Mike Weir
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Mr Mike Weir (Angus) (SNP)
I am pleased to make a brief contribution to the debate. I congratulate the hon. Member for Glasgow North West (John Robertson) on securing the debate. He is, of course, a well known and passionate advocate of nuclear power, as is the Minister—these debates often seem like a meeting of old friends. While I respect their positions, it will not come as a great surprise to either of them that I take a somewhat different position. The Scottish National party remains opposed to new nuclear power stations. We believe that Scotland neither needs nor wants such stations, and there is a clear majority in the Scottish Parliament against them. This debate centres on the new Westminster Government’s policy, and I do not want to debate the pros and cons of nuclear power as such, but will focus on what their policy is.
Before the election, the Conservatives made no secret of their support for nuclear power, and their manifesto clearly supported new nuclear power stations
“provided they receive no public subsidy”.
The Liberal Democrats clearly stated that they
“reject a new generation of nuclear power stations”.
However, the coalition agreement states unequivocally:
“We will implement a process allowing the Liberal Democrats to maintain their opposition to nuclear power while permitting the Government to bring forward the National Planning Statement for ratification by Parliament so that new nuclear construction becomes possible”—
a fudge if ever there was one. It gets worse, in that the Liberal Democrats can speak against it but are committed to abstain on any vote. That seems to lack principle completely. The present Liberal Democrat Secretary of State for Energy and Climate Change, the right hon. Member for Eastleigh (Chris Huhne), who once described nuclear power as a “failed technology”, has stated that it is very clear that there will be a new generation of nuclear power stations. No doubt the Conservative party are relying on a temporary coalition with Labour to ensure the measure goes through.
We should not be unduly surprised; the Liberal Democrats were against nuclear weapons, but now appear to be in favour as long as they cost less than Trident. The position appears to be that there will be new nuclear power stations provided the private sector meets all the costs, but how will that work? In November last year, Citigroup published a fascinating report entitled “New Nuclear—the Economics Say No”, in which it describes the “three Corporate Killers” and says:
“Three of the risks faced by developers—Construction, Power Price, and Operational—are so large and variable that individually they could each bring even the largest utility company to its knees financially. This makes new nuclear a unique investment proposition for utility companies.”
I presume it does not mean that in a good way. It makes the point that
“No where else in the world…have nuclear power stations been built on this basis”,
and concludes:
“Nor will they be built in the UK—We see little if any prospect that new nuclear stations will be built in the UK by the private sector unless developers can lay off substantial elements of the three major risks. Financing guarantees, minimum power prices, and/or government-backed power off-take agreements may all be needed if stations are to be built.”
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Has the hon. Gentleman not seen the comments by the head of EDF, Vincent de Rivaz, about how his organisation welcomes this new development and how it will continue to put forward its programmes despite there being no subsidy from the public sector? Such comments will be very pleasing to my constituents because it should mean that Sizewell will get built.
Mr Weir
I have heard Mr de Rivaz’s comments, but he seems to be the only one to make such comments. Different comments have been made by the head of E.ON UK, who is also interested in new nuclear power stations.
Let me return to what Citigroup was saying. I should add that the report was written before the oil spill in the gulf of Mexico, where BP has found that legal maximum liabilities are meaningless. Already, it has paid out more than the legal maximum under United States federal law and is facing many billions more in compensation payments. Just what would the cost be to any operator of a nuclear power station should—God forbid—there be a serious incident? The fact that there is a serious potential liability should be a red light to utility companies, and all those who invest in them. It is also worth noting that the present Secretary of State has already reported a black hole in the budget of his Department to meet the cost of decommissioning current stations and of containment of our existing stock of nuclear waste. Given that situation, how will the Government ensure that the new nuclear power stations will be built without public subsidy, especially as that has never been done anywhere in the world?
The coalition agreement gives us a clue when it states:
“We will introduce a floor price for carbon, and make efforts to persuade the EU to move towards a full auctioning of ETS permits.”
It seems that that is the answer as to how nuclear power is to be given a subsidy. Nuclear is to be made commercial by introducing a floor price for carbon. In a recent speech to the Nuclear Industry Forum, the Minister said:
“The carbon price is not a subsidy for new nuclear, it is to drive forward low carbon investment.”
An argument can be made that that is the case, but it is also undoubtedly true that new nuclear will be the main beneficiary of such a policy. It will have the effect of driving up, perhaps very substantially, the price of energy produced by fossil fuels, thus making nuclear much more attractive, which is why the nuclear industry is the cheerleader for this particular policy. In his speech, the hon. Member for Glasgow North West said that without nuclear power, we faced the prospect of very high energy prices, but if this policy is pursued, we may face very high electricity prices across the board with or without nuclear power.
In effect, the introduction of a floor price would be fixing the market, which I thought would have been anathema to free market Conservatives. It will no doubt be argued that that is a move that will help all other low carbon emitters, and that there are already many subsidies on different kinds of renewables. That point was also made by the hon. Member for Glasgow North West. Some of that is true, but other forms of renewables are new technologies that are receiving help to get them to a take-off postion in the market. The previous Government’s proposals to stagger renewables obligation certificates recognised that some of them had almost reached that position.
Nuclear is not a new technology; it is an old technology that has already had a shedload of money from the taxpayers. I am old enough to remember when it was said that nuclear power would be too cheap to meter. That did not happen, and we have seen the vast amount that will be needed to deal with the legacy of waste, now and far into the future.
It seems, therefore, that rather than making private investors take the risks, it is again the taxpayer who will do so, and I would be interested to know whether the Minister can give us more details on how the policy of the floor of the carbon price is to work. For example, when and how is it to be introduced? I noticed that The Independent suggested that it will be introduced when new nuclear power stations would be up and running in 2025. Will the policy apply only within the UK if he is unable to persuade the EU to adopt such a position, and how will that work with the competition laws within the EU?
Finally, I ask the Minister to confirm that the coalition Government remain signed up to the respect agenda with the Scottish Government that the Prime Minister talked so much about, and that there will be no attempt to amend the powers of the Scottish Parliament in that area so that we might continue to be nuclear-free.
As I stated at the outset, the SNP remains opposed to new nuclear power stations. We believe that Scotland has great potential to be the green powerhouse of Europe and that the determination of all three Unionist parties to pursue new nuclear power stations is an horrendous mistake that will cost the taxpayers dearly in the future.
Sir Robert Smith
Historically, the nuclear industry has required public subsidy for the purposes of trying and testing. Even the great white hope in Finland, which was meant to show how the market could deliver, has turned out to need an underpinning of public subsidy. I recognise that the carbon market is an important way of incentivising whatever means of low-carbon electricity generation comes before us, and anything that can be done to get a better price for carbon will be an important part of driving forward alternative energy supplies.
I must declare an interest here as a shareholder in Shell. I also represent the north-east of Scotland, where the oil and gas industry is extremely important. The hon. Gentleman said that he was worried about us relying on gas. This Government will have to address one of the legacies of the previous Government and make sure that we maximise our own gas production, because in that way we will reduce any immediate worries about having to rely on imported gas.
Moreover, the Government must recognise that the big change resulting from the near-decoupling of the oil and gas markets following the discovery of the means of producing shale gas—a new means of producing gas—is altering the whole concern about a further dash for gas. Gas is one of the cleaner fuels. Although it produces CO2 , it produces less than other fuels. Therefore, it can play an important part in our electricity mix without too much concern.
Mr Weir
I hear what the hon. Gentleman says, and I agree with him in many ways, but does he not accept the point that raising carbon prices will affect the cheapness of gas? It will substantially push up the price because gas is a fossil fuel and will be hard hit if we put a floor on the carbon price to benefit nuclear power.
Sir Robert Smith
What the hon. Gentleman has to accept is that we want a low-carbon future. Can he suggest a mechanism other than putting a price on carbon? The EU has embraced the idea of putting a price on carbon as the only means of producing a low-carbon future for the European Union.
Mr Weir
The EU has not accepted a floor price for carbon, as is proposed by the coalition Government. So we may have a position in which the UK is the only country trying to impose a floor price for carbon while remaining within the emissions trading scheme. I cannot see how that is workable.
Sir Robert Smith
That is why we have to convince the EU that, if it is going to deliver on a low-carbon agenda and if it has embraced the ETS, it will have to put a floor on carbon to make the ETS deliver the treaty commitments and other commitments to having a low-carbon future.
The hon. Member for Glasgow North West said that the world is facing the major problem of there being too much carbon dioxide going into the atmosphere. There is no way of not putting CO2 into the atmosphere unless we are willing to pay the costs of producing alternatives to CO2. Nuclear is one alternative, which we do not think is the right alternative, but marine renewables also need a floor on carbon—all low-carbon energy systems, if they are going to take off and be delivered, will need a floor on carbon. That is the only way. The EU has decided to embrace the ETS and unless we actually make the ETS work, we will not deliver on all our commitments.
Dr Alan Whitehead (Southampton, Test) (Lab)
I congratulate my hon. Friend the Member for Glasgow North West (John Robertson) on securing this debate. It is, of course, a debate about Government policy on new nuclear; we are not talking about the overall advisability of going down the nuclear route. My view remains that nuclear power is not renewable. We have no nuclear fuel in or around the UK and I have my views on that subject. However, Government policy on new nuclear is the important issue that we need to concentrate on right now.
In that context, the Minister has an enormous responsibility on his shoulders. I, too, have a great regard for him and for his skills in tackling these matters. However, he will need at least the skill of those responsible for putting in and removing the nuclear cores from Three Mile Island to keep the coalition on track as far as its policy is concerned, because although the provisional wing of the coalition is in for this debate, the official wing is apparently locked into Government policy on nuclear, in respect of the decisions that will need to be made as far as the Department of Energy and Climate Change is concerned.
Of course, we have clarity about what those decisions will consist of—indeed, we had that clarity in a speech that the Minister made to the Nuclear Industry Forum very recently. In that speech, he stated:
“We will keep the fast-track process for major infrastructure, but planning decisions will be made by Ministers thereby ensuring democratic accountability”.
There is a national policy statement on nuclear. Incidentally, the new Government are going to take that statement apart and put it together again, which I think will ensure further delays in the process. Among all the national policy statements that have come out, the statement on nuclear is unique in that it is site-specific. We have already heard mention this morning of the inclusion or exclusion in that statement of a particular site at Dungeness; in total, 10 sites have been identified in the statement.
If that is to happen as far as those sites are concerned, the decision taken by the Minister will mean that he will have to frank each of those sites and so will, among other things, give an enormous use value to those people who are then commissioned to develop them. The Minister will have to take a positive decision; he cannot remove himself from it.
As my hon. Friend the Member for Hartlepool (Mr Wright) mentioned, we will therefore have the spectacle of an agreement that appears to suggest that the Liberal Democrats can maintain their opposition to nuclear power while permitting the Government to bring forward the national planning statement for ratification. But that same Minister, in agreeing to that national planning statement, will specifically have to frank those sites, thereby allowing those particular nuclear stations to be developed.
Dr Whitehead
I was just going to reflect on that issue very briefly. As the Minister mentioned in his recent speech to the Nuclear Industry Forum, these decisions will come before Parliament. Presumably, therefore, the Minister who has made the decisions will be in the position of abstaining during votes on them. That will be an interesting piece of choreography, if the policy is to go ahead.
In his recent speech to the Nuclear Industry Forum, the Minister also emphasised that there will be no cost to the public purse as a result of the new nuclear programme. We need a little more clarification of what that actually means. In the past, one of the reasons why potential builders of nuclear power stations said that they might go ahead with nuclear build was that their clear underlying view was that they really did not believe that the new proposals would present no cost to the public purse.
It is one thing to say that there should be a floor price for carbon—that would not be a cost to the public purse, but generic assistance for all forms of low-carbon energy—but there is also the question of subsidising or giving guarantees of last resort on insurance, waste and storage, and of giving assistance on how all that works. Those are subsidies. If the Government are saying out of one side of their mouth that there will be no subsidies but out of the other side that, actually, there will be subsidies in several areas, that may be the way forward that they wish to assume as far as their policy is concerned. However, if they really do mean that there will be no subsidy from the public purse, there will also be no timetable for the build of new nuclear.
That is the crucial issue that we need to face in respect of future policy. If there is no subsidy at all from the public purse, a company may come forward and build a new nuclear power station, two or three companies may come forward and build two or three new nuclear power stations, or perhaps no one will come forward to build a new nuclear power station. We cannot easily afford that uncertainty, given our energy supply situation.
The previous Government’s timetable for the arrival of the first new nuclear power station was 2017-18. My hon. Friend the Member for Glasgow North West mentioned that potential date today. Interestingly, a policy document issued in 2007 by the then Department of Trade and Industry, “New nuclear power generation in the UK: Cost benefit analysis”, gave a different date—the early 2020s—for the arrival of the first new nuclear power station. Indeed, several industry analysts and others suggest that a realistic date is more likely to be in the mid-2020s.
That is important because, by that date, some 8 GW of coal-fired power stations, 3 GW of oil-fired power stations and 7 GW of nuclear power stations will have gone out of commission—for various reasons, including the large combustion plant directive, the age of the plant and the difficulty of maintaining or extending the life of nuclear power stations. That capacity will definitely be out of the system, so the question is what we do in the meantime to replace it. If no nuclear power stations are likely to come on stream until the mid-2020s, it will have to be replaced by other means.