. What we are talking about here is like buying a property and then saying that the ground rent in future will be decided by a random number generator. We do not know what the costs will be, but those costs of trying to dispose of this material exist.

The noble Lord, Lord Howell, said, “Oh, we have the technological solutions”, and the noble Lord, Lord Deben, hinted at the issue when he asked, “Why would future generations dig this up?” We should think about what we have done to the pyramids and a great many ancient sites: here is this mysterious thing from the past and there might be treasures in there. One of the great challenges of trying to decide about deep geological disposal is the question of whether you should mark it or hide it. If you mark it then how do you convey, many centuries into the future, that this is a dangerous place? That is not a question that anyone has ever found an answer to because there is no answer to it.

I would be interested in the Minister’s answer to this. At Second Reading the noble Lord, Lord Oates, said there had not been much discussion of this issue, but when I raised the question of a geological disposal facility the Minister told me there were four places where this was being consulted on. I asked him to identify those places and he said he could not, so I would be interested to hear any updates on that. It rather contradicts the comments from the noble Lord in front of me, who said that three places had already decided. I spoke at Second Reading about my experience of being in Cumbria and seeing what resistance there was, even in a place that is broadly pro-nuclear power, to deep geological disposal.

You do not make a purchase, particularly with public money, without knowing what the costs will be. I have some sympathy with the amendments in the names of the noble Lords, Lord Wigley and Lord Vaux, about trying to make sure that the cost does not land on the public purse—except that the practical reality is that we have seen a great deal of socialisation of costs and privatisation of profits. The state will always be the organisation that has to pick up the costs because the clean-up and the storage have to happen and the state has to ensure the security of its people.

[Baroness Worthington (CB)]

My Lords, I apologise for not being present at Second Reading, and this is the first time I have spoken in Committee. I am speaking to Amendments 3, 44 and 45. Normally, when I speak on matters of climate change, there is not much distance between my position and those of the noble Lords, Lord Oates and Lord Teverson. However, on this issue, I totally oppose Amendment 3, which can be interpreted really only as a wrecking amendment designed to derail the Bill and the financing of this essential infrastructure, which we need to see built for the clean, affordable and secure sources of electricity that we will need in the future. Amendments 44 and 45 similarly seek to derail this effort and therefore should be opposed by the Government.

To pick up on some of the details, at heart, the difference between us is a sense of radiophobia. Noble Lords on the other side believe radiation to be a deadly, uncontrollable source of pollution that cannot be managed, which is just not true. We know how to manage this waste today and will know how to manage it tomorrow. If you know the source of radiation, and whether it is alpha, beta or gamma, and how it can be stopped by simple everyday materials—paper, metal and concrete—you can contain this waste. You can stand today in a disposal facility of high-level waste, in existing reactors above ground, and touch the sides of the casks containing that waste. It is that safe. In fact, the background radiation would be less than you would get if you were exposed to background radiation from visiting parts of Cornwall.

So please can noble Lords engage in this debate on the basis of science? Can you visit these facilities and engage in an understanding of how this currently operates and will operate in the future? If you drop this radiophobia, you will understand that this is essential in the fight against climate change—not only the existing reactors, but the new reactors and existing-design reactors. We need them all. We need to throw everything we can at this. We need to do it safely and securely, and that is what we have been and will be doing.

Please can we not accept this amendment, but have a dialogue and get to the root of noble Lords’ concerns? I am sure, as was pointed out by the noble Viscount, Lord Hanworth, that once you understand the nature of radiation and that the higher the radiation, the quicker it decays, you will understand that this is a manageable problem, unlike the completely unmanaged problem of CO₂ emissions. CO₂ is emitted every second of every day in every country, and is accumulating in the atmosphere with no one taking responsibility. No one is paying for its collection and storage. You have to put this in context, understand the science and visit the current management practices in this country and others. Then you will understand that these amendments are not in good faith; they are designed simply to slow this down, and I therefore cannot support them.

[Baroness Bennett of Manor Castle (GP)]

Before the noble Baroness sits down, perhaps she would acknowledge that the circumstances in which waste is currently being managed are stable—I do not think she was here when I was speaking to the earlier group of amendments, about Ukraine—and we have orderly government and an orderly economic system. We have controls. The world cannot be guaranteed to stay in that place. In another case, waste could look very different.

[Baroness Worthington (CB)]

Perhaps the noble Baroness would like to comment on the completely and utterly irresponsible spreading of misinformation around the Ukraine reactor. People are claiming that it would be 10 times worse than Chernobyl, which is utterly untrue. This is the largest reactor in Europe, yet it is so secure that it cannot be compared to Chernobyl in any way, shape or form, but all this misinformation is circling around it. We have seen that reactor being rendered to a safe point even under the conditions of war. What more proof do you need that this can be safely managed?

[Baroness Bennett of Manor Castle (GP)]

The noble Baroness directed that to me, so I will point out that, yes, the artillery shells did not hit the reactors, but they are designed to deal with aircraft strikes and earthquakes. They are not designed to deal with artillery shells.

[Baroness Worthington (CB)]

Which do you think is more impactful—an artillery shell, or an airliner or F14 fighter flying into the side of the reactor? They are designed for this. They have regular safety protocols and procedure which they go through in considering what should happen in a conflict situation like this. You are really not speaking from a position of information to understand this, I am afraid. I should not use pronouns; I should have said that the noble Baroness should really study this more before making proclamations such as this. It derails this essential effort.

[Lord Teverson (LD)]

My Lords, of course, the problem is actually flooding, as was shown at Fukushima—and bad maintenance, even in an organised society like Japan. The Tokyo Electric Power Company is probably seen as one of the most reliable companies in the world, but it did not do its job and caused a lot of the problem when there was the tsunami. I am not suggesting that a tsunami will hit Ukraine very soon, but there are issues.

I want to move away from the polemics. I thank Labour Members of the Committee for giving us a headline on opposing such facilities, but I admit that it is not the Liberal Democrats who have determined that they have not happened so far; it is the local communities that have rejected them. Maybe that will change. I have huge regard for the noble Baroness, Lady Worthington. I said this at Second Reading and will not go through it again: if you want nuclear, you do not do it this way. You do not build one big facility at 22 billion quid, and decide five years later to build another. You organise it in a different way, perhaps as South Korea did, with a fleet of the bloody things; sorry, I should not say that. This is the most inefficient and crass way of building nuclear power in this country.

[Baroness Worthington (CB)]

We are doing series building. The existing Hinkley Point is two reactors built in series, and these will be another two built in series. That is four, so that is not bad—and they are large reactors, double the size of the existing PWRs. You get what you pay for. You will get an enormous amount of reliable, secure and clean electricity that will be the backbone of our grid. It will flex to allow us to accommodate huge proportions of renewables, and it will be a system where we can produce hydrogen from nuclear. There is absolutely nothing for one to be concerned about in this proposal. I am a fan of alternative reactors; there are other ways of doing nuclear that are inherently safe and would not have led to the Fukushima accident, because they could have been designed differently. However, I ask the noble Lord: how many other reactors sustained themselves through that tsunami? It was unprecedented—10,000 people lost their lives—yet there was only one reactor problem, because it did not allow a release of pressurised air with water and vapour. That was what went wrong, not maintenance. There was a political call, and the reason for that was the world’s media focusing on it because of the radiophobia that has been spread, I am afraid, largely by the green movement over the last 30 years.

[Lord Teverson (LD)]

I can see the Government Benches starting to go for a refreshment break; never mind. I am trying to make a serious point. I have been to Hinkley C; I understand it all, believe me, but this is the wrong way to do it—the technology is obsolete. The question I want to ask the Minister outside the polemics is about the Nuclear Liabilities Fund, which he will be well aware of. Its current value in assets is £15 billion, largely through the Government’s sale of British Energy. We heard from my noble friend Lord Oates that the potential future liability is some £53 billion. EDF pays into the Nuclear Liabilities Fund at the moment.

My question is around the problem of there being a future liability that cannot be met. How does the Minister see that developing? Will the fund be able to meet the costs in the future? I am particularly interested in understanding whether the fund is in a bank account somewhere or is just an item on the Treasury’s balance sheet, so it is not really there and is just absorbed into public expenditure. It is a serious question. I would like to understand the previous methods that have been used to make sure that there is not a liability in the future. The figures just seem totally inadequate. Even if we do go through these types of facilities, how will we make sure that the liabilities can actually be met?

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[Lord Stunell (LD)]

The noble Lord is almost certainly right. That ship has sailed, to say the very least. In phases one, two and three of the nuclear programme, no adequate provision was made for decommissioning or any way of storing the waste. Unfortunately, that will clearly fall back on to the public sector in some form or another.

We are talking about a new generation. It is surely right and proper to learn from the mistakes of the last 60 years and make sure that that is properly costed in the formulation given for the construction and operation of these plants. I do not think that it is particularly controversial that we should learn from previous experience, although it is often very hard to do so.

Is the Minister satisfied that the public purse will be properly protected over a period of time from finally picking up the costs of geological disposal of nuclear waste from the plants that this Bill is intended to finance? The Government ought to answer that honestly and frankly so that there is no illusion on anyone’s part either about what is happening in terms of public subsidy or that the true costs of delivering a nuclear programme incorporate the costs of decommissioning, rather than shuffling them off at the start and delivering them as a bill of unknown but undoubtedly large size to the public purse.

[Baroness Worthington (CB)]

Before the Minister responds, I would be interested in whether we should have a review of the societal demands of how we treat the decommissioning and waste of nuclear, because it seems to me that we are operating against a set of principles that have become detached from the reality of how you can manage this more cost-effectively. A large body of evidence says that geological disposal is not needed, because you can just do subterranean management. If it were not for the widespread lack of understanding about the nature of the problem and the way it can be dealt with, we would not have to incur these costs. If there is a review, we should go back to basics.

The same is true of decommissioning. The simplest and cheapest way to decommission is to leave it alone and then decommission it. The desire to bring it back to greenfield status is utterly unnecessary. These are highly concentrated industrial sites that serve clean energy to millions of people. We should not be seeking to return them to greenfield on an accelerated timescale, unnecessarily incurring huge costs to the taxpayer. We should have a review, go back to basics and consider all of the above in terms of what we should do with our waste and decommissioning.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I shall speak to Amendments 3, 17, 20, 42, 44 and 45, laid by the noble Lords, Lord Oates, Lord Teverson, Lord Wigley and Lord Vaux, and the noble Baroness, Lady Bennett. They relate to decommissioning and it is appropriate that they are all discussed together.

Prior to doing that, I will address the comments of the noble Lord, Lord Teverson, on the Nuclear Liabilities Fund. The NLF is a segregated fund which has been set up to meet the costs of decommissioning nuclear power stations currently owned and operated by EDF. The fund is managed by an independent Scottish trust, the Nuclear Trust. The trustees are responsible for ensuring the sufficiency of the NLF to meet decommissioning liabilities. I hope that that answers his questions.

I return to new nuclear and make it clear to the Committee that there is already a robust and effective statutory regime in place that addresses the decommissioning costs of new nuclear power stations. Under the Energy Act 2008, it is a legal requirement that all proposed new nuclear power stations have a Secretary of State-approved funded decommissioning programme in place before nuclear-related construction can commence on site. This includes setting out how the operator will safely manage spent fuel and waste during operations and meet the costs of decommissioning and the clean-up of the site. I note with interest the comments made by the noble Lord, Lord Wigley, and welcome the opportunity to meet him if he would like to discuss this process further.

As part of the FDP approval process, the Secretary of State must consult the Office for Nuclear Regulation—the ONR—and relevant environmental regulators where their functions are concerned. The Government have also published FDP guidance, which clearly sets out the principles that the Secretary of State will expect to be satisfied in an FDP. I note that we expect any approved FDP for a new project to be available publicly, as was the case for Hinkley Point C, save for material of a sensitive nature.

Approximately 94% of legacy waste created by nuclear power stations in the UK is low-level waste, which is either recycled or disposed of safely and securely. Higher-activity waste is treated and stored safely and securely in nuclear-licensed sites around the country. This will then be disposed of in a geological disposal facility, which the Government are committed to developing. The noble Baroness, Lady Worthington, made these points eloquently and I thank her for her contribution. A GDF will ultimately allow the Nuclear Decommissioning Authority to complete the decommissioning and clean-up of the existing nuclear estate and to continue to manage radioactive waste effectively. This is the safest and most environmentally responsible option for managing higher-activity radioactive waste in the long term and there is a process under way to identify a suitable location for a GDF.

The noble Lord, Lord Callanan, recently wrote to the noble Baroness, Lady Bennett, on this very matter. A GDF working group, which is the first formal step in the process to identify a suitable location, has been formed in Theddlethorpe in Lincolnshire and is beginning discussions with the local community. In addition, the first three GDF community partnerships—the second formal step in the process—have been formed in Mid Copeland, South Copeland and Allerdale in Cumbria. These groups provide a platform for long-term community engagement, local investment funding and investigations to assess potential site suitability.

It is for these reasons that I cannot accept Amendments 3, 17, 20, 44 and 45. The FDP regime in the Energy Act 2008 already exists to ensure that new nuclear projects have effective arrangements in place before they begin construction to manage, pay for and dispose of the waste that they create. Amendment 3 in particular would prevent the Government from bringing forward new nuclear power using the nuclear RAB model that we need to decarbonise our power system and help meet our ambitious climate change goals. A GDF is the best option for the long-term management of radioactive waste and I thank the noble Viscount, Lord Hanworth, for his support for such a facility. I also thank my noble friend Lord Howell for his thoughtful reflections on this matter. As I said, a process is already under way to identify a suitable location with a community willing to host a GDF. It is imperative that we bring forward nuclear now, given that arrangements are in place for safe, secure interim storage of waste and its ultimate disposal.

The noble Lord, Lord Oates, made several comments on the potential costs of a GDF and how our understanding of these has developed. The earlier cost figure to which the noble Lord referred represented a lower-end single point estimate around some basic assumptions on the depth and type of rock in which the GDF would be constructed. It included only the cost of disposing of legacy waste. The revised cost range of £20 billion to £53 billion is a more mature and complete estimate based on credible scenarios. It includes figures for waste from new nuclear projects and materials such as uranium and spent fuel from earlier nuclear power stations, which may be declared as waste if no further use is found for them. It also accounts for factors including uncertainty and optimism bias. Uncertainty will be reduced as we progress through the siting process. We will understand the specific geology and associated engineering and technical requirements, allowing us to refine our cost estimates.

I turn to Amendment 42, which was laid by the noble Lord, Lord Vaux. It is our understanding that the intent of the definition of “associated” in Section 67 of the Energy Act 2008 was to provide the Secretary of State with the flexibility to impose decommissioning obligations on entities that would be expected to have a substantial degree of influence over the operator’s normal activities, such as the operator’s group companies and shareholders with an interest in the company significant enough to influence its decisions.

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[Lord Wigley (PC)]

I am sorry to press this further, but of course there will be negotiations and some sort of a deal will be made with those developers, but if the circumstances change, as happened at Trawsfynydd, and there are immense additional costs beyond what was anticipated, surely there has to be a public guarantee to those communities. Those communities have supported nuclear power on the basis that such an understanding exists. If it is not there, there will be a volte-face, and there will be a reaction against nuclear power. This assurance has to be given one way or the other. If the Government want to go away, think about what mechanism is appropriate and come back on Report, I accept that, but to say that in no circumstances would the Government pick up the tab is to kill off the prospect of those locations.

[Baroness Worthington (CB)]

I do not think that that assertion is correct, because my understanding is that once the nuclear industry stopped building new reactors it moved into decommissioning. What we had was a period in which the entire sector was making all its money from decommissioning costs. The reason that those costs kept rising was that we had a very poor regulator which allowed a reciprocal relationship with private contractors, who brought forward all sorts of faster decommissioning timetables. That was nothing to do with what society needed or required; it was to do with the profitability of the industry. I hesitate to say that there are these red lines where society will not accept a new reactor because of decommissioning. It is much more complicated than that. We must be careful that we are not gold-plating regulations that deliver millions of pounds to contractors unnecessarily.

[Lord Wigley (PC)]

I entirely accept what the noble Baroness is saying, but circumstances will change and there will be costs that have not been anticipated. Those will be picked up either by the local community or by someone else. If it is someone else, who else can it be but central government?

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[Lord Oates (LD)]

I have heard this from others, and the argument seems to be, “Well, we’ve created such a mess already that it doesn’t make much difference if we create any more.” They may create less waste than the old Magnox reactors, but all I am asking is that, before we create more of that waste, we have a way of disposing of it. It is important that we take that seriously, whether we are pro-nuclear or anti-nuclear. We will not convince people unless we deal with this sensibly. In terms of this Bill, we cannot know the real costs unless we understand the costs of construction and operation.

[Baroness Worthington (CB)]

My Lords—

[Lord Oates (LD)]

I say with respect to the noble Baroness, Lady Worthington, that she has intervened on many occasions and we probably need to move on. I just ask that these matters be taken seriously and that when people discuss nuclear waste they think about it in terms of the very long term over which it has to be dealt with and the fact that we do not yet have that GDF and cannot possibly know the costs of it. I beg leave to withdraw the amendment.

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[Viscount Hanworth (Lab)]

My discourse on renewables would have been on the extraordinary cost of having to accommodate intermittence. I am afraid there are other things to discuss. I have already discussed this in another forum, so I think we can leave that point.

[Baroness Worthington (CB)]

My Lords, I will speak briefly on Amendment 4, as much of what I was going to say has already been covered. I have some sympathy with this amendment, as transparency is nearly always good and it would benefit the industry to have a thorough description of the value of investing in nuclear on this and other scales, so that we have it as an option as we combat climate change and seek to deliver affordable power to the nation.

As the noble Lord, Lord Howell, pointed out, value is subjective. Therefore, it would be hard to use it as an objective way of saying that this should not go ahead. What value does Switzerland currently place on its electricity grid, which is almost 100% hydro and nuclear? That means that, despite its location in the centre of Europe, Switzerland is feeling incredibly safe in these troubled times. What value does it place on that? It is of huge value to Switzerland.

Similarly, the social cost of carbon rapidly needs to be revised as we realise that the impacts of climate change are happening far faster and at far greater cost than we ever thought. How do we factor that into value? Transparency is important and I would welcome a much more open discussion about the value that these large-scale nuclear power projects deliver for us. You can look at the levelised cost of electricity, but I suggest it is not the most important factor. You can pay a lot less for a tricycle than for a tractor, but they do not perform the same job. You must compare like with like.

With renewable technologies you have rapid deployment but very diffuse sources of energy, large land take and intermittency, which then requires a substantial extra cost on the grid for levelling when the sun is not shining or when we have periods of no wind, which does happen in Europe—it happened recently, actually, and contributed to the high gas prices we have seen. Let us have that discussion. I feel confident that the project we are talking about here, Sizewell C, will provide a great value for the money we are about to spend, not least because 50% of its additional cost comes from its financing, as has already been stated. That is a huge overhead, because these are capital-intensive long projects. This Bill will help reduce that and increase the value for money.

We now have two reactors under construction today. We can look at the costs of those to see how they transfer to subsequent projects that are funded under this more efficient mechanism. I have been informed about and questioned EDF about its cost overruns. The costs of the two reactors being built today are in line with what you would expect if you were building a huge construction project through the period of Brexit and Covid. Nearly all the inflated costs are true of all big infrastructure projects and are not unique to the nuclear project currently under way. So I would welcome having this conversation. I think transparency would be a friend of the industry and I therefore have some sympathy with this amendment.

[Lord Oates (LD)]

My Lords, I will concentrate in particular on Amendment 6, addressing nuclear outages, and Amendment 37, which would protect recipients of universal credit from being liable to the levies under this Bill. I support the amendments in the name of my noble friend Lord Foster of Bath, and I am slightly bemused about why it is not recognised that we should understand the basis of the value for money test, given that it is in the Bill.

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While it may be true that the sun does not always shine and the wind does not always blow, it is equally true that nuclear power plants do not always generate. If a plant such as Hinkley—I am told it is estimated that, when it finally comes online, it will form something like 6% to 8% of total generating capacity—goes offline, we had better have some back-up for it. I hope that in his reply the Minister addresses some of these points and tells us what plans the Government have to ensure that that back-up exists to cover nuclear stations when they are non-operational.

[Baroness Worthington (CB)]

When we embarked on our nuclear build, we also took government money to build our hydroelectric pumped storage units, which were designed specifically to compensate and were built alongside the nuclear units. We are losing nuclear units, but we still have our hydroelectric pumped storage. The noble Lord can speak to National Grid. As we are not going to be seeing the same parity of nuclear output even after we have built the next round because we are losing the AGRs, we have more than enough capacity on the grid to cope with those fluctuations.

[Viscount Hanworth (Lab)]

I regard this amendment as a complete blind. Indeed, the figures that have been quoted do not tally with the ones to which I am privy. Large nuclear power plants are the only proven technology available today to provide a continuous and reliable source of low-carbon electricity. They have never been afflicted by major unplanned outages, albeit that as nuclear power plants—

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[Lord Howell of Guildford (Con)]

My Lords, surely no one is suggesting that these are alternatives, or if they are then that is not what any sensible assessment would allow. Of course the aim for a decarbonised world has to be sought through many forms. All that is being said is that to leave out one of the major areas of decarbonised electricity is asking for trouble, unless one can begin to assess the enormous costs of trying to fill it in in areas where it may not even be available.

The example of Germany is one that the noble Lord should perhaps bear in mind. The rumour is that, having tried to do without nuclear power and got down to its three remaining nuclear stations, there is strong talk that if it is to move into the new world that we are facing now, which has all sorts of implications for the future, a large chunk of reliable low-carbon nuclear capacity must be either retained or developed to add to all the other highly desirable things for net zero and all the other projects, including of course energy efficiency and a far greater use of every kilowatt of electricity for output, which is the secret of considerable improvement without too much electricity. If that is what is being argued, we are all for it, but nuclear electricity is an unavoidable part and to drop it seems a bit odd and very high-cost indeed.

[Baroness Worthington (CB)]

The noble Lord, Lord Teverson, has talked about the cost of energy. I agree with him that it is very important that we take this issue seriously. The reality is that the CfD mechanism, which will still be part of the financing mechanism under the RAB model, will pay back when we see these very high prices—some of those CfD models are paying back to consumers. My question for the Minister is: under the RAB model, if it pays back in future, will that revenue flow back to consumers or will it sit with the Treasury?

One of the criticisms that could be levelled at this idea is that it is regressive. If it were a tax, those who could afford to pay it would pay more while those who could not would pay less. The universal credit amendment is trying to say that the regressive nature of this needs to be thought about. If you exclude someone from the payments then you might be excluding them from the repayments if the CfD provides revenue back, so this needs thinking through. There is a real question here about its regressive nature. If the CfD is paying back in, are we holding that in the Treasury or could it go back to the consumer?