Energy Bill [H.L.]

HL Deb 11 December 2003 vol 655 cc829-65

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)

My Lords, I beg to move that this Bill be now read a second time.

This Bill supports the Government's commitment to a sustainable energy policy for the future, while also taking responsibility for cleaning up the nuclear legacy from the past. The Government's strategy was set out in the Energy White Paper earlier this year. The Bill provides many of the legislative requirements to deliver that policy and the policy set out in the Government's White Paper, Managing the Nuclear Legacy. The Bill will also create the single wholesale electricity market for Britain—BETTA—improving competition and delivering greater choice for Scottish consumers. The BETTA element of the Bill was published for pre-legislative scrutiny in January 2003 and the draft Nuclear Sites and Radioactive Substances Bill, which contained provisions about the NDA, was published for pre-legislative scrutiny in June 2003.

The Energy White Paper restated the Government's commitment to competitive energy markets, supported by effective independent regulation, to deliver secure and reliable energy supplies. That will be even more important when we move from self-sufficiency to being a net importer of gas and oil. Renewables and distributed energy sources such as CHP will help us to avoid over-dependence on imports and make us less vulnerable to security threats.

In the electricity generating mix, gas is important now and will remain so in the future, but renewables will play an increasing role supported by measures we outlined in the energy White Paper. Existing nuclear stations will continue to contribute for many years yet, as will some coal-fired stations. The market is already preparing to supply us with the gas that we will need to import in future—through increased investment in inter-connectors and through long-term gas supply contracts, for example.

The Bill looks ahead to the long term, setting in place arrangements for decades to come, and has three main themes: improving arrangements for cleaning up the public sector civil nuclear legacy; underpinning our ambitious targets for exploiting renewable energy; and prudent market regulation to ensure that competitive energy markets continue to deliver reliable supplies at affordable prices.

Chapters 1 and 2 of Part 1 of the Bill implement our commitment in last year's Managing the Nuclear Legacy White Paper to make radical changes to arrangements for the decommissioning and clean up of the UK's civil public sector nuclear sites, continuing to be funded by the taxpayer. Current estimates put the total cost of this clean up at £48 billion. It is important that the task is completed as effectively as possible. The Bill therefore provides for the establishment of a Nuclear Decommissioning Authority, referred to in the Bill as the NDA, as a non-departmental public body by April 2005. The NDA will provide strategic management and direction to the task of securing decommissioning and clean up. In carrying out its functions it is to have particular regard to safety, security and the need to safeguard the environment. The NDA will be funded directly by the Government, with resources provided within the usual budgetary process. However, we recognise the long-term nature of the clean up task—more than 100 years—so we have provided for the establishment of a statutory account, the Nuclear Decommissioning Funding Account, to demonstrate our commitment to meet the costs of cleaning up the public sector nuclear legacy for future generations.

The NDA will operate in an open and transparent manner. It will promote engagement with its stakeholders, and, by promoting competition for the management of sites, it will bring the best skills available to the task of clean up and deliver it effectively. The NDA will also have a function in encouraging and supporting socio-economic regeneration in the regions where it has responsibility for sites. Indeed, the NDA will be part of the strategic task force, for example, that the Government announced today for West Cumbria. The task force will be led by the North West Development Agency and will include central and local government, the private and social sectors. It will be charged with developing a sustainable vision and a plan for the long-term economic and social regeneration of that area of West Cumbria.

The setting up of the NDA was supported during our consultations on the 2002 White Paper and on the draft Nuclear Sites and Radioactive Substances Bill that we published in June, and which is now part of this broader Bill. We have therefore worked closely with all stakeholders in developing the Bill. In its report, following pre-legislative scrutiny, the Trade and Industry Committee of another place acknowledged that it would, provide the correct framework to give effect to the Government's plans for a coherent strategy for the decommissioning and clean up of the UK civil nuclear liability". The Government will respond to this constructive report in the Commons before the House rises for Christmas.

In the context of establishing the NDA, I would like to take this opportunity to mention that my right honourable friend the Secretary of State for Trade and Industry is today announcing in another place the conclusions of a strategic review of BNFL. That review, jointly carried out by the Government and BNFL itself, has addressed the future strategy and optimum structure for those parts of BNFL that will not become the NDA's responsibility. The detail of the recommendations is available in the Library of the House, but, broadly, the review has concluded that, in order to meet the Government's priority of cleaning up the nuclear legacy, a new parent company should be established in 2005. It will focus on the management of clean up activity through a group of subsidiary companies. The other businesses that are not directly contributing to this priority will be managed to deliver value and to limit risk to the taxpayer. In relation to the other BNFL businesses, steps will be taken, when appropriate, to open up possibilities for private sector participation.

Chapter 3 also implements proposals set out in the White Paper, Managing the Nuclear Legacy. The United Kingdom Atomic Energy Authority (UKAEA) Constabulary will be separated from the authority and reconstituted within a modern framework under a newly created statutory police authority.

The Civil Nuclear Police Authority will be responsible for the efficiency and effectiveness of the constabulary. The present UKAEA Constabulary will be renamed the Civil Nuclear Constabulary. Officers and staff will transfer from the UKAEA. The constabulary's jurisdiction will be largely unchanged and within its jurisdiction its officers will have the powers generally available to constables. The Bill also contains provisions about the employment arrangements for the new constabulary. They largely maintain existing arrangements and are intended to ensure that the conditions of service continue largely to mirror those of other police forces.

Chapter 4 amends the Radioactive Substances Act 1993 to streamline the process for the transfer or variation of discharge authorisations. The changes are intended to improve efficiency and effectiveness while reducing costs. Chapter 5 contains clauses to enable the implementation of changes to the UK's international obligations governing third party liability in the event of nuclear accidents; to address minor gaps in existing law on the regulation of security of equipment and software relating to uranium enrichment, and of sensitive nuclear information; and to give the Government explicit financial authority to incur expenditure under a range of options negotiated as part of the restructuring of British Energy.

I now turn to the second part of the Bill, which deals with offshore renewable energy sources-wind, wave and tidal energy. The Energy White Paper recognises the real contribution that this country's abundant wind, wave and tidal energy resources can make to meet the nation's energy needs in a more sustainable way. Wind energy will make a significant contribution to meeting our target that 10 per cent of UK electricity will be supplied by renewables by 2010 and, beyond that, the aspiration to double that percentage by 2020 and put us on the road to meeting our goal of cutting C0₂ emissions by a full 60 per cent by 2050.

The foundations of a new offshore wind sector are already in place. Last month, the first large-scale offshore wind facility at North Hoyle began generating electricity. A second project at Scroby Sands has begun construction and consents have been given to a further 10 projects around the coast. We need to keep up the momentum and to expand our domestic manufacturing base in order to create new jobs and export potential. The Government have recently agreed to extend the level of renewables electricity expected under the obligation to March 2016 to give the industry the security and confidence that it needs to mobilise investment in new projects.

Part 2 of the Bill fulfils the commitment in the energy White Paper to create a comprehensive legal framework to support future renewable energy developments further offshore beyond territorial waters. That could enable developments harnessing not only the significant wind resources there but also the wave and tidal power that, without the Bill, cannot legally be exploited. Before Christmas, the Crown Estate will be announcing the outcome of the competition for the second round of site leases for offshore wind farms. We anticipate that one-third of the site offers will be outside territorial waters.

I mentioned that the Bill provides for the future. In doing so, it provides not only for present technology but also for wave and tidal energy technologies where the UK should have the potential to be a world leader. As a result of the Bill, we will have a comprehensive legal framework already in place for wave and tidal projects when they become commercially viable.

Also of critical importance to the success of offshore power generation from renewables is to have the right infrastructure in place to bring the electricity on shore. We shall bring forward amendments to the Bill at later stages to provide for a cost-effective and efficient offshore transmission system with minimal impact on the marine environment.

Part 2 also allows us to move to a UK-wide system of tradable certificates for renewables once certificates can be issued in Northern Ireland and once Northern Ireland has implemented a corresponding system of mutual recognition. I am pleased to say that the renewables obligation is expected to come into effect in Northern Ireland in April 2005.

Part 3 of the Bill deals with a number of provisions relating to the effective regulation of our energy markets. Part 3, Chapter 1 introduces the single wholesale electricity market for Britain-BETTA- that will bring greater choice for Scottish domestic and business customers, who currently do not benefit from the same levels of competition already established in the England and Wales market. It will also provide all generators and suppliers with access to a strong, open and competitive GB-wide market. That will help to increase the competitiveness of British companies and will enable us to compete more effectively in an increasingly liberalised European energy market. It will also create the right regulatory backdrop to deliver the White Paper commitments for electricity generated by renewables.

The Government fully appreciate that smaller generators, including renewables and the CHP industry, continue to have concerns about the operation of the current NETA. However, a number of modifications have been made that have helped smaller generators to operate more effectively in the market. For example, the reduction in the gate closure time from three-and-a-half hours to one hour has enabled smaller and intermittent generators, in particular, better to manage the risks associated with exposure to electricity imbalance prices. We expect Ofgem to continue to work with smaller generators to ensure that the administrative procedures for the Balancing and Settlement Code under NETA, and under the new system, will be fully accessible to smaller generators.

My colleague, the Minister for Energy, Mr Stephen Timms, announced today that we intend to bring forward an amendment which would enable the Secretary of State to make an order which would have the effect of subsidising distribution costs in the north of Scotland. This will replace a licence condition known as "hydro benefit", created in recognition of the higher distribution charges in the remote Highlands and Islands as a result of the harsh terrain. It is intended that the order will, as far as possible, prevent these costs being passed on to consumers in the north of Scotland.

Chapter 2 extends current licensing regimes to electricity and gas interconnectors as the best way of implementing the new EU electricity and gas legislation and of ensuring fair third party access. Interconnectors will be increasingly important in meeting UK gas demand as we become dependent on imported gas supplies. They will help to improve our security of supply by adding to the diversity of our sources of gas and electricity.

Chapter 3 provides for an energy administration regime to be available in the event of the actual or threatened insolvency of a protected energy company; that is, a regulated monopoly company that is licensed to operate a physical network transporting gas or electricity.

Lord Jenkin of Roding

My Lords, I notice that that provision is to apply only to network companies. Does it also deal with the problem of the hole in the buy-out fund following the passage into administration by companies such as TXU? Some £23 million is missing as a result. Is that to be covered?

Lord Whitty

No, my Lords, this provision deals with network companies which are in a monopoly position. It does not address generators or other companies which operate in the competitive sector.

Lord Jenkin of Roding

Perhaps it should.

Lord Whitty

No doubt the noble Lord will pursue that point both today and at later stages of the Bill, but as the legislation stands, it deals with protected monopoly situations and not the area open to competition.

The measure to ensure continuity of network operation represents prudent contingency planning to protect consumers, business and the wider economy. The insolvency of a protected energy company is very unlikely, but were it to occur or the threat of it to arise, leading to the normal administration process, then we need to have in place special administration procedures because the normal process might result in part of or, indeed, the whole of the network being closed down. I do not need to spell out the consequences of that. Under our proposals for energy administration, this remote but potentially very serious outcome will be prevented. The energy administrator will have an overriding duty to ensure that there is no interruption to the safe and efficient delivery of gas or electricity which might otherwise arise from insolvency. These measures were supported by responses to a DTI consultation conducted earlier this year. They are similar to existing provisions in the water and railway sectors.

Chapter 4 provides for an appeals mechanism to the Competition Commission against any GEMA decisions on modifications to the main energy Network Codes providing the detailed rules governing activities in the gas and electricity markets. This will increase the accountability of decisions with economic and commercial significance without unduly increasing regulatory uncertainty or delay. Again, respondents to the DTI consultation supported a proportionate appeals mechanism and the Bill intends to deliver just that. We have provided for a tightly constrained right of appeal to prevent trivial and vexatious appeals, and a tightly defined process to ensure a swift outcome.

The remaining clauses in Chapters 3 and 4 cover a number of smaller, market-related items including correcting an anomaly in the current definition of electricity supply by bringing electricity conveyed over the transmission network within the scope of the definition; streamlining the process for public inquiries in connection with applications for consent for power stations and overhead lines under Sections 36 and 37 of the Electricity Act 1989, allowing lead inspectors to be assisted by further inspectors to consider issues concurrently rather than the present system of considering them sequentially; enabling the Scottish Executive to provide additional support for renewables, corresponding to a similar power for England and Wales provided in the Sustainable Energy Act 2003; enabling the Secretary of State to charge a fee to recover the costs incurred in providing specific services to the oil, gas and electricity generating industries; and enabling modifications to the Petroleum Act 1998 to give effect to certain provisions in existing or future international bilateral agreements relating to offshore installations or pipelines.

This Bill provides sustainable solutions to a number of legislative problems related to parts of our energy strategy. It also provides the basis on which we can move forward on the clean up of the nuclear industry, on renewables and on the regulation of gas and electricity supply. It safeguards the reliability and security of energy supplies to business and household consumers alike, and provides the basis on which the objectives of the White Paper-economic, environmental and social-can be met. I commend the Bill to the House.

Moved, That the Bill be now read a second time.- (Lord Whitty.)

11.25 a.m.

Baroness Miller of Hendon

My Lords, perhaps I may begin by first thanking the noble Lord, Lord Whitty, for his explanation of this massive Bill and, secondly, say what a pleasure it is for me to face him for the first time across the Dispatch Box.

Although his brief includes, "Energy issues (including energy efficiency," hitherto I have dealt with such matters with his colleague, the noble Lord, Lord Sainsbury of Turville, from whose brief, according to a recent publication from the Cabinet Office, the subject of energy appears to have been removed. However, I note also that "energy and sustainable development" remain, as now, in the DTI brief of the Minister of State in the other place.

When he replies, I wonder if the Minister can tell us the reason for the division of this same responsibility between two different departments in the two Houses, and to which Secretary of State he has to report on the Bill before us if and when, as I am sure he will, he makes decisions and concessions as it progresses through the House. To whom will he go to check that such decisions are in order?

In asking that important question, I hasten to add that in no way do I have any doubts about the considerable ability of the noble Lord, Lord Whitty, or about our ability to work together on this Bill. Indeed, I look forward to it. We have no overriding objections to what is proposed in the Bill, subject to our examination of the detail, although we do have serious concerns about what has been left out.

Perhaps this is the appropriate place to mention that my noble friend Lady Byford will wind up this debate for the Conservative Opposition. I should also mention, by way of another prefatory observation, that although the noble Lord, Lord Whitty, has certified that this Bill is compatible with the European Convention on Human Rights, we believe that there are circumstances in which public rights of navigation may be "possessions" within the meaning of the First Protocol. For example, they may be crucial to the commercial success of a maritime enterprise that can obtain entry to and exit from its premises only by using such public rights. To the extent that compensation under Article 1 of the First Protocol is required to be paid to an individual as a consequence of the extinguishment of a public right of navigation, doubts must be raised about the adequacy of the procedure provided in Schedule 8 to the Electricity Act 1989 with respect to Article 6 of the European Convention on Human Rights. We may need to explore this much further during the course of the Bill.

I have just described this legislation as "massive", and indeed it is. It covers four different topics, each of which could have been the subject of a separate Bill. There is the civil nuclear industry, including the establishment of a Nuclear Decommissioning Authority. It addresses sources of renewable energy and I believe that I heard the Minister correctly when he referred to bringing forward amendments to that part. Although the noble Lord shakes his head, I was sure that I heard him refer to amendments. That is extraordinary. On the day after the Queen's Speech and just preceding the first day of the debate in reply, an announcement was made that there was to be another Bill. Further, on the very day that this Bill receives its Second Reading, we hear that an amendment is to be brought forward. A long time has passed between the publication of the White Paper and the production of the Bill. What is the matter with the Government that they need to bring forward amendments to their own legislation? They do not wait for us to do it; they bring forward amendments themselves.

The third part of the Bill concerns energy markets and regulation, including the creation of a single, national wholesale market for Britain, the British Electricity Trading and Transmission Arrangement, known by the acronym BETTA. The fourth topic, not highlighted in the excellent Explanatory Notes produced by the DTI but just mentioned by the Minister, is security and policing. My noble friend Lady Anelay will give us the benefit of her expertise in this field when we reach the appropriate part.

Although the Bill is intended to extend, to the whole of the United Kingdom", the Government will have to seek the approval of the Scottish Parliament to a number of functions devolved to Scotland. This highlights, if anything does, the problems caused by the Government's vote-catching exercise of devolving major legislative powers to Scotland. What happens if, for whatever reason, the Scottish Parliament does not agree with the parts of the Bill relating to functions devolved to it?

While on the subject of Scotland—although this has nothing to do with devolvement but with the word "Scotland"—I am sure I also heard that the energy Minister in another place, Stephen Timms, will be bringing forward amendments on that issue. I repeat, surely we are not really bringing forward amendments just as we begin.

I return to the West Lothian question: in the event of such a disagreement, will the Scottish Members of the other place vote with their democratically elected MSPs or in accordance with the instruction of their Westminster Whips?

We will need to examine carefully the provision for the reversal of proof in cases of certain alleged offences. This is another erosion by this authoritarian Government of the traditional position in criminal cases where the onus of proof is on the prosecution. Even though I acknowledge there have been instances of the reversal of the burden of proof by previous governments of both parties, the Government will need to provide convincing reasons for its application in this case. Similarly, we may wish to examine the need for the strict liability offences created by Part 2, Chapter 2, albeit with the defence of the exercise of due diligence.

Clause 106 gives the Secretary of State power to modify licences granted under the new trading and transmission arrangements. Again I inquire, which Secretary of State are we talking about? The Secretary of State at the DTI or the Secretary of State at Defra? Perhaps the definitions clause in the Bill should clarify this.

The Explanatory Notes airily dismiss this power as a mere "exercise of policy" and suggest that the remedy of judicial review is sufficient to comply with Article 6 of the European Convention on Human Rights. The Government are well aware of the huge mountain that a litigant has to climb to secure a hearing, let alone win a judicial review, to say nothing of the enormous costs involved. The availability of a judicial review is a longstop, not an excuse for the Government to avoid defining acceptable criteria for granting, refusing or amending licences, which can have a huge financial impact on the licensee.

If this were accepted as a precedent for future legislation it would be the means of the Government refusing to accept a defined liability to be responsible in any secondary legislation or licensing activity. The provision as drafted is an excuse for not defining the basis of the exercise of this very important economic power.

In the same clause, the Secretary of State is given power to modify standard conditions of licences or the specific conditions of particular licences. That is fair enough. However, subsection (5) authorises him to publish any modifications,

in such manner as he considers appropriate". Here we go again. We went through this same exercise in the Employment Act, where the Government wanted power to legislate through primary or secondary legislation "or otherwise". It took the intervention of two Law Lords to persuade the Minister to drop "or otherwise". In this case, the Minister could decide that it is appropriate to publish a modification by posting details on a lamp-post in the Outer Hebrides. This provision will certainly need to be amended in the interests of what the Government frequently call "transparency".

The White Paper, Managing the Nuclear Legacy, commits the Government to improving the way in which the nuclear clean-up is managed but notes that many of the, legacy facilities were built and used at a time when regulatory requirements and operational priorities were very different from those that apply today". The White Paper also reported a consultation in 2001 about the responsibility for sealed sources and other radioactive wastes. Perhaps in his reply the Minister will inform the House about the outcome of that consultation and advise us of how and where the Government's conclusions are reflected in the present Bill and whether the Nuclear Decommissioning Authority will be given that responsibility.

The White Paper asks whether the creation of the Nuclear Decommissioning Authority is a kind of back-door route to more nuclear power stations. I can confidently endorse the White Paper's denial. I believe that the whole tenor of the Bill is to push the question of the development of new nuclear power stations to replace the existing ones into the background. This is borne out by a little phrase hidden away in the White Paper, where the Government state:

The NDA's focus will be squarely on the progressive reduction of liabilities". Your Lordships will note that there is nothing about assuming responsibility for future liabilities.

The Government admit that the present contribution of 21 per cent of our power from nuclear generation will reduce to a mere 7 per cent by 2020. My noble friend Lord Peyton of Yeovil asked what the Government meant by their statement that they were,

keeping the nuclear energy option open".-[Official Report, 17/11/03; col. 1769.] He received only the vaguest and uninformative of replies.

The Government claimed in the White Paper that, The initiative [for any new nuclear build] lies with the market". This is the most specious and disingenuous of suggestions. It is no more possible for the commercial market to decide to build a new nuclear power station, with all the attendant planning problems and so on, than it is for someone to commission a new aircraft carrier.

In fact, the Minister of State, Mr Stephen Timms, when speaking at the All-Party Nuclear Energy Group dinner as recently as 3rd December, said:

We need the possibility of new nuclear build". I understand that he made the same remark elsewhere in the same week. Aside from the fact that that is not the kind of statement that should be made in an after-dinner speech as a throwaway line, the question is not whether we need the possibility of new nuclear build but whether or not the Government are going to grasp the nettle and do something about it.

There is a misconception held by the public that nuclear waste consists of spent fuel. In fact, one nuclear power station produces only about half a cubic yard of such material a year. It would fit under an ordinary card table. This compares with half a ton of ash a minute and the vast quantities of CO₂ that are produced by power stations powered by coal. The real problem lies in the large quantities of other waste, ranging from soiled clothing to the entire reactors and the buildings that house them. This is what the Nuclear Decommissioning Agency is being set up to deal with.

The decision about whether new nuclear power stations are to be built, with the attendant future decommissioning liabilities, rests with the Government as part of the national infrastructure to ensure diversity and continuity of the domestic supply of electricity without leaving Britain totally in the hands of foreign generators. This decision rests with the present Government, not any future one, because of the long lead time between the date when a project is planned and the date when the new station can join the grid. While the Government continue to dither and bury their heads in the sand, time is inexorably slipping away as the amount of nuclear power available steadily reduces.

There would, of course, be a future cost of decommissioning any new nuclear power stations. Although it would be commercially uneconomic to include this in the generating costs, the Government have to make a decision whether strategically it ought to be charged to general taxation as a means of reducing our dependency on foreign fuel supplies. If site clean-up is charged to general taxation, this could be done by linking the cost directly with the half-life of the atomic material. At the moment, it is French taxpayers who enjoy the benefit of our maximising the use of their equally uneconomic power stations.

Can the Minister tell the House-if he cannot do so today, perhaps he will write to me-what assessment the Government have made of the situation in both France and Finland, where they take into account the benefits of less reliance on foreign, and not necessarily secure, sources of supply? If such studies have been made-as indeed they ought to have been-will the Government publish them, as they have done in the case of studies into higher education?

A great deal has been said in recent debates and Parliamentary Questions about renewable sources of energy, the Government definition of which excludes nuclear energy. I do not wish to detract from the renewable source that the Government are placing so much store by-wind power. At best, however, this is irregular and can serve only to reduce demands on other sources of power. Even then, it can provide only a minute fraction of our power needs. The environmental impact of the giant windmills, both on land and offshore, gives rise to no less controversy than do nuclear power stations. The first site in Wales was linked to the grid only two weeks ago.

The Government have extended their renewables obligation to 2015, as it is clear that their objective of reaching 10.4 per cent by 2010 was stretching it, to put it mildly.

The Bill creates a single wholesale electricity market for Britain-the British Electricity Trading and Transmission Arrangements, to be known by the acronym of BETTA. This joins the alphabet soup of organisations including NETA, Nirex and Ofgem, to name but three affecting the industry. However, BETTA, as the Bill points out, is only a trading market, and will not itself produce enough electricity to light a single bulb. It is to be hoped, however, that a single electricity market will ensure a consistency of supply.

I referred at the beginning of my remarks to our concerns about what is left out of this huge Bill. I have to ask why it does not include combined heat and power. The Government have admitted that their policies for delivering the United Kingdom target for the development of high efficiency combined heat and power schemes are failing.

Less than a year ago, the Government's energy White Paper reconfirmed the United Kingdom's combined heat and power targets of 10 gigawatts of electricity by 2010. Achieving this would deliver a large proportion of the UK's carbon reductions and boost the competitiveness of British industry. A few weeks ago, the Government published their latest modelling work by Cambridge Econometrics, which confirmed that Britain will be at least two gigawatts of electricity short of its 2010 target.

With the widespread job losses across the CHP sector since the introduction of NETA, Ofgem creating a legal challenge to the Government's long-awaited decision to exempt CHP from the climate change levy and new regulatory costs being imposed on the CHP sector by the extension of the renewables obligation, the Energy Bill should have given a unique opportunity to create a far more viable market for combined heat and power.

High level policy conflicts in the Government have sent the CHP industry into a downward spiral. The Bill can reverse that trend and ensure that CHP becomes the centrepiece of policy, not an afterthought. We will be introducing amendments to achieve that end.

I now turn briefly to the part of the Bill dealing with the new Civil Nuclear Police Authority. It is vital that our police and security services have the support they need to ensure that they are able to work to the highest standards to provide security for our communities throughout the United Kingdom. This is especially so at a time of heightened concern about terrorist activity. It is therefore appropriate that the new police authority should be accountable to the Home Secretary and the expertise of the Home Office. But in establishing this new police authority, the Government should reconsider our proposal that there should be a Minister for homeland defence so that all security services can be effectively co-ordinated.

I ask the Minister to confirm that the new police authority will cover not only UKAEA but also BNFL and URENCO. We would also like confirmation that, as I understand has been previously agreed, the DTI will fund the transition costs of the current, non-statutory police force when it turns into the Civil Nuclear Police Authority. I believe these costs will be in the region of £1 million.

An answer from the Minister, either during this debate or very soon after, is urgently needed, because the transition will take time to achieve, and BNFL will need to start spending money very soon. We shall be scrutinising this very important part of the Bill and my noble friends and I will be putting down some constructive amendments to make it more effective.

I would like to give your Lordships a few abbreviated quotations from experts in the industry regarding the energy supply. The Institution of Civil Engineers warns that, the energy industry is at its lowest ebb since privatisation with many generators in serious financial difficulty and little new investment in new generation". Dieter Helm of Oxford University says that we are extremely close to the margins. Professor Ian Fells, a former government adviser on energy, says that adequate spare capacity is essential, despite the expense, and that our current margin is inadequate. PowerGen has warned the Government of the possibility of power cuts. Transco also warns about a severe lack of generating capacity. There have been many more such views, but that is enough for now.

Finally, reverting to the question of the future of nuclear power, if there is to be one, both the White Paper and the Bill have ducked the issue-as, indeed, has the Minister when asked about it in your Lordships' House. If the Bill is very important-and it is-and if its principles are deserving of cross-party support-and they are-it is nevertheless only part of the picture. In the past few years, we have heard references in your Lordships' House, in a completely different context, to stage two, to follow stage one. The Bill is but stage one of dealing with the looming energy crisis. The Government must have the courage to produce a viable stage two before it is too late.

11.46 a.m.

Lord Ezra

My Lords, in speaking in this debate, I wish to declare that I have been actively and continuously involved in the energy sector since 1947 and am currently chairman of Micropower, which promotes the small-scale generation of electricity.

As we have heard from the Minister, the Bill deals with three major aspects of energy policy. While they are all of importance, they are by no means the most important issues raised in the energy White Paper of February 2003. In that connection, I consider that the short title of the Bill is somewhat misleading. It gives the impression that this is a much more wide-ranging piece of legislation than it really is. A more appropriate title would be the "Energy (Miscellaneous Provisions) Bill", which would leave room for the further Bill to which the noble Baroness, Lady Miller of Hendon, referred. Perhaps we can explore that at the next stage.

While the Bill is important and will command widespread support as far as it goes, my general reaction to it is one of sad disappointment. When reference was made in the Queen's Speech to the introduction of legislation on energy matters which would aim to, promote secure, sustainable supplies and a safer environment", I looked forward to the Bill with eager anticipation. I thought that here would be a statutory endorsement of the main courses of action and aspirations set out in the energy White Paper of February 2003. Instead, we have three disparate pieces of legislation rolled into one, which, although important and significant, are by no means the main issues raised in the White Paper.

Part 1 of the Bill deals primarily with nuclear decommissioning and the setting up of the Nuclear Decommissioning Authority. There will be widespread support for that. The full cost of decommissioning over time is enormous; it is estimated that it will be of the order of £50 billion during the next century. We need to know the likely costs over the next decade, bearing in mind that all but three of the existing nuclear power stations are due to close in that period. How are these large sums to be accounted for? In responding to that, perhaps the Minister can also enlighten us on the relationship which is likely to develop between the different nuclear agencies-the newly established NDA, Nirex, BNFL and the UKAEA. I know that my noble friend Lord Maclennan of Rogart will refer to that issue later.

The Bill does not deal with two matters of over-riding importance in the nuclear sector. First, there is the long-term management of nuclear waste, which is very relevant to the setting up of the NDA, has been under discussion for many years and is as yet unresolved. I asked a Question on that subject the other day. Secondly, there is the over-riding issue of the future of the nuclear industry itself, to which the noble Baroness, Lady Miller of Hendon, referred. That will have a substantial impact on energy policy as a whole. So long as it remains unresolved, it is difficult to see how a coherent and effective future energy policy can be devised.

Part 2 deals with renewable energy sources in a limited context. It covers the exploitation of renewable energy outside territorial waters, and the decommissioning of such offshore installations. Perhaps the Minister can advise us how many offshore renewable energy installations beyond territorial waters the Government anticipate and what the cost will be, bearing in mind the long transmission distance that will have to be covered.

The Bill deals, too, with the mutual recognition of the renewables obligation regime in Northern Ireland. While that is a desirable measure, the opportunity has surely been lost of dealing with a root problem in the renewables issue. I refer to the relatively slow progress so far made in the development and use of renewable energy, and the need to widen the range of eligible fuels and processes that can contribute to carbon abatement. At present, the Government's target of 10 per cent of electricity generated from renewable sources by 2010 is unlikely to be reached, despite what the Minister told us. The aspirations beyond that date are even more in doubt, so it is regrettable that the Bill does not cover the urgent issues that are now called for.

First, further measures should be taken to stimulate the production and use of renewables as presently defined, and, secondly, there is a need to extend the principle of the renewables obligation to fuels and processes that can significantly reduce the amount of carbon going into the atmosphere. For example, as the noble Baroness, Lady Miller of Hendon, rightly said, combined heat and power, the principle of which the Government fully support, is going through a very difficult period and is likely to be at least 20 per cent short of the 2010 target. Measures to relaunch that proven energy-saving process need urgently to be taken. Perhaps we could suggest some of those measures in Committee.

A variant of CHP, called micro-CHP or micropower, in which I have declared an interest, is a newly emerging process that takes electricity generation right into the home. That would increase efficiency, eliminate transmission and distribution losses and reduce carbon emissions. The process needs to be vigorously supported in its build-up period.

The Government have also given insufficient support to the recovery and treatment of the methane from coal mines and have refused to apply to it the renewables obligation principle. In Germany, coal-mine methane has been treated as a renewable energy source and is making much more vigorous headway than in the UK. Indeed, some leading companies involved in that process have extended their operations to Germany because of the more favourable inducements. That is hardly a good reflection of the way in which British industry is being supported.

We do not yet have in the UK a clean coal technology plant, even though the process is now well established and can be associated with carbon extraction, thus virtually entirely eliminating the CO2 emissions from the use of coal. The construction of such plants could be substantially assisted if the process came within the terms of the renewables obligation or its equivalent.

The third part of the Bill extends the new electricity trading arrangements-NETA-to include Scotland as well as England and Wales. Indeed, it is desirable that there should be a competitive wholesale electricity market based on the same rules throughout England, Scotland and Wales, bearing in mind the interpenetration of the power companies across borders. However, why has the opportunity not been taken to remedy the defects of the existing NETA system in dealing with renewables and CHP, which continue to suffer under the balancing and settlement procedure? It is for the simple reason that they cannot precisely predict their electricity output in any given period and are penalised accordingly. While some steps have been taken to lessen the adverse impact of the settlement procedure on smaller generators, it remains an obstacle that could surely have been dealt with in the Bill.

My conclusion is that the Bill covers important issues of energy policy arising from the energy White Paper. However, in spite of its excessive size, it is limited in its scope and does not deal with the major unresolved issues of energy policy. It is a Bill of missed opportunities.

11.56 a.m.

Lord Christopher

My Lords, like the noble Lord, Lord Ezra, whose measured contributions are always well worth listening to, I must declare an interest. Since before I came into your Lordships' House, I have been a consultant for BNFL plc. However, I wish the House to know that the speech is mine and that BNFL did not ask me to make it. I shall have to face the music from the latter if I say things that it does not like.

I am also in the unusual position, in speaking so early, of having to edit what I say as I go along, when all that we have heard so far has come from the Benches opposite. I have to say that I found much of it agreeable, so I shall do my best not to weary noble Lords by too much repetition.

As the noble Baroness, Lady Miller of Hendon, said, central to the criticisms that many of us would make about the Bill is that it does not take a long enough view about energy security supplies for Britain. If a long view is taken, it is illogical that nuclear does not in fact face a more positive approach in the paper. I believe that to be somewhat dangerous.

I do not know whether my noble friend the Minister will be able to tell us what security risk assessments have been made with regard to energy, but it would be fascinating to know whether they have been made and, if so, what they say. I have always been a staunch supporter, as has the Trades Union Congress, of a balanced energy policy. Notwithstanding the historical sentiments about coal, there was support for renewables and nuclear. Yet we are taking serious risks with UK supplies ahead, although perhaps not immediately. We must not overlook the fact that the newer forms of energy have a long lead time-a much longer lead time than the older forms.

We can all here remember the problems of shortages of supply of a wide range of goods during the war. I put it to noble Lords that the current situation with energy is not so significantly different, although the causes may be. There will certainly be aggressive competition for energy across the world, and prices will rise. Indeed, we learned only this week that wholesale gas prices rose 15 per cent in 2003, and forward pricing increases are signalled at between 17 per cent and 21 per cent. British Gas domestic supplies of electricity and gas are scheduled to rise by around 6 per cent.

Stating the obvious, we live on an island, or two islands. We are a serious distance offshore of mainland Europe and far, far away from the energy sources that we shall be seeking. The solutions that Europe may find will not necessarily meet the issues which we shall face. It is foolish to neglect the possibility of sabotage of pipelines if you do not have a balanced policy. Energy supplies are affected by weather. France, indeed, is facing that at the present time, first due to heat and latterly to flood.

There is a risk that the energy flow from renewables may not be on the scale that we plan and hope for. Experience from Denmark, which at 18 per cent of electricity production has the highest percentage of wind power of any EU country, is that load factors have generally been well below the UK estimate of 35 per cent. Hugh Sharman of Danish company, Ecoteco, made that point recently. In fact, a figure of around 25 per cent is closer to the Danish average. This means that installed capacity would have to be four times that of the desired output, always assuming that the wind is blowing somewhere in the United Kingdom! To be sure of avoiding power cuts, equivalent generating capacity, probably utilising gas, would have to be provided on standby at considerable expense. I am not sure that relying on that is a sensible policy.

Danish experience also shows that at any one time roughly 13 per cent of wind turbines are out of commission. On the basis of that experience the Danish Government recently announced that they were ending subsidies to new wind power installations. The Times quoted on 9th December that UK wind power is two-and-a-half times the cost of conventional power.

My anxiety about all this arose a long time back when an elderly professor from Korea forecast China's future energy requirements. I am still endeavouring to obtain an authoritative assessment of the energy demands of China, India, Russia and South America when their energy requirements in terms of use per capita match those of OECD countries. That, I believe, is the time scale involved in the planning that we need to carry out over the next few years.

I wonder whether noble Lords are aware of the current position in China, which has one of the fastest-growing, if not the fastest-growing, economies in the world. It presently has 11 per cent less generating capacity than it needs, and its capacity is based on only 1 per cent of nuclear, although I believe that it is building another four power stations, partly supported by France and, I believe, by Japan. Today electricity is rationed in China. Coca-Cola and China National Cereals, Oils and Foodstuffs Import and Export Corporation Company have no electricity on one in four working days a week. Hunan Province, which relies for 50 per cent of its power on hydro electricity, has serious shortages following drought. If ever there was an example of the folly of not having a fully balanced mixed energy policy, Hunan Province provides it. Shanghai's major shipyards are now working only at night and at weekends because of energy shortages.

I turn to the issue of jobs and to Cumbria in particular. Refocusing sites such as Sellafield on decommissioning is all very well but that type of work will inevitably employ significantly fewer and less skilled workers than the current reprocessing operations. In remote areas such as west Cumbria it will be extremely difficult to re-employ those redundant skills locally, having a massive effect on the region's economy. What provision will the Government make for retraining and redeploying the workers who will be thus affected?

I feel that I must ask the Minister the following question. Given that we shall have government-owned companies on both sides of the table, how will they ensure that BNFL will not be disadvantaged in the competitive tendering for a variety of operations? There will be conflicting objectives and a longer-term strategy should not be based exclusively on cost but on future purposes.

In my opinion we need to create a climate, particularly, but not exclusively, in Cumbria, for long-term storage as I do not believe that the relevant material will go anywhere else. Unless and until the Government buy into "compensation"-financial inducements to make people love nuclear-Cumbria is the only location that would be likely cheerfully to accept a waste disposal storage unit. Exactly the same considerations should be addressed right across the nuclear game board. We are most likely to find sites for new nuclear power stations where there is clean-up.

The Bill's focus on decommissioning and reassigning the associated liabilities is necessary but in my judgment misses the point that new nuclear build is essential if, as the Government would have it, the nuclear option is to remain fully open. In contrast, the United States administration are streamlining their regulatory processes and encouraging investment in preparation for the replacement of their nuclear fleet-something which was forecast to me when I asked the American energy Secretary a few years ago a tongue-in-cheek, cheeky question regarding when a new nuclear power station would be built. Instead of saying, "Never", he took the question seriously and said, "Before too long".

Finland and France have announced that they will not permit themselves to become ever more dependent on unreliable external sources of fossil fuels and are engaging in new nuclear construction. Moreover, they have shown conclusively that nuclear power represents a very cheap option.

Since the present Government, and previous governments, have signally failed to make progress on the thorny issue of where and how to dispose of the nation's high and medium level radioactive waste— which, as has been stated, is not a terribly large problem in volume terms, and will be less so in the future as the new stations will produce only about 10 per cent of the waste of the older stations-will the Government undertake to support the new NDA by accelerating the essential process of consultation and decision-making? We in this country are falling a long way behind countries such as Finland, Sweden and France which have taken the difficult decisions and are embarking on national programmes of research and demonstration that will lead to operational repositories within a generation.

I hope that I have not been overlong in seeking to make these points but I believe it is important that they are made. I hope that the Government-which I fully expect to be in power in 2020, when all these problems are likely to arise-will take what I have said seriously.

12.8 p.m.

Lord Jenkin of Roding

My Lords, it is almost 20 years to the day that I had to stand up in the House of Commons and make a Statement about a very serious discharge of radioactive effluent from the Sellafield works into the Irish Sea. I had to announce the closure of the beaches along the coast for 20 miles on either side of that factory. It was many weeks before they were declared safe for public access.

Every week I made a series of Statements in the House of Commons-I see the noble Lord, Lord Campbell-Savours, nodding-to report progress on the clean-up. Eventually a report on the accident was published and was given very wide circulation.

I mention that for three reasons, all of which are of great significance to the Bill. First-this is not generally known-I came under pressure at that time from my colleagues in the DTI, who complained that I was undermining confidence in the nuclear industry by my frequent Statements. My reply was that, on the contrary, by seeking to be open and transparent I was trying to restore confidence in an industry that had a notorious reputation for being far too secretive. In the event, the dispute had to be referred to the Prime Minister-informally, I have to say. She ruled in my favour, and in favour of openness. That was a turning point. Much more importantly, openness is an integral part of the Bill. I think that the industry and successive governments have recognised since that day the huge importance of openness and transparency.

The second reason why I mention that episode is again something not widely known. Over the past 20 to 30 years, the polluting discharges from Sellafield have been reduced to one thousandth of what they were in the 1970s-0.1 per cent. That is a remarkable achievement. The company has never been given the proper credit for what it has succeeded in doing. As a result of that and the experience of various other firms in the industry, the issues of safety are now part of the culture and deeply embedded in how they conduct their businesses. I hope that the Bill reflects that, but we may need to pursue it.

The third reason is that at the heart of that culture of safety lies the recruitment, training and retention of the scientists, engineers, technicians and other skilled staff that both that industry and its regulators will need to do their jobs. At this stage, there are very serious concerns about that. That is directly relevant to the duties placed on the NDA in the Bill. I shall return to that matter in a few moments.

I want to make two comments on the speeches made so far. The noble Lord, Lord Christopher, was a little unfair to the governments of whom I was a member. My right honourable friend John Gummer brought forward a perfectly respectable proposal for a rock characterisation facility at Sellafield, only to have it rejected by a public inquiry about which there have been a good many criticisms. For goodness' sake, he was trying. By comparison, last night I heard a very distinguished member of the Cross Benches say that the present Government had taken the question of nuclear waste and kicked it into the long grass, and then gone looking for it in order to kick it into still deeper grass. I fear that that is what has happened, and I hope that the noble Lord, Lord Christopher, will recognise the contrast.

My noble friend on the Front Bench made an absolutely outstanding speech. As a result, mine may be a little shorter than it otherwise would have been, as she made some of the points that I would have made.

Before I discuss the Bill itself, we deserve an answer to one question. Why is the Bill being introduced into this House? I ask that because Ministers have made much of the intention that the Bill should be through by July, and that the NDA should be up and running by April 2005. The noble Lord, Lord Whitty, will have to appoint chairmen and directors, who will have to appoint staff, and a great deal of work is to be done. He will be aware of the Treasury convention that Ministers may not spend a single penny under a new Bill until it has received a Second Reading in another place. By introducing the Bill to this House, Ministers have pushed back that timetable by several months. Why? I put that to Mr Timms the other day, and did not get a very clear answer. Clearly it was not his decision. The noble Lord may be able to give us an answer.

I shall move straightaway to the Bill. I share the disappointment of the noble Lord, Lord Ezra, that it does not contain much of what it should. As will become apparent, and like other noble Lords, I shall ask many questions about matters that are not in the Bill but ought to be. I welcome the Bill, although it will require careful debate and a good many additions during its passage through the House. Indeed, the Minister has already announced this morning that there will be several additions.

A Statement is being made in another place today, and a paper has been placed in the Library today. That is treating this House with contempt. If we are to debate the Second Reading, why is it not possible to have the documents at least a day before? I have searched for the reply to the report of the Commons Select Committee in the Library and on the web, but it does not exist. Why? It has not been issued yet. We are told that it will be issued before Christmas. At least we will have it for Committee, but that is not good enough. If the noble Lord is to get collaboration and co-operation on the Bill, he has to treat this House with more respect.

I should like to follow other noble Lords and say that the Bill does not stand alone but is only part of a whole. Therefore, I shall say a word or two about the context of the overall energy "policy". I put that word in quotation marks because very many people would not regard the White Paper as a statement of policy, but as a whole series of aspirations. As the noble Lord, Lord Christopher, pointed out, the UK has enjoyed near self-sufficiency in energy for several decades, but that comes to an end shortly. In three years, we will be a net importer of gas, and in seven years a net importer of oil. By 2020, we will be dependent on imported energy, mostly gas, from distant and unreliable sources for three quarters of our primary energy needs.

As the Institution of Civil Engineers stated in its recent report, the situation is about to change "dramatically" with profound implications, not least for the security and continuity of power generation. Perhaps I can add to what the noble Lord, Lord Christopher, said. He did not make the point that, on the eastern seaboard of the United States, several terminals to import liquefied natural gas are being built, for which there will be competition for gas in exactly the same markets as those in which we shall be seeking supplies. That is bound to have an overall impact on the price of natural gas.

Another point that has not so far been made is what happens if one becomes dependent on other countries for one's primary energy supply. Go and ask the Italians. They had a massive blackout all over Italy. Why? Someone talked about trees falling on transmission lines, but it was rubbish. The French turned them off. They needed their energy. The French are huge exporters of energy based on nuclear power, and they needed to use it all so they turned the Italians' supplies off. Ministers need to pay more attention to such issues.

Then there is the Government's policy at the heart of their White Paper concerning the large reductions in greenhouse gas emissions-20 per cent CO₂ reduction by 2010 and, in that lambent phrase, "on a path to" 60 per cent CO2 reduction by 2050. It is not the moment for a detailed analysis of that, because it could be quite lengthy. However, I am extremely doubtful about those aspirations-that is what they are. A very general view is that there is little prospect, despite what the Minister said, of hitting the 2010 CO₂ target. Moreover, it is my view, and that of many well informed people outside, that the 60 per cent target will be unattainable if the existing carbon-free sources of power are closed down and not replaced by new nuclear build.

It is pure fantasy to imagine that the renewables of wind, wave and tidal can possibly fill the gap as the existing nuclear stations reach the end of their lives. In any event, as the noble Lord, Lord Christopher, pointed out, there has to be back-up for wind power. As he said, that is extremely expensive. It will be very difficult for the power companies to raise the capital to build back-up gas-fired plants that will come into operation only if the wind stops blowing.

Wind is not reliable, sustainable or controllable. I agree that it has a part to play, but it is pure fantasy to imagine that it can replace other energy sources. The other energy source that is mentioned in the White Paper is biomass: coppicing. Is the House aware that if one wanted to replace Dungeness B nuclear power station in Kent, one would have to cover the entire area of Kent, other than the built-up areas, in short-term willow coppicing? That is fantasy. It adds nothing to the question of keeping the lights on. There an; huge gaps in the Government's overall energy policy, with real risks ahead for the security of supply to homes, offices and factories.

Like other noble Lords who have spoken, most of my questions will be about what is not in the Bill. The Government have said that they "will keep the nuclear option open". Therefore, my first question to the Minister-and I echo other noble Lords-is: what is there in the Bill to help to keep the nuclear option open? That phrase was used in the Government's White Paper last February. This is the first major Bill intended to implement the policy of the White Paper, as we heard this morning. What is there in the Bill to deal with that? The answer is nothing.

When Ministers gave evidence to the Select Committee in another place, they fell over backwards to appease the anti-nuclear lobby and to convince them that there was nothing in the Bill about new nuclear build. I find that almost incredible. One would have thought, to use a nautical metaphor, that they would at least have tried to have some kind of anchor out to windward, so that if it does become necessary to build-and many of the Minister's colleagues think that it will be-they will be able to go ahead with it quickly. That raises the question of research and so on, which I do not have time to address today.

I shall stay for a moment with the Select Committee report. I know that we should receive the Government's response before Christmas, but today is 1lth December and we are entitled to answers in this debate. The Select Committee made the following recommendation in paragraph 8 of its report:

We recommend that the Department produce a fuller estimate of the cost implications of this Bill before its presentation to Parliament". It also referred to the need for the usual regulatory impact statement. When will we receive that? Will we receive it before Committee? Will we able to debate it when we debate the Bill in Committee? The report continued thus in paragraph 13:

We consider that a clear and unambiguous statement of the overarching principles with which the NDA will work would be a useful addition to the draft Bill. Such a statement would have most force if it were given in the main body of the Bill". It is not there. Will the Government accept that and amend the Bill appropriately? We deserve an answer.

I return briefly to the question of the disposal of radioactive waste. I cannot add much to what was said by the noble Lord, Lord Christopher. There is a definition of "treatment" and "hazardous material" in the definition clause of the Bill. There is no definition of "disposing", yet it speaks about "disposing" of long-term nuclear waste in a depository. The Explanatory Notes revealingly state that Clause 3(1)(d) also covers the Drigg low-level waste depository. If it covers Drigg, does the Bill intend to cover the disposal of medium-level and high-level waste?

That leads to another question. Will the NDA be the body that eventually takes forward the process, if it can find the ball in the long grass, of moving towards long-term disposal of waste? I sat on the Science and Technology Select Committee that looked at the matter five years ago. We are still waiting for progress on that front. Or do the Government envisage yet another authority? The Bill has been published for several days. I have spoken to people in the industry, such as those at BNFL, and they do not know the answer to that question. They have not been told whether the NDA will be the authority for long-term waste. We must have an answer when the noble Lord replies this evening. I recognise that a considerable process of gaining public acceptability must be embarked on, but we need to know whether that authority will carry out that role.

Lord Davies of Oldham

My Lords, we are all grateful for the noble Lord's expertise and his contribution is valuable, but he will know that the Companion indicates that speeches in all debates should be about 15 minutes long.

Lord Jenkin of Roding

My Lords, I asked the Government's Whips' Office this morning whether there would be any limit and I was assured that there was none. I shall finish in a very short time so that the noble Lord can go for his lunch.

I shall ask again about the hole in the buy-out fund. I hope that the noble Lord will reply to that. He kindly gave way to my intervention in his speech. The hole is £23 million.

I return to the future supply of scientists and engineers. Such people are essential, not only for the NDA, but also for many other bodies-not least, to keep the nuclear option open. Last June, I received a Written Answer from the noble Baroness, Lady Ashton of Upholland, in the Department for Education and Skills. I asked her how many undergraduate and postgraduate university courses there are for nuclear scientists and engineers. She answered that, no universities currently offer undergraduate courses specifically in nuclear science and engineering".-[Official Report, 26/6/03, WA42; She listed a number of universities that offer postgraduate courses and I have been going into that. It appears that that answer was already more than two years out of date. I have been in touch with the Health and Safety Executive, which rather surprisingly keeps the details of them, and it appears that there are now a few more modules being offered for nuclear engineering and science. One of the professors who is running a course at Imperial College told me that that is a very long way from providing the trained nuclear scientists and engineers that this country will need if we are to keep that industry going. There is a great deal that we will wish to explore in Committee about that.

I am told that the Chief Scientific Advisor is compiling a report. Will the Minister tell us if Sir David King's report will be available to the Standing Committee on the Bill? It is a hugely important question.

I have not spoken about offshore wind farms or about regulatory matters. I shall conclude with one more point. I am told that the cost of electricity from offshore wind farms will be three-and-a-half times the cost of power generated from a conventional gas-fired power station. That is 350 per cent more. Some of that will be covered by subsidy. In the end, it will all have to be covered by subsidy. The Government recently announced substantial increases in that.

When I hear Ministers talk about wind power being the solution to all our problems, I am reminded of that wonderful Peter Sellers character, the communist shop steward, in the film "I'm All Right Jack". He was fantasising about the marvels of Soviet Russia- 'all that waving corn and the Ballet at night". Ministers seem to be similarly mesmerised by "all those waving wind farms-and the lights miraculously staying on all night".

12.30 p.m.

Lord Beaumont of Whitley

My Lords, I am delighted to be able to follow the noble Lord, Lord Jenkin of Roding, in that speech. I think that it is absolutely right that your Lordships should devote as much time as necessary to Second Reading speeches on Bills of this nature and this importance. I would particularly say to the noble Lord and to your Lordships that I take very seriously the points that he has been making about the national security of energy supplies. It is one of the Government's most important responsibilities. I realise that, in meeting that responsibility, they may often clash with the stance that I have taken as a member of and spokesman for the Green Party with our emphasis on renewables. I do not in any way sideline those problems. They are ones that I and everyone else will have to face.

It is a big Bill. We are obviously going to have a great many amendments to it and spend a lot of time on it. The noble Baroness, Lady Miller, promised us a certain number of amendments. I do not think that she will get very far with the amendment she proposes to define a "Secretary of State". She may think that there are lots of Secretaries of State but there are not. Platonically and constitutionally, there is but one Secretary of State. We cannot start dividing them up in Bills. That may not be very sensible, but it is what actually happens.

I turn to the provisions that I think need amendment and that I shall do my best to help your Lordships to amend. There is government funding for the liabilities of British Energy and British private operators. The Bill, if enacted, will allow the Nuclear Decommissioning Authority to take on British Energy's liabilities, at an estimated cost of £3.3 billion over the next 10 years, since British Energy did not set aside enough to cover its liabilities before it went bankrupt. The Bill is also worded to allow for liabilities of future private nuclear companies to be picked up by the public purse.

We believe that we should remove provisions, such as Clause 7(2), that allow for public funding of the liabilities of private operators. Given British Energy's failure to account properly for its liabilities, the Government must legislate to ensure that future private operators establish segregated funds for nuclear waste before commencing operation of nuclear facilities. There should be a legal requirement on private investors, if they decide to build new stations, to have a segregated liabilities fund large enough to avoid repeating the mistakes made by British Energy. Knowing that the liabilities could be picked up by the Government would in fact prove a major incentive to private investors to build new reactors. We and Greenpeace, which has been advising me on this, do not think that any new or existing nuclear stations are necessary. However, despite calls for segregated funds, it is expected that the Government will not legislate to make that obligatory, as I think they should.

The Nuclear Decommissioning Authority clauses raise an issue of new building. The NDA will be given powers to operate electricity generating stations. Clause 10(2), taken with Clauses 3(1)(a) and 3(1)(d), could give the NDA the option to build and operate certain types of nuclear power stations such as plutonium-burning reactors-perhaps to dispose of the UK's embarrassing plutonium stockpile under the guise of waste management. We believe that Clause 10(2) should explicitly exclude the construction of new nuclear stations under the NDA and that the NDA should conduct research into immobilising plutonium as a waste form.

As for the justification of facilities which continue to create waste, the Bill contains no provision for the annual review on the rationale for continuing to keep nuclear facilities open, as promised in the White Paper at paragraph 5.27. Clause 3(1)(a) allows the NDA to operate BNFL's ageing, loss-making Magnox reactors. Clause 3(1)(d) allows it to continue operating the Sellafield reprocessing plants and Mox plant. As recommended by the Trade and Industry Committee, the legislation should make compulsory annual reviews of the continued operation of these facilities.

We also feel strongly about the lack of environmental principles. Clause 9(2) confers duties on the NDA in uncompromising terms, apart from its environmental duties. The NDA needs a clearly defined set of environmental principles, enshrined in legislation to avoid inappropriate methods of nuclear waste management being promoted. The NDA needs a clear set of overarching principles and should take into account protection of the health and safety of people and the environment from the harmful effects of radiation. Environmental and sustainability concerns should be given primacy over commercial or economic ones.

I turn to statutory public consultation. There is only "no constraint" on the NDA consulting the public at large and national stakeholder groups such as NGOs. As far as it goes, that is okay. However, the Bill gives a limited list of stakeholders who must be consulted. We believe that consulting NGOs and the public should be made a statutory requirement in the Bill.

I move from sins of commission and turn to the sins of omission. I shall do so only briefly, your Lordships will be glad to hear. My protest about the time on speeches which I delivered at the beginning of my speech was more on behalf of the noble Lord, Lord Jenkin, and others than of myself.

We were very disappointed, as were farmers generally, at the Chancellor's recent failure to announce rebates on duty levels on green fuels such as biocthanol, a petrol substitute derived from sugar beet, and biodiesel. The National Farmers Union said that the failure left the industry in limbo and meant that there was no way that British farmers can meet the European Union's target of 2 per cent biofuel usage by 2005. I think that the noble Lord, Lord Palmer, would have spoken on this subject had he been present. He has, quite rightly, been banging away on the subject.

I turn to three very short points raised by Energywatch, one or two of which concern itself almost alone. However, the first point does not concern Energywatch alone-it is an absolutely basic point in which I believe and in which I believe your Lordships will believe; I hope that the Liberal Democrat Benches will take it on board. The opportunity should have been taken in the Bill to end energy disconnection due to debt. Such a practice should be banned. I shall not go further into the point now, but I look forward to expounding the reasons for it in Committee. The reasons are probably self-explanatory.

Energywatch also believes that, if it is to do its job properly, it should be given greater information-gathering powers. Again, that is something to be explored in Committee, as is the matter of the information-gathering powers of the regulators.

This is a big Bill. It is something of a curate's egg, although it is not quite a curate's egg because the traditional curate's egg was, in fact, bad all through, which this Bill is not. But various parts of it are not as good as they should be. It seems to me to be very muddled, and the speeches that I have heard in your Lordships' House today have gone no way towards dispelling that thought. However, I am sure that we shall all do our best, and I hope to contribute to improving the Bill in Committee and on Report before it goes to another place.

12.41 p.m.

Lord Dixon-Smith

My Lords, the Bill is welcomed not only for its content, which is, in effect, part of a solution to a very great problem that this country faces; it is also welcomed in the wider sense because of the debate to which it has given rise today. That debate has already spread its tentacles, if I may express it that way, rather wider than the subject of the Bill itself. That is very important. The only depressing issue for me on a purely personal level is the speed with which I have been reduced to an echo of what so many noble Lords have already said. The subject matter involved in the Bill is fairly tight and fairly focused. The issues, which are very important and absolutely fundamental to the future security and development of our community, are small and detailed and will be repeated over and again.

I make no apologies for giving a resume across the energy spectrum. We keep hearing about the issue a little here and a little there. But the situation that this country now faces is very serious and it is dramatically different from the energy environment that we have enjoyed over the past 30 or 40 years.

We are soon to be a net oil importer, moving rapidly from the position that we were in in previous decades of being a net exporter. Our natural gas production, which, again, has more than met our requirements in previous decades, will meet only 50 per cent of our consumption by 2010. Subsequently, it will probably fall to approximately 20 per cent of our requirements by 2020. We have heard that by 2020 nuclear-produced electricity generation will have decreased from approximately 20 per cent to about 7 per cent of total generation. All those factors come together when there is, above all, a need to diminish CO₂ emissions in response to global warming and Kyoto.

Behind all that is the priority of the consumer, which I believe is still security of supply and, after that, price. We have had a very efficient energy-pricing system because of our fortunate situation vis-à-vis domestic supply and the administrative arrangements that have been put in place. But the reality is that we are moving from decades of low energy prices into a period of high energy prices and cost to the consumer. That issue must be faced.

I want to raise a number of points in relation to the part of the Bill which deals with nuclear energy. We must remember that the Bill follows a White Paper, which my noble friend Lord Jenkin called "a statement of aspirations". That is what it was and is. The question that arises for me is whether the Bill is the same thing. The responsibilities of the Nuclear Decommissioning Authority are set out but they are all subject to a direction or designation from the Minister. Those responsibilities do not exist without that direction or designation. The question that must be asked is: do the Government intend to issue those directions and designations?

That applies to all the functions of the authority and it applies, in particular, to the question of the disposal of nuclear waste-a subject which, again, has already been touched on by noble Lords. Does the Minister intend to issue the authority for the Nuclear Decommissioning Authority to get on with those functions? The way that I read the Bill, without a designation from the Minister, the functions are nonexistent. I am sure that, when he responds to the debate, the Minister will correct me if I am wrong, but I do not believe that 1 am. That is fair enough; there is no problem about that. I am sure that it is entirely appropriate that the detail of the decisions and the ensuing action should be initiated by government. As I see it, in the Bill we are establishing the opportunity for the Government to act. The question is whether the Government will do so.

That question is also important in relation to the possibility of future nuclear generation. I do not intend to repeat all the arguments that have been made so far today in favour of that. But we must face the fact that, without future nuclear generation, we shall not be able to give the public of this country the security of energy supply that they rightly demand. That is absolutely fundamental.

It is very interesting to see the second part of the Bill, which deals with the establishment of what I call "deep-sea wind farms". By coincidence, it appears that they could replace the nuclear-generating capacity, which I suppose they could. Bearing in mind that nuclear generation accounts for 20 per cent of our current electricity generation and bearing in mind also the Danish experience, in order to guarantee security of supply we should have to put 80 per cent of the present total nuclear-generating capacity out to sea in order to guarantee security of the 20 per cent that we require. However, we would still not be certain that it would be there when it was required. One has only to consider a heavy anticyclone in the middle of the winter, which brings extreme cold and, often, very still periods for days on end. If we build a system that is dependent on the wind in order to produce 20 per cent of our electricity-generating capacity, we shall fail our electorate because the wind may well not blow. It is all very well to assume that if we have stations in the southern North Sea, the mid-North Sea, the northern North Sea and the Irish Sea that the wind will blow somewhere. There are conditions when it does not, so there is a problem. We cannot rely on wind as a major source of supply so we have to turn to other sources.

What has not been said as regards renewable energy is what will happen about tidal energy. This country has what is probably the greatest European estuary with the capacity to generate electricity; namely, the Severn estuary. The noble Lord, Lord Hooson, has tabled an Unstarred Question on this topic and I apologise to him for raising the point here. That form of supply is secure. Courtesy of the gravity pull of the moon, the tide keeps going in and out. There is therefore the possibility of producing a renewable energy source that is a guaranteed form of generation.

I understand that the Government are considering in an entirely different field-this is not related to this debate but becomes pertinent-the possible need for yet another road crossing on the river Thames lower down than Dartford. Linked to that is the possible need-I am sure that the noble Lord, Lord Whitty, will be familiar with all these issues-for a replacement of the Thames Barrier, which is already becoming vulnerable, partly due to global warming but also because the east coast of the United Kingdom is gradually sinking. It seems to me that there is an opportunity there to meet those requirements together with the requirement for reliable sources of renewable energy. The Thames estuary, which also has a very big tidal variation, could perhaps be used. The opportunity for using tidal energy is not mentioned in the Bill.

There are all sorts of other sources of renewable energy. As mentioned by the noble Lord, Lord Beaumont, the noble Lord, Lord Palmer, has pursued the issue of biofuels and biomass. He is correct in principle; it is a very good carbon-neutral form of energy. However, if we are serious about energy production, plants are very inefficient converters of the sun's energy into usable power. If we want to talk about using energy from the sun, which is what plants do for us, it would be much more energy efficient to convert it using photo-electrics. Do we need to consider energy farming in that context rather than in the context of biofuels? I ask the question; I do not pretend to know the answer at this stage.

There is another aspect to the question of photovoltaics. When I was in Germany about eight years ago, plenty of houses were built with photovoltaics in the construction and there were times when electricity production was greater than electricity consumption. In that situation, it was supplied back to the grid. Are we sure-I hope the Minister will be able to answer this question-that our existing structures and arrangements are sufficient to permit and encourage that? Already, major office projects and, indeed, many prototype houses are being built with electricity-generation capacity. If we are serious about green energy, that has to be encouraged. I am not clear that we are giving that sufficient encouragement.

One can go on from there to matters such as combined heat and power, and so forth, all of which again are not properly addressed in the Bill, although a great deal of work is going on in that regard. The problem I have with the Bill is the problem that existed with the White Paper. It appears to me to be a statement of aspiration. What I do not know, and the question the Government must answer, is whether they will turn it into action.

12.55 p.m.

Lord Bridges

My Lords, the Bill before the House today is a very large item. It covers an extensive range of issues and will call for most careful scrutiny in Committee. I shall therefore confine my remarks to some of the broad questions which I believe we need to consider.

The first matter I want to mention is the Government's general approach to the somewhat precarious imbalance between generating capacity and projected demand. Looking at the Bill, one would not suppose that this is a particularly serious problem, but I do believe that to be the case. In the days of the former CEGB, according to the press there was a margin of more than 20 per cent between capacity and likely demand, and sometimes more. They may have erred on the side of caution at great public expense, but let us compare that with the situation that prevails today. Again, according to what I read in the newspapers, which I suppose may be wrong, the margin is as low as 10 per cent and may be a good deal less in a few years' time. That seems to me to be at the heart of the energy problem today, but it is not addressed as such in the Bill, nor did it feature in the White Paper. It seems to me very odd that such an extensive Bill on energy does not refer openly to our most serious power problem.

Instead, pride of place is given to decommissioning of existing nuclear power stations. Of course, it is prudent to give thought to the problems likely to arise before decommissioning occurs, although I note that several Magnox reactors have already been retired without the full panoply of precautionary legislation in the Bill.

It appears that the Government are determined to show that despite their commitment to reduce CO₂ emissions, they do not like nuclear power and they want to proceed to its abandonment as soon as they can get round to it if circumstances permit. However, there seems to be little likelihood of that happening in the near future. Indeed, as I have explained, the gap between capacity and likely demand is so tight that we shall be heavily dependent on nuclear power stations in the foreseeable future.

It seems to me that the priority of place given to the NDA in the Bill is based on a somewhat false understanding of our needs and current capacity to meet them. The Government will no doubt say that the driving force is to honour our international commitment to reduce CO₂ emissions but that that should be done with due regard to our existing national policies to protect designated sites of particular value in the landscape context. They may not find that that circle can readily be squared without the continued use of nuclear energy.

To replace the nuclear stations, the Government look to stations generating power from wind and tide. In particular, they want to maximise wind power as a major new source. We have seen what some of our continental neighbours have done, and very sensibly want to do likewise. This does seem to be a likely source of useful new generating capacity. But this is not altogether straightforward. The existing grid will need to be adapted and rebuilt to channel the power to the consumers. Some noble Lords will recall the long period it took to obtain permission recently to improve part of the grid in North Yorkshire. Nor is it clear to me from the text of the Bill how this system would operate. I do not see any references to the selection of companies to build such stations and how that would be done. Would they be built and operated by the state or by an official agency? Will bids be sought from commercial undertakings? Or are the Government thinking of establishing an offshoot of the state such as the old CEGB?

I also wonder whether there are likely to be problems in Brussels if we assert our right to build wind stations on the Continental Shelf, and to prevent vessels getting too close to them. It is important that careful thought is devoted to the legal status of offshore power stations, particular if they are to be beyond the Continental Shelf, before we proceed down that road.

Then there are the problems regarding the landscape environment, to which I referred briefly. One aspect of wind power of particular concern to me is the possible siting of large wind power stations in areas which at present enjoy special landscape protection under existing legislation, notably in the national parks and the areas of outstanding national beauty.

There are some passages in PPS22,I believe, which have given rise to some apprehension about the Government's intention. When I raised the matter at Question Time recently, I was not reassured by the Minister's reply. I hope it is clear to the Government that any move to implant large wind installations in areas that enjoy protection at present-or damagingly close to them-will encounter firm and perhaps implacable opposition from bodies such as the CPRE, the National Trust and the Council for National Parks. These bodies are capable of mounting an effective campaign and any move in that direction without proper safeguards would, I fear, be bound to tarnish the Government's environmental credentials.

Finally, I urge the Government to look at some areas where they might be more active. We would consume less energy if we promoted the widespread use of solar panels. Many people doubt whether they are of much use in our climate, but, as the proud owner of a panel for the past 20 years, I have to say that I am agreeably surprised by its contribution.

If the Government really believe that global wanning is happening, they should buy some solar panels themselves. Did they remember to build some into the recent palatial reconstruction of the government offices in Great George Street? Not having a personal helicopter, I have not been able to verify that, but I doubt it. The Gladstonian tradition of saving on such small matters, ignoring sometimes the wider picture, is still alive and kicking in the Treasury.

We could also persuade more people to use their domestic washing machines and so on at night, when the generating margin is under less pressure. After all, the cheapest way of not having an energy crisis is to use less power, and to use it more prudently.

In short, we have a great deal of work to do on the Bill. The main problem I have with it is the emphasis given to decommissioning the nuclear stations. I understand the Government's motives, but I doubt whether this is the right approach. We certainly cannot afford to adopt it at present when the power provided by the nuclear stations is so important to us. If the Government in a headlong way are so rash as to proceed with this policy, I expect that we shall become seriously short of generating capacity at certain moments; and a few cold winters in the years ahead would not be very good for their credibility.

It is not very often that we have an opportunity to improve scripture, but we may have an opportunity to do so at the moment. I refer to the well-known phrase:

The wind bloweth where it listeth". I would add, and the wind bloweth when it listeth". We need a contribution to ensure the base loads of a power generation in this country. I do not see it in this Bill as drafted.

1.3 p.m.

Baroness O'Cathain

My Lords, when the Bill completes its Second Reading today and proceeds to Committee-or, unfortunately, Grand Committee- the first question that will be asked is that the Title be postponed. A much better question would be, "Should the Title be changed?" as I believe, the Title is a misnomer. I am not alone in that thought; it has already been referred to on two previous occasions. It creates the expectation that the Bill is an Energy Bill; that is, a Bill to bring forward proposals to deal with the supply of energy to ensure that industry and commerce and domestic life in this country will be able to rely on a continual, consistent supply of electricity in the years to come. This Bill, my Lords, certainly does not do that.

When I spoke in the first day's debate on the gracious Speech on 27th November I had not seen the Bill. I must say that I was not frightfully optimistic and drew attention to the fact that the lines in the Queen's Speech dealt only with the decommissioning of waste and some weasel words about the promotion of, secure, sustainable supplies and a safer environment".-[Official Report, 26/11/03; col. 3.] That is a nice alliterative turn of phrase but not exactly reassuring to those of us who worry about the lights being turned off.

On reading through the Bill, my worst fears have been confirmed. It really should be called a waste Bill; it is certainly a wasted opportunity to do something to reassure the country that what has happened recently in California and in continental Europe is unlikely to happen here. Given the Title of the Bill one could be misled into believing that it would address the significant challenges facing the sector, and, by extension, the economy as a whole. Sadly, that is far from the case, as the noble Lord, Lord Ezra, has already suggested. He suggested that it should be called the Energy (Miscellaneous Provisions) Bill.

The proposed legislation dealing with the Nuclear Decommissioning Authority is a major part of the Bill. It comprises 74 clauses out of a total of 162 and 14 schedules out of a total of 23. All deal, in effect, with waste.

The Bill's objective is the need to introduce competition into the management of waste and decommissioning as the financial numbers involved are so large. I would go along with that absolutely. I thought the figure was approximately £50 billion but the Minister today quoted £48 billion. Even a 1 or 2 per cent saving would be very significant and amount to £500 million or £1 billion, whichever figure one takes. That is to be applauded. But it does not do much to safeguard "secure, sustainable supplies". I repeat, it is a waste Bill, not an energy Bill.

I am told that the nuclear industry welcomes the proposed legislation involving the formation of the NDA. The sooner the better. Since 1997 the industry has been drifting. It is essential to get rid of the uncertainty. Why has it taken so long?

Sadly, for the nuclear industry, it appears that there is to be yet another delay on top of the six-and-a-half years. That delay is being built into the system. The resolution of the problems of waste disposal depends solely on funding. Because the Bill has been introduced in your Lordships' House there will be no release of funds until the Members in the other place give it a Second Reading. My noble friend Lord Jenkin has already referred to that fact. The appointment of a chairman, staff and even the provision of accommodation cannot go ahead, as we have been told, because we have no locus to deal with money matters. That delay results in yet further delay in getting action. We are now told that there will be no action until April 2005.

However, this long period of indecision and delay affecting the issue of the NDA is compatible with the delay that has permeated so many areas of economic life in this country recently. In the case of energy, the Government's supposition must be that the lights will always function, otherwise they would have to take action on future energy supplies now and not just concentrate on waste. Energy I suppose is not sexy; it is not a vote-winner when the lights are still on and functioning; it will not grab the headlines in the press; and it probably is too complicated for superficial spin merchants. But it is a real serious problem.

On another issue, like my noble friend Lady Miller, I am somewhat confused where the responsibility for the Bill actually lies. The NDA will be a non-departmental public body reporting into the DTI, yet the body is being discussed and debated in a Bill being led by Defra.

If the press are to be believed, and the Government seem to lay great store in briefing-hanging on their every word and having knee-jerk reactions to all that is published-the future existence of the DTI and Defra is not exactly a reassuring foregone conclusion. Perhaps I am too reliant on the BBC's "Farming Today" programme, to which I listen every weekday morning, but it does appear that Defra is in the sickbay-not with the Minister, thank goodness, but certainly his department-alongside the DTI which apparently no longer has a job. This is a dog's dinner; it is certainly not joined-up government. Only this morning we have been informed that the Government will table amendments to Parts 2 and 3. We are falling into the habit of a draft Bill being called a Bill. This is being paraded as a Bill, but it is a draft Bill. That is not good enough. An Energy Bill? I do not think so. In order to make it respectable, all sorts of things have been bolted on to the waste issue, not least the need to introduce the electricity trading arrangements, which, I am informed, have been hanging around in the DTI for at least two years. It is lucky that it has now found a vehicle to get them into the legislative programme.

My main concern is not that we are fiddling while Rome is burning but that it should not be beyond the wit of man-and for man read woman-employed in either the DTI or Defra to produce policies that would truly guarantee, secure, sustainable supplies and a safer environment -note, nothing is said about an acceptable aesthetic environment.

I know that coming so far down the list of speakers in this debate, there is a risk of being repetitive, but this bears repetition. I feel that I must return to the theme that I adopted in the debate on the gracious Speech on 27th November. Nuclear power is the only option if we are to safeguard our supplies. We cannot rely on about 70 per cent of our electricity generating supplies being imported. Secondly, we must promote sustainable supplies, with the sub-text of reducing carbon emissions. We all agree on that. The Performance and Innovation Unit paper laid out a Utopian view of a country powered by windmills with no dirty coal nor nasty nuclear in sight.

Do we ever look across the Channel and see how it is done elsewhere? About 80 per cent of electricity generation in France is now produced by nuclear power. It is ironic that we are actually importing 5 per cent of our electricity supplies from France, which generates them from nuclear power. However, is even that a reliable source, bearing in mind what my noble friend Lord Jenkin described as the switch-off by France of supplies to Italy earlier this year?

My noble friend also referred to the renewable energy application of coppice and gave us a wonderful picture of the whole of Kent being coppiced just to supply the energy currently supplied by Dungeness. I also have a Kent story. I am told that it has been estimated that if we were to meet our long-term emissions target, the number of windmills required would cover the whole of Kent. Being a resident of West Sussex, I guess that that would not bother me too much, but I am not a nimby at heart and parts of Kent are almost as beautiful as parts of West Sussex, and must remain so. The pursuance of windmills is truly a bonkers policy—or am I just tilting at windmills?

The Bill is a logical follow-on from the White Paper. The DTI is almost obliged to do something to meet the policy decisions contained in the White Paper, so this is the result. The Bill lays out the legal framework for offshore wind, but offshore wind will not deliver 10 per cent renewables or any substantial carbon reduction, because the non-carbon generating facilities-namely, nuclear power stations-are being run down. The policies will only replace the non-carbon element currently provided by nuclear with other supplies which have noxious effects either in their manufacture, to which I referred in our debate on 27th November- voltaics are manufactured with some pretty noxious materials-or their production, such as biomass.

Let us remember that we get 25 per cent of our electricity from nuclear at present. What will happen if the nuclear industry is allowed to wind down without any replacement programme in sight? Sadly, thinking of the few cases that I mentioned, it appears that the delaying tactics of the Government will continue.

The noble Lord, Lord Davies of Oldham, told us on 2nd December that the nuclear option will be kept open until the last nuclear power station shuts down in 2035. The inference is that just because we know how to operate certain types of nuclear power stations, we will continue to know how to build and operate one 70 years later.

That is a little like saying that no action is required to save an endangered species until the last pair is dying and past its breeding years. I know that the noble Lord is a football fan. I wish that I had been here that day to ask him whether he could envisage maintaining the Football League if there was only one team left. Or, to be perhaps more up to date, I should provide a neater analogy: just because we know how to operate a computer does not mean that we know how to build one.

We are in serious danger of losing our skill and knowledge base, not investing in keeping up to date with all the new developments taking place in the current construction of nuclear power stations in nine other countries. Something must be done about the nuclear option now. There is no other option if we are to, promote secure, sustainable supplies and a safer environment". I hope that we get some indication today about the Government's view of the nuclear option; if not I shall attempt to use the Committee stage of the Bill to nail them.

1.15 p.m.

Lord Gray of Contin:

My Lords, we have before us today a very substantial Energy Bill, which has come about largely as a result of the White Paper that the Government published in February this year. It is disappointing, to say the least, that we have not had an opportunity to discuss that White Paper prior to the presentation of the Bill. One would have thought that the Government would have welcomed the views of your Lordships' House. Indeed, they would have found areas where their own ideas were echoed, while at the same time, they would have heard criticisms and suggestions, some of which they might just have found useful. Pre-legislative scrutiny is important but should complement rather than replace debate in this House.

The Government have attracted unto themselves a rather unenviable reputation for producing legislation that has not been thought through. I was going to add to that criticism until the Minister rather stole my fox, because the afterthought that he introduced to his announcement during today's debate that consumers of electricity in the Highlands and Islands of Scotland would not have extra charges levied on them as a result of extra distribution costs is very welcome. To that extent, he will get away without some of the criticism that I might otherwise have levied at him.

Much of what the Bill contains was predictable. Decommissioning of nuclear power stations at the end of their lives and waste management legislation were certainly likely starters from the outset, as was a legal framework for offshore renewable structures. The setting up of a single wholesale electricity market is new but interesting and will require careful thought. I envisage many discussions on all those issues.

However, most of the detail of the Bill will be dealt with in Committee and this Second Reading debate provides us with the opportunity to give some thought to the wider energy scene. Had the Government been prepared to tackle realistically the disposal of nuclear waste, the whole future of power generation could have been outlined. The White Paper is a sadly missed opportunity. By not giving a firm indication of support for nuclear power in the short term, doubt has been raised and suspicions aroused with the result that the Government could be left with the worst of all worlds.

Disposal of nuclear waste is far and away the most important problem. It screams out for attention at the highest political level. It is no exaggeration to suggest that if a satisfactory solution to that problem were to be found, the attitude of the public to nuclear power would change overnight-not that the public are by any means wholly opposed even now. There is a strong body of support that would become vocal in favour of nuclear power once that proviso were overcome. I shall return to that subject later.

Renewable sources of energy have an important role to play but I fear that the Government have a blinkered view and are wildly over-optimistic in their anticipation of the contribution of renewables, especially wind power. It is unlikely that targets for energy efficiency or security of supply, allegedly to be delivered by renewables, can be met. In any event, an increase in renewable energy in line with targets in the White Paper will not solve the dilemma of reducing carbon emissions, because they will replace the existing nuclear capacity only as it cuts out-regrettably, with much less certainty, such is the dependence of renewable sources on weather.

This year has been a very good example of the unpredictability of our climate. There has been low rainfall, much sun, little wind, various records broken in many different parts of the country and promises of more weather peculiarities due to global warming. There is all that dependency on uncertain sources of energy while our fossil fuels are depleting and our nuclear reactors ageing. It is imperative that an R & D programme be established to ensure that our nuclear technology is maintained and developed further so that, as the more senior members of our nuclear industry retire-and this applies at all levels-their younger successors will be properly trained and available in this country, not tempted overseas where nuclear power is thriving in order to help their nuclear industry, but remaining here for the future of our new nuclear industry. The nuclear industry will not fade away; it is essential to our future, and we must ensure that the raw deal that nuclear power gets in the White Paper is countered.

An excellent commentary on the White Paper was prepared for the influential body Trade Unionists for Safe Nuclear Energy by Malcolm Grimston, honorary senior research fellow at Imperial College. On page two of that document, he says:

It is difficult to assess why nuclear power should be written off on economic grounds-for example, the industry claims its total costs for new build to the latest designs will be below the subsidy offered to renewables in the White Paper". Again, on page 13, he states:

The absence of any appraisal of the economic claims being made on behalf of advanced passive reactor designs makes the statement that new power stations should be rejected on economic grounds impossible to assess". That is the judgment of an expert in the field, who feels that the description in the White Paper does not give a fair crack of the whip to nuclear energy.

The truth is that the performance of the nuclear industry in many parts of the world is commendable. In the United States, for example, the figures of the Institute of Nuclear Power Operations show that the unit capability factors-that is to say, the percentage of time at full generating capacity-have been running at approximately 90 per cent for the past four years and were at an all-time record level of 91.2 per cent in 2002. It is worth noting that new nuclear power stations are being built in many parts of the world, including Russia and China. The total now operating approaches the 450 mark.

The gas situation in America has given great cause for concern, and the colossal power cuts there have raised fears elsewhere, not least in our own country. Unless we replace nuclear with nuclear, the British people had better get used to power cuts. Indeed, they may not have to wait that long: the safety cushion between available capacity and peak demand is down to 17 per cent, with the real margin likely to be substantially less-and that against a desirable spare capacity of over 20 per cent.

Disposal of nuclear waste is not an insurmountable problem. The Nuclear Decommissioning Authority faces a challenging future, and I wish it every success. Disposal has been resolved in other parts of the world, where the predominance of the alarmist lobby has been overtaken by reality. I agree with much of what the noble Lord, Lord Christopher, said this afternoon. If I repeat some of the points that he made, I hope that he will bear with me.

Over many years, successive governments in the United Kingdom have devised schemes to attract development to various parts of the country, sometimes to counter closures in dying industries or to stimulate new ventures in areas of high unemployment. Special development areas were created, where substantial tax breaks were available and various other monetary incentives offered. Perhaps some original thinking ought to be introduced to focus on ways of making safe disposal of nuclear waste acceptable in different parts of the country, with monetary benefits by no means excluded.

Finland is a very good example of a country where concern was acute but a considered and sensible approach by government, with open discussion and exchange of views, led to the present situation where nuclear energy accounts for 27 per cent of Finland's electricity. Finland's four principal nuclear reactors are among the best performing in the world, and last year its parliament voted to proceed with a fifth reactor. The case for that decision was based on economic grounds plus the potential reduction in greenhouse gas emissions. Spent fuel is kept in interim storage in water pools at power stations for several decades, until eventual disposal at a depth of 500 metres below a bedrock geological feature is achieved. That ongoing decision-making process has been managed with great care, and the consultation and co-operation of national and local politicians and the media have combined to reach a most satisfactory outcome.

Unless its problem of nuclear waste disposal is tackled and resolved, the United Kingdom is in real danger of falling increasingly further behind the more enlightened and progressive countries, from China to Eastern Europe and India to America, where those challenges are being confronted realistically. What a tragedy it would be if our once-great nuclear industry should perish through lack of ingenuity on the part of its political masters.

Lord Davies of Oldham

My Lords, this; seems like an appropriate time to adjourn our proceedings. Accordingly, I beg to move that the debate on the Second Reading of the Bill be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 1.29 to 2 p.m. for Judicial Business and to 3 p.m. for Public Business.]