Wylfa Nuclear Power Project: Taxpayer Liability for Safety

Paul Sweeney Excerpts

Tuesday 24th July 2018 Westminster Hall

[Alan Brown]

Clearly, we can both tear apart quotes, but the bottom line is that that is what the then chief executive of National Grid said. I was just going to come on to a quote from Dr Mark Diesendorf, of the University of New South Wales, in Australia. He stated that the assumption is

“that nuclear power is a reliable baseload supplier. In fact it’s no such thing. All nuclear power stations are subject to tripping out for safety reasons or technical faults. That means that a 3.2GW nuclear power station has to be matched by 3.2GW of expensive ‘spinning reserve’ that can be called in at a moment’s notice.”

He further states:

“The assumption that baseload power stations are necessary to provide a reliable supply of grid electricity has been disproven by both practical experience in electricity grids with high contributions from renewable energy, and by hourly computer simulations.”

Therefore, the argument that Wylfa and other stations are required to supply baseload is flawed.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

On the point about baseload, does the hon. Gentleman not recognise that the whole point of managing a baseload with nuclear power stations and reactors is that they are organised to be taken offline in a scheduled programme of maintenance? In the case of Torness, it almost broke the world record for a continuous run of 495 days before being taken offline. Surely that is a huge achievement for engineers in Scotland?

[Alan Brown]

The hon. Gentleman tried to worm in a compliment to engineers in Scotland at the end of his intervention. Of course I welcome the skills of engineers, including nuclear engineers—I have no doubt that the guys doing that work are highly skilled engineers. I still do not agree with the concept that the baseload is required from nuclear. If we think about Hinkley power station, we were originally told that, because of the baseload required, if it was not commissioned by December 2017, the lights would go out. We are way beyond that deadline, since Hinkley will not come on stream until closer to the end of this decade, and we are still managing our electricity supplies. There are ways to manage baseload through alternate supplies, which I will come on to.

The only other reasoning I can see for this headlong rush into more nuclear is the equally outdated concept of the UK being a world leader in a particular sector, but that will come about because of other countries pulling out of the nuclear sector. The US is not building new nuclear, Japan has changed tack and Germany has pledged to phase out new nuclear. It seems that the UK will be a world leader in propping up the nuclear sector for other countries. In a recent Westminster Hall debate on the nuclear sector deal, the hon. Member for Bolton West (Chris Green) stated that we should not be reliant on foreign countries for our energy, but with these new nuclear proposals, including Wylfa, that is exactly what we will still be: reliant on foreign countries for their expertise, knowledge and supply of goods.

I suggest that the UK might be the world leader in bad nuclear deals. Returning to Hinkley, we have a 35-year agreement at a strike rate of £92.50 per MWh, when offshore wind recently came in at a strike rate of £57.50 per MWh, and that £57.50 is only for a 15-year tenure. The Hinkley deal is so bad that it was criticised by the NAO as bad value for money. Part of the problem with Hinkley was the risk and the financial exposure to private investors, allied with the fact that the technology for the EPR, or European pressurised reactor, has still to be proven, with all existing EPR projects under construction still facing delays and cost overruns.

As investment in nuclear around the world falls, the UK has planning for 11 reactors on the go and two reactors under construction at Hinkley. In its latest report, released recently, the National Infrastructure Commission states that there should be a maximum of just one new nuclear contract signed before 2025 because of the reduced costs of renewables and the other emerging technologies, including the massive decrease in the cost of batteries. Its report also illustrates that, over the years, the cost of nuclear has not decreased, debunking another UK Government aspiration that continually commissioning new nuclear such as Wylfa will somehow reduce costs. Has the Minister assessed those comments, and will the Government provide a response to the report in due course?

Wylfa is also a different technology from Hinkley, and other proposed sites have yet further different technologies. It therefore stands to reason that, when employing those different technologies, the inherent price will not be brought down, because we will not benefit from repeat constructions and using the skills gained during one project on another. There will also be site-specific constraints and considerations.

This backdrop brings us directly back to the Wylfa proposals. Getting direct information from the Government remains difficult due to their claims of commercial confidentiality. However, the private developer, Hitachi, has clearly had difficulties with the costs and risks associated with the project, which has led to the suggestion of the Government taking a direct £5 billion stake. In principle, a direct Government stake in key infrastructure projects makes sense, as they can borrow more cheaply than private investors. However, in this case, it seems to be part of another, wider blank cheque-type agreement, with the Government desperate to get the project moving.

It is not only me using the blank cheque analogy. Will Gardiner, chief executive officer of Drax Group, said:

“I am not a fan of sweetheart deals, the government sitting down with Hitachi and writing them a cheque. That’s not good economics”.

On the economics, we have heard reported strike rate figures of £77.50 per megawatt-hour quoted for Wylfa. That reduced rate, compared with Hinkley’s, is on the back of the £5 billion stake. While the Government are trying to keep information under wraps, managing to learn anything is still a bit of a smoke-and-mirrors game.

Under the Paris and Brussels conventions, a nuclear operator is liable for any nuclear incidents. However, that liability is capped at €1.2 billion, which is way below the cost of a catastrophic incident—the Fukushima incident ran into the hundreds of billions of pounds—so the cap is arguably too low. Hitachi has already had two serious safety breaches in other nuclear developments, and was fined $2.7 million by the US Government for one of them. Apparently learning from that, Hitachi is resisting taking on liability for nuclear incidents at Wylfa. We do not know its exact proposal, but it marks a departure from current agreements, where the operator should be responsible for health and safety and attendant risks and liabilities.

The Times reports that Hitachi “won’t pay” for nuclear accidents at Wylfa, based on Nikkei reports that some of Hitachi’s directors wanted

“safeguards that reduce or eliminate Hitachi’s financial responsibility for accidents at the plant”.

It also marks a departure from the “polluter pays” principle. It is critical that the UK Government do not sign up to any such crazy proposals. I hope the Minister provides real clarity on this matter and does not hide behind commercial confidentiality.

We know the Prime Minister hit the pause button for Hinkley Point C to allow for a cost review. Despite that review, she somehow then caved in and accepted what the National Audit Office has subsequently confirmed is a bad deal. Why do the Government appear to be pulling out all the stops again to get Wylfa over the finishing line—by which I mean the agreeing of the contract? We know full well that the project will invariably end up over budget and delayed, just like every other ongoing nuclear project in the world.

Another argument in favour of Wylfa and other nuclear projects is the jobs they will create. I agree that these high-skilled jobs are vital for the localities with existing power stations, and I understand Members lobbying to maintain—or to create further—high-skilled jobs. However, those jobs should not come at any cost. Indeed, paragraph 23 of the Welsh Affairs Committee’s July 2016 report, “The Future of nuclear power in Wales”, explicitly states:

“We recommend that the Government negotiate a strike price for Wylfa Newydd below that agreed for Hinkley Point C and seek a price that would be competitive with renewable sources, such as on-shore wind. The Government should not continue with the project if the price is too high.”

It seems, based on that recommendation, that the Committee must by default be against this project continuing, as it clearly cannot be competitive compared with onshore wind. Has the Minister consulted the Committee on the recent developments in the likely cost of Wylfa?

I would not want to see job losses anywhere. I represent a deindustrialised constituency. Over the years, we have lost coal mining and many different manufacturing jobs. However, we can spend money more wisely to create jobs. Wylfa will cost up to £20 billion. The new nuclear legacy programme will cost circa £100 billion, and we have spent nearly £120 billion in decommissioning costs. Departing from civil nuclear projects, the successor programme to replace the Trident submarines will have whole-life costs of more than £200 billion, with future decommissioning costing up to £250 billion.

Those are astronomical sums of money, and we should be able to think how to spend them more wisely. We could have proper infrastructure investment and a targeted jobs and manufacturing strategy that would create more jobs and a more balanced economy, and we will not have the toxic legacy of nuclear. By the time Hinkley and Wylfa are constructed, with their anticipated 6 GW capacity, we could build something like 20 GW of offshore wind capacity. We know that the costs of batteries are plummeting, and renewable costs have also plummeted.

We should invest in carbon capture and storage. I welcome the Government’s latest report on CCS, but we should never have pulled the previous £1 billion allocation. How ridiculously small does that £1 billion seem compared with the costs of nuclear I have outlined? CCS will also allow for the decarbonisation of gas and biomass electricity generation and will open up the potential for a supply of zero-carbon fuel, in the form of hydrogen. However, each massive undertaking for nuclear is to the detriment of investment in renewables. When the Government give undertakings and risk guarantees for Wylfa, they reduce their scope to make similar guarantees for emerging technologies.

On jobs not coming at any cost, we also have to appreciate the potential health risks. As outlined by Dr Ian Fairlie, an independent consultant on radioactivity, the risks of leukaemia in nuclear workers are double those found in a 2005 study, and there is

“strong evidence of a dose-response relationship between cumulative, external, chronic, low-dose, exposures to radiation and leukaemia”.

He also states:

“When nuclear reactors are refueled, a 12-hour spike in radioactive emissions exposes local people to levels of radioactivity up to 500 times greater than during normal operation”.

He states in his blog that the research behind these findings is “impeccable”, as it was based on

“a huge study of over 300,000 nuclear workers adding up to over 8 million person years, thus ensuring its findings are statistically significant”.

I suggest we pay heed to such research.

As I have said, the cost legacy is bad enough, and we still do not have a solution to the long-term disposal of nuclear waste, so it is absolute folly to sign a deal in which the taxpayer takes on unlimited risk for a nuclear incident. This could prove to be the worst deal yet unless the Government change tack soon.

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[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the hon. Member for Kilmarnock and Loudoun (Alan Brown) on securing this debate. This is an important and pressing issue for the UK, because, as we have heard, all of Britain’s currently operational nuclear reactors are due to go offline by 2030. So there is a pressing need to address this energy question.

In Scotland, the nuclear energy sector is worth £1 billion a year. Although 1,000 people are directly employed in Scotland’s two nuclear power stations, which have four advanced gas-cooled nuclear reactors installed, 12,000 people are indirectly employed, through a large supply chain encompassing engineering and design, which is a huge benefit to the Scottish economy. This is, therefore, a pressing policy issue for not only the whole UK but Scotland in particular.

I find it extremely dismaying that there is this dislike of nuclear power production, when the sector presents so much opportunity for Britain to re-establish a lead. After all, Britain was the world’s first generator of civil nuclear power. That is, unfortunately, an industrial lead that we have lost through lack of planning and lack of rigour in the 1990s. We can, hopefully, re-establish that lead with a bit of imagination and boldness.

I have the pleasure of serving on the council of the Institution of Engineers and Shipbuilders in Scotland. In 2015, we presented a lifetime achievement award to Sir Donald Miller, inducting him into the Scottish Engineering Hall of Fame. He is Britain’s foremost electrical engineer and was almost singlehandedly responsible for the design and development of Scotland’s entire post-war electrical generation and supply system.

I was interested to hear what Sir Donald Miller had to say about Scottish energy generation today. When he was presented with his award, he delivered a speech, which I feel is worth quoting at length. He mentioned that when he retired as chairman of the South of Scotland Electricity Board, which is now known as ScottishPower, in the early 1990s, he could take a great deal of satisfaction from the fact that

“we could claim to have one of the most secure and cost effective systems world-wide. Some 60% of our energy was from nuclear and with the hydro we could, incidentally, also claim to be one of the greenest systems with the lowest carbon emissions… The coal fired station at Longannet”—

which was recently decommissioned and was groundbreaking when it was built—

“was used mainly for back up and profitable exports to England for the benefit of Scottish consumers.

Today we see a very different picture. The decommissioning of our conventional generation is fast approaching”—

indeed, it has already approached—

“and yet there are no plans to replace the generating capacity at Longannet or the nuclear. Even more incomprehensible is that we shall, in a few years, be importing power for much of the time from the new nuclear station to be built just over the border in England at Sellafield. You may wonder just why Scotland (birthplace of so much engineering)”—

a pioneer of nuclear energy—

“should be importing power we could well generate here, exporting highly skilled jobs in the process. And moreover ending up with the least reliable and insecure electricity supply that we have seen for a hundred years. And this at a time when electricity has never been more important in the lifeblood of modern society.

We seem to be drifting into this situation with our eyes shut; just hoping it will be all right on the night. But with no electricity for twenty four hours (and perhaps even longer) it will seem a very long night indeed.

No engineer would set out to build a complex structure without a detailed plan and an electricity supply system is no different in this respect from a road network or an aircraft carrier. But there is no plan and nor is there any significant engineering input into the main decision making.”

That is a chilling statement, coming from someone of such repute, about the current state of Scotland’s energy system. That drives me to understand that there is an urgency here that we are not recognising but that we must address with imagination. The Scottish Government have been found utterly wanting for their lack of willingness to embrace new technologies when it comes to nuclear energy.

I have had the pleasure of twice visiting Torness nuclear power station, where the two advanced gas-cooled reactors are situated. The great tragedy of that advanced gas-cooled system is that the entire power station is limited by the life cycle of the reactor. The infrastructure around the reactors is highly modern. It is a great shame that, in 2030, infrastructure that could continue operating for many decades afterwards has to be closed and dismantled, because the reactors themselves cannot be moved and dismantled safely without that whole system being shut down.

Yet, there are emerging technologies that offer great opportunities, such as small modular reactors, which Britain will potentially pioneer, with Rolls-Royce in the foreground. I am hopeful that that is something that Scotland can look at and embrace. Not only can we secure the sector, which, as we know, is worth £1 billion and 12,000 jobs, but we can achieve so much if we are on the front foot. When I was working for BAE Systems at Govan shipyard, we looked at how we could develop and manufacture small modular reactors in the shipyard, thus sustaining not only nuclear supply, but our shipbuilding industry. There are huge opportunities for coastal locations.

[Albert Owen]

I was pleased that the Government launched the nuclear sector deal in Trawsfynydd. Trawsfynydd is a decommissioned station, but it has the infrastructure in place, and it has a community that understands and accepts nuclear energy for the future. I believe that putting the two together will benefit those communities and the whole of the UK.

[Mr Sweeney]

I thank my hon. Friend for that timely intervention. We have to think about this outside of these silos of energy generation. Although we want to decarbonise electricity in the UK, which is a laudable and vital aspiration, if we are to tackle the problem of climate change, it is critical that we recognise that nuclear has to be part of that mix.

Renewables, although we hope that they will eventually substitute all energy generation in the UK, are simply not mature enough, in terms of their reliability, to deliver output that is secure enough. The variability of wind is proving to be problematic. July’s wind energy is 40% lower compared with the same period last year. That is simply not sustainable enough for us to generate reliable energy sources in the UK. We have to look at other technologies, and nuclear presents an opportunity. We are not talking about rebuilding advanced gas-cooled reactors, which was a technology developed in the 1960s—it was advanced for the time, but is simply obsolete today. We are not talking about rebuilding that, with all the legacies of toxicity and problems with waste disposal that were mentioned, although I have to say that the advanced gas-cooled reactor fleet in the UK is a global benchmark for safety. I do not think there are any substantial risks associated with the advanced gas-cooled reactor fleet—it has had a tremendous safety record in the UK, which is a great triumph of British engineering.

We have to approach this with an industrial strategy; that is where we have to grip this. We are talking about shipbuilding and energy generation. All of those things can be linked to deliver a huge industrial and economic benefit for the UK.

[Alan Brown]

The hon. Gentleman is talking about emerging technologies—if new nuclear is an emerging technology. I presume he would welcome investment in carbon capture and storage in Scotland, and investment in tidal. The Scottish Government are not saying no to nuclear and no to new technologies; they are going to welcome wider technologies that are completely renewable and that do not have the potential toxic legacy of nuclear.

[Mr Sweeney]

That is an entirely legitimate point to make. We want to push on all fronts. We want Britain to be leading the world on all fronts. That requires investment in battery technology, where we have a huge disruptive opportunity. Let us push on that front. Let us push on carbon capture and storage. Again, the problem is that we have no rigorous industrial strategy. When I worked at Scottish Enterprise, for example, we watched Longannet drop off a cliff, with no plan for its succession and how it would be managed. As a result of that, we saw the collapse of Hunterston ore terminal in Ayrshire, which has now lost all its customers, because it was the input point for the transportation of coal to the power station.

[Alan Brown]

Longannet collapsed because it was no longer economically viable, due to the amount Longannet had to pay to connect to the grid, which is all based on distance from the population of London. Does the hon. Gentleman accept, therefore, that that is a UK Government failure, not a Scottish Government failure?

[Mr Sweeney]

The issue was a joint problem because we did not embrace the possibility of carbon capture and storage at Longannet. Nor, as the hon. Gentleman mentions, did we address the calculation system and the price charged for generation at Longannet—we have to address this issue on all fronts. Longannet was a failure because, ultimately, the jobs and industrial benefits were lost. As a result, we now have a large brownfield site that will cost a lot of money to clear up, for want of a proper succession plan and a proper strategy.

I urge all Governments to get a grip. I do not lay the blame on any one of them. I am describing the reality that faces the community and our country now, and it is about time we gripped it. I urge people to get together to sort it out. We have a lack of strategy in dealing with succession planning when it comes to closing down our nuclear fleet and also our conventional coal-fired fleet, so we have to address that. We must have a strategy. We have the opportunity.

Emerging technologies, such as the integral fast reactor, which is under development, will address the waste problem in nuclear. As Professor David MacKay, the chief scientist at the former Department of Energy and Climate Change, said, the reactor could supply all the UK’s energy needs for 500 years by consuming the UK’s existing stockpile of waste. That also addresses the decommissioning of the nuclear submarine fleet and the nuclear weapons at Aldermaston. It is a huge cycle that we have to address, and currently we are not gripping it.

We have a huge opportunity to embrace these technologies and use them as a basis for Britain to re-establish a global leadership position in civil nuclear energy that addresses the huge legacy of problems that we have had with nuclear. This is not about saying we can write nuclear off because the technology developed in the 1960s was flawed; it is about saying we are where we are and there are opportunities to utilise nuclear not only to deliver a low-carbon generation capability, but to address toxic waste issues. It is about developing, regenerating and manufacturing an advanced engineering base.

That is why I urge everyone to be open-minded when approaching the issue of new nuclear technologies in the UK and to look at new technologies that can benefit the Scottish and UK economies. That is how we and the trade unions are approaching it, and it is an entirely legitimate and open-minded approach. I am dismayed that the SNP will unconditionally block any potential exploitation of the opportunity in Scotland at Torness or Hunterston. That is a great tragedy for Scotland, a nation that has done so much to be a world leader in civil nuclear technology. I hope the SNP might look at those technologies and change their minds.

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[Ronnie Cowan]

As I was born and raised within a short distance of Hunterston power station, I understand that people worked on building that station, but we are talking about power that can cause so much destruction that we cannot possibly comprehend it. I agree we need a balance, which is why I support wind, wave, tidal, solar and hydro as part of the mix. I want us to progress so that we do not need nuclear as part of the mix. That is the ideal situation that we should work towards.

The hon. Gentleman correctly highlighted job creation, but obviously the jobs are where the investment is. He highlighted the lack of support for the Swansea tidal bay, which is an absolute travesty by this Government. It was a great opportunity to invest in renewable energy and see where that could take us. How many jobs would that create in Swansea and how many within the supply chain around it?

[Mr Sweeney]

The hon. Gentleman talks about a comparison with asbestos and the idea that nuclear energy generation is somehow inherently toxic. What does he say about the integral fast reactor or the small modular reactor technology that consumes nuclear and therefore solves the problem that he claims exists? That is surely to be welcomed and embraced.

[Ronnie Cowan]

As I said, we are working towards a mixture of renewable energy. Ideally, if we could do away with the potential dangers, we should do so. One can say that about absolutely any industry. The coal mining industry was a dangerous business. We always worked to minimise the dangers, which is what we should do in the case of nuclear energy. If we can do it with nuclear as part of the mix, that is what we should work towards. We should invest in new measures to see if we can attain that. We should learn the lessons of Hinkley, a point made by the hon. Member for Ynys Môn. I hope we will learn the lessons of Fukushima as well.

The hon. Member for Glasgow North East (Mr Sweeney) said that nuclear was once seen as the future in the United Kingdom. He is right: it was once seen as the future. It was also seen as the future in Germany and Japan, but they have moved on. Unless we want to be left behind in areas of technology, we have to move on as well.

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[The Minister for Energy and Clean Growth (Claire Perry)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Robertson. While I have the floor, may I take a moment to thank the Clerks and those who work so hard across the House of Commons to ensure that these debates take place? I particularly thank the Hansard reporters who are a miracle of accuracy, regardless of the quality of the debate—I just wanted to put that on the record before we go off on our summer holidays, although as we know, none of us are going on holiday; we will all be working hard in our constituencies.

I thank the hon. Member for Kilmarnock and Loudoun (Alan Brown) for securing this debate. We have had important conversations today, including two very stirring speeches from the hon. Members for Ynys Môn (Albert Owen) and for Glasgow North East (Mr Sweeney). I could not have made the case better myself—I will not try to, because Members probably do not want to hear me talking about that—but a point was made about having an energy supply that is diverse, strong, reliable, low cost for consumers, low carbon and, crucially, able to create innovation for reinvestment in the UK and for export.

I pay tribute to the long experience of the hon. Member for Glasgow North East in the shipyard. As he will know, if we had thought more about export potential when making some industrial decisions in the past, we would not have lost those high-skilled jobs. To reassure him, I was at the Cammell Laird shipyard two weeks ago to help to launch Boaty McBoatface. It was wonderful to see what £200 million of Government investment in polar research has delivered for that shipyard—thousands of jobs have been created and it has been able to bid for large-scale projects again. I enjoyed the speeches.

I will try to address the specific questions about safety, incidents and long-term liabilities. The hon. Member for Ynys Môn made a powerful case about our heritage. We should all be proud that we are leaders in the global civilian nuclear community in terms of safety and regulation, which we have built up extremely well over the years.

In this country, we do not set energy policy on the basis of ideology but on the basis of the test that I have discussed, so we will not make the mistakes of countries such as Germany. Last year, I was at the Conference of the Parties in Bonn to debate climate change, and barges of brown coal were sailing past the COP site—putting two fingers up to those who believe in reducing emissions and getting coal off the grid.

We all like to look at our apps, and there is an excellent one that tells us about the energy mix in the last 24 hours. We have burned no coal, which is excellent, and we used a bit of wind, which made up about 6% of the energy supply. Of the rest, 25% was from nuclear, 50% was from combined-cycle gas plants, some was from biomass and some was from interconnectors.

[Mr Sweeney]

Last year, for the first time since industrialisation, the country did not burn coal for energy generation, which was a huge milestone. The Minister talks about the huge industrial benefits and the benefits to the wider economy. Does she also recognise the benefits of the nuclear advanced manufacturing research centre in Rotherham, which has re-established large-scale casting capabilities in Sheffield—an industrial capability that had been lost in the UK?

[Claire Perry]

The hon. Gentleman is absolutely right. I will make reference to the nuclear sector deal that invests in the small modular reactor technology that he talked about and that engages with the industry and its supply chain by investing in innovation and skills and by thinking about what we can generate and export in the UK. I also pay tribute to the organisation that he mentioned.