Written Ministerial Statement on energy policy: The Rt Hon Chris Huhne MP, 18 October 2010

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

On 15 July my Hon Friend the Minister of State for Energy and Climate Change told the House that the Government would hold a further consultation…

On 15 July my Hon Friend the Minister of State for Energy and Climate Change told the House that the Government would hold a further consultation in the autumn on the draft energy National Policy Statements (NPSs).

I am today announcing this further consultation. It follows a consultation undertaken by the previous Administration which closed earlier this year. We have decided on this further consultation in particular because of changes which have been made to the Appraisals of Sustainability for the non-nuclear energy National Policy Statements following the previous consultation.

As my Rt Hon Friend the Minister for Decentralisation told the House on 29 June in announcing changes to the planning system, National Policy Statements are critically important documents and should have the strongest possible democratic legitimacy. They should be subject to public consultation and both scrutinised and ratified by Parliament before designation. I am today laying the revised draft NPSs before Parliament for any further scrutiny that Parliament may decide to undertake, and I am taking this opportunity to specify that the Relevant Period for that scrutiny under Section 9(6) of the Planning Act 2008 will end on 31 January 2011. The public consultation will run until 24 January 2011, and we intend to present the finalised statements to Parliament for ratification next spring.
Energy National Policy Statements will be critical to delivering secure low-carbon energy supplies through the role they will play in the planning system. Decisions on new nationally significant infrastructure projects, whether by the Infrastructure Planning Commission or, in due course, by Ministers (subject to the passage of the Decentralisation and Localism Bill), will be taken in accordance with the framework of policies set out in the NPS.

At least one-quarter of the UK’s electricity generating capacity needs to be replaced by 2020 and it will be important we create the right environment for business to invest in the energy market. The revised statements will give investors the certainty they need to bring forward proposals to maintain security of supply and ensure progress towards decarbonisation.

The Energy NPSs set out national policy on a number of key energy policy areas: Fossil Fuels; Renewables; Gas Supply and Gas and Oil Pipelines; Electricity Networks; and Nuclear. Each of these forms a separate NPS, sitting below an Overarching Energy NPS.
Each of the NPSs is accompanied by an Appraisal of Sustainability (AoS), which incorporates environmental reports which have been prepared under European law, and by a Habitats Regulations Assessment (HRA). We are also consulting again on these associated documents.

Earlier this year, Parliament scrutinised draft energy NPSs both here and in another place. I would like to thank the Energy and Climate Change Committee for its report, and those in another place who also undertook important scrutiny work on the earlier drafts. I am today publishing the Government’s response to Parliament alongside the revised NPSs.
I am today also publishing a Government Response to the previous consultation, to which there were over 3,000 responses, which identifies the key themes in the responses and responds to them.

Copies of all these documents have been deposited in the Libraries of the House and are available at .

Regulatory justification

I have today laid before the House draft statutory instruments containing my decisions, as Justifying Authority under the Justification of Practices Involving Ionising Radiation Regulations 2004, that the generation of electricity from the nuclear reactor designs known as the AP1000 and the EPR is Justified.

Regulatory Justification is one of the actions which the Government is taking to facilitate the building of new nuclear power stations. It is required under EU legislation that provides that before any new practice involving ionising radiation (such as new designs of nuclear reactors) can be introduced, it must first undergo a high-level, generic assessment to determine whether its economic, social or other benefits outweigh the health detriment it may cause.

As Secretary of State for Energy and Climate Change I am the Justifying Authority and it is my responsibility to take these decisions.

Justification decisions are made by statutory instruments. The statutory instruments which I have today laid in draft before the House are supported by reasons documents, copies of which have been deposited in the Libraries of the House.

The reasons documents set out how I have considered responses to the public consultations carried out by my department, how I have assessed the net benefit of the classes or types of practice against the radiological health detriment they may cause, and how I have come to the decisions that they are Justified.

In summary, the basis for my decisions as set out in the draft statutory instruments is that there is a clear need for the generation of electricity by the nuclear reactor designs to which the statutory instruments relate, because of the contribution they can make to increased security of energy supplies and reduced carbon emissions. Against this the radiological detriment to health from these nuclear reactor designs and their associated waste facilities will be low compared to overall levels of radiation, and effectively controlled by the UK’s robust and effective regulators. I have therefore concluded that the reactor designs should be Justified.

The Justification Regulations provide that “the Justifying Authority may cause an inquiry or other hearing to be held if it appears to him expedient to do so in connection with the exercise of any of his functions under these Regulations”.

Having considered all the evidence supplied in the course of the public consultations, I have concluded that interested parties have been provided with sufficient opportunity to make their views known; that I have been provided with sufficient information to balance the competing arguments, interests and evidence bases in the relevant areas; and that I have sufficient information before me to make a decision. The draft statutory instruments containing the decisions will also be subject to debates in both Houses of Parliament. I have therefore concluded that holding an inquiry or other hearing as part of the process would produce insufficient further information or other benefit to justify delaying the making of these decisions and that it is not expedient to do so.

Copies of a statement to this effect, and of the reasons documents, have been deposited in the Libraries of the House and are available on my department’s website at .

Financing of nuclear waste and decommissioning

The Energy Act 2008 puts in place the framework to ensure that operators of new nuclear power stations meet in full their waste management, waste disposal and decommissioning costs.

Today I am laying in the House the Nuclear Decommissioning and Waste Handling (Designated Technical Matters) Order 2010. This order will give operators greater clarity over which liabilities require monies to be set aside in segregated funds.

The Order will proceed under the affirmative procedure and, if passed, will be followed by the Decommissioning and Waste Handling (Finance and Fees) Regulations 2010.

The Order and the Regulations together complete the statutory framework for the financing of nuclear waste and decommissioning.

No subsidy for new nuclear power

Alongside the other announcements being made today on steps the Government is taking to enable new nuclear power, I should like to take the opportunity to reconfirm the Government’s policy that there will be no public subsidy for new nuclear power.

To be clear, this means that there will be no levy, direct payment or market support for electricity supplied or capacity provided by a private sector new nuclear operator, unless similar support is also made available more widely to other types of generation.

New nuclear power will, for example, benefit from any general measures that are in place or may be introduced as part of wider reform of the electricity market to encourage investment in low-carbon generation.

I would also like to make it clear that we are not ruling out action by the Government to take on financial risks or liabilities for which it is appropriately compensated or for which there are corresponding benefits.

Specifically, within the framework of the Government’s policy under the Energy Act 2008, that new nuclear operators must have arrangements in place to meet the full costs of decommissioning and their full share of waste management costs, we will not rule out taking title to radioactive waste, including spent fuel, at a fixed price provided that price properly reflects any financial risks or liabilities assumed by the state.

In addition, the Government is committed to the Paris Convention on nuclear third party liability and the Brussels Supplementary Convention. These Conventions establish an internationally agreed framework for compensating victims in the unlikely event of a nuclear accident. The UK is already a party to them - and currently caps operators’ liability at £140m. The UK is also bound, with other Brussels signatory states, to contribute to a fund that will compensate victims both in the UK and other convention countries should a serious nuclear incident happen.

The Government will consult later this year on our proposals to implement amendments to the Conventions. These amendments impose a more stringent regime for operators than the current one, and alongside these improvements, the Government will be consulting on whether to continue to include an upper limit on operator liability, as permitted by the Conventions. Accordingly, in line with the policy I am outlining, and without prejudice to the outcome of that consultation, the Government has not ruled out the maintenance of a limit on operator liability set at an appropriate level provided that it is justifiable in the public interest, is the right way of ensuring that risk is appropriately managed, and that, overall, any potential cost or risk to the Government can be justified by the corresponding benefits of the Paris/Brussels regime.

Arguably, few economic activities can be absolutely free of subsidy in some respect, given the wide ranging scope of state activity and the need to abide by international treaty obligations. Our “no subsidy” policy will therefore need to be applied having regard to proportionality and materiality.

We will not rule out the Government providing support to industry in the normal course of the business of government, for example through the activities of the Office for Nuclear Development in taking forward the actions to facilitate the deployment of new nuclear power in a similar manner to the facilitation of other energy types. The Government will continue to meet its international obligations and support wider activity in the nuclear sector, including support for research and development, supply chain and skills activity.

The Government will also continue to provide funding to the Nuclear Decommissioning Authority to ensure the efficient and effective clean-up of the UK’s civil, public sector legacy nuclear facilities.

Severn Tidal Power feasibility study

I am also today publishing the conclusions of the Severn Tidal Power Feasibility Study and the key documents which informed its conclusions.

Following a positive recommendation from the Sustainable Development Commission in October 2007, a two-year cross-Government Feasibility Study was launched to inform a decision whether or not to promote a tidal power scheme in the Severn Estuary. The cross-Government Feasibility Study, led by my Department, also included representatives from the Welsh Assembly Government and the South West of England Regional Development Agency.

The Severn’s enormous tidal range could provide up to 5% of our current electricity generation from an indigenous renewable source, and bring new employment opportunity both locally and nationally. But costs would be high, and a scheme would have to have a strategic need compared to other ways of meeting our need for renewable energy. Furthermore, the Severn estuary and some of its tributaries are designated as internationally important nature conservation sites. The Study has considered whether Government could support a tidal power project in the Severn estuary and, if so, on what terms.

It has looked at five potentially viable scheme options in outline and assessed their costs, benefits and risks. The evidence base which I am publishing with the findings of the study is extensive and includes a Strategic Environmental Assessment of the Severn tidal power options short-listed following last year’s consultation.

The key conclusion of the Feasibility Study is that the Government does not see a strategic case at this time for public funding of a tidal scheme to generate energy in the Severn estuary. The costs and risks for the taxpayer and energy consumer would be excessive compared to other low-carbon energy options. Furthermore, uncertainties over compliance with regulation would add to the cost and risk of construction. The Government believes that other options, such as the expansion of wind energy, carbon capture and storage and nuclear power, represent a better deal for taxpayers and consumers at this time.

However, the Government recognises that factors which will determine the feasibility of Severn tidal power could change over time. The Feasibility Study evidence therefore includes potential triggers for a future review, so that it can be considered by the Committee on Climate Change in the work they will be doing on the level of renewables ambition required to meet the 2050 greenhouse gas reduction target. The Committee is expected to report next year. The Government does not intend to review Severn tidal power before 2015.