Nuclear Energy (Financing) Bill

Lord Stunell Excerpts

Committee stage
Tuesday 8th March 2022 Grand Committee

[Baroness Wilcox of Newport (Lab)]

My Lords, this group of amendments centres on the important aspects of nuclear waste and the decommissioning process. As we have heard, they give rise to polarised opinions. I will be brief, given the number of amendments that we are aiming to get through this afternoon.

A number of speakers raised issues around nuclear waste at Second Reading. The Minister acknowledged that work on a geological disposal facility to dispose of high-level waste permanently is still ongoing. It is doubtful that the Minister will be able to provide any meaningful updates on that project this afternoon, but I may be proved wrong.

There are genuine questions to be answered. However, whether they need to be answered in full through this Bill is less clear. The answer to that question may lie in the likely process once the Government are finally ready to proceed with their chosen long-term solution. Will separate legislation be required to get that project under way?

[Lord Stunell (LD)]

My Lords—

[Lord Foulkes of Cumnock (Lab Co-op)]

Oh, no.

[Lord Stunell (LD)]

Yes, I know—it’s boring hearing the facts, isn’t it? I apologise for not catching the noble Baroness’s eye earlier but I want to contribute briefly to this debate with just a couple of historical facts that might help.

I thank the noble Lord, Lord Howell, for his words about the Liberal Democrats in the coalition. As one of the four people from the Liberal Democrat side who contributed to the agreement with the Conservatives, my recollection on that is that, as I am sure he will remember, nuclear power was to be at no cost to the public purse. That was very much the coalition’s starting and finishing point; I hope that it will continue to be so.

I have done most of the things that the noble Baroness, Lady Worthington, invited us to do to apprise ourselves of the facts. Indeed, back in 2001, with the active co-operation of BNFL—British Nuclear Fuels Ltd—I produced a short report, Cleaning Up the Mess, which looked specifically at what would be the best way to deal with nuclear waste; at that time, it was much more prominent in the headlines than it is now and just as intractable. We looked at some of the conditions needed. One is stable geology but the other, which the noble Baroness, Lady Bennett, mentioned, is stable politics. If you look at Europe, only two countries —England and Sweden—have had even 350 years of political stability. Of course, the events in eastern Europe at the moment are a reminder of that.

[Lord Foulkes of Cumnock (Lab Co-op)]

It seems to have been relatively stable in Scotland.

[Lord Stunell (LD)]

I am sure that the noble Lord’s colleagues from the Scottish National Party will remind him of the Act of Union, which was subsequent to that date. Yes, England was a deliberate choice, but I will accept other places; it is hard, however, to find another place other than Sweden that has had even 300 years, let alone however many thousands of years we are talking about, of stability.

[Lord Foulkes of Cumnock (Lab Co-op)]

What about Portugal?

[Lord Stunell (LD)]

Let us try Portugal. The Duke of Wellington was required to liberate Portugal from Spanish and Napoleonic domination. It is easy to forget Napoleon and Hitler and all sorts of things but—not that it is particularly relevant to this debate—political stability is important and rare. This country is one of the places that has been able to exhibit that despite our sometimes fractious debates on nuclear storage.

The conclusion of my report was that you need deep geological storage. It would be sensible for it to be in England. This is not, and never has been, Liberal Democrat policy, but my report pointed out that there was a big business opportunity because nobody else in the world—neither then nor, for that matter, now—had a good place to put their nuclear waste. I am certainly not opposed to having a deep geological disposal point.

The purpose of this is to establish the risk and the cost to the public purse. I go back to where I was in 2010—that there should be no cost to the public purse. We have gone backwards since 1999. Then we at least had a site and a plan—or BNFL did, which was strongly advocating it—but at the moment we have neither. We had a timescale; it would have been operational in 2024, which would have been very convenient for the passage of this Bill. Now it will probably not be for another 25 years, even if it gets a fair wind.

[Lord Wigley (PC)]

When the noble Lord says that there should be no cost to the public purse, is that in regard only to future projects or also to existing nuclear power stations? I mentioned in my intervention the situation in Trawsfynydd, the cost of decommissioning which could never have been anticipated when it was built. Is there not a case in those circumstances that the public purse is the only way to bail out that sort of situation?

[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.

Nuclear Energy (Financing) Bill

Lord Stunell Excerpts

Report stage
Thursday 24th March 2022 Lords Chamber

[Baroness Worthington (CB)]

My Lords, I shall speak to this group of amendments, particularly Amendment 1, moved by the noble Lord, Lord Oates. As I said in Committee, I have some sympathy with the greater transparency of the assessment of the value for money of new nuclear, partly because it will prove once and for all that there is a very strong case for pursuing reinvestment in our nuclear capabilities at every scale, whether the large-scale reactors that we are considering at Sizewell and Hinckley Point, or the SMRs, which I hope will be pursued with a considerable increase in speed as we address our needs for secure, affordable and zero-emission electricity.

As noted by the noble Baroness, Lady Bennett, we will be seeing a greater need for electricity. We will, I hope, see a huge increase in energy efficiency as we move to electric vehicles, because they are inherently more efficient than the combustion engine fuel supply chain, but there will be a greater load on the grid so we will need vastly more electricity, even as we get more efficient. We need a varied set of technologies providing power reliably and with resilience throughout the year. Nuclear can clearly play an excellent role alongside greater increases in solar, wind and other forms of renewable electricity. There is no need for these to be seen as competing; they complement each other very well.

I suspect that the Minister will reply that it is not necessary and that there will be information in the public domain about the choice. The noble Lord, Lord Howell, made a very compelling case for how difficult it would be to provide a full value-for-money assessment when such things as national security are so hard to translate into a sum of money. As we noted in Committee, there are countries much less concerned by the terrible events in Ukraine because of the nature of their electricity supply. It is right and proper that the UK should pursue the Bill—that we get on with it and see money flowing in the sector, which has been very stop-start. If we get this going, can sustain our interest and not do stop-start, the value for money will increase. The Bill is all about making these investments less costly for the taxpayer and the consumer and I support it. I am sympathetic to the amendment, but I do not support it.

[Lord Stunell (LD)]

My Lords, there were a couple of paper tigers dancing around in the Chamber today. I will deal with one of them straightaway. We are not unique in this Chamber in thinking that it is a good idea to do a value-for-money study on these projects. In Clause 2(3)(b), one of the criteria for designation is that

“the Secretary of State is of the opinion that designating the nuclear company in relation to the project is likely to result in value for money.”

Given that the Government themselves believe it is appropriate to have a value for money study, those who think we have somehow dreamt up something totally unfeasible, ridiculous and stupid need to address their remarks to the author of the clause, not the authors of the amendment. The two amendments actually say two things, the first of which is that we believe the Secretary of State thinking it likely to result in value for money is not a sufficiently high level of evidence. It needs to be that it

“will result in value for money”.

I would express that as being the difference between “the balance of probabilities” in a civil case and “beyond reasonable doubt” in a criminal case. Basically, we want a better than 50% chance that the value for money guess comes out right. I do not think that unreasonable or contrary to the spirit of value for money, as Governments ought to be exercising it when spending public money. That needs to be considered quite carefully by those who think that value for money is somehow a Liberal Democrat evil which has been conjured out of nowhere.

The second of our Amendments says that when that has been done it should be published. My noble friend Lord Oates drew on examples in the nuclear industry in the past 60 years of evidence and material being gathered and kept very, very quiet. Of course, eventually it all comes out, if only in the decommissioning costs or from the actual unit cost of producing the electricity, which nobody can any longer avoid. The first generation was built on the basis that the electricity would be so cheap we would not need to have electricity meters. We tend to forget that those kinds of claims were ever made, but they were never supported by evidence because the evidence was never published at a relevant time when it could have affected the decisions being made.

The two amendments the Liberal Democrats have put into play are based on making sure that the Secretary of State does a proper value for money exercise and that they base their decision not just on the balance of probabilities—“If we’re lucky it’ll be all right; if we’re unlucky, well there we go”—but with some reasonable level of certainty that the exercise has produced the right result. Making it transparent and putting it on the public record is a good way of making sure that those who make a professional evaluation of value for money are well aware that what they put into their report will be in the public eye and open to challenge and discussion.

If only that had been the case with previous generations of nuclear generation decision-making, we would have got a better outcome. I do not mean that there would be no nuclear plants built, but we would have perhaps avoided what the noble Baroness, Lady Bloomfield, speaking on behalf of the Government, complained about in relation to the decommissioning process. The noble Baroness, Lady Worthington, said that it is necessary to avoid “gold-plating” decommissioning costs

“that deliver millions of pounds to contractors unnecessarily”.—[Official Report, 8/3/22; col. GC 434.]

I thought those were powerful words. She was talking about decommissioning costs, but should we not be doing the same with commissioning costs? What can be wrong with testing that out?

Also, value for money is not something that can be assessed anyway, because there are impenetrable questions which make valuing the outcome completely unfeasible. When one looks at the value for money of any project, there are two issues. The first is the actual cost of the project. Have the costs been realistically assessed and are they properly built into the estimates being presented? For generation after generation of nuclear plants, it has been perfectly obvious that the cost of building them has not been correctly assessed. Indeed, that is true of the plants currently under construction.

The second thing that needs to be quantified is the nature of the rewards that one gets from the project when it has been built. What are they? The rewards from a nuclear plant consist of the electrical output and the security factor. The noble Lord, Lord Howell, made an excellent contribution on that topic in Committee, the essence of which he repeated just now. I do not reach quite the conclusion that he did, but I will say how I think we might best analyse it.

We know that at the moment, the electricity that will be produced will be at least 50% more expensive than if it came from offshore wind power, for example. The noble Baroness, Lady Bennett, gave some of the figures. This plant will not come on stream for another 15 years. We do not know what the unit cost of offshore wind will be in 15 years’ time but, if you follow the graph, it is reasonable to suppose that it will be quite a lot cheaper than it is now. So it is a competition where nuclear starts 50% ahead; it will probably be more like 70% ahead when it comes online. I am setting aside any consideration of whether any allowance should be made for decommissioning costs.

Then, we get to the security argument: what happens when the wind does not blow? Well, we have a strike price that is nearly double that of offshore wind. It is therefore obviously a premium product. It is not something you would indulge in unless you could see a substantial value that was related not to its electrical output but to something else. The carbon reduction is real and not to be neglected but, of course, other renewables—certainly offshore wind, solar and onshore wind—have those carbon savings. It is a matter of debate whether they provide more or fewer savings per gigawatt than nuclear but, as I understand it, nobody is really saying that other renewables would not deliver the same carbon savings. So security of supply is the point in play. For me, the exam question, therefore, is this: can we get that security of supply in any other way that is cheaper and faster, with less or no impact on the RAB figures, which consumers will have to pay at the end of the day?

By coincidence, yesterday morning, I attended a presentation given by National Grid. It was asked some quite poky questions about whether it thought that the national grid would have the resilience for all the electrical power that will be demanded to flow through the system. Its answer was surprisingly upbeat. It said that it would be relaxed about the grid’s capacity if, for instance, there were 15 million or 20 million electric-powered vehicles dispersed widely throughout the United Kingdom, and, incidentally, concentrated in the places where electrical demand is greatest, such as the south-east of England. It sees the grid as a fundamental element of the storage of power to cover the times when it is needed. It did say, however, that there will have to be additional investment by the distributive network organisations, or DNOs, to reinforce the local distribution grid.