Paul Flynn
Main Page: Paul Flynn (Labour - Newport West)(11 years, 10 months ago)
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Paul Flynn (Newport West) (Lab)
I agree with every word said by the hon. Members for Hove (Mike Weatherley) and for Cheltenham (Martin Horwood). We are in an extraordinary situation in relation to our nuclear policy, charging ahead to a certain financial train crash. Huge sums will be spent and Parliament is to be kept in ignorance of the details of what is going on. That must be changed. We have heard the Chairman of the Public Accounts Committee say that her Committee has no responsibility until the contract has been signed. By then, it will be too late and we will have committed ourselves to a period of probably 30 years at least to pay an enormous cost to a company that is not British, that is in France and that is already subsidised. It is crazy.
We have seen the stampede of all the companies—E.ON, RWE and now Centrica—away from investing in nuclear power, and for very good reason: it is a financial basket case. I will not repeat the figures relating to the two new nuclear stations, in Finland and at Flamanville. They are the future, but one is four years late, and the other is six years late; one is €3 billion over budget, and the other is €5 billion over budget.
Albert Owen (Ynys Môn) (Lab)
My hon. Friend and I will never agree on nuclear power, but to set the record straight, there are nuclear power stations that were built on time and on budget in Taiwan and many other places by Hitachi with Japanese technology. My hon. Friend identifies one technology in one country.
Paul Flynn
My hon. Friend, like my hon. Friend the Member for Hartlepool (Mr Wright), has a point of view. They have nuclear power stations and nuclear jobs in their constituencies, and naturally they have to fight for their constituents. One can understand the distortions of view that inevitably result from that.
The history of nuclear power has been a story of false dawns all my life. I can remember as a schoolboy going to an exhibition in Cardiff called “Atoms for Peace”. I remember ZETA, a fusion reactor that was going to produce electricity that was too cheap to warrant a meter. We had the steam-generating heavy water reactor, one of the worst civil investment decisions since the building of the pyramids—huge investment that produced nothing of value. Margaret Thatcher had plans to build 10 nuclear power stations, but only one was actually built. My party was seduced by the pied piper of nuclear power fairly recently.
Mark Tami
Let me put it on record that I do not have a nuclear power station in my area. Is it not the logic of my hon. Friend’s argument that instead of building a great new green generation of stations, this country will import electricity from abroad, probably from French nuclear power stations?
Paul Flynn
That is a very limited view of the history of the matter, which I will come to. As recently as 2007, however, my party took the view that nuclear was economically unattractive. That was in one of our manifestos. But an event took place in Downing street where there was a PowerPoint presentation to the then Prime Minister that said, “Mr Blair, there’s going to be a gap in our electricity supply because the advanced gas-cooled reactors are going to become obsolete and that will create a problem in a number of years that will have to be solved.” Within a year of the Labour Government changing their policy on nuclear power, having decided that what had been economically unattractive was okay, the life of the AGRs was lengthened and the gap had disappeared. The spin had taken place, and we were seduced into the view that nuclear was inevitable.
All parties, I believe, went into the last election with the promise that nuclear was acceptable if there were no subsidies, but where are we now? There are enormous subsidies. In 2008, I heard a debate in this House about the insurance costs for the Government of nuclear power. The most recent figure that we have for the cost of a nuclear accident is £200 billion for Chernobyl, and the taxpayer would have to pay that.
Martin Horwood
I agree with much of what the hon. Gentleman says, but I must correct him on one thing. He said that all the parties went into the last election supporting nuclear power. The Liberal Democrats did not—we were opposed.
Paul Flynn
I am delighted to be reminded of that. However, I could spend the rest of my speech quoting what the Secretary of State and many other Liberal Democrat Members have said about this. Why has their position changed? As the hon. Gentleman rightly said, they were not in favour of nuclear power; I was suggesting that they went into the election promising no subsidies. The Secretary of State has been attracted by the red boxes or by other considerations, and he has had some kind of ministerial lobotomy whereby he can no longer see what is obvious—that nuclear power, which he never believed in until only two years ago, is a false trail.
Martin Horwood
Obviously I cannot speak on behalf of the Secretary of State, but I remind the hon. Gentleman that when the national policy statement passed through this Chamber, not even Liberal Democrat Ministers voted for it. Under the terms of the coalition agreement—I think we might have had to strike a similar deal with his party—we abstained at that time.
Paul Flynn
I have some hope that the Liberal Democrat party will return to the paths of virtue.
A few hours ago in this Chamber, I asked the Business Secretary a question in which I praised him for what he has done with Greencoat UK by investing money in wind power and urged him to do the same in relation to tidal power. Let me say a few words about tidal power, because it is ignored.
Paul Flynn
I cannot do so any more because I have run out of injury time.
My constituency, like that of several other Members on the English side of the Bristol channel, is washed by an enormous cliff of water that travels up and down the estuary twice a day. There is immense power there that is unused and wasted. This can be tackled, but not by a barrage, which has so many difficulties and objections that it would be impractical. It is not necessary to build a brick wall across a tidal flow to get energy from it. Water wheels work very simply: the water flows and they tap the energy. The best way in which we could get that energy cheaply and cleanly is through a series of small machines in the water to tap the energy that could then be linked with a pump storage scheme, possibly in the valleys of south Wales. That would provide demand-responsive energy—base load energy—that was entirely predictable and did not alter like wind or any other sources. It would be available, clean, British—
Paul Flynn
My hon. Friend says that it is expensive, but it is very cheap. He should take a trip to La Rance in Brittany, where for more than 30 years there has been a tidal power station producing the cheapest electricity in France.
Thanks to the Public Accounts Committee, we now have a clear picture of the future. Let us look at the enormity of the sums involved. Professor Tom Burke, who was an adviser to a previous Government, has said:
“The scale of the proposed investment is very large. The contract will last for a very long time at a strike price of £100/MW and a 30 year contract like this would require a subsidy of £1 billion/year above today’s wholesale price for electricity. This would lead to a transfer of £30 billion to EDF”—
Électricité de France, a French company—from the pockets of British taxpayers. He continued:
“Should the whole of the 16GW of new nuclear anticipated by the Energy Minister be financed on similar terms it would cost householders and businesses £150 billion by 2050.”
Back in 2008, I tabled an early-day motion forecasting that any profits that might be made from nuclear power would be enjoyed by foreign companies. We have seen the stampede that is now going on with E.ON, RWE and Centrica, and that is all for business reasons. Any profits would be enjoyed in France, but the enormous cost would be paid by British taxpayers.
There are huge liabilities involved. We hear about £67.5 billion—an astonishing figure—for dealing with nuclear waste. The Flowers committee report said in 1976 that it was irresponsible to go on generating electricity from nuclear power without a solution to the waste problem.
Paul Flynn
I cannot give way any more.
The waste problem is continuing at a cost of £1.5 billion a year. We still do not have the solution and we are in the same position with the £67.5 billion. The answer used to be to dig a hole and bury it. Now, thanks to Cumbria council’s decision, quite rightly, not to build—
David Mowat
I agree with the hon. Gentleman that the issue of legacy waste is not relevant to this discussion, but neither is it a great advert for the nuclear industry. It is true that much of the waste that is causing the difficulties in Cumbria is military and health waste, rather than waste from nuclear power stations. However, it is also true that the old stations were not designed with the disposal of waste in mind and we are paying the price of that.
David Mowat
I have given way twice, so let me see how I get on and I will try to come back to the hon. Gentleman.
I support the broad thrust of the Energy Bill. The DECC assumption is that we need to construct 60 GW of capacity by 2035 and that up to a third of that will be nuclear. Much of the rest will be made up by renewables, including wind and biomass, but I am afraid that some of it will come from gas.
There are three competing targets in energy policy. The first is cost, which we talk about very little, the second is energy security and the third is decarbonisation, which we talk about a lot. I will say a little about each of those targets.
Cost matters and fuel poverty matters. We need to decarbonise our economy, but old people being cold and dying of hypothermia is not a price worth paying for that. We should be very circumspect about cost and we must consider the cost equation for the different technologies. I accept that the cost of renewables is coming down, albeit from a very high base. We also need to consider the cost to our industries. I gently tell the House that a large part of the GDP in the north comes from heavy industries. If we want to rebalance the economy, we must bear it in mind that GDP growth correlates with energy use. We will not achieve that aim if we have differentially higher energy prices. We must be careful about that.
The UK faces unique issues in respect of energy security. We have decided to decommission 20 GW of nuclear and coal capacity over the next five or six years. The figures vary depending on who looks at the matter and when, but by 2017 we will have a capacity excess of about 4%. That is dangerous and we need to address it. If it is not addressed in time, the default will be to use fossil fuel. Gas power is about the only thing that can be produced at scale quickly enough. We cannot build wind capacity at that level quickly enough.
We often talk as if this country is one of the worst performers in Europe on carbon, but both the absolute figures and the trajectory on carbon per head and carbon per unit of GDP show that the UK is one of the best performers of the major economies in Europe. I will not end the comparisons with Germany because it uses 20% more carbon per head and 23% more carbon per unit of GDP than us, and yet it has three to four times more renewables. Why is that? The answer is that it burns substantially more coal than us. The trajectory appears to show that it will burn yet more coal than it has in the past. The way to decarbonise is to get off coal, and nuclear power can be part of that.
What are our options? The first option is to use less power. I hope that the green deal works because there is no question but that it is the best thing that we can do. The option that I like least is imports. There is a risk that the Government will go down that route. The fastest growing source of electricity is imports coming in from France through the interconnector with Holland.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I congratulate my hon. Friends the Members for Cheltenham (Martin Horwood) and for Hove (Mike Weatherley) on securing this important debate.
New nuclear power will not be subsidised. That is what my hon. Friend the Minister of State, Department of Energy and Climate Change (Mr Hayes) said, as did his predecessor, my hon. Friend the Member for Wealden (Charles Hendry), and it is also stated in the coalition agreement. Since the Government have been clear about that, perhaps this debate is really about a non-existent subsidy and we should instead be debating our future energy needs.
Dr Coffey
Not yet. I will go a bit further. As my hon. Friend the Member for Warrington South (David Mowat) pointed out, we should be focusing on carbon. My hon. Friend the Member for Northampton North (Michael Ellis)—I have just realised that neither of my hon. Friends is in his place—mentioned energy security, and that is why I believe nuclear power is key to the mix in the short term. The hon. Member for Newport West (Paul Flynn) referred to other energy sources, and we must develop low-carbon technology as well as storage, which is currently one of the barriers to many sources of renewable energy.
Paul Flynn
On energy security, after Fukushima, every single one of the 52 reactors in Japan closed down and Germany turned against nuclear power. If there is another accident—we have one every decade—would not the danger when the lights go out be the public’s reaction and a refusal to allow the generation of nuclear power in this country, just as happened in Japan after Fukushima?
Dr Coffey
I believe that the public are reassured by the work of the Office for Nuclear Regulation, and Dr Weightman, a world-renowned specialist, went to Fukushima to help sort out some issues. I do not know exactly why Fukushima ended up as it did but, in addition to the tsunami, there were other issues definitely related to that. I think the situation in Germany is more of a political situation.
Dr Coffey
I will not give way further on that matter. It would not surprise me if Germany is burning more coal and importing electricity from Poland in the short term.
I welcome the contracts for difference mechanism introduced by the Government. Such contracts will not be exclusive to nuclear but will include all the large-scale, low-carbon elements such as renewables and carbon capture and storage that we require for a reliable mix of energy supplies. I often refer to my constituency not simply as Suffolk Coastal but as the green coast. We have offshore wind at Greater Gabbard and at Galloper, and we will have the East Anglia offshore array. It has been suggested that those wind farms in my constituency could produce 8.2 GW for the country. If that is combined with Sizewell B and the proposed Sizewell C, it is possible that my little bit of Suffolk will generate about a quarter of the nation’s electricity needs. We are truly fizzing in that part of East Anglia.
Crucially, once the Government agree a strike price with the generator that is fair and sustainable, whatever the source of energy might be, the contract will provide stability for consumers and operators alike. The market price will be topped up when below the strike price, but when it is above that level—people do not think that that will happen, but I can see it happening—the generator will have to pay back the difference. The Library suggests that that two-way relationship is a “key advantage” of the Government’s policy. We should recognise that it means the Government can strike a fair deal that runs both ways.
The motion states that there is “new evidence” proving that CFDs amount to a subsidy, but the supposed exposés in the press in recent months are hollow claims. It has been suggested that the Government will secretly funnel money to operators, but they have been clear on their intention to publish the contracts, except where there is a need for commercially sensitive information to be kept private on a very narrow range of points. The Government do not negotiate in public when they are spending money in other areas, and we should not expect them to do so in this case.
Simon Hughes
I have been to Finland, though not to look at the waste issue. When I was party spokesperson, I went to Sellafield and had tours of the site. I am very happy to go to Finland again.
I was making the point that there are three strong arguments. I have made the arguments that on cost and on safety in the long term, nuclear does not work. Thirdly, it is the most depersonalised form of power in the world—there is no community control. It becomes the plaything and business of the few, rather than the energy of the many. It is not something that a community, village, town, city, region or country can control, but something that is developed and run internationally. We need to have control of our power sources, and the best way to achieve that is through renewables and energy that we produce and control ourselves.
The debate is about what we do now and what we ask the Government to do. The Secretary of State for Energy and Climate Change, who has been a friend of mine for many years, has an important responsibility. Our party kept its anti-nuclear position right up to the general election, and it was in our manifesto. When we negotiated the coalition agreement with the Tory party, which is pro-nuclear, with a few dissenters, obviously we had to come to a deal. We would have had to have the same conversation in negotiations with the Labour party, because it is overwhelmingly pro-nuclear too. It would not have been any different; it would have been the same. I guess that we would have had the same outcome and retained our anti-nuclear position as a party. The deal we were willing to do in Government was that we would let it go ahead if it was needed, provided there was no subsidy. When we voted on the plan there was, as my hon. Friend the Member for Cheltenham (Martin Horwood) said, an opt-out clause for Liberal Democrats and we did not vote in favour of the plan that included nuclear. The big question therefore remains: what is a subsidy?
Paul Flynn
Can we anticipate another principled stand by the Liberal Democrats, like the one they took on boundaries, to oppose any subsidy on nuclear power?
Simon Hughes
The hon. Gentleman is being mischievous. He and I are on the same side in this argument, so he should love and care for his friends, and not seek to be rude. Indeed, the Welsh Labour party was desperately pleased that the new boundaries did not go through, so let us have a little less of the attack on us.
We have our position that we negotiated in the coalition agreement; that is fine and we will deliver on it. However, my job and that of my hon. Friend the Member for Cheltenham is to hold my right hon. Friend the Minister, the Department and the Government to account. That is why we need to nail what is currently going on and stop—either in the Energy Bill, which is in Committee and will be coming back here, or elsewhere—any mechanism whereby power is given to Ministers to do deals with companies such as EDF that could produce the sort of hidden subsidy mentioned by the hon. Member for Newport West.
The hon. Gentleman referred to Professor Tom Burke, who is a friend and constituent of mine, and I had a long and up-to-date conversation with him on this issue only this weekend. I am clear that the figures cited by the hon. Gentleman are the figures we are talking about. The reality is that if the strike price is £100 per megawatt and there is a 30-year contract life, that would be a subsidy of £1 billion a year above today’s wholesale price for electricity. That would be £30 billion to EDF from Britain’s householders and businesses—the very people we are trying to protect from high energy bills. If the whole of the 16 GW nuclear energy currently planned by the Government were financed on similar terms, that figure would be £150 billion by 2050.
Somebody asked—I cannot remember who it was; I think it was my hon. Friend the Member for Cheltenham —whether there had ever been any suggestion of such a large amount of money going through without scrutiny. The answer, as you will know as well as anybody, Mr Deputy Speaker, is that in this place we have often authorised huge amounts of expenditure with no debate. Indeed, when my right hon. Friend the Minister was a spokesman on Treasury matters for the Liberal Democrats he used to complain that we would spend lots of time debating taxation, but almost no time debating spend. Consolidated Fund Bills relating to billions of pounds of expenditure would go through with no debate at all. We are trying to say that we should stop and check now because we believe there is a danger of a really big subsidy being agreed under the table, as it were, in terms of parliamentary transparency, that we cannot then pull out of or unscramble.
Caroline Flint (Don Valley) (Lab)
I congratulate hon. Members on securing this debate. Even if we hold different views, it is important that we find time to debate the role of nuclear power in our energy mix. I think we have heard nine speeches in this short debate so far, and all of them, in their different ways, were reasonable contributions.
At the outset, I will make my position clear: we strongly support and are absolutely committed to new nuclear build in Britain. In our view, the challenge of climate change is so great that there will be a role for new nuclear power in our energy supply in the future, alongside an expansion of renewable energy and, we hope, investment in carbon capture and storage. Let me set out why we support nuclear power, what assurances we are seeking from the Government and the nuclear industry for future nuclear build, and why we will not be supporting the motion before us.
I have always been clear that an effective energy policy must meet three criteria: it must be secure, it must be low-carbon and consistent with our climate change obligations, and it must be affordable. Let me start with security. Today, nuclear power accounts for about one sixth of the electricity we generate. In the next 20 years, however, all Britain’s remaining nuclear power stations are scheduled to close. Of course we support energy efficiency measures to reduce demand, and we look forward to the Government bringing forward proposals in the Energy Bill. However, even if demand does not increase, which seems unlikely, we will still need new electricity generation to replace power plants as they close.
Unless we replace Britain’s nuclear power stations as they come offline, we will leave a significant gap in our electricity generation capacity. As for what we replace them with, my view is that the best way to secure our energy supply is to encourage a diversified mix of generating technologies. A diverse energy supply makes the system more resilient and reduces the risk of interruptions or sudden, large spikes in electricity prices. Not allowing energy companies to invest in new nuclear power stations would increase our dependence on fewer technologies and expose the UK’s energy supply to risk.
Clearly a secure energy supply must also be safe. Every Government have the responsibility to remain vigilant and ensure that our regulatory regime in the nuclear industry is robust. Although there is no room for complacency, I draw the House’s attention to the Weightman report, which was published after the Fukushima disaster in Japan. Dr Weightman was tasked with investigating the implications for nuclear safety in the UK. He found no fundamental weaknesses in the current licensing regime or safety principle, and concluded that there were no grounds to restrict UK nuclear reactors or stop building new ones. On that basis, we believe that investing in nuclear power supports the security of our energy supply.
Paul Flynn
Does my right hon. Friend recall that Dr Weightman was expressly forbidden from considering the costs of Fukushima, which—it is quoted—could have been an extra £2 billion for one new reactor? Today’s debate has been about costs. Surely we cannot rely on Weightman for that.
Caroline Flint
I was talking about safety, but I will come to costs later. It was absolutely right for the Government to commission that report. Regardless of that report, however, I believe we should always be vigilant and not complacent. I feel assured that we in the UK can be justly proud of the regulatory system, the way it operates and our safety record.
Let me turn to our climate change obligation. Based on the significant evidence available, the life-cycle carbon emissions from nuclear power stations are significantly lower than for fossil-fuel generation and about the same as for electricity generated from wind. Investing in new nuclear is therefore consistent with decarbonising the power sector by 2030 and reducing our carbon emissions by 80% by 2050. No one would pretend that new nuclear alone can solve climate change; equally, no one should deny that new nuclear power stations could make a significant contribution to tackling it. By way of illustration, if our existing nuclear power stations were all replaced with fossil fuel-fired powered stations, our emissions would be anywhere between 8 million and 16 million tonnes of carbon a year higher as result. As I have said, investing in new nuclear should come not at the expense of demand reduction or investment in other clean energy, but alongside it.
Let me turn to affordability. There has been much speculation about the strike price that the Government will agree for new nuclear developments. Obviously I am not privy to the Government’s negotiations, which are ongoing. Estimates of the future costs of generation from technology are often uncertain and vary widely. However, according to the most up-to-date research commissioned by the Government, when we take into account the lifetime levelised costs of the various sources of energy and the up-front capital, fuel, maintenance, decommissioning and waste costs, the latest estimate still has nuclear as the cheapest of the various clean technologies. At a time when energy bills stand at a record high of more than £1,400, we must secure and decarbonise our power supply in the most cost-effective way possible. On the basis of the information we have today, I do not see how we can do that without investing in new nuclear.
Having set out in broad terms why we support new nuclear, let me say a word about what, in return for that investment, we should expect of the nuclear industry and ask of Government. First, new nuclear build has the potential to contribute to economic growth and job creation—a point eloquently expressed by my hon. Friend the Member for Hartlepool (Mr Wright)—but developers have a responsibility to support young people into work and provide them with the skills and training that will allow them to progress in a career in the nuclear industry. Secondly, I can assure the House that we take the issue of waste seriously and understand that the public are rightly concerned about it. As we established in the Energy Act 2008, and in the light of the Public Accounts Committee report on Sellafield, which was published on Monday, operators of new nuclear power stations must meet the full costs of decommissioning and their full share of waste management costs, not leave taxpayers to foot the bill.
Thirdly—and perhaps most topically, given that the Energy Bill is being debated in Committee as we speak—the process for agreeing contracts for difference for new nuclear must be robust and transparent and deliver value for money for consumers. We support new nuclear power, but it is for energy companies, not the Government, to fund, develop and build new nuclear power stations. The development of new nuclear capacity must happen without Government subsidy. Having looked carefully at the proposals for contracts for difference in the Energy Bill—which do not involve any direct transfer of Government money to nuclear generators or provide nuclear power with any support that is not also available to other forms of clean energy—I am satisfied that that is the case. Also, in the event of the market price being higher than the price that nuclear generators have agreed with the Government, generators must pay back the difference.
However, there is a role for the Government in ensuring that we as a country attract the investment we need to keep the lights on, cut our carbon emissions and keep the cost of electricity as low as possible. That means that safeguards must be put in place to ensure that bill payers—who will ultimately be funding this investment—get value for money. I do not think the proposal in today’s motion is the best way of achieving that; however, I do think there are issues that Ministers should address before the Energy Bill returns to the Chamber on Report. From the exchanges at Energy and Climate Change questions last week and from the points my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) has made in Committee, the Secretary of State knows what improvements Labour would like to see.
We would like the investment contracts that are agreed to be laid before Parliament within three days of being entered into. We would like provisions to ensure that any change to investment contracts are published and subject to proper scrutiny. We would also like greater protection to ensure that if construction costs are lower than those projected, a compensatory mechanism will ensure that the strike price reflects a fair return to the company, but also a fair deal for bill payers. I think those are all fair points. From what the chief executive of EDF said when he appeared before the Energy Bill Committee, I think he regards them as legitimate concerns too. With an eye to what we might inherit in 2015, I hope the Secretary of State will consider those ideas and amendments in the constructive spirit in which they are made.
In summary, we recognise that new nuclear power cannot be a one-way thing, where energy companies get the necessary planning permission and price agreement from the Government without offering something in return that benefits the local community where the plant is built, as well as the wider economy. However, I am pleased to have the opportunity today to reaffirm the position of Her Majesty’s Opposition and put it firmly on the record that we believe that nuclear power will have an important role to play as part of a more balanced, secure and low-carbon energy supply for the future.
Mr Davey
No, I want to make some progress.
On new build, is it is for energy companies themselves to construct, operate and decommission power stations. Industry has set out plans to develop about 16 GW of new nuclear capacity in the UK. This level of new build equates to some £60 billion of new investment, with up to 19,000 jobs created at peak construction, benefiting the communities directly concerned and driving growth right through the supply chain. We want to make the UK a leading destination for investment in new nuclear, which will play a key role in our future energy mix.
We welcome EDF Energy’s continued commitment and determination to take forward the Hinkley Point C project. Centrica’s decision to withdraw from the consortium reflects that company’s investment priorities and is not a reflection on UK Government policy. Indeed, the recent purchase of Horizon Nuclear Power by Hitachi is clear evidence of the attractiveness of the new nuclear market in the UK.
On subsidy, there has been understandable concern about how the programme for new nuclear power will be paid for. After all, expensive mistakes have been made in the past. I welcome this opportunity to explain the no-subsidy policy in the context of electricity market reform.
This far-reaching reform of the UK electricity market will encourage investment in low-carbon electricity generation, which is critical to tackling climate change and meeting our legally binding carbon targets. Electricity market reform is the most transparent and most market-based means of bringing forward the transition to a low-carbon economy. Under EMR, as set out to Parliament in October 2010, new nuclear will receive no levy, direct payment or market support for electricity supplied or capacity provided, unless similar support is also made available more widely to other types of generation.
By similar, we do not mean the same. Whether similar support is being provided must take account of the material circumstances. It is not a mechanical exercise; it is a matter of sensible judgment. It is obvious that the characteristics of a small onshore wind farm are very different from those of a large offshore wind farm and, indeed, those of a nuclear plant. The obvious example is that an offshore wind turbine is expected to last for about 25 years, while a new nuclear power station could potentially generate electricity for more than 60 years. Nuclear energy would provide base-load generation, whereas other forms of low-carbon electricity would be intermittent. These different characteristics are likely to require differences in the support provided under our electricity market reform.
A key element of EMR is contracts for difference, as my hon. Friend the Member for Cheltenham (Martin Horwood) rightly pointed out in his speech. Contracts for difference have been designed to stimulate investment in all forms of low-carbon generation, including renewables, nuclear and carbon capture and storage. They provide a stable price for operators to encourage investment, making it easier and cheaper to secure finance for low carbon.
The key point is that we recognise that CFDs significantly reduce risks to developers and incentivises investment in low carbon. It is right that new nuclear power will be entitled to benefit from Energy Bill measures such as contracts for difference and investment contracts.
Paul Flynn
I have a simple question. Is the Secretary of State able to provide an assurance that there will be no subsidies to nuclear power without the full knowledge and consent of this House?
Mr Davey
I am trying to explain our policy on no subsidy, but the hon. Gentleman interrupted me. If he will listen, the position is being put on the record in a way that I have never had a chance to do before.
Our aim is for a broadly standardised approach to contracts for difference that will allow for comparability between technologies and the introduction of competition for CFDs. I do not think that what is needed is a line-by-line comparison of the terms of each contract. That is not what our policy says or requires. In fact, there are likely to be variations in CFD designs between one technology and another, and perhaps also between different projects within the same technology. What is important is that the terms agreed deliver a similar result across technologies and projects, and that they result in a proper allocation of risk. In addition, each contract will need to deliver value for money for the consumer and be compatible with state-aid rules. A contract with a nuclear developer that does those things would be compatible with our no-subsidy policy.
Let me be clear—this is not about getting a deal at any price. We have put in place rigorous processes to ensure that any contract for Hinkley Point C, the most advanced nuclear project, represents the best possible deal for consumers. We are also committed to transparency with regard to any contracts for new nuclear—more transparency on nuclear than this House has ever seen. Under the Energy Bill, all investment contracts must be published and laid before Parliament. We have commissioned expert technical and financial advisers to conduct open-book scrutiny on the developer’s project plans and costs, and we will also publish a summary of the reports from our external advisers and our value-for-money appraisal for Hinkley Point C. Hon. and right hon. Members will be able to see the evidence and judge for themselves.