Energy Supply

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Mr. Wilson: It is important to stress that there are no proposals for nuclear energy at present. Equally, there has never been a moratorium on building nuclear power stations in this country—the fact is simply that in the past 20 years no one has thought it a good idea to do so. In future, commercial companies will take the decisions. The halcyon days of the Government deciding to build nuclear power stations are in the past and companies will take commercial decisions on whether to build them. As far as I am aware, there are no such proposals at present.

The PIU report will cover nuclear and all other forms of energy generation. The PIU team is not predisposed one way or another on nuclear energy. The arguments will be set out and general conclusions will be drawn. The job of the PIU team is to examine the arguments for and against nuclear energy, just as it will examine those for and against renewables and increasing dependence on gas.

The honest and clear position is that there is no policy and the PIU is being given no steer on nuclear energy. The merits and demerits of nuclear energy must be assessed along with those of other forms of energy. Waste is one element in that, and a separate review is being carried out under the auspices of the Department for Environment, Food and Rural Affairs on what to do about it.

To put the debate in context, at present the UK gets 25 per cent. of its electricity from nuclear sources, so they are a big and largely emission-free contributor. The corollary of companies deciding not to replace nuclear power stations will make the challenge of meeting our Kyoto obligations all the greater, as the contribution made by nuclear power is declining steeply. It will be down to 2 per cent. or 3 per cent. by 2020.

The PIU report caused the problem to be tackled seriously, as it suggested that we could not ignore it. If a source, no matter what it was, that supplied 25 per cent of our energy needs were to disappear, we should ask whether that was desirable and what we could do to replace it. Those questions arise on nuclear power as they would on other forms of power generation.

Dr. Stephen Ladyman (South Thanet): I would not like the Minister to mislead the Committee. On Tuesday, in a written answer, he told me that the percentage of electricity produced from nuclear sources by 2020 would be 7 per cent., not 2 or 3 per cent. Does the Minister agree that if we reduce electricity production from nuclear sources from 24 per cent. in 2005 to 7 per cent. in 2020, the vast majority of that capacity will be replaced by forms of energy that produce greenhouse gases, despite the Government's vast investment in renewables? Will he confirm that the rest of the European Union will have similar figures?

Mr. Wilson: My hon. Friend makes a good point. Those are exactly the balances and trade-offs to be considered, at present in the PIU report, but in time by the Government when we formulate policy. We create the policy framework, but companies will make proposals within that.

The last thing that I want the debate to become is an argument about nuclear versus renewables. In all foreseeable circumstances, there is a role not only for a substantial increase in the contribution from renewables, but for an increase in the targets that we can set for them beyond 2010. We can all feel good about setting targets, but we must ask whether they are deliverable. By all reasonable accounts, a 10 per cent. target for 2010 is challenging and we will have our work cut out to meet it. I want to meet it and go beyond it.

I also want to encourage the growth and development of renewables in a way that will bring down the cost of generation, which is another trade-off. We can all pay lip service to renewables, but if they shove electricity bills up, a broad body of opinion will suddenly consider them less attractive. A lot of work must be done on renewables. It is important to break the term down, as it is not generic, and consider the separate forms of generation, some of which have better prospects than others.

My hon. Friend's basic point is right. In this job, one finds that there is opposition to everything, be it nuclear, windmills or coal. There should be a proper debate about reliance on gas, especially imported sources of gas, on which we will become increasingly reliant in the circumstances that he described.

Mr. Michael Jack (Fylde): Paragraph 1.4 of a report of the Select Committee on European Scrutiny reminds us that member states have adopted the necessary national legislation for the freeing up of their internal markets, which the Minister supported in his statement. It also points out that infraction proceedings are presently being undertaken against the Governments of France, Luxembourg and Germany due to their unwillingness to proceed on liberalisation. Will the Minister tell us whether he thinks that the matter will be concluded within the time scale laid out in the draft proposals?

Mr. Wilson: We are making progress on liberalisation. However, I do not underestimate the inherent difficulties and the extent of the resistance to full liberalisation. That resistance comes particularly from France, which is not a great revelation. It is difficult to advance such an agenda in France during the run-up to the elections there, but work is continuing through the European institutions. The objective is clear and it is high on our list of priorities. We will continue to push the issue under the Belgian presidency and then under the Spanish presidency. We will keep it high on the agenda and achieve it, I hope, within the time scale to which the right hon. Gentleman referred. It is not easy. In France, they have different considerations and a different perspective. We have to win the argument through negotiation and pressure and without deviating from the objective.

Mr. John Grogan (Selby): Annexe 3 of the Commission report deals with coal. The Minister said that he saw no justification for continuing coal subsidies on security of supply grounds after the current treaty expires in 2003. Are there other grounds on which the British Government might countenance the continued provision of aid to the coal industry throughout Europe?

Mr. Wilson: As with everything else in Europe, there are processes of negotiation and different countries have different priorities and views, which synthesise into a policy to which we all sign up. As I have said in the past, if a successor coal regime is introduced in the EU, we will not allow our industry to be put at a relative disadvantage, on principle. However, our stated position is our starting point in the discussions and if another state aid regime is agreed to, we will reluctantly subscribe to it and it will then be part of the scheme to which we have subscribed.

Mr. Andrew Lansley (South Cambridgeshire): I apologise to the Minister for not hearing his opening words. He went on to talk about the harmonisation of fiscal taxes and I was not sure that he discriminated between measures designed to reduce demand and those designed to promote one form of energy supply over another. Are the Government opposed to both those types of fiscal taxation?

Mr. Wilson: I think that I said that the purpose of taxation is to raise revenue. Its primary function is not to achieve other desirable objectives. A mixture of incentives can be applied to achieve our objectives, particularly in relation to renewable energy. However, that should not be done through taxation—measures such as the renewables obligation are more effective. The obligation is not a tax but a clear message to the renewables industry that if it can propose projects, we will guarantee it a worthwhile return by guaranteeing it access to the grid and the payment of a premium price to give it that access. That is not a tax but a financial incentive, which I am sure will work well.

Mr. Hugo Swire (East Devon): I am sorry to revert to the question of nuclear energy. Does the Minister agree that, despite there being obvious concerns about plant safety and the disposal of waste, for example, the matter under discussion is all about cleanliness, renewable energy, storage of energy and, perhaps more importantly, reducing the dependency of countries on outside sources of energy? In that case, would he agree that the nuclear way forward should be considered closely, especially when we bear in mind the dependency on nuclear generation of countries such as Bulgaria, Hungary, Slovakia and Slovenia, which want to be admitted into the family of European nations?

Mr. Wilson: I agree entirely that the continuing nuclear option should be looked at closely and compared with other options. There are several strands to the argument, including the contribution to our Kyoto targets and the security of supply. It is obvious that we have an indigenous industry, which may be in contrast to other countries where imports are an increasingly large factor. The problem is that as soon as one takes a balanced view of the nuclear industry, one is immediately branded as some sort of pro-nuclear freak, whose obsession in life is to build 15 nuclear power stations around the country. That is not my position or the position from which the PIU report starts, but I make no apology that we start from the position that the nuclear industry is highly valuable to this country. It makes a valuable contribution to our energy needs, is a clean source of energy and employs a large number of highly skilled people. It would be plain daft to throw all that away in a refusal to contemplate the prolongation of the nuclear industry. What I have said is not a conclusion on which we then build facts, however. We must consider all the facts relating to the nuclear industry as part of the current mix and ask the intelligent question, which no one should try to avoid, as to whether nuclear has a continuing role in this country.

The hon. Gentleman's argument is right and those who want to rule out the nuclear option conveniently ignore it on what are sometimes spurious grounds. We do not control what happens close to our own shores, given that France has a 70 per cent. nuclear dependency and that other countries depend on it that are less sophisticated than us and could benefit from our expertise. The hon. Gentleman is right in saying that we should consider the continuing role of nuclear in our energy mix and should not start with prejudices.

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Prepared 28 November 2001