Lord McNicol of West Kilbride Portrait Lord McNicol of West Kilbride (Lab)
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My Lords, I thank the Minister for his introduction and all noble Lords who have spoken in today’s short debate.

I start by declaring an interest—not a financial one, like many other noble Lords, but a personal one. I grew up in Thirdpart, west Kilbride, on a small holding about one mile from Hunterston nuclear power station. My dad, Iain McNicol, worked at the power station as an operator for 17 years in the 1980s and 1990s, so my experience is far more on a personal level.

I do not think there is a contradiction between encouraging and driving new nuclear build, investing in and expanding renewables, and retrofitting and insulating. All the different parts of creating a future energy system and the better use of energy can be complementary and fit together.

This Bill is about finance as much as it is about nuclear power. As my noble friend Lord Rooker said, Labour believes that new nuclear has an important supporting role to play in the future energy mix, alongside the decisive shift towards renewables that is needed to deliver the climate transition and secure our energy security. As my noble friend Lord West touched on, energy security for the future is critical.

If we are going to build new nuclear power stations—which we agree with—the fundamental question is: how are we going to fund them? We could use the Hinkley Point CfD model, but, as my noble friend Lord Rooker said earlier, if not discredited, the CfD model has at least had its value for money questioned and challenged. We saw that in the NAO 2016 and 2017 Hinkley Point review.

As the noble Lord, Lord Teverson, and my noble friend Lord Hanworth, said, we could fund it by direct government financing, which I am not opposed to. On the impact assessment, when the different funding models were considered, was direct government funding considered as one of them? If not, why not?

In front of us we have the system of the regulated asset base—RAB—model. As I said, Labour supports the building of new nuclear power stations for a number of reasons. Nuclear energy is the only proven technology that can supply low-carbon baseload electricity at scale, notwithstanding the comments and points made by the noble Lord, Lord Teverson. We heard that when Hinkley Point C comes on stream, it will provide 7% of the UK’s energy at any one time—that is from one station.

This is at a time when we face a global climate crisis. The further rolling out of nuclear energy will play a crucial role in the UK meeting its climate targets. Nuclear energy will help ensure that the UK has control over the transition to net zero, due to its small land footprint and it being a low-carbon generating technology, as the noble Lord, Lord Wigley, said.

Rebalancing—it is rebalancing—the use of nuclear energy could also see the further use of hydrogen, as my noble friend Lord Whitty and the noble Lords, Lord Ravensdale and Lord Wigley, mentioned. More specifically, the production of green hydrogen is another key to decarbonising our electricity economy. Hydrogen can be used, without any carbon emissions, as a vehicle fuel and industrial or domestic heat source, if produced using renewable or nuclear energy sources. Although there may be issues around the baseload and the effect of the use of energy across the grid, you can use both renewable sources and nuclear, through electrolysis, to change the hydrogen and create hydrogen that can be stored for use when required.

Although some renewable energy sources, such as solar and wind, are dependent on weather conditions, as we have just heard, nuclear energy has no such constraint: it does not matter if the wind is not blowing or if it is cloudy. Nuclear power plants are essentially unaffected by external climatic factors and can create predictable and steady energy output. Come 2028, Hinkley Point C—if it is constructed on time—and the existing Sizewell B station in Suffolk will be the only nuclear plants generating power in the UK.

We have not even touched on the energy security issues or the socioeconomic and financial reasons for the UK to continue the use of nuclear energy. Nuclear power stations sustain thousands of well-paid and highly skilled jobs, most of which are outside the south-east of England. They also support thousands of supply-chain jobs across the country.

As we have heard, the regulated asset base model is tried and tested. When delivered reliably, it can help to save on capital infrastructure costs, especially those encountered in the CFD model. We will scrutinise the Bill to guarantee fairness for bill payers, including protecting consumers against any potential cost overruns, protecting the poorest households and scrutinising the balance between public spending and the bill payers.

Sizewell C will supply 6 million homes with low-carbon energy for up to 60 years. It will bolster Britain’s network supply chain, providing up to 70,000 jobs and 1,500 apprenticeships. It can reduce Britain’s reliance on energy imports, which is critical for our energy future.

We of course need to proceed with caution in anything as costly and crucial as this. We must learn the lessons from Hinkley; some have been learned in the move from the CFD to the RAB model. But we always need to ensure that consumers are the ones who benefit from these projects in the long run.

This is why Labour had previously proposed amendments around foreign state control, which would mandate nuclear stations to use UK-manufactured fuel and stick to UK consumer charges. As the Bill progresses, the Government can expect Labour’s overall support but also a proper critical eye on aspects of the mechanisms they are adopting and an emphasis on protecting people.

I agree with the noble Lord, Lord Oates, on one point: transparency. We are debating transparency in the Subsidy Control Bill and there will be further such discussions on this Bill. The Government and the country will only benefit from wider and greater transparency. There is no time to waste. Nuclear and low-carbon energy projects are crucial for the future of our environment, economy and energy security. It is therefore critical that we act now.

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Lord Callanan Portrait Lord Callanan (Con)
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When we have announcements to make on those areas, I am sure the noble Baroness will be here to question me, but I am not in a position to release the names at the moment.

The noble Lords, Lord Whitty, Lord Wigley and Lord Ravensdale, all made important points about nuclear projects’ potential for the cogeneration of hydrogen. As the noble Lord, Lord Ravensdale, said, the Sizewell C project is in the initial phase of exploring the potential of using electricity and low-carbon heat for a range of cogeneration applications such as the production of low-carbon hydrogen and direct air capture of CO2 for carbon capture. While these cogeneration opportunities are currently outside the scope of consumer funding through the RAB model, they could provide benefits to consumers by enabling Sizewell C to be utilised as a more flexible asset. I look forward to exploring that further with the noble Lord. This could provide greater flexibility for the energy system, thereby facilitating a greater number of potential pathways to meet the net zero target by 2050. If used in this way, Sizewell C could become the first nuclear low-carbon heat source, setting an example that we can emulate at other future nuclear power plants.

The noble Lord, Lord Wigley, and my noble friends Lord Howell and Lord Trenchard asked about the application of legislation to small and advanced nuclear modular reactors, for which we see a vital role moving forward. The Prime Minister’s 10-point plan for a green industrial revolution highlighted that SMR technologies have the potential to be operational by the early 2030s in the UK. The recently published net-zero strategy committed to take measures to inform investment decisions during the next Parliament on further nuclear projects as we work to reach our net-zero target. This will of course include consideration of large-scale and advanced nuclear technologies, including SMRs and, potentially, AMRs. As part of this, the net-zero strategy announced a new £120 million future nuclear enabling fund to provide targeted support to barriers to entry. Let me reassure noble Lords that the Bill is not product-specific and could apply to all civil nuclear technologies, and we will make decisions on appropriate investment portfolios on a case-by-case basis when presented with specific project proposals.

The noble Lord, Lord Wigley, as he always does, asked me about the role of devolved Administrations in the process of designating a project company to benefit from the RAB model. Although the ultimate decision to designate a nuclear company for the purposes of the RAB model will sit with the Secretary of State, given that nuclear energy and electricity are not devolved matters for Scotland or Wales, the Bill takes steps to ensure there is both strong transparency in decision-making and involvement of the devolved Governments. The Secretary of State will need to consult the relevant devolved Government before designating a nuclear company where any part of the site of the relevant nuclear project is in Scotland or Wales. It is important to make the point that the Bill will not alter the current planning approval process for new nuclear or the responsibilities of the devolved Governments in the planning process. Nothing in the Bill will change the fact that devolved Ministers are responsible for approving applications for large-scale onshore electricity generation stations within their own territories.

To move on to address some of the points made by the noble Lord, Lord Oates—I addressed some earlier—renewables represent an important and ever-growing source of electricity, but it is important that we have a diverse mix of sources to ensure a resilient electricity system in which the lights do not go off. Just as consumers paid for the previous generation of nuclear power plants, which, according to EDF, have generated enough electricity to power all Britain’s homes for 20 years and saved something like 700 million tonnes of greenhouse gas emissions, it is right that all consumers should share the costs of these projects to help realise their overall longevity and ensure that future generators bear the cost of the low-carbon infrastructure that we need to reach our net-zero goals.

The noble Lord, Lord West—and, I think, the noble Lord, Lord McNicol—asked me about Chinese involvement. In a 2016 Statement to Parliament, the then Secretary of State, Greg Clark, set out Her Majesty’s Government’s intention to

“take a special share in all future nuclear new build projects.”—[Official Report, Commons, 15/9/16; col. 1066.]

This policy has not changed; as such, we intend to take a special share in the Sizewell C project at the suitable time and, of course, subject to negotiation.

Lord McNicol of West Kilbride Portrait Lord McNicol of West Kilbride (Lab)
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My Lords, the Minister mentioned taking a special share in Sizewell C. Are the Government looking to take one in Hinkley as well?

Lord Callanan Portrait Lord Callanan (Con)
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These matters are subject to future negotiations. I will come back to the noble Lord on that.

I have addressed most of the points made in the debate. I am encouraged by the general support for the Bill across your Lordships’ House and I look forward to continuing the constructive engagement with all sides as it progresses. I therefore commend the Bill to the House.