Speech

Charles Hendry's speech to the Nuclear Industry Forum

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

Introduction Thank you for inviting me here today. The Prime Minister, in his second day of office, came to my department. He tasked us with…

Introduction

Thank you for inviting me here today. The Prime Minister, in his second day of office, came to my department. He tasked us with leading this government to be the greenest ever. I think that shows how high on the agenda we are and our commitment to the low carbon agenda.

I want to address the biggest challenge of all, how we decarbonise society while securing our energy supplies.

We face the greatest energy challenge in our lifetime. Over the next 10-15 years we will need £200bn of new investment. For the first time we have to appeal internationally for new investment. £5 trillion of investment is needed to maintain our gas supplies. And it is estimated that 3 million barrels of new oil per day must be added each year, to keep up the current demand. All but Sizewell B of our nuclear fleet is due to close by the early 2020s. The challenge in Britain is great and must be seen in the context of the global challenge.

Subsidy

The coalition agreement clearly sees a role for new nuclear, provided that there is no subsidy. We are clear. It is for private sector energy companies to construct, operate and decommission new nuclear plants. It will be for us to ensure the appropriate levels of safety, security and environmental regulation.

In all my conversations with industry, it is clear that you are keen to invest.

I would like to recognise John Hutton’s work here. After publishing the White Paper in January 2008, John Hutton chaired the ‘Nuclear Investors Conference’. And that was the starting point for new nuclear to make a positive contribution to a low carbon society.

And I would like to recognise the work of Dr Tim Stone and would also like to thank Mark Higson and the OND for their fantastic work in policy in taking new nuclear forward.

As we approach 2050, we need to move away from fossil fuels. And nuclear, as a low carbon energy source, has the potential to play a very important role in that.

We will of course continue to remove obstacles to the development of new nuclear, but have to win the debate with the public: we must recognise there are genuine public reservations about nuclear power, in particular about the costs of decommissioning and waste disposal.

So, as we have said from day one we will take the new nuclear agenda forward - without public subsidy - and we will urgently take forward work on planning, regulatory Justification, Generic Design Assessment and on waste and decommissioning finance .

Conversations I’ve had with companies suggest they are willing to invest without public subsidy. Though we will have a role in removing unnecessary barriers, by setting a strong carbon floor price, for example, to bring on all forms of low carbon technology. From the commitment I’ve seen from the nuclear industry I have no doubt that you can rise to the challenge.

The carbon price is not a subsidy for new nuclear, it is to drive forward low carbon investment. The scale of the challenge here is great - addressing the ageing infrastructure in Britain.

Such as the reform of the planning system. It will provide a fast-track system for major infrastructure projects alongside progress on Electricity Market Reform programme. I want to see National Policy Statements (NPSs) continue, including the Nuclear NPS. NPSs will be ratified, not just debated, by Parliament, making them more robust. However, we were concerned with the unelected IPC making decisions. We will keep the fast-track process for major infrastructure , but planning decisions will be made by Ministers thereby ensuring democratic accountability. I also want see a decision taken on regulatory justification.

We must also ensure that regulators and reactor vendors together deliver a meaningful Generic Design Assessment by June 2011 and we must redouble our efforts to deliver a framework for dealing with decommissioning and waste costs which protects the taxpayer and provides the taxpayer and operators with clarity.

I cannot overstate the issue of waste enough: it is a crucial challenge and one that we take seriously. The Secretary of State and I visited Sellafield together recently and we were both struck by the magnitude of the challenge. However, we have been managing radioactive waste for half a century and are confident that we have the experience and expertise to put the correct mechanisms in place to manage the new generation of nuclear waste.

We are committed to ensuring geological disposal of higher activity radioactive waste, safe and secure interim storage and a siting process based on voluntarism and community partnership.

We are encouraged by the three local authorities that have come forward in Cumbria and we continue to look for more. For us, the buy-in of local communities is essential.

This government also wants to give increased confidence on how it manages nuclear waste in the long term and to demonstrate that progress towards geological disposal is taken seriously at the highest levels.

Nuclear power can have a key role in our energy mix. But I appreciate clarity from us is essential if new investment is to happen. The Secretary of State and I are at one on this. And I am pleased that some of those most interested in investing in new nuclear, such as EDF, have welcomed the coalition’s position on nuclear.

We also recognise that openness is essential. One of the key factors of the coalition is that we have the certainty of a 5 year Parliament and therefore providing certainty for the industry is easier.

Regulation in the energy sector will also play a vital part in providing certainty and attracting the right investment, improving competition in the markets and getting a fair deal for customers. We will review the role of Ofgem and will ensure that policy is made by ministers, and the regulators will do the regulation.

Skills and supply chain

But are there enough skills to match our ambition? At the moment: patently not. And skills, not only in the workforce, but at a corporate level - will drive our success. We need that low carbon thinking from the top. It needs to trickle down in business. It needs access to all areas of corporate thinking, so we can drive low carbon jobs in Britain.

Some 80 per cent of today’s power industry workforce will retire by 2024. That leaves a significant gap to fill. All nuclear power stations except for Sizewell B are set to close by the 2020’s. The plans announced by operators to build 16 GW of new nuclear capacity will create huge demand for design and planning, equipment manufacturing and engineering and construction skills. UK companies that are successful here will have a fantastic springboard to compete internationally.

Investments in projects such as Sheffield Forgemasters are being looked at objectively along with all commitments that were made pre-May. All are being looked at on an even playing-field, to ensure the best use of taxpayers money.

This skills shortage has to be faced and to me this presents an opportunity. In facing this we must look to creating long term job prospects for a dynamic sector. This sector has the potential to create an estimated 30,000 jobs. The National Skills Academy for Nuclear is doing excellent work so far, in bringing skills and training together across the nuclear sector. May I pay tribute here to Jean Llewellyn, Chief Executive of the National Skills Academy for Nuclear. Jean is a true dynamo and a driving force for delivering change in this area.

Security of supply

Every day that I work in my new office, I am convinced that time is not on our side. We need to renew our infrastructure whilst lowering our carbon emissions.

Much of our generating capacity is reaching the end of its working life, or will not meet the increasingly stringent controls on emissions. The question for Britain is, can we meet our security of supply needs in a low carbon way, by building renewables, CCS and nuclear. And simply put, yes.

I am very pleased to have had the opportunity to speak to you, because I want you to be clear what you can expect from me. I want to see Britain as the number one place to invest in. I want to see everyone here embracing the challenge we have ahead of us. And I want to a genuine partnership between government and industry in making this happen.