Select Committee on Trade and Industry Minutes of Evidence


Examination of Witnesses (Questions 83-95)

MR ROGER HIGMAN AND DR RACHEL WESTERN

TUESDAY 9 JULY 2002

Chairman

  83. Good morning, Mr Higman and Dr Western. I do not know if you could maybe explain to us your respective roles within Friends of the Earth.
  (Mr Higman) My name is Roger Higman. I am the Senior Campaigner for Climate and Transport with Friends of the Earth, which includes the issue of nuclear power. Dr Western is our nuclear researcher.

  84. Thank you. As I have been saying to other witnesses this morning, this document was not altogether a surprise and it has not necessarily changed a great deal apart from the £6 billion, which is rather a large increase, but, nonetheless, apart from that financial aspect, do you think that this points the way to addressing the problem of tackling of nuclear waste?
  (Mr Higman) Well, we welcome the Government's intention to establish the Liabilities Management Authority. Our principal concern though is that we do not believe that the information in the White Paper is particularly transparent as to whether the Government and the taxpayer have got best value for money out of this approach and, in particular, whether the sums being set aside for liabilities and essentially being taken from BNFL's liabilities are the right sums. We are concerned that there may be money possibly in BNFL's hands which should be taken which has not been taken.
  (Dr Western) In addition, there was a recent report released by RWMAC and NuSAC, the Nuclear Safety Advisory Committee, which has in its appendix the amount of work which has been actually done by BNFL to meet the requirements of the intermediate-level waste conditioning which was raised by the NII in 1998. Only 15 per cent of radioactive intermediate-level waste has actually been dealt with adequately. That is an appallingly low figure and the waste presents very severe hazards. There was no mention at all within the White Paper of the actual nature of the waste. The whole thing seems an umbrella and a superficial arrangement of finance and bureaucracy just to take away the debt from BNFL. It is not really about dealing with the waste. Secondly, the other major problem with the White Paper is that it makes no distinction between redundant and operating plant. As Greenpeace made the point, the plan is that there will be an essential business-as-usual operation and plants like B205 which run the Magnox reprocessing, the Magnox plants, and THORP will continue to churn out waste and liabilities at an alarming rate. Unless we address that, we are never going to address the problems of liabilities.

  85. The RWMAC/NuSAC report you quote, but I am not very clear about the White Paper targets, so what was the target that the White Paper had set for 2002 or 2001? Was it 15 per cent or is there a level of under-achievement here because I do not think you made that clear in your evidence to us or your statement?
  (Dr Western) The figure quoted was in a report that was produced by the NII in 1998 which said that around 15 per cent of the raw intermediate-level waste at Sellafield has been conditioned to a passive safe state, and that is the most recent figure, the 1998 figure.

  86. So we will ask them then this afternoon whether that figure is higher because what you are telling us is that there is not any evidence that suggests that any more work has been done. Is that correct?
  (Dr Western) Well, there is the June report which came out in June 2002 from RWMAC

  87. What did they say?
  (Dr Western) They just do an appendix. They do not give a percentage, but they just say what has been done by BNFL. Basically BNFL are taking cursory intermediate action, building outer housing, putting in argon, and they have mentioned one figure, but in five years they have just dealt with about 10 per cent of the waste from Drigg. That is just an example figure, but basically they are doing essentially nothing.

  Chairman: Well, we will raise that with them this afternoon. You may not be here, but it will certainly be on the record. Your disappointment at their performance will be put to them and we will get an explanation as to whether your disappointment is justified and, if it is justified, why, but we will take that up. I think we had better move on to the costs of the clean-up as distinct from the scale of the clean-up.

MR BERRY

  88. One or two concerns you have mentioned in your submission are the clarity about liabilities and the increase of the estimate of the public sector liabilities from £42 million[sic] last November to what is now £48 million[sic]. Sorry, billion. These are really big. It is billion, not million. I am catching the Chairman's disease here! This £6 billion increase over the last six months, (a) do you have any idea why the figure has changed by so much over the last six months, and (b) how do you respond to comments that BNIF made this morning that it is only six months and if you were to look at a ten-year period, the last ten years, for example, these are the kind of ballpark figures they have always been talking about?
  (Mr Higman) I actually do not know the detail of exactly why the figure has increased so rapidly in six months and perhaps Dr Western will be able to say more. I think the concern that we have, and we see all sorts of figures, yes, we were aware that there were substantial liabilities and we have been calling for some time for a segregated fund to deal with those liabilities. The concern that we have is that even now in the White Paper we understand that the figure of £48 billion is not strictly comparable, according to the DTI, to the figure of £4 billion in the NLIP. The figures for additional funding for dealing with liabilities are being put in a completely different format with reference to net present values and net present costs. What is unclear, both from the White Paper and previous statements, are three things: firstly, the extent of the shortfall; secondly, the extent to which the White Paper is taking on new liabilities and the value of those liabilities that previously were not taken on; and, thirdly, what particular aspect of the liabilities are being taken on—because some of those previous commitments related, for example, to only the Magnox undertakings or the Ministry of Defence. What we would like to see is a much more transparent presentation of the values in a common format, that explain what a shortfall is, what is new about the White Paper's arrangement in terms of a shortfall, and which aspects of waste they relate to.
  (Dr Western) I was not at all surprised by the £6 billion increase; it is par for the course really. Mike Sadnicki did a report for Friends of the Earth in 1996 called Managing Nuclear Liabilities with Gordon MacKerron, who is here this afternoon, which documented through the years the percentage increases that we have found. The report that Greenpeace are going to submit to you today starts with a 2½ times increase in one particular factory, the waste vitrification plant, which went from £120 million to 320 million. Similarly in 1990-2000 there was an almost doubling in the Sellafield decommissioning and reprocessing liabilities costs. I do not know if you remember when the Energy Committee existed in the late 1980s there was documentation; they did a report on the cost of nuclear power which documented the enormous increase in Magnox liabilities, the decommissioning liabilities. This is just routine. If you actually read the detail of the nature of the waste it is quite obvious that those cost increases are just the beginning. As Greenpeace mentioned, the wastes have not been characterised; we have no idea what waste actually exists. As we do know then we are going to have to factor in more costs to deal with the specific nature of the waste.

Linda Perham

  89. Do you think the setting up of the LMA will actually help look at the size of the problem with these estimated liabilities? The White Paper says that there will be a better definition of the problem which means that the liabilities estimate will rise, and talks about regulatory and policy requirements that would also indicate that. Do you welcome the setting up of this, that it will give us an idea of the size of the problem?
  (Mr Higman) I think if it does, yes, we would welcome it.

  90. But you think it may not?
  (Mr Higman) The big issue is: will the LMA actually get through its task; how long will it take for it to be set up; and will we see the restructuring of the new BNFL. Therefore, our primary concern at the moment is: have the proposals in the White Paper actually identified all the sources of funding that might be available from the nuclear industry for clean-up, and made sure that those sources of funding are available for clean-up? If we do not have the money it does fall to the taxpayer, and I do not think we would have confidence in the long-run that we would see an improvement.
  (Dr Western) The second point is a point which was raised by RWMAC and NuSAC, that what they called for was an LMA with purpose, that brought cohesion into dealing with the nature of the waste that actually needed to be handled. We do not actually see that. In the same way that Greenpeace mentioned no mention of the word "sustainability"—I do not remember seeing the words "passive safety" in there about what you actually have to do to waste to deal with the hazard that it presents. The real risk which Friends of the Earth sees is that this is purely an administrative gambit to allow BNFL to develop new build of new nuclear reactors to take the burden of the debt away from them, so that they can present themselves as a profitable company. There does not seem to be any real determination to reduce the hazard that is presented by radioactive waste.
  (Mr Higman) I think the final thing on that point is, of course we do not have a coherent waste management policy in the United Kingdom. We have a consultation process that is expected to last for five years and develop that. There are some aspects of how you handle the high level waste that depend on having a coherent policy, so that is going to limit the LMA's ability and could lead to money being spent unnecessarily, or money not being spent when it should have been spent.

Mrs Lawrence

  91. Can I just bring you back to the point I made earlier—and I think Greenpeace made it as well—about the characterisation of the waste. One of the things I am always told is that handling nuclear waste effectively creates more waste, because whatever you are using to handle it becomes part of the waste problem. Are you saying that the way waste has not been sorted and characterised in the past has added to the problem of liabilities, and that that lesson has not been learnt? In effect, because that lesson has not been learnt for short-term financial gain, it will actually add to the costs for the future? Really what ought to be done is characterisation should have been done in the past and has not been, needs doing now and if it is not it will actually multiply the costs of disposing of waste in the longer-term?
  (Dr Western) There is a very acute problem we are facing right now that is not being addressed at all. One thing that the LMA mentions and it says would be a good thing is that it would be able to bang heads together between the regulators, the Environment Agency and the NII. There are real tensions between getting a quick and dirty conditioning for waste, which is essentially mixing up the concrete so that it does not present such a large hazard, or taking the time and doing it slowly and taking into consideration the Nirex letter of comfort process and really developing a conditioned form that should be suitable for the long-term. What might happen is that BNFL, to save money, may be allowed to condition waste without doing the characterisation which is necessary, which will only mean that 50 years down the track somebody is going to have to unpackage that waste so that it will be suitable for the even longer term, and it will have to be treated again. Not only will that increase costs substantially, it will also significantly increase total operator dose, because it is a very dangerous process getting in there and opening up the waste packages again.

  92. You mentioned tensions—what are the source of those tensions?
  (Dr Western) There is a number of them. The June report from RWMAC/NuSAC is one that details the most. There was a newspaper cutting quite recently that mentioned that the buildings on the Sellafield site—that is the old buildings from the historic legacy like B241, B211, B12, B38 and B41 — are in a very poor state. The NII want them treated, and want the waste packaged and the liquid discharges sent out to sea as soon as possible. The Environment Agency want time taken to ensure that the long-term risk that you get from the waste is as low as possible, and that the amount discharged to sea is as low as possible. There is a direct tension between the two. Although Nirex is not a regulator it has a quasi regulatory role in that it produces a letter of comfort and there is a tension there, because they are pressurising the waste producers to spend time conditioning the waste properly and characterising it properly, which involves spending a lot of money. There are three lots of tensions: operator dose versus public dose; between the NII and the Environment Agency; and future dose versus costs between Nirex and the waste producers. One thing that Friends of the Earth is extremely concerned about is that we do not have a quick and dirty knocking of heads together to get something on the route through to the conveyor belt which is at the expense of long-term environmental safety.

Mr Lansley

  93. Firstly, you have said something about other sources of funds in order to contribute towards the clean-up costs. What particularly do you have in mind?
  (Mr Higman) I think the source of concern is in Mr Sadnicki's report in that he talks about more money being taken from the NLIP than is actually spent on liabilities. He talks about investments being made in the Sellafield MOX plant that, from the Government's own figures, demonstrate will not be recovered and he talks about the purchase of other companies, Westinghouse and ABB, that looked poor value for money. Now, our guess is that there has been water under the bridge there and there are some costs there which will never be recovered. However, we want to see a more thorough investigation from the National Audit Office into the DTI's handling of this because we feel that there may be other ways of restructuring which would actually provide more money for liabilities in the long run. We are also concerned that the White Paper, for example, proposes that the contracts for reprocessing contracts for the Sellafield MOX plant should be retained by the new BNFL which would seem to put the new BNFL in a monopoly position over the operation of THORP and the Sellafield MOX plant. We are not convinced that that is necessarily the best arrangement for the taxpayer. It might be that the taxpayer could get more revenue out of that arrangement if the Government and the other agencies were to hold those contracts and make a decision as to whether the way which would be created was worth creating for the money raised. There are issues like that which suggest that there might be alternative ways of restructuring the system which would actually serve the taxpayer better.
  (Dr Western) A simple figure is that dry storage for spent fuel, which is the alternative to reprocessing, costs just 20 per cent of the costs of reprocessing. Mike Sadnicki did a report for Friends of the Earth about three years ago on renegotiation of the contracts and we calculated that there would be a saving of £600 million which could be shared between the contracting countries and BNFL. There has never been transparency in the figures and the contracts have always been kept secret, but that is one way of saving money. Another way of saving money is simply to stop producing the waste. One factor which is going to be enormous when it is finally resolved is the cost of managing reprocessed uranium and plutonium. They are not factored in as liabilities at the moment, although that is purely accountancy when you look at the amount of money. They were originally valued at £1 million per tonne in the 1955 White Paper and now it costs £1 million per year to store which is an enormous sum of money, and there needs to be an amount of money spent to immobilise plutonium so that it does not get into the hands of terrorists and it will present less of a weapons risk in the longer term. All of those costs could be significantly reduced by reducing the amount of liabilities which are produced.

  94. Clearly the implication of what you said previously was that you are in favour of a segregated fund for the purpose of dealing with the costs as they arise. Is that as distinct from the segregated account?
  (Mr Higman) No, that was the policy that we had prior to publication of the White Paper. We have not really had a chance to look in detail yet at the two options, both of which are segregated and to compare exactly what they mean in terms of continuity of payment and this sort of thing.

Richard Burden

  95. You mentioned your concerns about moving towards, as you described it, a quick and dirty way of knocking heads together. As well as warning about the dangers of that happening, what would you like to positively see in terms of the relationship between the LMA and regulators and so on which you think could minimise the chances of that happening?
  (Dr Western) I think one of the things which needs to happen is transparency. Prior to the 1998 report which I referred to earlier, there was a very good report produced in 1996, I think, by the NII which was an inventory, an audit of the waste which actually had photographs of the waste and it made very clear and transparent what the problems were that needed to be dealt with, so that is the first one which needs transparency. The second thing that needs transparency is between the economics of contracts for reprocessing and so on and, finally, there needs to be a lot of public consultation on the dilemmas between costs, public exposure and operator exposure, but I think the point that I would really like to make is that there is not a quick solution and it is something that has to be worked through with time. There needs to be a lot of money and investment put into the programme, but the time needs to be spent working through publicly what is the best route.

  Chairman: Well, I think we have covered all of the points we wanted to raise with you and if there is anything you think you would like to supplement your evidence with, we have made the point that we need to get it by next Wednesday, 5 o'clock in the evening. That is the last call. I am sorry, I keep saying it to people, but we are anxious to get it out and we think that it will assist the process if we can have everyone's evidence by that time. Thank you very much for your evidence this morning and we appreciate your coming today.


 
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