Examination of Witnesses (Questions 83-95)|
TUESDAY 9 JULY 2002
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
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
(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.
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 onbecause 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
(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.
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
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.
91. Can I just bring you back to the point I
made earlierand I think Greenpeace made it as wellabout
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
(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
92. You mentioned tensionswhat 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 sitethat 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.
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.
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.