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Grand Committee

Tuesday, 9 March 2010.

Arrangement of Business

Announcement

3.30 pm

The Deputy Chairman of Committees (Viscount Ullswater): My Lords, before the Minister moves that the draft national policy statement be considered, I remind noble Lords that the Motion before the Committee will be that the Committee do consider rather than approve the draft national policy statement. If there is a Division in the House, the Committee will adjourn for 10 minutes.

Energy: Draft National Policy Statement for Nuclear Power Generation (EN-6)

Considered in Grand Committee

3.31 pm

Moved By Lord Hunt of Kings Heath

That the Grand Committee do report to the House that it has considered the Draft National Policy Statement for Nuclear Power Generation (EN-6).

The Minister of State, Department of Energy and Climate Change (Lord Hunt of Kings Heath): My Lords, I am pleased to open this debate on the Draft National Policy Statement for Nuclear Power Generation. We have already discussed in detail the draft overarching energy NPS, which will be the primary document for energy development consents, and in two days' time we will be debating the draft non-nuclear NPSs.

Let me draw the attention of noble Lords to the fact that the House retains the right to adopt a resolution in respect of a specific national policy statement if it so wishes. My noble friend the Leader of the House has indicated that in the event of a Motion for resolution being tabled, the usual channels would undertake to provide time for a debate in the Chamber.

This afternoon we focus our attention on the draft nuclear national policy statement. We heard in the previous debate that the national policy statements are a key part of the planning reforms introduced in the Planning Act 2008. They are the essential policy statements against which the Infrastructure Planning Commission will determine applications for development consents by those wishing to build major energy infrastructure. They also set out the Government's policy on the need for new energy infrastructure. However, they do not in general set out any new policy. This is also the case for the draft nuclear policy statements.

We are not here today to debate the need for nuclear energy, as that is decided. The Government concluded in the 2008 nuclear power White Paper that nuclear has a role to play in the future energy mix alongside renewables and clean coal. We also said that it is in the public interest to allow energy companies to

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fund, develop and build new nuclear power stations and that government will take active steps to make the conditions right for investment and to enable new nuclear to come online as soon as possible. Action taken by the Government so far has resulted in real interest in new nuclear in the UK, with energy companies announcing plans to build around 16 gigawatts of new nuclear capacity.

The delivery of the nuclear NPS is a key part of these actions, and we are here today to consider whether the draft nuclear NPS, alongside the five other energy NPSs, is fit for purpose, and how it might be further improved. As I said two weeks ago, the nuclear NPS is not the same as the other technology-specific NPSs. In the draft nuclear NPS, 10 sites have been identified which the Government have considered potentially suitable for new nuclear power stations. They were identified after the Government undertook a strategic siting assessment to establish which sites are potentially suitable for the deployment of new nuclear power stations by the end of 2025. We consider that all these sites are needed to contribute towards the carbon reduction objectives set out in the low-carbon transition plan. That is not to say, however, that all sites listed will have a power station built on them immediately. Ten sites are listed to ensure that sufficient sites are available, even if a number of sites are not developed or fail to secure development consent.

In our first sitting, the noble Lord, Lord Jenkin, urged the Government to reconsider the suitability of Dungeness. I have no doubt that we shall come to consider that question further in this sitting. However, at this point I should say that the reason we did not consider Dungeness to be potentially suitable is that development would result in adverse impacts, which could not be avoided or mitigated, on the integrity of a European special area of conservation. The Government also commissioned a study to identify whether there might be alternative sites to those nominated. Three sites were identified as worthy of further consideration. However, having considered them further, the Government do not consider them credible candidates for deployment by 2025.

In the long term, meeting the objectives in our low-carbon transition plan will be a significant challenge. The overarching energy NPS sets out that the lead scenarios estimate that demand for electricity up to 2025 will remain at around 60 gigawatts. Our present generation capacity is 80 gigawatts, which provides a buffer to meet demand when, for example, a generating station is offline for maintenance. However, there will be a loss of capacity over the next decade, as around 12 gigawatts of coal-fired capacity closes by 2015 in response to more stringent emission standards set by the large combustion plant directive and around 10 gigawatts of nuclear capacity reaches the end of its life. We also anticipate that some gas-fired generating stations built before 2002 will close in response to the industrial emissions directive, and that capacity must also be replaced.

Leading up to 2025, there is therefore a significant need for new major energy infrastructure, including net additional electricity generation. We estimate that around 30 per cent of electricity generation should be

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from renewable sources, mainly wind, by 2020. Wind, as some noble Lords who are here today often remind me, is intermittent, as other renewable energy sources are, so there must be sufficient alternative generation capacity to meet demand when the wind is not blowing. Fossil fuels provide a flexible capacity but have high emissions. The NPSs therefore set out how the IPC should implement our policy, set out in the framework for coal, which requires all new fossil fuel generating stations to be carbon-capture ready and all new coal-fired generating stations to have carbon capture and storage on at least 300 megawatts net generating capacity. The Government are also providing funding for four CCS demonstration plants, although this does not preclude developers bringing forward more proposals for coal-fired generating stations with CCS if they consider it a commercial proposition.

Alongside these technologies, the Government believe that new nuclear power should in principle be free to contribute as much as possible towards meeting the 25 gigawatts of new non-renewable capacity. The Government expect that, under this approach, a significant proportion of the 25 gigawatts will in practice be filled by nuclear power. The explanation of the need and urgency for new nuclear power stations is an important part of the draft nuclear national policy statement, and that will be central to the Infrastructure Planning Commission's decision-making.

The overarching national policy statement makes it clear that the IPC will need to balance the need for new nuclear power stations against their potential impacts. The draft nuclear NPS will guide the Infrastructure Planning Commission on how to assess potential impacts of new nuclear power stations, such as on local infrastructure and through visual effects. Where relevant, it suggests measures that the Infrastructure Planning Commission might expect the developer to take or to have taken to reduce impacts.

The draft nuclear NPS also explains the Government's assessment of arrangements for waste. In the 2008 nuclear White Paper, we said that before development consents for new nuclear power stations are granted, the Government will need to be satisfied that effective arrangements exist, or will exist, to manage and dispose of the waste that they will produce. Having considered this issue in the NPS, we are satisfied that effective arrangements will exist to manage and dispose of the waste that will be produced from the new nuclear power stations. These include safe and secure interim storage of radioactive waste onsite, followed by long-term disposal in a geological disposal facility. Having made good progress in recent years, the Government are now running a staged process to identify a suitable location for a future geological disposal facility. We have already received formal expressions of interest from three local authorities about potential involvement in a geological disposal facility siting process.

Alongside the draft nuclear NPS are two environmental reports-an appraisal of sustainability and a habitats regulations assessment. They support the draft nuclear NPS and the Government's assessment of sites. The appraisal of sustainability is required by the Planning Act and helps to ensure that national policy statements and the Government's assessment of sites take account

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of environmental, social and economic considerations, and contribute to sustainable development. The habitats regulations assessment assesses whether the nuclear NPS is likely to have an adverse impact on particular habitats which are protected under European law. When the habitats regulations assessment concludes that there are adverse impacts, the NPS cannot be approved unless the Government think that there is an imperative reason of overriding public interest to do so.

We have just completed a comprehensive consultation exercise, inviting detailed responses from local communities which might be affected by the potential new nuclear power stations. I believe that the consultation was thorough and effective. I have been enormously impressed by the quality of contributions and the large numbers of people who have attended. We have seen more than 3,000 people attend our national and local events; there were some 21,000 visitors to the NPS consultation website and more than 3,000 responses to the consultation. Of these, more than 2,000 responded to one or more questions on the nuclear NPS. Many important issues have been raised that we will consider carefully and reflect appropriately in the final NPS.

We will of course consider carefully the report by the Select Committee in the other place, which is expected by the end of March, and the issues raised by your Lordships. At the end of these sittings, the Grand Committee will report to the House. This is not the last opportunity for people to have their say. Developers must consult communities before submitting an application to the IPC, and people will also have the chance to input at application stage. However, this consultation has provided people with a chance to shape the guidance which the IPC will use to inform its decisions.

Like the other energy NPSs, the nuclear NPS is critical in bringing forward nuclear infrastructure developments and ensuring that the right framework is used in the consideration of development consents. We strongly believe that the nuclear NPS is fit for purpose. I welcome today's debate and look forward to responding to the points raised by noble Lords.

3.43 pm

Lord Jenkin of Roding: My Lords, I am sure that the Committee is grateful to the Minister for his careful introduction. It will not altogether surprise him if I return to some of the points that he has made, particularly on the Government's refusal to countenance Dungeness as a site for future nuclear build. I shall also want to talk, not today but on Thursday, about carbon capture readiness.

I start my speech with a compliment. The nuclear NPS is perhaps the clearest statement of the Government's civil nuclear policy that they have made since they first embarked on it in 2006. The Minister referred to the 2008 White Paper, but there were intimations well before that. After that, the compliments must end. Ministers cannot escape responsibility for the fact that the years of delay before 2006, which was the reversal of policy, means that there is now, as we have been warned by Ofgem, a serious risk of interruptions of the supply of electricity to consumers later this decade. It was only last month that Ofgem gave that warning.

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From 1997 onwards, this Government's policy was based on the foolish fantasy that renewable energy-in practice, mostly wind power-was somehow going to keep the lights on. Indeed, former Ministers at the DTI and Defra gave every appearance of believing, no doubt with complete sincerity, that they were presiding over the run-down and eventual disappearance of civil nuclear power in this country. One has only to look at the history to see what happened. They were content to see British Energy virtually go to the wall, to the point where, in order to keep operating, it had to be rescued by the Treasury. That led to the almost inevitable takeover which happened when it was taken over by EDF. The Government's flagship legislation during this period had nothing whatever to say about new nuclear build. They were concerned only with winding down and decommissioning existing plants and facilities.

Lord O'Neill of Clackmannan: Could the noble Lord perhaps refresh our memories by telling us what references to nuclear power there were in the Conservative manifesto of 1997? It is my understanding that the Conservative Opposition, as they then became, had long previously abandoned nuclear power as far as further construction of power stations was concerned.

Lord Jenkin of Roding: I think that the noble Lord has it entirely wrong. There was of course argument, and I took part in it with some of the shadow Ministers at the other end, but David Cameron made it perfectly clear in a speech to the CBI early on that the Opposition would support new nuclear build.

This Government sold Westinghouse, the only British-owned company that could actually build a new nuclear power station. It was a company with an international reputation, but they sold it to the Japanese. Even the members appointed by Michael Meacher to the committee set up to advise the Government on nuclear waste-I noticed what the Minister said about that-were mostly so anti-nuclear that they were not even prepared to consider the question of handling the waste from new nuclear build. It was not until the membership was substantially changed, as a result of recommendations of the Select Committee on Science and Technology in this House, that the Government began to make progress.

We are now faced with the problem of having to catch up after those wasted years. We need to build a new nuclear supply chain. I declare an immediate interest as a president of the Energy Industries Council, which is striving to do exactly that. We need to train a new generation of skilled manpower. I declare another interest as the honorary president of the National Skills Academy for Nuclear. We need to start the long process of assessing the latest reactor designs for safety and integrity, and we have to invent new procedures and processes to allow investors to identify and get the consents for the sites to be able to start work. It is a truly dismal story, and I hope that Ministers now recognise how much they will be blamed if indeed the lights go out.

However, we are where we are, and we have to do our best with what is before us. I therefore turn to EN-6. As was foreseen at the time of the Planning Bill, and as the Minister said, this is the only national policy statement to deal with the spatial element of

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the industry. The Government have determined where the new plants are to be built and also where they are not to be built. As I think I said during the passage of the Planning Bill, that seems very sensible. However, I have a number of points to make.

First, much is made, and it has been repeated again today, of the need to get 25 gigawatts of new nuclear capacity up and running by 2025. In my view that is a highly ambitious target, and it is most unlikely to be realised.

I have been provided with a chart which has a number of figures based on information drawn from the National Grid Transmission Entry Capacity Register. It is a very important document because it shows where sites will be linked to the grid. It has four columns. It gives a first-connection date for the sites. Some of those are as early as 2016-interestingly, it includes Dungeness-but others go much later, into the 2020s. Then there is what it calls a "first capacity", which is in megawatts, and that comes to a possible total of 13.5 gigawatts. The maximum capacity by 2025 is shown in the next column, and would go up to 25.5 gigawatts. Then there is the best guess of the actual build by 2025, and there the figure is 10.2 gigawatts. There is a massive difference, of course, between the first, second and last figures, and one might ask why that is. Why are we not going to reach the 25-gigawatt figure?

There are, in fact, three reasons. Even where building can start before 2025-and so far only one company, EDF Energy, has given notice to the IPC about one site, Hinkley Point, and that is under the Planning Act procedure-the rate of build is likely to be phased considerably. Early on, there was some thought that a company such as EDF or Horizon Nuclear Power, the partnership between E.ON and RWE, would be able to build several stations at the same time. They have now made it clear that that will be very difficult. For example, EDF may start at Hinkley Point. Its next station will be at Sizewell, but that is not likely to start for several years after work has commenced at Hinkley Point. Therefore, the completion will be later. It is the same with Oldbury and Wylfa. At one point, there was some suggestion that they might be built together, but in fact that is not so. I have seen minutes from the companies saying that, although they might start the second one before the first one is completed, they are going to be substantially staggered. At one of the sites, Sellafield, it is perfectly clear that only half the capacity will be built by 2025. That is the first reason.

The second reason is that some sites might not be developed at all. It would not surprise me if the noble Lord, Lord Chorley, has something to say about that in a few minutes. The examples are Braystones and Kirksanton in Cumbria. I have two pieces of evidence for saying that. First, it is being recommended to Cumbria County Council that it should not support these two sites. I have here a paper prepared for the council's cabinet only in February. The NIWG committee-the Nuclear Issues Working Group-also recommended that,

"Cabinet be minded not to support Kirksanton and Braystones because it was not convinced at either site that the benefits of development would outweigh the costs".

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Bearing in mind that these are greenfield sites involving villages which have not had nuclear facilities before, that is not altogether surprising. Therefore, those two are unlikely to be built.

Furthermore, it has emerged that RWE, which had originally had applications agreed for these two sites, has now withdrawn them. Therefore, that grid connection is not by any means certain. Nucleonics Week states:

"RWE npower said in a statement that it could renew the grid connection applications at a future date. But it said that since it was not possible to commit to specific plans for the sites at this time, it had chosen 'not to maintain the current grid connection agreements'".

So the company involved and the local authority are saying that those two sites are not in their immediate programme. That is the second reason.

The third reason is that two sites have yet to have any developer committed to build on them at all; namely, Heysham and Hartlepool. The maps that one has seen show, as yet, no interest in either of those. I draw two conclusions from this. The original 10 sites of which the Minister spoke a few moments ago are likely now to be down to six by 2025, and some of those six will not be completed by then. So the outcomes are bound to run a long way behind the Government's estimates of built capacity by 2025.

My other point was made by the Minister, and we must bear it in mind. There is always the possibility that the IPC might reject one or more of the sites which it will be considering. This leads me to a conclusion that has been reached by a number of other people, which has also been put to DECC and was certainly voiced to the DECC Select Committee at the other end-some of us sat through some hours of evidence-giving. My conclusion is that the Government have been very premature in rejecting Dungeness. I will return to that in a moment.

In the mean time, I have a number of questions which I hope the Minister will be able to answer. If it becomes clear that the 10 so-called approved sites turn out to be insufficient to support the proposed expansion of nuclear capacity, what will be the procedure? Here one has to turn to the consultation paper to which I referred in our debate on 23 February. Not only was Dungeness rejected; so too were three other sites which the noble Lord has mentioned today-Druridge Bay on the coast of Northumberland, Kingsnorth in east Kent and Owston Ferry in the Yorkshire and Humberside region. As the noble Lord reminded us today, the central reason for the rejection of those last three sites was that they would not be credible by 2025. However, we are to have a road map to take us to 2050. What is the procedure for this?

One also needs to bear in mind the very important-I thought it was excellent-report prepared by the Minister's predecessor, Malcolm Wicks, Minister for Energy, who was appointed by the Prime Minister as a special representative on energy security. Last August he produced a report which had a lot of sensible things to say, one of which concerned the future of nuclear energy. Paragraph 6.12 states that,

"our demand for electricity in 2050 could be 50 per cent higher than it is today ... it is therefore important that it relies on large scale, low carbon and proven technologies to meet a proportion of this increased demand. As nuclear meets these criteria it is well

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placed to play a key role in our future energy mix. I believe that the level of ambition should be much higher in the longer term than currently projected. To enhance energy security and reduce our reliance on imports, a range between, say, 35-40 per cent of electricity from nuclear could be a sensible aspiration, beyond 2030".

He is not going up to 2050, only to 2030. He has been supported by a number of very influential bodies, including the CBI, which is calling for an increased nuclear build. Inevitably, however, this is bound to increase the need for more sites. What is to be the procedure? How is that to be run? Would it not be sensible to have something in this NPS, EN-6, to indicate how that will be done? In the mean time, as I understand it, if someone puts in an application for a nuclear station on a site which is not listed, that does not go to the IPC but is handled by the department. Perhaps the Minister would be kind enough to confirm that.

One then comes back to the question of Dungeness. In the circumstances, it is rather surprising that that was the preliminary decision. The industry has been almost unanimously dismayed that the site has been rejected. The Select Committee heard that from its witnesses, and the Minister told the committee on 23 February that he did not have a closed mind. I and the Committee were pleased to hear that.

Perhaps I may end my speech-I do not wish to go on for too long-by saying why I think that Dungeness should be included. First, one comes back to the concept of need. Much emphasis is laid upon this in all the national policy statements. Dungeness could have connection to the grid by 2016. It could therefore be one of the earliest to come on-stream. It could have a full capacity of 1,650 megawatts, and it could be producing electricity certainly by 2019. Given Ministers' recognition of the need,

"to maximise the contribution of nuclear as soon as possible",

as part of the action to be taken against climate change, it is premature to rule out Dungeness at this early stage.

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