Energy Review (Hansard, 13 March 2002)

§ Dr. Desmond Turner (Brighton, Kemptown)
I hope that this is the beginning of a major national debate on "The Energy Review" document. I congratulate the Government on bringing the review to the House and to the nation. It is a wide-ranging and in many ways impressive document, but it is not without flaws. I hope that my hon. Friend the Minister for Employment and the Regions, who is substituting for my hon. Friend the Minister for Industry and Energy today, will not take too much offence if I criticise it. My criticism is well meant.
Life will be made easier if I begin with the parts of the report with which I wholeheartedly agree. The review recommends that Britain should reduce domestic energy consumption by 20 per cent. between now and 2010, and by another 20 per cent. between 2010 and 2020. We will make a significant contribution to future provision if we achieve that degree of energy conservation and reduce energy need by approximately one fifth. Energy conservation is, appropriately, known as the fifth fuel, because it is just as good as power generation.
By a happy coincidence, the energy saving target of 20 per cent. by 2010 is almost identical to the target of 30 per cent. between 1996 and 2011 set in the guidance issued under the Home Energy Conservation Act 1995. Unfortunately, that guidance is not statutory, and the implementation of that target is not a statutory duty of local authorities, so it is not surprising that some local authorities take their energy authority role more seriously than others. Performance varies accordingly: some excellent authorities have reported savings of 15 per cent., some have reported as little as 0.003 per cent., and others have not bothered to report at all. It is clear that the 30 per cent. HECA target will not be achieved under the current legislation, and nor will the target set out in "The Energy Review" unless we do something about it. The Minister will agree that there is a strong case for achieving that target.
I therefore proposed a new private Member's Bill—the Home Energy Conservation Bill—that would make the achievement of energy conservation targets set by the Secretary of State the statutory responsibility of local authorities. That would ensure the delivery of home energy conservation targets, on which the report and my Bill are in perfect harmony. Our objectives are the same, so I hope that the Government will maintain their support for my Bill and help to bring it to a successful conclusion. I appreciate that the Minister here today has no direct involvement with my Bill, but I remind him of comments made by the Energy Minister to the House of Lords European Union Committee in January. He said that energy conservation was going to form a significant plank of the report, and added: I take the point very seriously…we will be setting targets which will result in very significant increases in building standards so as to reach the targets we are setting. I am happy with that expression of intent, but making new buildings or modifications comply with new building regulations is unlikely to make a sufficient contribution to energy conservation to achieve the national target. It is vital to address the energy conservation capacity of existing stock: we should 273WH remember that half our existing stock was built before 1914, does not have a cavity wall in site, is ineligible for the existing home energy efficiency scheme, and cannot take advantage of most of the energy conservation measures already in place. That issue must be revisited. The Minister for Employment and the Regions is strongly interested in energy conservation and I would appreciate his support for my Bill, which is an instrument already at hand to deliver one of the key recommendations of "The Energy Review".
I agree with the report that achieving large reductions in carbon dioxide emissions by moving to a low-carbon energy economy is a major challenge—one to which we must rise if we are to ameliorate climate change. Thanks to the legacy of 18 years of Conservative misrule, we now have a liberalised energy market, so achieving such a step change is a major test for the Government. It is achievable, provided that some of the recommendations of the report are amended. We are planning for the next 50 years and succeeding generations will judge us on what we do now.
The UK has four non-carbon options available for the generation of large-scale electricity. Setting photovoltaics aside—I shall not address the whole spectrum of energy provision in the report, because I do not want to take up all 90 minutes—

§ Dr. Ian Gibson (Norwich, North)
Thank God!

§ Dr. Turner
I value my hon. Friend's support.
I shall concentrate on the four non-carbon options that can generate large quantities of electrical power—the nuclear option and the three renewable energy sources—wind, wave and tide, in which the UK is uniquely rich.

§ Joan Ruddock (Lewisham, Deptford)
I know that my hon. Friend is not a photovoltaics enthusiast, but I wonder why he sets them aside. Our competitors give vastly greater sums in direct Government support to that fledgling industry, with considerable success. Is not the lack of investment the main reason for setting photovoltaics aside? If we had the political will, we could change that.

§ Dr. Turner
I am not setting photovoltaics aside because I am opposed to them in any way. I am simply dealing with ways in which to feed large quantities of power to the grid, which is not a role identified for photovoltaics. They will have a valuable future role in embedded generation, perhaps through photovoltaic roofs of our houses, and I agree with my hon. Friend that the Government should support the photovoltaics industry in this country. We do not disagree; it is simply that I do not want to take the whole 90 minutes of debate for myself.

§ Sir Robert Smith (West Aberdeenshire and Kincardine)
Is the hon. Gentleman tempted to include biomass and biodiesel as renewable sources of energy? Not only could they provide large amounts of energy, but they have the potential to help rural communities at the same time.

§ Dr. Turner
I was going to mention biomass, although I am not a great fan. I can see some downsides. I am only 274WH a simple scientist and cannot understand the argument of supporters of biomass who say that it will reduce CO² emissions: that strikes me as being on the same level as the argument for perpetual motion; it does not stack up. Biomass would increase CO² emissions, and the question of potential toxic emissions would remain, as would considerations of cost. To the best of my knowledge, biomass has not yet achieved anything close to commercial costings. It may have a role, but it is not as simple as the hon. Gentleman suggests.
The report mentions the reasonable concern that the United Kingdom's response to energy problems should not place it at a competitive disadvantage. The report uses the currently low generating costs of coal and gas as cost comparators, but they might not provide the most accurate guideline, because coal and gas prices are artificially low now and they not likely to remain as low in the foreseeable future. The report is also less than even-handed in assessing the relative contributions that the nuclear and renewables options can make. Surprisingly, it recognises that the costs of generation by nuclear fission with current reactor technology are too high to be commercially viable.

§ Dr. Gibson
Will my hon. Friend comment on the recent pronouncements of the Government's chief scientific adviser, Professor David King, who has come out on a pro-nuclear platform? Does he regard that as a conclusion or a contribution to the debate?

§ Dr. Turner
It is unusual for me to disagree with the chief scientific adviser, but I do on this occasion. He was premature in making those statements on nuclear power. He must have read the report and accepted its conclusions without too much consideration. His statements were not a valuable contribution.
Current cost of nuclear generation is about 5p per kW, which is at least double the current baseline range. Even that figure is not a reliable estimate, because the nuclear industry has a long history of obfuscating the real costs of generation. To this day, one cannot be certain that costs include provision for decommissioning, waste disposal and so on. Remembering that, in the good old days when nuclear power was new, the Government said that electricity would be too cheap to meter, one must take anything that the nuclear industry says about costs with several tonnes of salt.

§ Bob Spink (Castle Point)
On the costs of the nuclear option and the uncertainty around it, does the hon. Gentleman agree that it would help if the Government came to a decision about how they will manage waste in future? That would enable costs to be quantified and the debate to make progress. Does he agree that the Government should fix a policy for managing nuclear waste, above or underground, so that the engineers can get on with the work?

§ Dr. Turner
I agree entirely. Nuclear waste disposal is a problem that we have to tackle, whether or not we allow a new chain of nuclear stations to be built. It is inescapable.
The report describes nuclear power as a "mature technology"; it has had 50 years to develop, so that is not a surprising conclusion. However, it looks to future 275WH design developments to produce reactors with lower generating costs: a range of 2.5 to 4p per kWh is quoted. To achieve such costs involves extremely improbable operating assumptions that the nuclear industry has not met in its entire history. The putative costs are probably unreliable and unachievable.

§ Dr. Iddon
Does my hon. Friend agree that environmental as well as financial costs should be taken into consideration? One of the advantages of the nuclear industry is that it does not produce any carbon dioxide.

§ Dr. Turner
I thought that I had made my views clear, but I shall reinforce what I said. The only reason I am even discussing the nuclear option is because it does not lead to CO² emissions.
We must remember the awful history of the early 1980s. Research into renewables, in which this country then led the world, was stopped, and more nuclear capacity was built. It is reasonable to suggest that to maintain the nuclear option, the possibility of renewables was set back 20 years. This country was ahead in wind power, but Denmark stepped in and took over world leadership. Wave power was coming along nicely, but it was stopped dead in its tracks and only now is it reaching the point it had reached 20 years ago. If we are not careful, the nuclear option could be developed at the expense of renewables. Although nuclear power stations do not emit CO², genuinely renewable options would save just as much CO² and be completely sustainable.
The other argument from the nuclear industry centres on jobs. I do not want to put anyone out of a job, and for the foreseeable future the nuclear industry would have jobs for all its personnel just cleaning up the mess, let alone doing anything else. I would hate jobs in an obsolete 20th-century industry to be saved at the expense of generating far more jobs in a sustainable, 21st-century industry.
Another principal feature of nuclear power is its use to solve intermittency problems to provide baseline load. It has been argued that it is necessary to replace sufficient nuclear power plant to serve that purpose, but tidal energy has the potential to do the same thing. One of the beauties of tidal streams as an energy source is that they are completely predictable; they run at sufficient strength in any given place for 23 hours of the day. The variation in the times of tides around the coasts means that in most places there is always energy at any given time. Furthermore, the grid can handle it very easily, as ScottishPower plc stated in evidence to the Select Committee.

§ Mr. Simon Thomas (Ceredigion)
Will the hon. Gentleman give way?

§ Dr. Turner
I have given way so many times that if I do so again I shall take time from other hon. Members.
The most baffling feature of the report is that although it recognises the enormous power-producing potential of marine renewables—wave and tide—it makes little reference to them thereafter, save to suggest that although they might be making a major 276WH contribution by 2050, but they will be making only a small, unspecified contribution by 2020. The report does not explain why, but perhaps one can assume that that is an assessment of what might happen if the market were left alone to decide the progress of renewables, with little or no Government intervention.
It is clearly convenient for those arguing for a new generation of nuclear plants to have an apparent energy and carbon dioxide saving gap until 2020. That would fit nicely with the suggested option of having renewed reactors by that year. I venture to suggest that that is an attempt, conscious or otherwise, at a self-fulfilling prophecy. It is a simple fact that we would not have a network of nuclear stations had the matter been left to a purely commercial market. Those stations, and the national grid system that links them, were built with public investment by a nationalised industry, just like the stations in France and other countries. As the report admits, pure market operation would not produce any more nuclear build: some Government assistance would be essential if any more nuclear stations were to be built in Britain.
The report's allegedly neutral stance towards different alternative energy sources does not bear close examination. There is a massive carbon dioxide-free energy source waiting to be exploited off our shores. The report refers to 100 tWh of electricity from offshore wind and 700 tWh per year from wave and tide. Given that our current electrical generation is 360 tWh per year, it is clear that we have more than twice the resource that we need to supply our entire electricity generation needs. However, the report does not suggest how we might reasonably foster that.
The report also makes no allowance for cost reductions that will arise naturally from development and commercial exploitation. It quotes costs for marine renewables of 4p to 8p per kWh, but that is for almost pre-commercial demonstration machines, and similar costs by 2020 are assumed, which is absurd. We have only to consider the history of wind generation, the costs of which have decreased remarkably as it has been exploited. The same will inevitably happen with wave and tidal generation. Given that we also have all the lessons from the wind industry, the development and exploitation time scale for wave and tide could be much quicker. I can see no valid reason why, with sufficient encouragement, wave and tide could not make a massive contribution by 2020, such that there would be no case for new nuclear build.

§ Ms Joan Walley (Stoke-on-Trent, North)
In the light of what he has said, does my hon. Friend agree with all the submissions from the non-governmental organisations that one way to achieve his objective would be to have targets that are far tighter than the current ones? We could use the tighter targets as stepping stones towards the energy consumption and production goals he mentions.

§ Dr. Turner
I agree that we should have tighter targets. Indeed, I was going to advocate that, because I believe that they would be achievable and would have precisely the effect that my hon. Friend describes. I hope that the Government will resist the blandishments of the nuclear industry, which is seeking the same favourable treatment as renewables. The nuclear industry has a history of doing anything to perpetuate itself.
277WH I find the Government's reticence in the face of the enormous potential of renewables curious, to say the least. When £120 million was announced for renewable energy research and development last year, only £5 million was allocated for marine renewable projects. That is derisory in view of the massive potential of that source. There is another way in which marine technologies need help for rapid development: as well as research and development and start-up costs, there is the problem of grid connections. The main grid does not reach the remote areas where the best power generation sites are located. If early commercial sites have to bear the cost of building grid connectors, it would be a huge barrier to development based on pure market considerations.
If there is to be large-scale renewables generation in the UK the Government have to grapple with the modernisation of the grid. The current grid is an obstacle to future development of any source except nuclear power, in which plant will be sited next to old plant where the grid was built at public expense—in effect, yet another subsidy for the nuclear industry. The report virtually ignores that problem. I suggest that substantial upgrading of the national transmission system will not be needed in the short-to-medium term", but that sounds like another self-fulfilling prophecy. There will not be large-scale renewables because the grid connections are not there, but those connections are awfully convenient for nuclear stations.
The report appears to give equal weight to several future generation technologies such as photovoltaics, combined heat and power, clean coal, biomass and municipal waste incineration. However, none of those has the potential to produce enough power to run the country, although together they could make a contribution. Only photovoltaics guarantee no CO², emissions, and all are either more expensive than marine technologies or have other serious downsides, such as the potential for toxic emissions with waste and biomass, and the fact that in waste incineration the material burnt is precisely the stuff that should be being recycled. A consideration totally ignored in the report's contemplation of the continued massive use of fossil fuel reserves is that they will assume increasing importance as chemical feedstock, and so will become too precious to burn.
I hope that the Government listen carefully to the responses to the report before they finalise their policy. If they follow the guidance of the report without question, they will favour the renewed use of nuclear power at the expense of genuinely renewable and sustainable technologies, yet the use of those technologies has to be the ultimate goal, and the sooner it is achieved, the better. The report contains a bias that is not justified by the evidence and must be seriously re-examined.
The achievability of any renewables target is hugely influenced by the political will behind it. I am convinced that it is possible to achieve far more than the 20 per cent. by 2020 envisaged in the report. There are clearly technological obstacles to overcome, but they are much less problematic than the task that the Government should be taking on, which is achieving a planned, low- 278WH carbon energy economy in a liberalised market. It would be the biggest challenge ever for new Labour, but the prize for success would be gigantic.

Several hon. Members
rose—

§ Mr. Deputy Speaker (Mr. John McWilliam)
Order. I have no power to impose time limits on speeches, but a large number of hon. Members have written in and even more are trying to catch my eye. I appeal to hon. Members to be brief so as to enable as many as possible to speak.

§ Bob Spink (Castle Point)
I did not intend to speak today, only to listen and learn. I will make a short contribution as so many other hon. Members want to speak.
I am in favour of replacing nuclear with nuclear because it is right and inevitable that we should do so. Nuclear power in Britain is very safe, and it has been safer than many of the alternatives for many years. If, however, we are to do that we should make sure that we use the best possible plant and equipment. I am therefore disappointed that the Select Committee on Science and Technology, whose Chairman is staring me out, has decided not to take the opportunity to go round the world to see the latest reactors, research and plant. I hope that we can find time to do that soon to allow us to advise the House.
The bottom line is that if we were to replace nuclear with nuclear, we would increase the total waste that must be managed in Britain by a very small overall percentage. That would enable us to avoid known, serious and certain damage to our planet from CO². I rest my case on those remarks.

§ Dr. Ashok Kumar (Middlesbrough, South and Cleveland, East)
I congratulate my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) on securing the debate, but that is where that sentiment stops because I find myself on the other side of everything he had to say about nuclear power.
The report is timely. For the first time we are looking at our energy supply in the UK in terms of the next 40 or 50 years. For many years we have relied on fossil fuels with no thought of either the future or the health and environmental implications of our energy industry. The executive summary, which is on page 5 of the report, simply states: The future framework for energy policy needs to address all three objectives of sustainable development—environmental, economic and social—as well as energy security. The review has let us down on that fundamental point. The future of nuclear power is missing from the PIU recommendations. It is addressed in the report, but it is not included in its recommendations.
My hon. Friend criticised the Government's adviser on energy matters, Professor David King, for giving his support to nuclear power. Professor King has joined the debate, and he has given his opinion, which it is important that a senior person in his position should do. 279WH I welcome his remarks, which on this occasion concur with mine, and I am happy that he has given his support and has reminded us of our responsibilities.
The Select Committee on Trade and Industry, of which I am a member, also produced a study on the security of energy supplies, which concluded: It is essential that there be no further delay in Government decision making: the Government should make a clear statement on the future of nuclear energy as quickly as possible. No such decision was reached in the PIU report.

§ Sir Robert Smith
The hon. Gentleman did not say the way in which the Government should make that decision.

§ Dr. Kumar
Yes, I know. I am trying to draw the Minister's attention to that recommendation, which the Government should examine.
It is incredible that one of the most important current and future power sources, nuclear power, has been dismissed out of hand. It is seen as a last-resort technology. The report recommends keeping the nuclear option in order to compensate for the failure of other technologies.

§ Mr. Colin Challen (Morley and Rothwell)
One of the remarks—I shall not say conclusions—in the report is that if all the costs of nuclear power were internalised and subject to market forces, it would simply not be economically viable. We should seek economically viable sources of electricity generation.

§ Dr. Kumar
I recommend to my hon. Friend a European study that undertakes a cost analysis of nuclear generation. I shall come back to that, but I am conscious of time.
I return to the report's main safety, environmental and economic concerns. Of course there are safety questions here, as with every major industrial process. Risk is presented in everything that we do, however important it is. As a practising engineer before I entered the House, I regularly calculated risk in industrial processes. That was the nature of my job. Safety is an important issue, and it is part and parcel of making calculations and judgments, but the knee-jerk reaction of those who are against nuclear power is always that safety is serious and important. We recognise that. I also recognise that dealing with nuclear waste is a serious problem, which must be solved, whether new nuclear plants are built or not. The Government and we as a country must address it.
The Trade and Industry Committee report recognises, as the hon. Member for Brighton, Kemptown said, that the difficulties involved in the storage of radioactive waste are no longer seen merely in technical terms. I want to raise environmental concerns.

§ Dr. Iddon
I should like to put on record the fact that Professor King's support for the nuclear industry, like mine, revolves around wanting to move from fission, which produces much disposable waste, to fusion. In the 280WH minds of the industry's scientists, we are now only a generation away from nuclear fusion. Is that not an important reason for keeping the nuclear industry alive?

§ Dr. Kumar
I agree wholeheartedly with my hon. Friend, but I recognise that difficulties reside in the public's reluctance to accept the safety of various techniques. Suitable sites for the storage of waste material need to be found; we cannot duck public anxieties on that matter.
I am aware that Greenpeace, other environmental groups and hon. Members feel strongly about the importance of the environment. I was horrified with Greenpeace's reaction to the review. On the nuclear option, its website says that the review leaves the door open for a wave of dangerous new nuclear power stations", which proves my point. I am sure that no one setting up an installation does so intending to create a dangerous one. That happens because of the nature of the process—a process that deals with hazardous materials.
Those opposed to the nuclear option on environmental grounds have to weigh up difficult issues.

§ Dr. Desmond Turner
My hon. Friend says that one of the difficulties of the nuclear industry is that it involves a hazardous process and hazardous materials. Does he agree that that, by definition, is not the case with renewables?

§ Dr. Kumar
I agree with my hon. Friend, but we have not at this moment in time developed the technology for renewables. Although I admire his support for that great future ambition, we must recognise what is providing electricity at the present, whatever the process.

§ Joan Ruddock
When will the perceived energy gap arise? Will my hon. Friend quantify that gap, and is that his justification for nuclear power? He is arguing about safety and environmental factors, but to conduct the overall energy review we must know the needs of the nation. Does he agree with the report's finding that there will have to be public subsidy if the perceived gap is to be closed?

§ Dr. Kumar
I believe in the nuclear option that my hon. Friend the Member for Bolton, South-East (Dr. Iddon) mentioned. I do not have any objection to renewables and other developments, but they would not be ready in time because the technology that is required would still be in a primitive state in 20 or 30 years' time. Nobody can take that risk because the lights will go out. Hon. Members should remember what happened in California. In order to ensure that that does not happen, we should remember that this technology works.

§ Mr. David Chaytor (Bury, North)
Will my hon. Friend give way?

§ Dr. Kumar
Many hon. Members wish to speak, so I want to bring my remarks to an end quickly.

§ Mr. Robert Key (Salisbury)
We want more.

§ Dr. Kumar
The hon. Gentleman says he wants more, but I am just trying temporarily to settle the score for 281WH nuclear power. It is crucial that those who argue the environmental case recognise that we have an obligation to deal with global warming, and there is a powerful case for nuclear power assisting us in that. It is no good harping on about our commitment to Kyoto. We ignore at our peril a known technology that works. I believe strongly in nuclear power as a technology for generating electricity on a large scale because it deals with greenhouse gas emissions. It is a sector that we need to protect because if we do not, we will undermine our commitment to a treaty that the Deputy Prime Minister signed a few years ago.
The economics issue has been mentioned. I recognise that it is one of the hardest issues on which we must square the circle. ExternE, a European funded study of energy costs, concludes that on a gross basis, nuclear power is one of the cheapest forms of energy presently available, but we must consider issues other than the price. Skilled personnel are required to maintain such installations, and the capital costs are significant because of the aforementioned safety provisions. The PIU report says that the nuclear option will be left open for years to come, but the difficulty is in maintaining the necessary skill base to operate any future facility. The outlay for new nuclear facilities is significant and companies are reluctant to invest such sums in an industry that is not recognised by the Government as having a clear, lengthy future. The review states: Because nuclear is a mature technology within a well established global industry, there is no current case for further government support. Without Government backing, verbal or financial, the future of nuclear power is uncertain.

§ Mr. Chaytor
Is my hon. Friend arguing the case that nuclear ought to be part of the permanent solution to climate change, or is he endorsing the statement from the chief scientific adviser that nuclear has a role as a temporary stopgap until the full development of a renewable energy industry?

§ Dr. Kumar
I am arguing that nuclear has an important role to play at the moment. It provides 21 per cent. of our electricity, and is an important sector. It is important that we maintain it to meet our Kyoto obligations, and to provide electricity. It plays a part in meeting our environmental targets. We should not take the risk of not being ready in future when all plants could be decommissioned. We must prepare for alternatives.

§ Ms Walley
Will not continuing to subsidise the nuclear industry prevent the emergence of new renewable energies, so that we may never have alternative sources of energy? The Government's response to the energy review must take that up.

§ Dr. Kumar
I am asking for the Government to make their intentions clear so that companies know where to invest. It is important that the Government come down on one side or the other. Plants take 10 to 15 years to build, and hon. Members will recall that the Sizewell B inquiry took many years —rightly, because important issues had to be addressed. The Government must make up their mind and state their intended direction. European countries such as Germany are to phase out 282WH nuclear power. If we are to maintain it, a course that I would support, the Government need to give a clear response. The report ducks that issue.
I remain committed to nuclear power, and that puts me in a minority on this side. I am glad to have taken part in this debate, which was secured by my hon. Friend the Member for Brighton, Kemptown. Always, we have been on the same side and, for the first time, we find ourselves on opposite sides.

§ Mr. Simon Thomas (Ceredigion)
The hon. Member for Middlesbrough, South and Cleveland, East (Dr. Kumar) tried to score a goal for nuclear energy, so I shall make a break down the flank for an alternative scenario and suggest a way in which we could meet this country's obligations by 2050 through the use of alternative energy resources. None the less, our nuclear output provides a stopgap, and no one is asking to close our nuclear power stations overnight.
I agree with the hon. Gentleman that the report ducks some issues. Never was a document better named: it is only a "review" of the current state of play, and offers little intelligent guesswork about where we might be in 10 or 15 years as regards renewable technology. He is also right to say that it does not address where nuclear technology could take us in that period. That puts the onus on the Minister to come up with some answers. Until we answer such questions, we will not be able to move forwards.
To my party, our parliamentary group and me, nuclear power is not a long-term option. The royal commission on environmental pollution recognised that there were at least two scenarios in which nuclear power did not need to be an option to meet our Kyoto obligations. I could not accept nuclear as a realistic long-term option until several issues were resolved to my satisfaction and to that of the public. One of those issues, which is higher on the agenda than ever before, is terrorism and the fear of a terrorist attack on a nuclear power station. Another is nuclear power's less than wonderful history of record keeping, reporting, openness and accountability, which does not engender faith in the industry's future.
How will new nuclear power stations take shape? We are told that there is a new design—I must tell the hon. Member for Bolton, South-East (Dr. Iddon) that it is based on fission, not fusion—but how will it work and can it be trusted? Storage and decommissioning must also be addressed. We already have a storage problem and there is no point adding to it. My concern is that more nuclear power production in this country would merely add fuel to the debate on recycling nuclear materials, mixed oxide fuel plants, and other dangerous technologies.
Finally, it is important to ensure that the cost of nuclear power is internalised to the industry. The hon. Member for Middlesbrough, South and Cleveland, East referred to an EU report which I have not seen; however, I have seen the "Annual Energy Review". It is clear from attempts to find ways to internalise costs that the best solution is wind power. It costs half as much as nuclear power, which is an expensive way of generating electricity.
We do not need nuclear power to meet our Kyoto obligations. Last week the Secretary of State for Trade and Industry intimated as much in a statement made in 283WH response to questions from me and other hon. Members. It is important to confirm that and I should be grateful if the Minister did so this morning. The Kyoto treaty takes us to 2012 and we must look beyond that, but we do not need nuclear power to meet our immediate obligations.

§ Bob Spink
I believe that there is a misunderstanding. The hon. Gentleman said that he did not want the nuclear industry to be switched off, but that is what will happen unless the Government have the courage to make a decision to continue the nuclear industry so that the gap can be filled. If renewables and nuclear energy proceed sensibly, they will develop and there will not be a gap. As both forms of technology develop, we can make informed decisions, but unless the Government make a decision to support the nuclear industry, there will be a switch-off.

§ Mr. Thomas
I agree with the hon. Gentleman's last point and I am sorry if I misled him about my point of view. A switch-off is what I want, but I do not want that to happen overnight. I want it to be phased and natural. I want current nuclear energy production to come to a natural end. My position is the same as the Green party, with which my party is allied at EU level.
Events in Germany show a wonderful way forward. I recently visited Germany as a member of the Environmental Audit Committee. I want to give a positive description of how we could move forward with renewables.

§ Mr. Chaytor
Does the hon. Gentleman agree that the key issue is that it would be irresponsible to allow new build in the nuclear industry before the problem of radioactive waste management is resolved? We face costs of £85 billion to deal with the existing stockpile of radioactive waste. Surely that should be solved before we consider new nuclear power stations?

§ Mr. Thomas
I agree absolutely, but I shall not go further down that route.
Germany has agreed to a phased, natural end to its nuclear power and is looking for ways forward. The Environmental Audit Committee looked at renewables during its visit. There is a gap in the future scenario: the German Government are not sure where all their energy will come from in 2050, but they are prepared to take a leap in the dark and to bridge that chasm by investing heavily in renewables. They have made that decision without great regard to the cost implications, in common with decisions in the 1950s and 1960s to invest in nuclear power.
The German Government estimate that they will derive one quarter of their energy needs from wind, and 36,000 people are already employed in the wind energy industry. That is a significant number of jobs with only 3 or 4 per cent. wind energy production. If production reaches 25 per cent. of need, more jobs will be created. It must be emphasised repeatedly that phasing out nuclear energy should not and must not lead to job losses in constituencies with nuclear power stations. We need 284WH investment now in renewables technology, using the high-level engineering and other skills that are used for nuclear power to achieve that aim.

§ Mr. Bob Blizzard (Waveney)
If we are to achieve the investment needed—not only from project developers but from the supply chain industries that will create the jobs—to make the most of renewables such as offshore wind, industry must have confidence in the sector. That will require not only the renewables obligation and capital grants but a single, comprehensive, joined-up authorisation system. At present, there is no single point of contact. People have to deal with the Crown Estates, the Department of Trade and Industry and the Ministry of Defence. Onshore wind has been knocked back by the planning process, and we must overcome that to achieve full confidence in investing in offshore wind.

§ Mr. Thomas
I have some sympathy with the hon. Gentleman's comments, but local public participation must remain part of the decision-making process. I will address his points in a moment, but I wish to make progress so that I can finish in reasonable time.
Germany has invested heavily in alternative energy sources: for example, biomass is on the agenda. The hon. Member for Brighton, Kemptown (Dr. Turner) is not too happy about biomass, but it has a neutral carbon cycle—we can argue about that another time—and would have a huge beneficial effect in helping rural areas to overcome the results of changes to the common agricultural policy regime. Germany has also invested heavily in hydrogen research. Security and intermittency of supply are problems with some renewables. Hydrogen is a very good carrier of energy and, if we can overcome storage problems, it becomes even more attractive.
There is clear under-ambition in the review. We are aiming for 20 per cent. renewables by 2010, but that could easily be doubled with current technology, a bit of will and a bit more investment. A target of 30 or 40 per cent. for renewables—not only wind but the whole range of renewables—is achievable in this country and should be the target of any Government who want seriously to address climate change issues. Incidentally, such a renewables target would produce the amount of electricity that nuclear now produces—about 80 to 90 tWh annually.
The hon. Member for Waveney (Mr. Blizzard) mentioned consents policy. There is certainly a problem. On the Opposition day last week, the Scottish National party initiated a debate on consents policy for nuclear power in Scotland. It became clear that if the Government made a strategic decision to site a new nuclear power station in Scotland, it would be built, whatever the Scottish Parliament said. The situation in Wales is even worse. The relevant power in section 39 of the Electricity Act 1989 has not been devolved to the National Assembly. As a result, it has no say on any development, including renewables, over 50 MW in Wales. The decision about a large 60 MW wind farm at Cefn Croes in my constituency, which will be the largest wind farm in England and Wales—perhaps the largest in the United Kingdom—was made by the Minister for Industry and Energy alone.
285WH Although I support wind energy and agree with the decision, it has left a sour taste in the mouth. We have an Assembly that decides planning matters, yet decisions are taken directly by the Department of Trade and Industry without involving the Assembly. There is increasing concern in Wales that nuclear energy will be foisted on the people of Wales. Hon. Members may be aware that in 1982–20 years ago last month—Wales declared itself nuclear free; it was the first country to do so. Such a decision would be received very poorly in Wales.

§ Mr. Gareth R. Thomas (Harrow, West)
Will the hon. Gentleman give way?

§ Mr. Simon Thomas
No, I want to conclude.
The Minister must address the issue, because last week the Economic Development Committee of the National Assembly backed out of an ambitious 4 tWh target for renewables in Wales and left the country without a strategy. We have an energy review but no strategy for energy or renewables in Wales. I hope that that Committee and the Welsh Executive will get their act together and that the DTI will consult them. Germany identifies at federal level the sites that may be suitable for the production of wind energy, then lets local bodies get on with it. Wales is one of the most energy-rich parts of the United Kingdom, but we have identified no sites that may produce wind and wave energy and have made no effort to involve the local community in those decisions.
As the Secretary of State for Trade and Industry pointed out, people oppose new wind farm developments; no doubt, they will oppose offshore developments in the same way, as they are not part of the planning process from the start. I advocate a fresh view, as there is huge potential in Wales for developments such as a tidal barge on the River Severn and the proposed offshore wind farm in north Wales. Those developments would meet huge energy needs, but they are not free of environmental cost. Local communities and the whole of Wales must be involved in those decisions.
I have an alternative vision of where "The Energy Review" will take us. In 10 years, we should have doubled our target on renewable energy output, achieved the aims of the Home Energy Conservation Bill, and established an interconnector along the west coast so that we can bring wind and wave energy from energy-rich areas to energy-dependent areas. I hope that Wales will benefit from the economic development of those energy-rich areas. Offshore wind will develop much more quickly, as it has better potential than onshore wind to achieve those targets. I hope that we will see a real strategy for wind energy development in Wales, and the final death of the nuclear power industry in the United Kingdom.

Several hon. Members
rose—

§ Mr. David Amess (in the Chair)
Order. I am advised that speeches have been long, with the exception of the speech made by the hon. Member for Castle Point (Bob Spink). That is a tragedy, as many hon. Members still wish to speak and we must conclude the debate soon. I ask all hon. Members to be as brief as possible.

§ Mr. Bob Blizzard (Waveney)
Thank you, Mr. Amess.
I have made clear my support for the development of offshore wind energy in this country, but while the green lobby and the nuclear lobby slug it out, we must keep our eye on the decades immediately before us and ensure that we squeeze every drop of our oil and gas from the UK continental shelf. The Government's Pilot initiative is to do just that, and I hope that the Minister will confirm that that is still their priority.
When gas was discovered in the North sea 35 years ago, people said that it would all be gone in 20 years. They are still saying that. The resource might last longer, but we cannot be sure. The key is innovation, which is linked to keeping costs down. I am therefore concerned about anything that imposes greater costs on the industry. The regulator Ofgem—the Office of Gas and Electricity Markets—has produced proposals on gas balancing which ILEX Energy Consulting, a reputable company, says will cost the industry £3.5 billion. Will the Minister comment on that?
We need independent regulators in any market, but we must take care to avoid proposals that undermine the Government's Pilot initiative. I urge my hon. Friend the Minister to take note of the recommendation made in the PIU report that Ofgem should conduct a proper cost-benefit analysis of its recommendations. Lord Haskins and the Better Regulation Task Force made that recommendation last year. I urge my hon. Friend to speak to the Minister for Industry and Energy to insist that Ofgem takes note of those two recommendations so that we can squeeze every last drop of oil and gas from the North sea for as many years as possible.

§ Mr. Gareth R. Thomas (Harrow, West)
I shall make a few points briefly. First, I congratulate my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) on initiating today's debate.
"The Energy Review" gets the nuclear issue about right, but we need to continue the debate and support further research into new nuclear generators. Some interesting suggestions have come out of research in South Africa and Canada, for example, and I support such research. Other hon. Members have flagged up the fact that the nuclear industry has received considerable support—far more than the renewables industry. It is right that the review focused on that and recommended that Government now accelerate the development of the renewables industry as the most important priority for energy in the next five years.
There are several system issues which have been touched on only briefly. My hon. Friend the Member for Brighton, Kemptown talked about the need for the energy network to be upgraded. We must recognise that the energy system in this country is predominantly designed for big power plants rather than the small ones that CHP and renewables inevitably offer. I was struck by the fact that a wind energy developer who wanted to build a wind farm on the Isle of Wight faced a £1 million bill for the upgrade of the network—needless to say, that wind farm has not been built. "The Energy Review" recognises some of those issues, and further detailed work in the Government's response—the coming White Paper—will be needed before we know how to solve some of the problems.
287WH Another interesting comment in the review is its description of inertia in the energy system. Further incentives are needed to encourage the delivery of renewable energy across the system. Perhaps as part of a review of the Barnett formula or the funding to regional development agencies, there should be a performance-related element that depends on whether areas, regions or nations meet their obligations on their contributions to renewable energy. I note the comments of the hon. Member for Ceredigion (Mr. Thomas), but, regrettably, the National Assembly for Wales has blocked or held up many sensible wind farm developments, and I suspect his party of being part of the problem rather than the solution.
Turning to the institutional reforms advocated in the review, I welcome the suggestion that the Carbon Trust and the Energy Saving Trust merge to provide a clearer non-governmental response. I welcome the proposal at long last to establish a sustainable energy unit. I have long championed the idea of a sustainable energy agency, but I will settle for a unit if that is all that that can be achieved in the first instance. I hope that the Minister will confirm the Department of Trade and Industry's strong support for such an initiative to accelerate the process.
On planning, there is a frustration about the delays in grants for renewable energy options. In a speech to the parliamentary renewables group last week, the Minister for Industry and Energy said that two-thirds of renewables applications granted under the non-fossil fuel obligation process have not happened because of difficulties with the planning system. The Government should re-examine how we can speed up decision making in that process, although industry should be more innovative in introducing renewable energy applications. I commend National Wind Power for its innovative scheme to reward communities and farmers who have wind-farm applications on their sites.
Focusing briefly on CHP and renewables, I look forward to the much-delayed CHP strategy. The industry is worried about companies that were keen to develop CHP initiatives moving out because of market conditions. I look forward to hearing the Minister clarify how best to respond to that threat. I hope that the Treasury will quickly offer full exemption under the climate change levy to all CHP plant.
Catherine Mitchell, a member of "The Energy Review" team, speaking at the same parliamentary renewables group meeting last week said that economic regulation should be technologically neutral". To be frank, Ofgem has not been as supportive of the renewables industry as it should have been. Until recently, it did not engage with the impact on the renewables sector of new electricity trading arrangements. I hope that we will soon see either a change of personnel at Ofgem, or the necessary legislation to require it to take sensible positive action.
One criticism of "The Energy Review" is the absence of any attempt to cost progress in the renewable energy sector. I strongly endorse the call for more funding for research and development, particularly for renewables. The review failed to deal with micro-renewables, particularly solarvoltaics and the importance of 288WH encouraging groups of individuals, farmers and local authorities to build up renewable capacity in their communities.
I welcome "The Energy Review" and commend the Government for their willingness to engage with the recommendation made by the royal commission on environmental pollution to establish a 50-year programme to reduce carbon dioxide emissions. "The Energy Review" is clearly part of that process and I look forward to reading the White Paper, which will develop the debate further.

§ Mr. David Amess (in the Chair)
Order. The Minister has generously cut his winding-up time from 10 to six minutes, so I advise the two Opposition spokesmen to share the available time.

§ Mr. Andrew Stunell (Hazel Grove)
Thank you, Mr. Amess. I shall gallop through discarding notes and not following all the by-ways trodden by the hon. Member for Brighton, Kemptown (Dr. Turner). I agree with much of what he said—nuclear power is unprofitable, unpopular and unnecessary—but confronting all his arguments would require a longer debate. I hope that the Minister will take with him from this morning's proceedings recognition of the need for a much wider and sustained debate in the main Chamber to cover the key issues.
"The Energy Review" is welcome, if somewhat overdue. We look forward to hearing, today and in future, about how the Government will confront and respond to the issues. It is crucial to find new ways of generating electricity and better ways of conserving energy. The Energy Saving Trust has set targets of a 12.5 per cent. reduction in domestic energy use by 2010, which should be easily achievable, and 25 per cent. by 2020. I fully endorse the targets, the achievement of which would greatly improve people's quality of life in the home, turn economic costs into benefits, and reduce carbon emission and consumption. Those goals can be achieved almost entirely through regulation, without the need for primary legislation or much head scratching. It can be done through building regulations, fully implementing HECA and ensuring that appliances make efficient use of electricity in the home.
A great political paradox has been illustrated again this morning. We have been fighting over one or another source of energy, which is a necessary debate, but we can probably do more to reduce carbon emissions by tackling energy use than by changing the method of generation. We spend much political energy fighting to reduce transport use, and arguing about nuclear and renewables but we do not invest in reducing the energy used in the home and in industry. That is what we should be doing.
I am delighted that the Government have recently—at long last—introduced the renewables obligation, although I have some criticisms of it. I want an escalator beyond 2010 because long-term signals will encourage this country's renewables industry to make strides and to achieve the same success as the renewables industry has scored in Denmark and will soon score in Germany. Finally, I hope that the Minister will respond to this debate by promising a longer one in the near future.

§ Mr. Robert Key (Salisbury)
I am grateful to the hon. Member for Brighton, Kemptown (Dr. Turner) for initiating the debate, although to start off the debate on the right fight would have required a statement in the House and a full debate in Government time when the PIU report was published. I suspect that the Government regret that that did not happen.
I congratulate the hon. Member for Middlesbrough, South and Cleveland, East (Dr. Kumar) on his measured and sensible approach to nuclear energy. I hardly dare intrude on the Labour party's private grief about the technology, which was exhibited in full Technicolor, but his contribution underlined the importance of having a serious and well-informed national debate on these issues. I congratulate the hon. Member for Waveney (Mr. Blizzard) on making an extremely important point about Ofgem, to which I shall return. The Minister for Industry and Energy is somewhere in—or possibly above—the North sea with Shell, extracting that final bit of oil and gas, but it is a pleasure to see the Minister for Employment and the Regions in his place; he is a fine substitute.

§ Mr. Blizzard
I believe the Energy Minister is celebrating the award of an important contract to a British contractor. Does the hon. Gentleman share my disappointment that BP awarded the first important contract on the Clare development, for which we have waited many years, to a Norwegian contractor?

§ Mr. Key
I am an internationalist and I do not wish to intervene in the commercial decisions of Britain's great oil companies.
The Conservative party greatly welcomes the review. We are fortunate to have such liberalised energy markets, in stark contrast to other European nations, especially France and Germany. I hope that this weekend in Barcelona the Government will continue to put enormous pressure on France and Germany to stir their stumps and wake up to the opportunities that await their consumers if only they will liberalise and not cling to the 19th century habits that they love so much. It is all very well EDF buying up London Electricity, infrastructure and energy companies throughout Europe, but not if it denies consumers back home the benefits of the liberalisation that it is so keen to exploit using lots of lovely soft French taxpayers' money.
"The Energy Review" should focus our minds on the really important elements of the debate on UK energy demand. The objective must be to provide the energy we need at the optimum price, to ensure security of supply, to achieve environmental objectives, balance and flexible sources, and to reduce energy waste in production, transmission and consumption. We do not start with a clean slate; we have an historic legacy of coal and town gas, and a distribution system—the national grid—designed to link coalfields with heavy steel industries in major cities, all of which have historic costs and expensive externalities.
If we are to be honest economists, or just ordinary consumers, we must recognise that there are externalities in all energy production. On the cost of the mooted west coast interconnector, the report, instead of coming up with the figure of £400 million to 290WH £600 million, says that it would cost £2.3 billion to provide a proper interconnector for wind farms in the Outer Hebrides. That should make us all sit up and think more clearly. We must spend more time considering CHP and energy from waste. The Government say that there are legal constraints, but they have the legal levers in their hands and can change things. It is also all very well talking about Denmark and Germany, but we could do anything if we charged the consumer Danish prices. It would be easy-peasy to talk about introducing lots of lovely clean electricity generated by wind or whatever we liked if we charged the consumer twice as much.
The other great trap into which we might fall if we are not careful is to regard the debate as a dogfight between renewable energy and nuclear energy. We should recognise from the start that the two are not mutually exclusive, but complementary. We should listen carefully to what the nuclear industry has to say and not confuse the disposal and clean-up of waste from previous generations of nuclear technology, based on the country's defence needs 50 years ago, with what might be achievable with new generations of technology. In particular, we can look two generations ahead to pebble bed technology, which could make an enormous contribution and which we should not write off at this stage.
Renewable energy technology is not an option but a necessity. I agree with the Government's chief scientific adviser, Professor David King, that we should consider replacing old nuclear power stations with new nuclear technology, for the best possible reason. I also agree that the Government must give the nuclear industry a clear signal, one way or another. Given the long lead times involved, if the Government fail to make an early statement on the future of nuclear energy, that will be as good as saying no, and the option will be closed.
We must consider the planning procedures for major national infrastructure projects, which the Government have addressed. Special parliamentary procedures already have precedents—not only in the Transport and Works Act 1992, but in various road schemes—by which decisions have come to Parliament. I recall the Okehampton bypass decision, the Lyndhurst bypass debate and so on. We must have a properly informed debate, because much of the effort we put in offers enormous future benefits.
As the hon. Member for Waveney pointed out, "The Energy Review" should give consideration to current bottlenecks. On gas, I draw the Minister's attention to the problem of entry capacity at St. Fergus, and to the problem of wet gas in the north North sea and dry gas in the south North sea at Bacton. One problem faced by the industry is the auction that has been going on at St. Fergus since 1999. Every six months the regulator changes the methodology because he claims that the system is "gameable"—in other words, because people can guess what the new system will be, they try to outwit it. Game theory is important. The problem is that discussions have been continuing with the industry for almost a year. There may be an opportunity to consider moving back to long-run marginal cost models instead of the six-monthly auction model.
291WH The move to shorter balancing, which Ofgem proposes, is important. The UK has a 24-hour balancing system for gas; Ofgem wants to reduce that to four to six-hour balancing. That would mean extensive new metering for producers, shippers and consumers, and ILEX Energy Consulting has calculated that the consequences of shorter balancing could be a 3.5 per cent. price rise for domestic consumers of gas. What is the benefit in having a regulator if he puts the price up to satisfy his whim? There is also a disincentive to new entrants. The Dutch and the Germans are returning to a long-run marginal cost system, with 24-hour balancing. The hon. Member for Waveney is right to say that Ofgem has not done a cost-benefit analysis.
To be fair to the Minister, I must conclude. We warmly welcome this debate. We must consider all options in an open and sensible way and not rule out anything. We must not allow our prejudices to rule our minds, and in that spirit I look forward to the next six months of debate until the Government produce their White Paper.

§ The Minister for Employment and the Regions (Alan Johnson)
I am an unworthy substitute called from the DTI subs' bench. My hon. Friend the Minister for Industry and Energy is busy being industrious and energetic sanctioning a gas field off Scotland.
"The Energy Review" makes a valuable contribution to the debate on how best to meet our long-term energy requirements. It is important to make it clear that it is not a Government report, but a report by the PIU to Government, and we need to consider its recommendations carefully.
My hon. Friend the Member for Brighton, Kemptown (Dr. Turner) said that he hopes that this is the start of the debate. He has had the historic opportunity to kick it off, as this is our first debate since the report was published. He also asked that we should not simply follow the guidance in the PIU report. We will consult widely and today's debate today will form an important foundation stone of that process. My hon. Friend said that he was a "simple scientist", but I think that that might be contradiction in terms. He was a very eloquent scientist putting forward his arguments today.
As part of the consultation, we will look closely at two relevant parliamentary reports: the Trade and Industry Committee's report on security of energy supply, published on 7 February and "How secure are we?" the report of Sub-Committee B of the House of Lords European Union Committee, published on 12 February. Those reports are timely and valuable in signalling Parliament's views about energy issues and indicating where the White Paper should focus. The Trade and Industry Committee has produced 48 conclusions and recommendations. There is a strong emphasis on network and infrastructure investment, 292WH and recommendations about the future use of economic instruments and regulation to achieve environmental objectives.

§ Dr. Desmond Turner
May I recommend that the DTI also take into consideration the recent Science and Technology Committee report on wind and tidal energy?

§ Alan Johnson
I was just coming to that report, of which we will take full cognisance. In another important contribution, the House of Lords has been conducting an inquiry into the European Commission's Green Paper on security of energy supply. That is another important contribution.
Trends in energy markets have been comparatively benign in recent years, and our energy policies have worked remarkably well with the grain of those markets. We are currently self-sufficient in energy, with our gas and electricity prices among the lowest in the G7 countries. We have diverse sources of supply from coal, gas and nuclear in power generation, and a small but growing contribution from renewables, and we are on target to meet our Kyoto commitments at the end of the decade. However, as the report argues, we cannot and should not be complacent: tough challenges lie ahead. The UK will become increasingly dependent on imported oil and gas.
The Californian crisis has highlighted the importance of getting the incentives for new investment right. The report concludes that the introduction of liberalised and competitive energy markets in the UK has been a success and should provide the cornerstone of future policy in the UK and internationally. It argues, however, that new challenges require new policies and that the policy framework should address all three objectives of sustainable development—economic, environmental and social—as well as security.
The report recommends that promoting energy efficiency and renewables should be the immediate priorities of a low-carbon energy policy. In renewables, we start from a very low base: they provide slightly less than 3 per cent. of our electricity supply. We have therefore set a challenging target of meeting 10 per cent. of electricity supply from renewable sources by 2010. There is a great deal to be done to achieve that target and we are introducing a range of robust measures. The report strikes the right balance: it stresses the potential for renewables, but recognises that nuclear energy, which provides around a quarter of UK electricity, offers a low-carbon electricity source that is larger than other plant options. The report also mentions the role of coal.
My hon. Friend Member for Brighton, Kemptown asked about his Home Energy Conservation Bill—indeed at one point I thought he was moving it. The Government supported that Bill on Second Reading, and we will continue to support it. We are at the start of an important process and I am happy to have heard the views of Opposition Members and my hon. Friends. Although the debate needs to be much fuller, my hon. Friend has made a great start by initiating it this morning.