Science and Technology Committee: Nuclear Research and Development

Lord Crickhowell Excerpts

Tuesday 19th June 2012 Grand Committee

[Lord Crickhowell]

My Lords, during the debate on the gracious Speech, I spoke about this report and described the extraordinary discrepancy between the view, on the one hand, of government officials in DECC and the previous Secretary of State and, on the other, those of almost everyone else, including the Government’s own scientific advisers. I quoted our conclusion:

“A fundamental change in the Government’s approach to nuclear R and D is needed now to address the complacency which permeates their vision of how the UK’s energy needs will be met in the future”.

I went on:

“Those were strong words and they seem to have detonated like a nuclear explosion within DECC. The Government’s response, accepting almost all our recommendations, appears to represent the fundamental change in approach to R and D that we demanded. It also acknowledges, ‘that nuclear power stations have a vital part in our energy strategy’”.—[Official Report, 16/5/12; col. 464.]

I welcomed the change, but said that I remained acutely concerned about the Government’s wider approach and about what I fear is still a possibility, an acute energy security crisis.

Many of my concerns remain. I believe that every member of the committee was deeply disturbed, indeed shocked, by the flaws in the approach of the department over this important area of its responsibilities that were exposed during our evidence sessions. Comforting although it is to have our criticisms and recommendations so comprehensively accepted, confidence was shaken and it will take a good deal of effort for it to be fully restored. What is important now is to see the commitments made in the Government’s response turned into reality.

The publication of the long-term strategy document in the summer, the creation of an advisory board led by the Government’s chief scientist and the development of the promised road map will all be significant steps, but a number of our recommendations are taken no further than the promise that they will be considered by the advisory board and as part of discussions on the road map. As the noble Lord, Lord Krebs, has already observed, many questions are unresolved. The Select Committee will need to keep a close eye on events as they unfold.

This is not the moment to range widely over energy policy and the problem issues I referred to in the debate on the gracious Speech. The coming debates on the energy Bill and the proposed hugely complex system of contracts for difference will provide plenty of opportunities for that. I believe that the nation’s energy security depends on a substantial nuclear component and will listen closely to the debate about whether that will require up-front price subsidies of the initial high capital costs of nuclear to produce competitive low-cost energy over a 60-year life cycle and whether the Government’s complex scheme will provide the certainty and confidence that France’s EDF and probably others will demand if they are to go ahead with the planned nuclear programme.

I leave those vital questions for now. I want to take up two points that arise directly from our report. The first is covered by paragraphs 84 to 86 and the former Secretary of State’s comments about oil and gas scenarios. Those responsible for energy policy have now to face the reality that gas prices are most unlikely to be at the top end of Mr Huhne’s alternative scenarios but are likely to be at the bottom. I shall, I hope, explain as I go on why this is a completely relevant topic to consider in the context of a report on nuclear R and D.

North American gas prices have tumbled due to the successful exploitation of US shale gas reserves. There are vast shale gas reserves around the world, including in Europe and under European waters. They are so vast in China, Mexico and South America that the energy resource geography of the world is likely to be completely transformed. That was the view of Professor Mike Stephenson of the British Geological Survey, who is also the director of the Nottingham Centre for Carbon Capture and Storage, who was speaking at an important seminar I attended yesterday at the Geological Society in Burlington House.

The Government appear to have been playing down the potential for UK shale oil, but the Commons Energy and Climate Change Committee has concluded that a moratorium on extraction in the UK is not justified and the way has been cleared for further exploratory work. That is important because at present we simply do not know how much we have. The BGS’s early estimate for the area being looked at in the north-east is likely to be revised up later this year, and estimates for the rest of the UK onshore will follow. Melvyn Giles, global head of unconventional gas and light oil at Shell, has recently reported that the UK’s offshore reserves are “mind-blowingly big”. At the moment, extraction costs make offshore reserves completely uncompetitive, but developing extraction technology may well change that. Onshore, it seems highly probable that the rest of the world will over the next few years follow the American lead.

The Select Committee’s report was about nuclear R and D; but R and D of one potential energy source cannot, or should not, be carried out in isolation. The reality is that UK shale gas exploration is in its infancy. We do not know how much is down there, onshore or offshore, we do not know what proportion is retrievable and we know very little about the likely cost of extraction. We also have much to learn about the potential environmental impact, given the political need to reassure the public that shale gas can be extracted safely. Almost everything I heard at Burlington House was reassuring, but the truth is that everyone has been caught a little by surprise by the speed of events and there is a need to catch up. Most of the studies produced so far in the US and here lack peer review. There is an urgent need for independent peer-reviewed assessment to identify low risks—the things we do not have to worry about—and those that are high risk that need to be regulated for public safety and to satisfy public opinion. There is a need to collect much more data.

If we are to have a sane energy policy, we need to know much more about these hugely important changes in the world’s energy resources and markets as a matter of some urgency. An article in the May edition of the journal of the Foundation for Science and Technology, entitled “The gas supply revolution”, by Malcolm Brinded, former executive director of Shell’s Upstream International business, provides compelling evidence in support of that argument, whether the primary concern is global warming, energy security or cost.

I believe that DECC should be encouraging a substantial research programme, perhaps jointly with the countries in eastern Europe that have vast reserves but could make good use of our expertise and regulatory experience. The funding councils stand back from such programmes, believing that it is a job for the oil industry, but researchers outside the oil industry have to be more and more involved if we are to get the information that we need. I do not apologise for saying all this on the back of a report on nuclear research. We need to have a properly co-ordinated programme of research that covers the main energy sources. They need to be looked at together. I have no doubt that this is a topic to which the Select Committee will have to return.

I turn to the subject of the UK nuclear industry’s potential,

“contribution to jobs, growth and high value exports”,

to pick up a quotation from the Government’s response. The Times, in a leading article on 11 June, observed that we need,

“to identify sectors, such as creative and professional services, health care and pharmaceuticals, the growth of which could make Britain a net exporter”.

The committee heard ample evidence that, despite several decades of government neglect, nuclear should be included in that list. I refer to paragraphs 67 and 68 of our report, which contain the TSB’s estimate that the global nuclear fission market is worth about £600 billion for new nuclear build and £250 billion for decommissioning, waste treatment and disposal over the next 20 years, with considerable opportunities for UK businesses. Paragraph 68 describes the R and D competition that the TSB has launched for feasibility studies targeted at SMEs, which could become part of a new nuclear supply chain and its likely future round of investment for larger collaborative R and D.

Evidence in paragraphs 72 to 74 suggested that the real opportunity would be,

“‘taking a lead now in the development of some of the technologies for future systems’ so that the UK had an exportable technology in two, three or four decades time and could take advantage of the ‘£1.7 trillion of investment worldwide’ in these technologies”.

Mr Ric Parker of Rolls-Royce told us that,

“there are two clear areas for the UK to play a role in the development of these technologies: the prime investment is in high-integrity manufacturing, monitoring and some of the technical and engineering support for these new facilities”.

He also thought that,

“small reactors, of the 200-, 300 megawatt size … could be a major earner for the UK”.

Paragraph 5 of the Government’s response talked of a commitment to securing the maximum economic benefit to the UK from investment in nuclear power generation. That will require more effective joined-up government, particularly between DECC and BIS, than we detected in the evidence that we received; and more effective international co-operation, something that has already been mentioned by colleagues, including the reinstatement of the UK’s active membership of the Generation IV Forum—our recommendation 5. The encouraging reality is that nuclear is not just a costly necessity but provides a huge opportunity for the growth of a large and profitable international industrial sector. We must seize that opportunity.