New Nuclear Power
Debate between Mike Weatherley and Lord Goldsmith of Richmond Park(11 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mike Weatherley
I thank my hon. Friend for his intervention. If I may, I will ask him to listen to my concluding remarks, which will show conclusively that by not subsidising nuclear, we will have a greener economy, rather than a carbon-dependent one.
If new nuclear is unable to meet the free market test, showing that it is competitively viable in the long term, it should yield to other forms of energy, particularly green forms of energy. When it comes to striking a price now, there are so many unknown variables that this can be done only by accepting that any price agreed will need future Government support. Members in favour of nuclear seem to accept that, which is horrific, given the coalition agreement.
The first of these unknown variables is the decommissioning of nuclear power sites. Decommissioning is a multi-faceted and complex process in which costs are hard to estimate accurately. The Public Accounts Committee last week noted the huge decommissioning failures at Sellafield, where the clean-up will take 120 years and cost £100 billion—twice the original estimate.
Mike Weatherley
I am sorry. I cannot give way because I am allowed only two lots of injury time.
Other factors can cause decommissioning costs to jump. Current laws can be amended. The 2002 White Paper “Managing a Nuclear Legacy” identified exactly this point as being a factor in the Sellafield costs. Secondly, fuel and waste management represent additional unknown financial burdens. Fuel management is particularly problematic. The Nuclear Decommissioning Authority notes, for example, that oxide fuel must be stored for decades before it is possible to place the fuel in a geological disposal facility. That brings me on to a crisis point: no GDF exists in any country. The UK Government have yet to locate an appropriate site for one on UK land. The full cost of constructing and operating such a facility is therefore unknown. Some £400 million of Government funding was spent examining a potential site for a GDF in Cumbria, only for Cumbria county council to vote against the plans last month on safety concerns.
Thirdly, the need for public funding is unlikely to abate over time. As the BBC journalist Richard Black points out, with the full life-cycle of nuclear power stations stretching over such long time frames, it is impossible to guarantee that companies originally involved in the running of the power plants will still be in existence or financially capable of meeting some of the costs of the decommissioning processes. Fourthly, aside from the decommissioning and other costs mentioned previously, the financial burden that a nuclear accident would place on UK taxpayers would be enormous, and this potential liability needs to be built into any pricing structure. Operators have some obligation to limited liability to cover accident costs, but these are capped, with Government underwriting the costs above the cap.
In March 2012 the Government response to the consultation held on increasing nuclear third party liability admitted:
“An incident of the scale of Fukushima would lead to costs that far exceed an operator liability limit.”
The response confirmed that Government intervention would very likely be needed. Proponents of nuclear will say that the likelihood of accidents is low, but the Government’s own advisers have confirmed that it is “not zero”. As recent history has shown, severe accidents do occur—five major incidents worldwide so far.
Mike Weatherley
I will try to give way before the end, if I can.
A good indicator of commercial viability is where the sector’s insurers stand. A 2010 Department of Energy and Climate Change working paper concedes that commercial insurance companies would not be willing to cover some of the nuclear industry’s liabilities.
The UBS financial group said recently that investing in nuclear power is a
“courageous 60-year bet on fuel prices, discount rates and promised efficiency gains.”
As my hon. Friend the Member for Cheltenham (Martin Horwood) noted, the EPR design planned for Hinkley Point has been planned twice before—once in France, where the costs have more than doubled and construction is five years behind schedule, and in Finland, where costs have almost trebled and construction is six years behind schedule.
A further cost which needs to be considered is that of protecting nuclear facilities from terrorist attacks. This includes protecting nuclear facilities from cyber-terrorist threats and providing adequate protection for nuclear materials in transit. Again, the cost is unknown.
Margaret Thatcher was a key advocate of removing subsidies from
“outdated industries, whose markets were in terminal decline”.
Today the market in decline is the British nuclear power industry when pitted against the alternatives.
I leave the Secretary of State with four questions and one frightening statistic. First, why is DECC being permitted to agree a contractual set price for nuclear power, in contravention of the coalition agreement not to allow nuclear subsidies? Secondly, why will this contract be presented as a non-reviewable document to Parliament? Thirdly, will the risks detailed earlier in my speech be taken into account in any price agreed? Fourthly and most importantly, will the Secretary of State consider delaying the negotiations until the relevant Committees have had a chance to review whether it represents value for money?
Finally, the frightening statistic: using formulas developed by Steve Thomas of Greenwich university and Peter Atherton of Citi, at a strike cost price of £161 per megawatt, which they have calculated, set against today’s wholesale price for electricity of around £51 per megawatt, and a 30-year contract life for the two proposed plants at Hinkley and Sizewell, it would cost householders and businesses or taxpayers £155 billion by 2050, and that is without any of the additional costs that I identified earlier. Imagine the renewable energy industry if we had invested over £155 billion in it. We would be world leaders, and I have every confidence that it would be low carbon and meeting all our energy needs.