Select Committee on Environmental Audit Appendices to the Minutes of Evidence


APPENDIX 26

Memorandum from Greenpeace

  Greenpeace is concerned that the PIU report seriously underplayed the role that renewable energy can play in the UK economy, and that it has left the door open to nuclear new build. We are also concerned that the Department of Trade and Industry is institutionally biased towards nuclear energy. We outline the details of this analysis below. Attached for background is our original submission to the PIU.

1.  THE PIU REPORT IS TIMID IN ITS AMBITIONS FOR RENEWABLE ENERGY

  If the PIU 20 per cent renewable target is adopted by Government it means that renewables will not be able to replace the expected decline in nuclear generation at the same time as contributing to the carbon reductions in the power sector. However there is considerable evidence from Government studies that renewable energy can do both quickly and at low cost. It would require targets to be set higher than the PIU recommendation, and the prioritisation of government support and public expenditure to renewable energy rather than nuclear power (see section 2).

  The PIU looked at two different targets for renewable energy for 2020—20 per cent and 30 per cent. It recommended the lowest of these on the basis that anything higher would require new renewables schemes to be built at rates far in excess of any we have yet seen in the UK. This seems a highly tenuous basis for defining the UK's renewables target given that it is critical to the future of UK energy and environmental policy. It is hardly surprising that there is no domestic experience of high build rates given that the UK renewable industry has been struggling to get up and running for the last 15 years. The PIU reinforce our view that this is a misjudgement by admitting that higher build rates have already been achieved in other European Countries.

  As Greenpeace pointed out in its submission to the PIU the Energy Technology Support Unit has already concluded that 224TWh can be generated from renewable energy at less than 4 p a KWh by 2025[19]. This figure includes an estimate that wave can supply 50 TWh and offshore wind can supply 100TWh (this ETSU offshore wind estimate was itself based on the conservative assumption that less than five per cent of the technical wind resource could be used which many in the industry would dispute).

  Other European countries with much lower wind resources are setting targets as high or higher than the PIU recommendation:

    —  Germany, which has an offshore wind resource one quarter the size of the UK, expects to generate 76 TWh from offshore wind by 2020—which is on par with the PIU's recommended target of 80 TWh for all UK renewables. In addition the German Government has announced a plan to get 130 TWh or 25 per cent of its total consumption from combined onshore and offshore wind programmes by 2020.

    —  Denmark expects to get 27 per cent of its power from renewables in the next year, having already achieved 18 per cent.

    —  10 of the 15 countries covered by the EU Renewables Directive have targets over 20 per cent for 2010. Some of these are, like the UK, starting from a low base eg Greece where renewables made up eight per cent of power output in 1997 is aiming for 20 per cent by 2010.

  We would urge the Environmental Audit Committee to support a higher target for renewables for 2020. We suggest that it should include the expectation that at least 100 TWh can be provided from offshore wind and 50 TWh from wave as outlined by ETSU's assessment for the Governments Renewables Review.

2.  THE PIU REPORT FAILS TO HIGHLIGHT THE REAL CONFLICT THERE IS BETWEEN ITS ASPIRATIONS FOR RENEWABLE ENERGY AND ITS ASPIRATION TO KEEP THE NUCLEAR OPTION OPEN.

  The strategy the Energy Minister appears to be developing is for the Government to be simultaneously pro renewables and pro nuclear. This is naïve as well as dangerous. It is clear that the nuclear industry intends to build new reactors if it can get the support it needs to overcome the current economic problems.

  It is dangerous because nuclear new build will increase nuclear discharges in the UK, increase the risk of accidents, and increase the build up of high level nuclear waste. As the Royal Commission made clear in its latest report you do not have to be anti-nuclear to conclude that no new nuclear plants should be built until there is an acceptable and safe way to dispose of nuclear waste. They said:

    "New nuclear power stations should not be built until the problem of managing nuclear waste has been solved to the satisfaction both of the scientific community and the general public"[20]

  This important condition was dropped by the PIU who downgraded nuclear waste to an issue of public perception.

  A pro renewables/pro nuclear strategy is also naïve because it fails to recognise that there are real conflicts between supporting one and supporting the other—the most obvious is the competition for Government support and public funding. It is clear that both renewable energy and nuclear power will require significant public support to deliver large amounts of carbon free energy. Eg British Energy's submission to PIU says that the gap between nuclear generating costs and today's post NETA price is £5-12/MWh which means that to achieve an aspiration for 10 new 1GW nuclear stations it would need minimum consumer/taxpayer support of £350-840 million. Whatever the relative distribution of costs it is very unlikely that consumers, government or industry will be prepared to shoulder the expense of supporting the development of two capital intensive electricity sectors.

  There will be many specific instances where nuclear power and renewables are in direct conflict and where the Government will have to choose which is the priority. We are already conscious of two:

i.  Decision on Climate Change Levy exemption:

  By excluding renewable energy from the CCL government have stimulated huge demand for renewable energy from Commercial and Industrial users of power. Suppliers are struggling to meet the demand, which has benefited renewable generators by ensuring that they see more of the benefit of the O.43p Climate Change Levy (CCL) in the price they are paid for their power. This market works because it is "short" ie there is more demand than supply, and because it is well defined ie "green". If new or refurbished nuclear capacity receives the benefit of CCL exemption as the PIU recommends it will be neither: nuclear electricity will swamp renewables output in the short term, and muddy the water for CCL exempt electricity by making the issue of its "greenness" controversial. Utility suppliers that we talk to have predicted that exempting nuclear power from the CCL would knock the bottom out of the flourishing commercial market in green electricity. Given how hard the Government has had to work to defend the CCL from attack by industry representatives such as the CBI it seems counterproductive to undermine its value to this important business sector.

ii.  Decision on access to coastal grid connections:

  We estimate that at least seven of the 13 nuclear power station sites in the UK are at key locations for the development of renewable energy because they are close to areas with large wind or wave resource, and sit on the strongest coastal grid connections (Sizewell, Bradwell, Dungeness, Hinkley, Wylfa, Heysham, Calder Hall). Over the next 12 years nuclear stations are closing at all of these key sites and a decision will have to be made as to whether the nuclear industry should be allowed to keep hold of the connection or whether to reserve them for the renewable energy industry. Article seven of the EU Renewable Electricity Directive states that member states "may also provide for priority access to the grid system for renewables". It is unclear as to whether the UK Government will do so at these sites, or whether they will force the renewables industry to pay the full costs of upgrading the grid at these points. The latter option could slow or stop many marine energy developments because these costs can be very large.

  In addition to the above sites, Hunterston B, which may close in 2011, in the Energy Ministers own constituency, could provide a useful landfall for the undersea cable which the Minister is proposing to deliver renewable electricity from the Western Isles to the markets further south. Unless capacity becomes available on the grid linking Scotland and England from the closure of nuclear stations like Hunterston B exports from Scotlands huge renewable energy resource will not be possible without further expensive grid upgrades[21].

  We suggest that the Environmental Audit Committee oppose the recommendation that new nuclear capacity be given CCL exemption and that it call on the Government to prioritise grid access for marine renewable energy to coastal grid points.

3.  THE DEPARTMENT OF TRADE AND INDUSTRY HAS A CONFLICT OF INTERESTS WHEN MAKING DECISIONS ON NUCLEAR POWER

  There is now only one nationalised energy company—BNFL-Westinghouse—whose sole shareholder is the Department of Trade and Industry. The DTI therefore has an interest in seeing BNFL prosper. Policies that benefit BNFL will often be at direct disbenefit to taxpayers and compromise the Departments responsibility to represent the public interest. The institutional bias of the DTI is evident in the Departments submission to the PIU which skates over the inherent problems of nuclear power, such as waste, and produces very optimistic assessment of future costs of nuclear electricity. We are concerned that the DTI will resist the PIU recommendation to internalise the external costs of nuclear power, and that it will use the Liabilities Management Authority as a back door method of subsidising BNFL's past mistakes.

  We would suggest that the responsibility for all major decisions on nuclear power be removed from the DTI and given to the Department of Environment, Food and Rural Affairs, given that DEFRA already has responsibility for the environmental impacts of the nuclear power cycle.

March 2002



19   Table 1 in the PIU scoping note on Renewable Energy. Back

20   RCEP (2000), Energy-the Changing Climate, p 151. Back

21   See "SCOTLAND'S RENEWABLE RESOURCE 2001-EXECUTIVE SUMMARY" by Garrad Hassan for the Scottish Executive, December 2001 for a discussion of the Scottish renewable resource of 60GW. Back


 
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