Government gives nuclear go-ahead

10 January 2008

It looks bad, this is only the first stage in a very long process before any new nuclear power stations will be built. In particular John Hutton stuck to his line that there will be no public subsidy - and he must be applauded for that. The only trouble is that without public subsidy, no new nuclear power stations will be built. Nuclear power always has been, and always will be, incapable of paying its own way.

So what are we to conclude? Is all this a sham, designed at keep nuclear fanatics in the CBI and various pro-nuclear oddballs happy? Or are they really going to press ahead with it all. And if they are, then how are they going to make it viable? In my view, the Government remains deeply divided on this issue. The only reason the Cabinet supported this policy unanimously is that both sides can read what they want into it. The real battle is to come.

The best indication as to at least one form of nuclear subsidy comes from the statement that the Government will be

"Working with our EU partners to strengthen the EU Emissions Trading Scheme so that investors have confidence in a meaningful, long-term carbon price when making decisions. This will benefit all forms of low carbon generation."

In other words the Government is looking to a high long term carbon price under the EUETS - something the EUETS has been entirely unable to deliver in the past. But it is hard to see how it can be provided in the future, especially as the current and the next phase of the EUETS will have expired by the time any nuclear power stations could be built, some time after 2020. Again, this could just be a smokescreen.

Meanwhile the Government is doing some very good things on renewable energy, with some really large-scale expansions planned, especially in offshore wind. These are the developments which will be able to deliver emissions cuts on the required timescale to meet emissions reductions targets for 2020.

As for nuclear, the industry is making happy noises but they are secretly very worried. Yes, applications to build power stations will come forward, in the hope that a subsidy package will eventually be put into place. But provided the Government sticks to its guns and refuses any public subsidy to the industry, we can be confident that nothing will be built. The main job of Nuclear Pledge is therefore to hold the Government to its 'no nuclear subsidy' promise.

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Full text of Government press release

UK Government invites new Nuclear Power into the energy mix

Building blocks for low carbon future outlined with publication of the Nuclear White Paper and Energy Bill

Energy companies were invited today to bring forward plans to build and operate new nuclear power stations as part of the UK's strategy for a secure, diverse, low carbon energy mix.

The Government's response to its nuclear consultation, in the form of a White Paper, was published alongside the Energy Bill which sets out a range of measures to address the twin challenges of tackling climate change and securing energy supplies.

Energy Secretary, John Hutton, said:

"Giving the go ahead today that new nuclear power should play a role in providing the UK with clean, secure and affordable energy is in our country's vital long term interest.

"Set against the challenges of climate change and security of supply, the evidence in support of new nuclear power stations is compelling. We should positively embrace the opportunity of delivering this important part of our energy policy.

"I therefore invite energy companies to bring forward plans to build and operate new nuclear power stations.

"With a third of our generating capacity coming offline within the next twenty years and increasing reliance on imported energy it is clear we need investment in a range of new energy infrastructure.

Measures in the Energy Bill will drive a greater deployment of renewables and enable investment in carbon capture and storage and offshore gas infrastructure. These will help build our energy security, reduce emissions and place the UK at the forefront in the development of low carbon energy technology."

The Government believes it is in the public interest that new nuclear power stations should have a role to play in this country's future energy mix alongside other low-carbon sources; that it would be in the public interest to allow energy companies the option of investing in new nuclear power stations; and that the Government should take active steps to open up the way to the construction of new nuclear power stations. It will be for energy companies to fund, develop and build new nuclear power stations in the UK, including meeting the full costs of decommissioning and their full share of waste management costs. Nuclear power is:

• Low-carbon - helping to minimise damaging climate change;
• Affordable - nuclear is currently one of the cheapest low-carbon electricity generation technologies, so could help us deliver our goals cost effectively;
• Dependable - a proven technology, currently supplying a fifth of our electricity supplies, with reactors capable of producing electricity reliably;
• Safe - backed up by a highly effective regulatory framework; and,
• Capable of increasing the diversity of our energy supplies and reducing our dependence on any one technology or country for our fuel supplies.

The UK's diverse electricity generation mix will be strengthened further through the publication of the Energy Bill. The Bill includes measures to ensure adequate funding provision is made by potential developers of new nuclear power stations, to drive greater and more rapid deployment of renewables, creates the framework for investment in carbon capture and storage, which has the potential to reduce the carbon emissions from fossil fuel power stations by up to 90%, and enables investment in new offshore gas infrastructure projects.

NUCLEAR WHITE PAPER:

To encourage nuclear investment the Government over the coming months will be taking forward the following steps:

• Publishing today the Energy Bill, which contains clauses to ensure adequate funding provision is made by potential developers of new nuclear power stations for the full costs of decommissioning and their full share of waste management costs;
• In Feb / March 2008 publishing a consultation on waste and decommissioning financing provisions guidance. This would set out the proposed arrangements for ensuring the full costs were met by companies;
• Starting to scope a new independent advisory body, the Nuclear Liabilities Financing Assurance Board (NLFAB). This will provide public advice to the Secretary of State on all aspects of the financial arrangements operators plan to put in place to cover waste management and decommissioning;
• Further strengthening the Nuclear Installations Inspectorate to enable it to meet a growing workload. The Government will work closely with the regulators to explore ways of enhancing the effectiveness of the regulatory regime in dealing with new nuclear power stations;
• Make use of the provisions of the Planning Bill to ensure that nuclear development projects are treated like other critical infrastructure projects. The Planning Bill will make the new system fairer - but it will also be faster. By establishing the national need for infrastructure first, delays will be reduced later on;
• In March 2008 issue a call for Justification applications. This Justification process meets requirements of EU regulation that new nuclear processes should demonstrate that their benefits outweigh any possible health detriment;
• In March/ April 2008 publishing a consultation on draft Strategic Siting Assessment criteria. This would be used to rule out those areas of the country in which there are no suitable sites and establish the framework for assessing the suitability of proposed sites. We expect that applications will focus on areas in the vicinity of existing nuclear facilities;
• In spring 2008 announcing the start of the process for selecting reactor designs for the next stage of Generic Design Assessment (GDA). GDA is intended to ensure that the technical aspects of designs for nuclear power plants are considered ahead of site specific applications; and,
• Working with our EU partners to strengthen the EU Emissions Trading Scheme so that investors have confidence in a meaningful, long-term carbon price when making decisions. This will benefit all forms of low carbon generation.

In addition, progress continues on the Government's Managing Radioactive Waste Safely process. DEFRA has today published a summary of responses and their analysis of the Managing Radioactive Waste Safely consultation. A White Paper is planned to follow in spring which will set out the framework for implementing geological disposal.

ENERGY BILL:

The purpose of the Energy Bill is to update and strengthen the legislative framework so that it is appropriate for today's energy market and fit for the challenges we face on climate change and security of supply.

Key elements of the bill include:

Nuclear

• Measures to ensure adequate funding provision is made by potential developers of new nuclear power stations to pay the full costs of decommissioning and their full share of waste management costs.

Carbon Capture and Storage (CCS)

• The Government has announced details of a competition for the first commercial scale demonstration of CCS - this will help reduce costs and risks for future projects and put the UK in the lead on the design, construction and operation of CCS.
• CCS has the potential to reduce the carbon emissions from fossil fuel power stations by up to 90%.
• We are creating a regulatory framework to enable private sector investment in CCS projects while also protecting the environment - for example by putting in place a licensing regime for storing carbon dioxide offshore.

Renewables

• We will strengthen the Renewables Obligation (RO) to drive greater and more rapid deployment of renewables in the UK. For example we will amend the RO to give more support to new and emerging technologies such as offshore wind, wave and tidal by banding the Obligation. Our proposals will also enable the RO to provide additional support to microgenerators (50 kW or less).
• To support the growth of offshore renewables we will create additional powers enabling Ofgem to administer an efficient and effective regulatory regime for offshore electricity transmission to connect large scale offshore renewables projects to the onshore electricity network.
• With our new proposals in place we expect a tripling of electricity supplied from renewable sources to around 15% by 2015.

Offshore gas supply infrastructure

• The current offshore regime for gas infrastructure projects is complex and a barrier to investment.
• The Bill will strengthen and simplify the regulatory framework to give investors more clarity and certainty, reducing costs and risks for private sector investment in offshore gas supply projects such as offshore storage and LNG infrastructure.
• This will help maintain reliable supplies of gas given we expect the UK will need to import well over half of its gas supplies by 2020.

Offshore oil and gas decommissioning

• The Energy Bill will update legislation in this area to reflect that there are more small players in today's oil and gas market and to ensure adequate environmental and tax payer protections.

Offshore renewables decommissioning

• Similar tax payer protection measures will be brought forward in the context of offshore renewables decommissioning, ensuring that companies have adequate decommissioning funds so that both the tax payer and the offshore environment is protected.

The Energy Bill, alongside the Planning and Climate Change Bills, will ensure our legislation underpins the long term delivery of our energy and climate change strategy.

Notes for Editors

1. The Future of Nuclear Power consultation ran from 23 May to 10 October 2007.

2. We conducted a full consultation based on Government's preliminary view that it was in the public interest for energy companies to be allowed to invest in new nuclear power stations. In particular:

Consultation ran for 20 weeks - longer than usual 12 week period for Government consultations.

• In total, over 4,000 individuals and groups responded to the consultation or attended one of our events.
• Over 2,700 written responses. Nine meetings with nearly 1,000 members of the public. A further 20 meetings with 600 stakeholders and those who live near existing nuclear sites. Direct mail to 5,000 + grassroots / community organisations. Placed copies and posters in all public libraries.
• Consultation website designed to make it easy for people to respond, although people could respond by post if they preferred. All who responded are receiving individual response directing them to published response on our website. Individual responses published except where people asked for their responses to remain confidential.
• All written responses have been published in full on the website, except those where participants requested confidentiality.

3. Dr Tim Stone was appointed in January 2007 as an advisor to the Secretary of State for Trade and Industry and Chief Secretary to the Treasury on nuclear new build decommissioning and long-term waste management cost allocation. Today we can announce that the Government will be extending his contract. In addition to this we announce today that he will also work with the regulators to explore ways of enhancing their efficiency in dealing with the challenges of a nuclear new build programme.

4. The response to the Renewables Obligation consultation on banding was published today and is available on the BERR website.

5. The Government today issued its response to views on the July 2007 Policy Statement on the new offshore transmission regime. The Government has confirmed that Ofgem should run the tender process for licensing connections of large scale offshore renewables projects to the onshore electricity network. We are seeking additional powers in the Energy Bill to enable Ofgem to carry out this role effectively.

6. The summary of responses and analysis of the Managing Radioactive Waste Safely consultation is available on the DEFRA website: www.defra.gov.uk