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Energy Bill

My Lords, most speakers hitherto have ranged a little wider than the provisions of the Bill—quite properly because, as everyone has said, the Bill deals only with some of the matters which we need as a country to address. The Bill as it stands is a mixed bag and so will be my speech. I am following other noble Lords in that. The measures outlined by the noble Lord, Lord Jones of Birmingham, in Parts 1 to 4 of the Bill, about gas and CO2 storage, renewable obligation certificates and decommissioning are all much as expected. All are urgently necessary and essential for the development of these sources of energy. Before I turn to the Bill—there are some provisions that I particularly want to look at—I shall talk about what I have called the new kid on the block. When, last year, the Nuclear Decommissioning Authority awarded a substantial decommissioning contract to a company called Energy Solutions, of Salt Lake City, Utah, in the United States, I am sure I was not the only one to be taken by surprise. Indeed, I tabled a Question, which I showed last week to the managing director of that company, and he laughed. Since then, I have made it my business to learn about the company. I am quite satisfied that its presence in the UK and its remarkable record, particularly on decommissioning and dealing with waste, is enormously important and gives rise to two issues of fundamental importance to our immediate energy policy. First, as recently as the nuclear White Paper last January, there seemed to be a widespread assumption that we were talking about replacing our decommissioned nuclear stations and that we might not therefore be planning for more than about four or five new nuclear reactors. Further, because of the need to avoid what I call the AGR mistakes—seven different designs for seven different stations—there was a widespread view that we needed to go for one design and replicate it to get all the benefits of scale. EDF—Électricité de France—and British Energy, perhaps in partnership with E.ON of Germany, have been seen as strong contenders for this. Their project would be based on the EPR reactor designed by Areva. Since then, however, we have had a very important speech by John Hutton, the Secretary of State, on 26 March. He said: "““I don’t want to see just a like for like replacement of nuclear capacity in the UK … But energy security and climate change should provide the push for a significant expansion of nuclear in the UK in the coming decades””." He went on to offer the promise that this could lead to 100,000 new skilled jobs. Many people have interpreted this, quite rightly, that this does not mean only four or five new nuclear power stations; it means, if anything, eight, 10 or possibly 12. This is why the arrival of Energy Solutions is now very important. It has publicly announced its intention—and that of its partners, RWE Power International of Germany, and Westinghouse, which we still regard as American, although it is Japanese-owned—to enter the market with a series of AP1000 reactors, which is the Westinghouse design. They may use not British Energy sites but sites that are being cleared by the NDA. They have mentioned Wylfa in Anglesey, Hinkley Point and even possibly Bradwell. There may be others. If there had been only one competitor in the UK market, I would have envisaged every prospect of a competition investigation, perhaps by the OFT, by the EU, or both. Ofgem will be able to offer initial advice, but it has told me that such a process could not take less than six to nine months. We cannot afford that delay. Now with the prospect of two entrants into the market, however, there will be competition. Although we do not expect Ministers to comment at all on the present negotiations, which are clearly highly market-sensitive, can they say whether having two entrants, with different partners with different reactor designs and based on different sites, obviates the need for any competition investigation? That is the first point. My second point about Energy Solutions relates to the contribution that it could make to managing our waste. I am told that it has been having detailed discussions with government departments, the NDA, the Environment Agency and the other regulators—the HSE and the Nuclear Installations Inspectorate—which hold out a real possibility of a step change in the plans which have hitherto been projected by Ministers, as approved by CoRWM, for dealing with our waste. Energy Solutions has told me that, while spent fuel and the waste from fuel reprocessing must go into a deep repository in this country, much of the so-called intermediate waste does not need to be managed in that way but can be either recycled for use in new nuclear build or transported to Energy Solutions’ own disposal facility, called Clive, in the Utah desert. I have no means of ascertaining this, but it claims that this could lead to substantially lower costs with a significantly smaller repository for new-build waste and so save us a great deal of money. I should like to ask the Minister a detailed question on the Bill. Of course we cannot decide; we have not even got the White Paper yet on waste. But Clause 45 in Chapter 1 of Part 3 of the Bill—this is the chapter which includes the funding of decommissioning and waste that many noble Lords have talked about—allows for the modification of an approved programme for funding and disposal. If the regulators approve a significantly less costly process of decommissioning and waste disposal, which is the offer held out by this company, will that clause allow the Government to modify an existing approval so as to allow the companies to reduce significantly the amount of money that they have to set aside for funding the obligation? I totally support the idea of funding the obligation, but will Clause 45, as it stands, do that, or will it need to be strengthened? I turn to the other end of the energy scale—