Re: Huhne walks tightrope in answering on nuclear policy
dave andrews
All:Here are Chris Huhne's on the record comments on nuclear policy from last week's Energy Select committee hearing.Interesting political tightrope walking and Janus-style pronouncements on atomic agnosticism and ministerial support......cheersDavidhttp://www.publications.parliament.uk/pa/cm201011/cmselect/cmenergy/uc474-i/uc47401.htm
UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 474-iHOUSE OF COMMONS
ORAL EVIDENCE
TAKEN BEFORE THE
ENERGY AND CLIMATE CHANGE Committee
Work of the Department of Energy and Climate Change
Wednesday 15 September 2010
RT HON CHRIS HUHNE MP, MOIRA WALLACE, PHIL WYNN OWEN and JONATHAN BREARLEY
Oral Evidence
Taken before the Energy and Climate Change Committee
on Wednesday 15 September 2010
Members present:
Mr Tim Yeo (Chair)
Dan Byles
Gemma Doyle
Tom Greatrex
Dr Philip Lee
Albert Owen
Christopher Pincher
Laura Sandys
Sir Robert Smith
Dr Alan Whitehead
Examination of Witnesses
Witnesses: Rt Hon Chris Huhne MP, Secretary of State for Energy and Climate Change, Moira Wallace, Permanent Secretary, DECC, Phil Wynn Owen, Director General, National Climate Change and Consumer Support, and Jonathan Brearley, Director, Energy Strategy and Futures, gave evidence.
Q1 Chair: Secretary of State, a very warm welcome to the Committee. This is your first appearance-our first meeting with you. We are delighted to have you. Thank you for making the time.
There is a great deal we would like to talk about, obviously, and I hope it is going to be a good tour d’horizon. Congratulations on your appointment anyway. I remember you described it to me as your dream job, so I hope it is proving to be a dream and not a nightmare.
Chris Huhne: So do I. Thank you very much, Mr Chairman, and congratulations to you too for being one of the first of the elected Select Committee Chairs. I think it is a very important development for Parliament, and I very much look forward to working with you as a newly invigorated Committee. I think Ministers are always in favour of tremendous Parliamentary scrutiny in principle. Well, I hope in practice that it is-and I am sure it will be-very good.
Q2 Chair: I think we start off from a pretty supportive position of you and the Department. We may be quite critical of some other areas of Government policy. I hope we will not have to be too confrontational with you because I think we would like to give you as much support as we can in what is clearly quite a challenging period. Do you want to introduce your colleagues, first of all?
Chris Huhne: Yes, absolutely. On my right is Moira Wallace, who is our Permanent Secretary and not just any old Permanent Secretary, but the founder of the Department-so very crucial. On her right is Jonathan Brearley, who is Director on the energy side and who is deputising today for Simon Burley, who is our Director General, who, unfortunately has had a minor operation and is recovering from that; and on my left is Phil Wynn Owen, who is the Director General in charge of climate change and consumer matters. I will attempt to answer all the easy questions and they will answer the difficult ones.
Q16 Albert Owen: But isn’t your flexibility hampered by the fact that 80% of your annual expenditure is committed to nuclear decommissioning?
Chris Huhne: It is not quite 80%, I think, but it is certainly a very, very substantial amount. The overall budget of the Department is about £3.2 billion and it is getting on for about half. So, you are right that it is an enormous slice.
Albert Owen: I am sorry, did you say it was half?
Chris Huhne: It is getting on for half, yes. So it is an enormous slice of the overall budget and that is legacy. It is dead money. It is money, frankly, that all of us would prefer not to have to spend at all because it is dealing with past problems rather than the future, and what we obviously want to see, both officials and Ministers, is the Department driving what is a very exciting process-the third industrial revolution, moving to electrification of the decarbonisation of the economy and to have to deal with that deadweight of old costs is a problem. But it is, as you say, a very important part of the budget and we have to deal with it.
Q17 Albert Owen: It is not completely dead, though, because it is an industry in itself, isn’t it, decommissioning? As the Chairman said, there are going to be jobs created in this area that are going to create tax revenues for the Treasury, so it is not completely dead. I hear what you say.
Chris Huhne: Dead in the sense that–
Albert Owen: You have inherited it?
Chris Huhne: In the sense that we have inherited it, and the vast bulk of the spending sadly is dealing with problems which, frankly, should have been dealt with by my predecessors many, many years ago. The costs of those problems are much, much greater as a result of the fact that we did not deal with them many, many years ago. So, in that sense, I am absolutely determined that we will not delay these decisions again because, frankly, if we do, we will simply be bequeathing an even worse problem to future generations.
You are right in the sense, obviously, that new nuclear will create waste and there will be a decommissioning issue. It is absolutely essential that, in future, we deal with that in a timely manner with proper investment that deals with deep geological depositories and so forth to deal with the waste vitrification rather than the situation that we have had over the last few decades in this country, which is deeply unsatisfactory, both in our own terms and by comparison with the way other countries have dealt with their problems of waste and decommissioning.
Q18 Albert Owen: I totally agree with you. I think we are almost together on nuclear now. We were not a few months ago, but I think you are moving on that journey towards a proper system. I am doing this gently in accepting the fact that you are right about the nuclear decommissioning legacy. I think that you are absolutely right to say that.
Chris Huhne: I have to say, I don’t think we have ever been different on this, Mr Owen, because when I was doing the Opposition’s environment brief on this I welcomed, for example, Coram’s report on the deep geological repository. It seemed to me that that is the best option for dealing with the waste that we have and the most realistic way forward. So I don’t think there is a political division on that matter.
Q19 Albert Owen: We might explore that a little further on. But one point is that you are saying about the NDA, for example, that it has the opportunity to generate more money to help your Department by extending the life of existing stations.
Do you have a direct policy on this? I know there are safety issues which are paramount. The inspectorate has to clear these, but is there an active policy that you have got that you have asked the NDA to look at all these nuclear stations now with a view to extending them because the economic climate is good?
Chris Huhne: No, because I think that is a decision that the operators have to take in the first instance. The reality is that the operators have an enormous incentive to run the investments which they have got for as long as they conceivably can. You can see what has been going on in Germany, for example. Therefore, it is appropriate for us-obviously, if applications come forward, that will be dealt with through the usual regulatory channels. But I don’t think it would be appropriate. The incentives are already clearly there.
Q20 Albert Owen: I hear what you are saying. I understand it very clearly. I don’t have to go to Germany. Close to my own area we have a nuclear power station which is applying for an extension and which will be good for the local economies, but also for energy security purposes and the low carbon agenda that you are mentioning. Surely, you should give some leadership in this and say, "Look, it is our intention, as a country, to produce safe nuclear generation for as long as possible."
Chris Huhne: It is certainly our intention to produce low carbon alternatives as quickly as possible and the coalition agreement very clearly envisages that new nuclear will have a role in that. I have made it very clear that a deal is a deal and my job as the Secretary of State for Energy and Climate Change is to deliver on that deal-exactly as I would expect, for example, Michael Gove, Education, to deliver on the pupil premium, which was a Liberal Democrat idea within the coalition agreement, I’m delivering on the nuclear elements which are in the coalition agreement, and I intend to do that.
I think that, on the specific issue of extending life, the incentives are very clear for British Energy. If it wants to do that, I don’t think that there will be any push-back, and it obviously makes the applications in the normal way.
Q21 Albert Owen: Sure, and Magnox and the other companies. But isn’t this a golden opportunity for you to generate more money at a time when everybody else has to cut back? That is my point.
Chris Huhne: I think that you do have to bear in mind what is the appropriate role for the Department in terms of setting the policy framework and the appropriate role for the individual economic actors. Although, in the energy sphere, it is absolutely crucial that we have a proper framework of policy and that people know where we are going and that we are providing regulatory certainty and clarity, I don’t think we can remove all decision-making capability from the companies involved.
Albert Owen: Give some incentive. Thank you.
Q39 Dr Lee: In that desire to become as self-reliant as possible, does your Department have a position on the use of thorium in the energy mix?
Chris Huhne: Yes. I don’t think we have actually taken a very formal position so far on thorium. Jonathan, do you want to comment?
Jonathan Brearley: I don’t think we have. I think we will come back with a note.
Q40 Dr Lee: I say that. There was a very interesting article over the summer in The Telegraph–
Chris Huhne: Yes, I remember reading it.
Q41 Dr Lee: There was a quote which says we have shown little appetite in this country and, "It is too much of a huge paradigm shift to a new technology". I think in view of the current state of play in the energy market, it strikes me-I don’t know whether that was a UK agency or whether the source of that quote is from somebody in the Department. It was suggested that one of the reasons was that when one of the European organisations for nuclear research went to the European Commission, dare I say it, the French saw it off at the pass because they have a vested interest because they know a lot about the old technology. You mentioned that they have cornered the market. In view of the fact that we all seek a niche for Britain economically, it does strike me that "leapfrogging" the French-excuse the pun-would be a good idea.
Chris Huhne: I’ll certainly come back to you with a note on thorium. I have a hazy memory of the article, but I seem to remember the Indians are doing it.
Q42 Dr Lee: The Norwegian company Aker has purchased the fuel cycle because there is a lot of thorium there. But we also have quite a bit of thorium, apparently in Cornwall.
Chris Huhne: There are all hot rocks in Cornwall.
Q43 Dr Lee: Yes. In view of the fact that there is little nuclear wastage, and we have already had lengthy conversations, and I have a sense that that is a concern you have and that is one of the reasons that you are perhaps not as enthusiastic about nuclear power in the future long term-certainly it has been reported in the past-is because of the problem of nuclear waste, which I would agree with. In view of that, and that the thorium doesn’t, it just strikes me that is something which, maybe, we should pursue.
Chris Huhne: Not just on the thorium thing, but I did actually ask our excellent Chief Scientist, Professor David MacKay, who I hope you have a chance to interview as well, about the prospects for fusion, which, of course, has always been held out as the great answer on nuclear which does not generate waste and the advice is that it is 40 years away, and it has been 40 years away for 40 years.
Q44 Dr Lee: But that may be because we have not taken the leap. We talk about 2050 as if it is around the corner when it comes to hitting targets. That is 40 years away.
Chris Huhne: Yes.
Q45 Dr Lee: I know money is tight, but this is an opportunity, possibly, to step on.
Chris Huhne: We will certainly look at it and we will come back to you with a note on thorium.
Q46 Laura Sandys: Moving along in the direction that you are outlining, obviously one of the most important things that the Government can do is keep the lights on and keep them on at a price that is affordable.
The strategy that we are looking at, whether it includes the success of CCS technology; whether it includes the certainty of investment into nuclear; and whether it includes, which it does, the certainty that certain countries will not be using energy for political ends, playing the market in a straightforward way –
Chris Huhne: Absolutely.
Q48 Laura Sandys: Absolutely, but there is still a risk assessment that needs to be done, for example, on nuclear replacement, which is a massive capacity issue that we are going to be facing.
Chris Huhne: Sure.
Q49 Laura Sandys: Again, whether it is on an annual basis you are assessing whether that investment will kick in, may I ask, if you feel there is a risk, whether you might want to come back to the Committee and discuss some of the risks that you see, particularly in that sector, because that is going to be a very large percentage of generation?
Chris Huhne: It is absolutely key and we have announced, not just for nuclear but obviously for other low carbon energy sources as well, that one of the things we want to do is have a carbon price floor. That was in the coalition agreement and that is under way in terms of the consultation which we will be having this autumn on reform of the climate change levy. We will continue to deal with these uncertainties.
The one thing I will say-and I will kick over to Jonathan because he is aching to get on this-on this is I think that the appreciation of the risks here is sometimes the wrong way round. I think there is less of a risk of us having a problem with the lights going out than there is of having a problem with our low carbon objectives because, in order to keep the lights on, the big six have basically reverted to their default position, which is to throw up a gas plant to generate electricity very quickly and that can be done in literally 18 months.
The real problem here is that we are committed to that low carbon future and we do have to make sure that that risk is dealt with.
Jonathan Brearley: I will start by saying that I have been in energy policy for around five years and what is remarkable to me is how dramatically and how quickly our perceptions of the future energy mix changed. Chris has already mentioned unconventional gas. A few years ago, we were worried about that and now people are coming to us describing it as a game-changer.
When we do things like reform the electricity market, which is something that I am intimately involved in, we need to design a set of instruments that are robust to these changes in our perception. So, alongside Chris’ portfolio approach, we need to generate mechanisms that can actually adapt to our changing view of what the future might be. So, if it is thorium or it is indeed importing solar from the north of Africa, which others have suggested, we have a system which is robust to deal with that.
Alongside that, I would add that, particularly for the big electricity sectors, so for nuclear, for CCS and for renewables, we do have challenges outside the economic challenges and those are delivery and practical challenges. That is why we set up the relative offices, so the Office of Carbon Capture and Storage and the Office of Renewable Energy Deployment, which work actively with the industry to identify those issues as they emerge and try and resolve them.
Moira Wallace: Can I just add on this? We do this in the short term and we also do it in the very long term. So, this summer we published the work we have been doing on 2050 and literally it is a plan A, a plan B, a plan C, etc. It risk assesses what would happen if technology X just came to nothing, and actually what would be the consequences elsewhere. So that is the analytical background to the sort of portfolio approach we are talking about and that is a big first for the Department to look that far ahead.
Chris Huhne: By the way, it is available to everybody on line. I am trying to popularise this as the executive toy of choice. You can go and sort your own energy mix out. You can say, "I don’t want this", or "I don’t want that", or "I want more of this and more of that", and it is David MacKay’s calculator, the Chief Scientist's calculator. Do have a look at it because I think it really shows the inter-relationship between different energy sources. It is a very useful tool.
Q55 Chair: There are several matters I want to try and cover in the time set. Just very briefly, you and some of your colleagues took an initiative within the EU to start discussions about a more demanding emissions reduction target by 2020. How are those discussions going?
Chris Huhne: We had a very good joint initiative, which was an article that I did with Jean-Louis Borloo, my French counterpart, and Norbert Röttgen, my German counterpart. Partly as a result of the reaction to that, where we backed the more ambitious 30% emissions target by 2020, we agreed that it would be useful for us to meet on an informal basis and we actually had another meeting a couple of weeks ago in Berlin as part of a series. We are determined, I think, the three of us-the French, German and British Governments-to try to inject some momentum both into the EU's domestic ambitions on movement towards the low carbon economy, but also, of course, as a way to reinvigorate the whole process of international negotiations through UNFCCC and Cancun and, next year, South Africa.
I think all my experience suggests that, if we can act together with our European partners, we have much more weight in this area than if we are singing a different tune. I think we need to remember how effective Europe was, both in delivering the first serious international treaty on this type of pollutant, which was the Chlorofluorocarbons Treaty, and, secondly, how important Europe was in delivering Kyoto as the first climate change treaty because, frankly, the Kyoto protocol would not have been delivered had it not been for European joint pressure on a number of major players, particularly Russia, to ratify. If the Russians had not ratified, it would not come into force and it was the joint EU position which I think was decisive in making sure the Russians ratified in time, but I am acutely aware of how important the European dimension is to making sure that this is dealt with at a global level.
I think an important part of our policy as a Government is to progress the climate change agenda, using the European Union very much as a way of amplifying our concerns and making sure that our national interest is dealt with on a global stage.
Q56 Chair: On Cancun, what you would regard as a successful outcome?
Chris Huhne: Well, there is a certain amount of sucking your teeth at that point, Chairman. The reality is that I think it is going to be difficult to come up with anything terribly material, certainly not a final agreement at Cancun. What I hope is that we will be able to demonstrate real progress in some of the dossiers that will form a part of a final agreement on climate change. So, for example, I hope that we might be able to show real progress on forestry. I hope we might be able to show real progress on the whole issue of reporting and monitoring and verification, which is absolutely key.
If we are going to have an agreement, we have to be confident that every country is actually applying that agreement fairly, and I hope that we will also see some progress on finance because, if the developing countries are going to come to the table, they are very aware of the potential costs to them of climate change. They make the absolutely legitimate moral point that some of the carbon that is out there in the atmosphere doing the global warming was actually emitted by this country 100 years ago, under the last Liberal Government, I have to say, and therefore we have a legacy issue which I think the developed world has to own up to. The developing countries, I think, morally make that point and we have to step up to the plate both with fast-start finance and indeed with help for them in terms of the broader issues of climate change finance. I hope those are three areas where we can demonstrate that there is some real progress and that we can try and get some sense of momentum back into the talks.
We have the Copenhagen accord. If the Copenhagen accord is delivered, there are some real potential gains there. Actually, there has not been a block on international progress. The Japanese, for example, have been moving on cutting their carbon emissions with a legal framework which actually is consistent, on my advice, with a 30% ambition in Europe. The Chinese-their latest emissions data are rather too hunky. It actually shows that their increase in emissions is about the same-the increase in one year is the same as the entire emissions of the UK, but they are also developing, at considerable pace, their green industries and they recently overtook, for example, Germany in the production of solar photovoltaic. So, I think, there is quite a lot going on, but we need to try and make sure that is funnelled into a sense of renewed momentum at Cancun and that we can then set the stage for potentially reaching a final agreement; it will not be at Cancun, but, maybe, in South Africa next year if we can get our ducks in a row.
I think a real continuing problem is the fact that the Americans have not delivered on climate change legislation in Congress and that is something which, in turn, means that a big developing country emitter like China can go on and say, "Well, hang on a minute. The Americans are not delivering. Why should we curtail our development?" Therefore, I think it is absolutely crucial that the Americans do pass clean energy legislation. After the mid-term elections, when our new colleagues in the Senate and in the House of Representatives have dusted themselves down and started thinking about what they want to do, I hope that they will seriously look at clean energy legislation. I think that we have a role, actually, in helping to persuade some of them-the more forward-thinking Senators and Congressmen-that this is in the US’s interest, and I hope very much that you and the Committee would be helpful in seeing them. In fact, we are expecting to see some leading congressmen and women over here in the latter part of the year and beginning of next year, to try to make the point to them that low carbon is about good business and is not about grinding the economy to a halt. I think it is something that many of us appreciate and it is part of our cross-party consensus in a way that, sadly, it is not in the US.
Q67 Dan Byles: I am delighted to hear you say that, that you don’t believe the man from the Ministry always knows best. But, obviously, nuclear power is not something that can respond quickly to changing market conditions. So, there does need to be more long-term strategic planning. Of course, it is very easy for the Government to inadvertently or otherwise put obstacles in the way of new build, particularly with something like nuclear.
Chris Huhne: Let me assure you on that, just because various parts of the press occasionally suggest that this might happen. I reiterate exactly what I said. The Coalition Agreement is a deal. The Coalition Agreement clearly envisages a part for new nuclear in the future energy mix and my job, as Secretary of State of this Department, is to deliver on the deal, and that is what I intend to do. There will be no obstacles put in the way of any energy source which can provide part of our future as a low carbon economy, and indeed we will facilitate that as fast as we possibly can right the way across the board. I want to see this happen.
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Dave Andrews
Claverton Energy Group
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