Nuclear Power Funding

Greg Hands Excerpts

Tuesday 9th November 2021 Westminster Hall

[The Minister of State, Department for Business, Energy and Industrial Strategy (Greg Hands)]

It has been an excellent debate. I congratulate my hon. Friend the Member for Ynys Môn (Virginia Crosbie) on securing this timely and important debate. Having met her as recently as yesterday to discuss these vital issues, I know how important this subject is to her and her constituents, although I am sure she would agree, as she did in her speech, that the topic is also of national importance.

Our net zero strategy puts the UK on a trajectory to meet carbon budget 6: a 78% reduction in emissions over 1990 levels by 2035. Ambitious goals are vital as we are currently hosting COP26 and mobilising global efforts to tackle climate change. Integral to achieving carbon budget 6 is our new ambition to fully decarbonise the power sector by 2035, also referred to by my hon. Friend. This will mean the UK is entirely powered by low-carbon electricity, subject to security of supply.

The future energy system will be predominantly made up of wind, solar and other renewable power, but as was clearly set out in the net zero strategy, following the Prime Minister’s 10-point plan and the energy White Paper, and as I was pleased to reiterate last week at COP26, nuclear has a crucial role to play in meeting our targets for reducing emissions and ensuring our energy security. It is a source of continuous reliable and low-carbon electricity which, as my hon. Friend said, has been a central part of our electricity system for 65 years, since the 1955 White Paper and the first civil nuclear power plant anywhere in the world at Calder Hall. Nuclear energy acts as a firm foundation for the remarkable progress we have made in decarbonising our power sector, reducing the UK’s total emissions by 44% since 1990.

My hon. Friend also referred to the benefits of nuclear power beyond simply keeping the lights on. High-skilled, high-productivity jobs, which are much needed in her constituency, in the civil nuclear sector contribute billions of pounds to the UK economy. More than 60,000 people are employed in a truly national industry with key hubs in Wales, Scotland and across the south, west, east and north of England. With 12 of the UK’s 30 current nuclear reactors scheduled to close between 2022 and 2030, if we are to reach our net zero goals, we need new nuclear power and the reliable, emissions-free electricity it provides.

My hon. Friend welcomed hydrogen power, and I know she is a great enthusiast for every aspect of our energy strategy. There is definitely more for her in the hydrogen strategy, which we launched in August. She mentioned Hitachi at Wylfa. The great advantage of the Nuclear Energy (Financing) Bill—a significant piece of legislation—is that it will allow more optionality, flexibility and more types of finance to come in, including British pension funds as well as institutional investors. I am delighted, as she and I well know, that Westinghouse Electric Company, Bechtel and others are interested in this new financing model. She asked about building multiple plants and whether we need more plants. The answer is that the Bill will not be technology specific within nuclear. It will allow for large plants. AMRs and SMRs can all be financed using the means in the Bill.

The hon. Member for Paisley and Renfrewshire North (Gavin Newlands) made some familiar points. He described the UK Government as being blinkered, but I would say that the same charge might be made against him in letting down communities in Scotland that are reliant on and determined to have nuclear power, with fine nuclear traditions, and electricity customers benefiting from a cheaper, more resilient, lower-carbon electricity system going forward. He asked why the £1.7 billion in the spending review is for Sizewell C. It is not specific to Sizewell C. He said that we do not need nuclear to decarbonise. Well, actually, the United Nations, no less, disagrees with him. The UN Economic Commission for Europe has stated that international climate objectives will not be met if nuclear power is excluded.

Of course, the Acorn cluster has not been rejected. The Acorn cluster for the CCUS—carbon capture, utilisation and storage—decision a few weeks ago is first reserve. It is very much not rejected but very much recognised. We look forward to continuing to work with the Acorn cluster.

The hon. Gentleman then attacked the Government for choosing two projects that happen to be in the north of England and said that was favouring the Government’s levelling-up agenda. I think he implied that there might have been something not quite right about it, but that is actually not the line that the Scottish National party has been following in the past couple of weeks. The hon. Member for Kilmarnock and Loudoun (Alan Brown) was here only two weeks ago congratulating the two successful clusters on being designated as such by the UK Government.

The hon. Member for Southampton, Test (Dr Whitehead) rightly points out Opposition Front Benchers’ in-principle support last week on Second Reading, which we very much welcome. In terms of his specific questions, he is right that the RAB model has advantages and has challenges. We agree, but we think that it will save the average bill payer about £10 per annum over the 60-year life of the project’s construction and operation. On Bradwell, the Government’s position has not changed: it is not a decision for now. In any case, CGN does not have regulatory approval for its reactor. He asked about Hinkley Point C, which we think will save the equivalent of 9 million tonnes of CO₂ during operations over an estimated lifetime, again, of 60 years. On Sizewell, he asked whether the £1.7 billion is designed to buy CGN out of Sizewell. No. CGN has a 20% stake in Sizewell up to the point of final investment decision. Negotiations are ongoing and no decisions, including on the final configuration of investors, have yet been made.

We are fully committed to our key nuclear objectives of approving at least one large-scale nuclear project during this Parliament and supporting the development of exciting new technologies, including small modular reactors. Good progress has been made on both counts. We have been engaged in constructive negotiations on Sizewell, as I mentioned, and we have also, just overnight, had a major announcement about funding for the Rolls-Royce SMR project. Funding for that project will be matched by private investment. The question at the centre of this debate—that of funding nuclear projects—is one of the key challenges given the scale and complexity of nuclear plants and the time they take to build.

We have already mentioned the Nuclear Energy (Financing) Bill. I am delighted that it will now start its progress towards Committee. I am looking forward to engaging with the hon. Member for Southampton, Test on it as early as next week. It will be a good chance to work together across all parties to show that the UK can do this. The spending review set out a series of other measures in terms of extra financing—the £1.7 billion already referred to and the new £120 million future nuclear enabling fund.

In conclusion, I once again thank my hon. Friend the Member for Ynys Môn for securing this debate. With her constituency in mind, and both the historical and current contributions that Wales makes to the UK nuclear sector, I am excited for the opportunities in Wales overall, and on Ynys Môn in particular, which could be unlocked by the measures that we have described. As I said, new nuclear is crucial to addressing climate change, ensuring our long-term economic security, and supporting national prosperity. I look forward to further engagement as we continue the passage of the Nuclear Energy (Financing) Bill.