06 October 2006
New nuclear reactors — the clean, green answer to the UK's growing energy problems, or expensive, hazardous white elephants? The government appears to have made its mind up, and is rewriting local planning rules to smooth the way. Mark Conrad investigates
As Tony Blair reminded the recent Labour Party conference, energy policy was barely on the agenda ten years ago. Not any more.
Environmental issues are now on all the parties' political radars. Global warming, according to the prime minister, is 'the greatest long-term threat to our political environment'. Just this week, ministers from the world's top 20 polluting nations, including Britain, gathered in Mexico for talks on combating climate change.
And this has brought to the fore one of the most controversial energy areas the government has to make a decision on – the future of its nuclear plants.
'Ten years ago, I parked the issue of nuclear power,' Blair confessed last week in Manchester. 'Today, I believe that without it we are going to face an energy crisis – and we can't let that happen.'
So certain is the PM of this point that he declared his conversion to nuclear power ahead of the government's July Energy Review – and before the follow-up white paper, due in early 2007.
The man charged with steering through the fine detail of this broad-brush policy is Malcolm Wicks, the energy minister at the Department of Trade and Industry. As he faces down rival interest groups, locked in bitter conflict over their proposed solutions to the global energy scramble, his brief is proving trickier than most.
Slumped in a corner of his Westminster office, Wicks tells Public Finance about the stark reality facing Britain's energy sector. 'We somehow need to secure improved and long-term access to energy sources at the same time that we have set ourselves probably the most ambitious target of any post-war government: to reduce UK carbon emissions by 60% by 2050. The challenge is immense.'
Among the problems Wicks has to contend with is the soaring price of gas and oil, as the emergence of India and China as energy-guzzling economic powerhouses intensifies global competition for dwindling fossil fuel supplies.
At the same time, declining North Sea oil and gas reserves, combined with growing domestic and international demand, means that the UK has become a net importer of gas. To add to Wicks' problems, around a third of Britain's domestic power plants are set to close by 2023, leaving a potential capacity shortfall.
All this is taking place amid concerns over global warming and the need for a dramatic reduction in carbon emissions. The production of vast amounts of 'clean' energy has, therefore, become the ultimate aim. Enter the elephant in the room – nuclear power.
It resurfaced again last month, rather literally, when protesters wearing gas marks and parading a 14-foot inflatable white elephant disrupted British Energy's annual general meeting in Edinburgh. In the same month, a protest outside Hartlepool's nuclear facility demonstrated just how unpopular new reactors are.
To add to Wicks' woes, the Local Government Association has added its voice to those concerned about proposed new planning regimes affecting nuclear plants. Paul Bettison, chair of the LGA's environment committee, is worried that these could lead to the demolition of local government's existing planning system, and would 'undermine town hall democracy more generally'.
So what are the issues thrown up by the Energy Review and the forthcoming white paper – dubbed by a senior DTI official as 'one of the most important pieces of public policy-making in a generation'?
One of the most controversial decisions has, seemingly, already been made via the review: the go-ahead for a new generation of nuclear reactors. While Wicks says that the government will tackle potential shortfalls with a 'diverse mix of energy generation projects', he adds that 'the most likely outcome [from the white paper] is that the UK will retain roughly its current output from nuclear power' – about 20% of all electricity.
However, 11 of the 12 existing nuclear power stations are among the plants due to close by 2023 and some older ones are already running into operational problems. Safety concerns at British Energy's Hunterston B plant in Ayrshire and Hinkley Point in Somerset, for example, have cut capacity.
So why has nuclear power re-emerged so strongly? As Tony Blair is quick to remind critics, it is a low-carbon technology. With gas and oil prices rising steadily, it is now also viewed as economically competitive. Nuclear power stations have lower operating costs than gas-powered sites, the Energy Review claims. Consequently, the CBI's submission to the review states that 'nuclear should be allowed to compete for investment on its own merits as a low-carbon technology'. Indeed, the business lobby claims that nuclear is the 'only low-carbon technology proven at a significant scale'.
One nuclear industry lobbyist also told PF that last winter's gas crisis, when Russia blocked supplies to the Ukraine (thereby threatening supplies to western Europe), was a 'wake-up call' to ministers. 'It was a heavy-handed reminder that Britain is far too reliant on a positive and settled geo-political environment to realise its energy needs,' he says. 'Nuclear power is effectively an indigenous source of energy.'
Blair has insisted that the private sector will have to initiate, fund, construct and operate any new nuclear sites, but the government is giving the industry a helping hand in overcoming local opposition to new reactors.
Wicks's review proposes a radical overhaul of the local authority planning system, 'streamlining' the public inquiry process that presents the case for and against new plants. 'As a generalisation, we have a problem with planning large infrastructure sites in the UK,' Wicks explains. 'Whether it is a nuclear power station or otherwise… there are always more people locally saying “no” than “yes” and they use every method that they can under the current planning regime to oppose something.'
The aim, he says, is to avoid the sort of six-year inquiry that delayed the opening of the Sizewell B reactor in Suffolk. 'That whole process took too long. We feel that we need a better balance between the national need for new energy plants and local people rightly having their say over new developments,' he argues.
To speed up the process, Wicks seems to be backing the nuclear industry's proposals for the 'pre-licensing' of new plants. Under this system, firms seeking to build power plants could have their designs signed off in advance of local planning inquiries by bodies such as the Health and Safety Executive, negating the need for design suitability and ethical concerns to be re-examined during each local hearing.
Wicks accepts that this is a 'controversial' proposal that will meet strong opposition from the local government community and environmental protesters. 'But our needs are urgent,' he claims. 'Sooner or later we simply must invest a lot of money through the commercial sector in generating new capacity – and we need a balanced environment for that.'
While Wicks' proposals would apply to all new power plants, including wind farms and gas stations, Jean McSorley from the environmental organisation Greenpeace says it is 'obvious that the system has been proposed to assist the nuclear industry'.
Bettison concurs. While the current planning system for new power plants allows the DTI to direct that permission to build sites should be granted, a wide-ranging public inquiry is compulsory if the local authority appeals. Bettison says he is worried that Wicks will support a revised system that pays lip service to local democratic input, but allows the government to effectively veto all serious opposition.
'That would undermine the democratic input in the whole planning system,' he argues. 'If you were to draw up a list of the ten most unwanted things to have on your doorstep, a nuclear power plant would probably be in the top three. Most residents oppose them – they worry about the health and safety issues relating to radioactive materials and they remember disasters such as Chernobyl. You can't simply force sites on a locality.'
While a Chernobyl-style accident remains unlikely in the UK, two nuclear operators – the United Kingdom Atomic Energy Authority and BNG Sellafield – were recently fined £2m each following spillages of radioactive materials. Safety issues loom large in the public's mind, despite the CBI's claim that 'nuclear has one of the best safety records of any part of the energy sector'.
Bettison says that the LGA 'is seeking assurances from the government that the white paper will allow for full democratic input by local authorities and residents'. He is also worried that 'significant' elements of the remaining inquiry process could be effectively closed to the public.
So is McSorley. 'The industry's position is not yet clear, but what they seem to be saying is that they want a lot of the major discussions around safety, security and environmental impact to be held behind closed doors before and during the planning and inquiry process, potentially casting aside the views of the local authorities themselves,' she warns.
Wicks says he 'will listen to the concerns of local authorities and residents' before final decisions are made and stresses that 'we're not trying to dodge the key issues'. To sweeten the nuclear pill further, Wicks says that his review 'gives a strong signal that probably the most obvious place for new reactors is on existing nuclear sites, or alongside them'.
However, the influential Compass group of Labour Party MPs claims that this is 'inconceivable', citing a New Scientist study which demonstrated that, because of rising sea levels caused by global warming, these sites could not be considered safe for the next 30 years. And in what one senior DTI staff member admitted was 'something of a blow', Jack McConnell, Scotland's first minister, recently said: 'I don't suspect that new [nuclear] stations would be required in Scotland.'
Impending threats to the planning processes are not the only implications for public policy when considering nuclear sites. Although the government wants industry to finance the new nuclear reactors, there is still likely to be a sizeable potential public cost, for example, around managing nuclear waste and decommissioning obsolete sites.
Simon Retallack, head of climate change at the Institute for Public Policy Research, says he 'doesn't buy into' Blair's claim that nuclear power would be cheaper than investment in other, currently less commercially viable, sources of energy such as solar, wind and tidal power. 'People need to ask “what is the government actually doing to help deliver these nuclear reactors?” Ministers will probably have to continue to provide the risk insurance that the nuclear industry cannot get from the commercial sector,' he adds.
Retallack also believes that a new generation of nuclear reactors could hinder local government's abilities to develop alternative clean solutions to Britain's energy problems. 'Nuclear power is problematic if you're interested in building decentralised [local] energy systems, based on renewable sources, because the two are diametrically opposed,' he warns.
The current centralised National Grid, for example, loses 60% of all its energy transferring power across the UK. 'That's a huge waste,' Retallack says. 'We must start to find ways of decentralising the system and allowing organisations such as local authorities to promote and produce energy generation projects.'
That's a view supported by Conservative Party leader David Cameron, who says that new nuclear installations are a 'last resort'. However, the party's interim energy report refused to rule out the option. The final policy should become clear next summer.
Only the Liberal Democrats have come out strongly against nuclear power – warning last month that expanding the sector would be 'an expensive mistake'.
As Wicks notes, the government's review encourages the development of decentralised systems, and reinforces targets to produce 20% of the UK's energy through renewables by 2020. But Retallack believes many of the government's commitments do not go far enough, and that direct public investment in alternative energy sources could suffer if nuclear power becomes the costly focus.
Wicks counters that he has overseen 'substantial' R&D investments, such as £50m for developing tidal power projects, and that the government will encourage local authorities and other public bodies to improve energy use in other ways.
But others argue that the government is presenting too positive a case on nuclear costs. Former environment minister Elliot Morley recently told the Guardian that his department did not have the input into the Energy Review that he would have liked – and that he doubted the figures put forward for nuclear power. 'If the review was open, transparent and fair, looking at the options on economic grounds across a whole-life cost assessment of nuclear stations, the solution may well point to renewables,' he was quoted as saying.
Morley argues that the full cost of new nuclear power projects is likely to be too high for the private sector, unless it is subsidised in some way by taxpayers.
The Commons trade and industry select committee last month estimated that decommissioning and clean-up costs for existing nuclear sites have risen to £70.2bn – £1,170 for every adult and child in Britain – compared with the £48bn and £56bn estimated in 2002 and 2004. Decommissioning costs are funded entirely by taxpayers, and are expected to spiral further as new ones manifest themselves in defunct sites such as Bradwell and as further investigative work is done at the most difficult sites at Sellafield and Dounreay.
To add to the government's financial considerations, it might have to shelve its planned sale of a £2.5bn stake in British Energy because of concerns over safety and short-term output.
Few people know what the ultimate costs will be. But all parties know that finding the right way forward – at the right cost to the environment, local democracy and the public purse – is essential. As Bettison says: 'This is a massive global, national and local issue. This generation of politicians and the public must get the balance right. If we cock this up, we'll leave behind an environment and society that will be damaged – possibly indefinitely and certainly for many generations.'
PFoct2006
