Overarching National Policy Statement for Energy

Lord Howell of Guildford Excerpts

Wednesday 9th July 2025 Grand Committee

[Lord Howell of Guildford (Con)]

My Lords, I declare my interests as set out in the register, as an adviser to the Kuwait Investment Office and, on the unremunerated side, as chairman of the Windsor Energy Group and several other similar groups.

I note with slight regret the departure of the noble Lord, Lord Hunt of Kings Heath, with whom we have had some exhilarating debates. That is rather sad for me; I think we were getting on pretty well, although he spent an entire column of Hansard ticking me off for allegedly being against Sizewell C, when he claimed that everyone else was in favour. I understand why he said that, but it is not quite true. I am, in fact, strongly in favour of further development of Sizewell C; I had something to do with the final kick-off for Sizewell B, which took 15 years to build. I am sure there is a good site at Sizewell C. What I am against is dumping on it another white elephant EPR of the design being painfully worked out at Hinkley, which has not worked in many other places, is vastly expensive, will probably take another 15 years to build, and will cost huge amounts of government money at a time when we do not have much.

It is perfectly clear that if the alternative, which I shall come to, involving a set of smaller products built by Rolls-Royce, GE Hitachi or anybody else, were placed on that prepared site of Sizewell C it would have enormous attraction for private investment. Several private investors—small modular reactor builders—have already indicated that it could be done in a quarter of the time and would involve far less uproar over planning and construction sites, because these things are fabricated mainly in factories. It would also greatly ease the huge pressures building up on the state, on the Government, on the consumer—who is already very hard pressed and paying some of the highest electricity prices in the world—and on the taxpayer. I cannot imagine or understand why it has been decided to use this site for a replica of Hinkley C.

The Secretary of State says, “Oh, it’s fine, we’re the driving force in promoting nuclear; it’s a very good thing”, and mentions a list of things including Hinkley and Sizewell C. All I can say on Hinkley is that we were supposed to cook turkeys with Hinkley electricity in 2017, so we are eight or nine years behind time. Originally, way back when it was first mooted under a Labour Government in 2007, believe it or not, it was supposed to cost £9 billion. The Tories continued to approve it through their period and the price gradually rose from £9 billion, to £17 billion, to £23 billion, to £30 billion and then to £33 billion—admittedly with inflation obviously operating on it. Now the figure is £46 billion, although I have heard a figure of £51 billion mentioned. The prices are out of control.

Is this a system that we want to replicate? Do we really believe that we will learn all the lessons of Hinkley C and other EPRs around the world that have not been at all successful and are of a design that even the French recognise as “unbuildable”, as the chief executive of EDF has said? Is that really the best use of this site? I think not. Having spent vast sums—£2.7 billion—preparing the site, we should think again about whether we want either to see carbon-free electricity flowing from that site in the next 10 years or to resign ourselves to the fact that it is very doubtful that it will be in time for the 2050 net-zero targets.

We will come back to that, but here we have this rather complicated suite of documents. We are debating EN-2, EN-3 and EN-5 today—and, of course, a revised system in EN-1; I see the logic of why we need to revise the base of the system each time we move forward into new areas. We have already discussed EN-7 in this Room, which was very useful in opening up, more widely than hitherto, the nuclear side and recognising more strongly the case for SMRs, AMRs and other new technology in nuclear power. All that should be fully applied in the next stage in nuclear development, including a very large number of SMRs. We need to move quickly because the order books of the world are filling up as many other nations move into the area of SMRs. The latest, I saw this morning, is Indonesia, which is ordering 20 new SMRs, which it believes will be in operation in 2028.

Nevertheless, here are all these documents. I will try to concentrate on EN-2, EN-3 and EN-5 although, inevitably, our questions spill over to EN-7, the response to EN-7 by the Government, and EN-6, although that is not actually available. The Printed Paper Office tells me that EN-6 has effect for listed nuclear projects capable of being deployed by the end of 2025 and that the Government are in the process of preparing a new NPS. We cannot debate what we have not seen, but that will obviously overlap with many of the things that we have seen in the three documents before us.

I will go through a list of what one welcomes and what one deplores. I welcome the comprehensive approach in every conceivable aspect of the construction, the environment and the impact. A tremendous amount of work has been done by very many minds, and it is very impressive.

I welcome that it is recognised that we need new gas infrastructure. Surely that does not fit into a net-zero world—but yes, it does. We will see in a moment that it is confirmed in these documents. I welcome that the NPSs take a cautious step forward on the whole issue of how on earth we get electricity to the place where it is needed, from the new sources to the new consumer markets, with the very sensitive issue of pylons and how it is carried and transmitted. I shall come to that in a moment.

I welcome the fact that EN-5, I think, openly recognises that only half of the total energy demand for electricity will be met by 2050—and the other half will presumably come from unabated or abated gas and oil. That opens the question of how on earth you handle the emissions from the unabated electricity, which is necessary for our modern electricity demand. The answer takes us into the world of carbon capture and storage, which again is covered and referred to fairly comprehensibly in one of the three documents—I forget which.

I notice the enthusiasm with which the Government, from the Secretary of State downwards, say that we are driving all these nuclear plans forward. I have to say that if he is driving the Hinkley C plan forward, he is a very slow learner driver indeed. As I have already remarked, it was meant to be ready in 2017, or even earlier.

Those are things that are good. Now I come to the rather negative side. Of course, the nuclear replacement programme is miserably slow. We are all waiting for the final decision on Sizewell C. It was rumoured that it was going to be announced while President Macron was here yesterday or today. I do not know whether that has happened—I have not heard anything on the radio or seen anything in the newspapers or on the television, but that was the idea.

We are moving really very slowly in the direction of the final decisions on the real momentum needed for small nuclear reactors, which are sweeping the world not as a diversion or an alternative but as the next stage on from the huge gigawatt plants that are being built at Hinkley and one or two other places in the world, one of which is apparently about to be built at Sizewell. That is yesterday’s scene; those are the technologies of yesterday. We need the technologies of today: hundreds of smaller modular reactors that will be built much more quickly and attract private money.

There is a lot of talk about how somehow private money can be induced into Sizewell, through the regulated asset bases; the more I try to work out why private investment will be attracted, the more complicated it becomes. Perhaps the Minister will tell us what the latest story is about this, since one rumour is that nothing has been raised at all. Other rumours are that there has been some development in attraction from the regulated asset base income stream, paid for by consumers, years before anything is actually completed, let alone before a single kilowatt of electricity is generated and sold.

I deplore, though not quite so strongly, the handling of the hydrogen sector, which is interesting. It is recognised that hydrogen is not a fuel but a vector; it is a means of carrying power from one place to another and of encouraging local distribution. There is no reason why the considerable amount of electricity that, at present, is not generated in the night when not wanted, even when there is a good wind—of course, that costs the consumer a lot of money—should not be used to convert into hydrogen. The hydrogen can then be shipped, just as petrol is now in petrol trucks, to the destination markets where it is used.

That has another implication, which is interesting and not mentioned at all: if hydrogen is being shipped by truck to markets where it could be either fed into trucks or turned back into electricity, you will not need pylons. You will avoid all the agony and debate, which we are going to get stuck into, about where pylons should go, and areas they are going to go over, including

“some rural and coastal parts of the UK”

that

“have not been near sources of electricity generation”.

Those are bureaucratic, polite words for, as we know, some big pylons marching over beautiful areas. That will involve a long planning battle and be expensive, although putting them underground is not much improvement even on that. I am told that, nowadays, it is not just a question of digging a trench; it is necessary to have at least two wires a tennis court’s distance apart, and a far bigger disruption of the landscape—equivalent, temporarily, to building a motorway. None of these documents goes into that reality, which is being widely discussed by many people outside the Department for Energy Security and Net Zero.

I am sad that the whole idea of the Morocco interconnector has been dropped—it was in early White Papers. That is 3.2 gigawatts of clean electricity that we will not have. I am sad that the CCUS projects are moving much too slowly, because how can we get to net zero and abate all the gas and oil that will still be burned without a massive expansion of CCUS? I regret that our contribution to lowering world emissions will thereby be lower than it is going to be anyway. I regret that the technology that we developed for CCUS—which would have a real benefit in high-emissions countries such as India, China and, indeed, the United States—which we could be exporting will not be exported. It is not even mentioned in these in these documents.

I regret that the limits of the Secretary of State’s power in agreeing or disagreeing infrastructure projects are so vague. All we get is guidance that there must be an “appropriate balance”. How nice that the Secretary of State should be guided by an appropriate balance. What is an appropriate balance? Who will decide it? How will it be fair and just between all the different and immense pressures?

I regret that there is a vast underestimate throughout all these documents of the amount of clean electricity demand that will be required. In one of the earlier documents there was talk about doubling electricity demand. When one realises that electricity demand is now about 1/10th of total energy usage, doubling it will get us nowhere. We are talking about 300 gigawatts at the very least. The official figure appears to be under 200 gigawatts.

Finally, I regret that there is an underestimate of the enormous complexities, about which I was warned 40 years ago as Secretary of State, of integrating intermittent electricity into a stable grid system. It requires vast engineering ingenuity of the kind that clearly did not exist the other day in Spain and Portugal, where the lights went out completely. I want our lights and power to stay on. I want our power to be affordable. I do not see any big reassurance, even in all this literature and huge suite of documents, that that will be achieved.