The EU announcement today that Britain has to meet a mandatory target to produce at least 15% of its energy from renewable sources by 2020 changes the entire energy equation for the UK. It renders the Energy Bill which received Second Reading in the Commons last night largely obsolete.
The crucial point is that the target relates to Britain’s total energy needs, not just electricity generation, but also transport fuel and heating. Since the contribution that renewables make to transport fuel is next to nothing and to heating is relatively small, the implication is that the UK will be required, if the target is to be met and it’s a mandatory one, to generate some 30-40% of its electricity from renewable sources by 2020. Since the figure today is just 4%, that’s an 8-fold increase in only 12 years!
What that means is that the Government will have to deliver on their ambitious promise to provide 33GW from offshore wind-power by 2020, as well as kick-starting a range of new renewable and decentralised technologies in which Britain can take a lead, including wave and tidal power. It means building new power stations which with CHP can, as in Scandinavia, achieve 90%+ efficiency levels and can burn cleaner fuels like biomass as well as fossil fuels. It means switching from Britain’s current renewable obligation certificate system to feed-in tariffs which give fixed-price rather than variable support and have been pioneered so successfully in Germany. And it means a massive improvement in our currently lamentable performance on energy efficiency – the Government’s own Environmental Technology Support Unit has stated that a 20-30% improvement by both industry and individual households is entirely practicable and affordable.
There is a further implication. If we do all these things – and we’ve got to in order to meet the mandatory EU target – then we will not need any nuclear power stations. That has enormous implications for Britain’s future energy policy. The Government’s case for nuclear was always weak (largely based on the nuclear fixation of DTI/DBERR officials), and now even that weak case will not be necessary.
The Government’s claim was that nuclear was needed to keep the lights on and to help meet Britain’s climate change commitments, and they also said that there would be no public subsidies and that the nuclear waste problem was perfectly manageable. The evidence is that all four statements are far from true.
First, nuclear can’t keep the lights on because no nuclear plant can now be built in time to meet the 2017-2020 energy gap when 20GW of new capacity will be needed to replace obsolete nuclear and coal plants. Anyway nuclear stations regularly take twice as long to build and cost twice as much as was planned. The Finnish plant currently being built is already 2 years late after just 2 years building, and the cost overrun is already over £1bn.
Secondly, nuclear cannot slash our carbon emissions while delivering energy security because nuclear provides such a tiny part of our energy requirements – just 3 ½ % at present, and falling. Half of our energy demand is for heat, which is mainly gas-based, and the next biggest demand is for transport fuels, which are mainly oil-based. Electricity generation represents the smallest component of energy demand, and new nuclear would be only a small portion of that.
Third, it clearly is not true that there will be no hidden subsidies. Paragraph 3.73 of the Energy White Paper indicates that the Government intends to put a cap on the cost of decommissioning for nuclear operators, and the rest – which could still be huge – will be paid by the taxpayer. Paragraph 3.52 is the give-away: “If the protections we are putting in place through the Energy Bill prove insufficient, in extreme circumstances the Government may be called upon to meet the costs of ensuring the protection of the public and the environment”. And these circumstances will not be extreme because the costs of decommissioning after 150 years – the time between the start of a new nuclear plant and when the waste is finally put into a geological repository – cannot be estimated and are potentially exponential. The decommissioning costs of existing plant are already £75bn with a further £21bn required to dispose of the waste – that’s equal to 7% of Britain’s entire annual GNP.
Nor, fourthly, is the nuclear waste problem manageable. There are already 10,000 tonnes of long-life radioactive toxic waste in this country, and Government estimates it will be 500,000 tonnes by the end of this century, even with no new nuclear build. So where is all the old waste and new additional waste going to go? There has been virtually no progress at all in answering that problem since the last Conservative Government abandoned the search for a nuclear waste dump in 1997.
Against this depressing background, perhaps today’s EU announcement will now point Britain in a profoundly different and much more hopeful direction. It is after all a mandatory requirement.
Mr. Michael Meacher (Oldham, West and Royton) (Lab): I want to put forward a rather different case from that made by Government and Opposition Front Benchers. In the last analysis, the Government’s case for nuclear was that it was needed to keep the lights on and to help Britain to meet its climate change commitments. The Government also said that that could be achieved without any public subsidies—that was repeated today—and that the waste problem would be perfectly manageable. Sadly, it is clear from the evidence that all four of those statements are very far from true.
First, nuclear power cannot keep the lights on because reactors take too long to build. The Government’s consultation conceded that even under their accelerated procedures, it would take at least eight years for construction to start. The consultation then assumed a five-year construction period. Optimistically, the earliest time at which a new nuclear power station could operate would be 2020, but that would be too late because, by then, there will be an energy gap in the order of 20 GW, which is the new electricity capacity that will be needed to replace obsolete nuclear and coal plants.
No nuclear station has been built on time or on budget in recent times. The average reactor takes three times as long to build, and costs twice as much, as was planned. My hon. Friend the Member for Morley and Rothwell (Colin Challen) referred to the plant in Finland, which is the only plant to have been built in Europe in a decade. It is already two years late—there has only been two years’ building—and it is something like £1 billion over budget, even with substantial subsidies from the Finnish and French Governments. It is not true that nuclear will keep the lights on when it is needed to address the energy gap between 2017 and 2020.
Secondly, it is false to claim that the only way in which we can slash our carbon emissions while delivering energy security is by building nuclear power stations. Nuclear cannot do that because half our energy demand is for heat, which is mainly gas-based, and the next biggest demand is for transport, which is mainly oil-based. Electricity generation, which is where
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nuclear comes in, represents the smallest component of energy demand, and new nuclear would be a small portion of that. At present, nuclear supplies only 3.5 per cent. of our total energy and that figure is falling.
Thirdly, the Government say that there will be no hidden subsidies. Well, I wish that were true, but it is clearly not the case. Paragraph 3.73 of the White Paper indicates that the Government intend to put a cap on the cost of decommissioning for nuclear operators and then to provide a mechanism for the taxpayer to meet the cost. Paragraph 3.52 is the real give-away when it says:
“If the protections we are putting in place through the Energy Bill prove insufficient, in extreme circumstances the Government may be called upon to meet the costs of ensuring the protection of the public and the environment.”
Those circumstances will not be extreme because the costs of decommissioning after 150 years—the time between the start of a new nuclear plant and point at which the waste is finally put in a geological repository—cannot be estimated. Those costs could increase exponentially. The bill for decommissioning and dismantling existing plants is more than £70 billion and, according to the Nuclear Decommissioning Authority, a further £20 billion will be required for the disposal of waste. I remind hon. Members that those figures together are the equivalent of 7 per cent. of our entire gross domestic product.
Even those sums leave out two important liabilities for the public purse, one of which is what happens if a nuclear plant goes bust. That is not a figment of the imagination because let us not forget that when the nuclear holding company British Energy went bankrupt a few years ago, the taxpayer had to pay £5 billion to bail it out. The other liability arises because the Government and the taxpayer will always remain the last-resort insurer in the case of a large nuclear incident. Again, that is not a figment of the imagination, because paragraph 2.66 of the White Paper admits that
“we cannot dismiss the risk”.
In the light of all that, it is frankly disingenuous to suggest that there are no hidden subsidies.
Iraq has now become synonymous with catastrophe – a cauldron of destruction and carnage for the Iraqi people which is never-ending, the gravest foreign policy miscalculation of modern times, a defeat for America from which Iran has been the biggest gainer. But there is another view, and we would be foolish to ignore it.
The Iraq war, as even Alan Greenspan has now acknowledged, was “largely about oil”. It happened not because Saddam Hussein had WMD (both UN and US inspectors were convinced he hadn’t), not because Iraqis were involved in 9/11 (there was never any such evidence), and not because he was a brutal tyrant (that was actually seen as an asset in controlling a volatile region). His fatal error was rather that he refused to allow Western oil companies to exploit Iraqi oil reserves.
Iraq has known oil reserves of at least 112bn barrels, the third largest source after Saudi and Iran, and 5 times greater than US reserves. Iraq is the only country in the world that offers the prospect of a huge and rapid increase in oil production to meet surging global demand. The pre-war average production was 2.5 million barrels per day, but in the 1970s it had reached 6 million per day. But that under-states the potential. It is by far the least explored of all the world’s oil-rich countries, with a mere 2,000 wells drilled (compared to a million just in Texas), and US official estimates put the total of undiscovered oil at some 200-300 billion barrels. That could now be worth $30 trillions, a sum 12 times larger than the entire GNP of the UK.
That prize, at a time when peak oil rapidly approaches, is nothing short of stupendous. The US military in Iraq may well be in physical control of a quarter of global oil reserves, with its troops located in the immediate vicinity of a further two-fifths of the world’s oil supply in Saudi Arabia and Iran (where US interests may be focused much more on Iranian oil than on any Iranian nuclear threat).
The original Pentagon plan was for full-scale oil privatisation, as announced by the US proconsul, Paul Bremer. When combined with the disbanding of the Iraqi army and the sacking of thousands of Baathist administrators, it precipitated an armed rebellion. When the plan was also opposed by the former Chief Executive of Shell’s American operations who was appointed by Washington to run the Iraqi oil industry, it was finally dropped. Attention shifted to Plan B. A draft Iraqi oil law was drawn up by the US with some UK involvement proposing that nearly all the oil would be ceded to Western companies. The Iraqi National Oil Company would keep less than a fifth of Iraq’s current 80 oilfields, while the rest, including crucially all the oilfields not yet discovered, would go to the Western oil majors.
Unsurprisingly, this too met unrelenting opposition. The Bush Administration pretended that this was merely because of antagonism between Shias, Sunnis and Kurds over the oil share-out. But the real reason the law continues to be stalled is that it violates the underlying Iraqi nationalism shared between all three groups.
So how will the US keep control of its prize? The aim right from the start was to establish a permanent military platform in the Middle East, and at least five self-sufficient super-bases are already in the course of being completed across Iraq. As the neo-cons have since admitted, “We didn’t have an exit strategy because we never intended to leave”. Significantly, the US bases in Saudi established after the first Gulf War in 1991 (and which so angered Osama bin Laden in the lead-up to 9/11) were only run down once Iraq had been secured in April 2003 and an alternative military control centre became available. Since these five super-bases can each house some 10-20,000 troops, it certainly suggests that US forces in Iraq will perhaps halve below their current ‘surge’ levels of 160,000, but not very much more, for a long time ahead.
Will this continuing US military hegemony be sufficient to get the Western oil companies the control they crave for? One indication of current tactics is that as the negotiations over the oil law broke down in September, the Kurdistan Regional Government simply signed an oil production agreement with the Hunt Oil Company located in Dallas and run by one of President Bush’s closest allies. The message was clear: the Iraqi Government may block the law, but in that case the oil companies will go ahead anyway. There is some evidence that this is already happening. Earlier this year Reuters revealed that B.P. has been operating in southern Iraq around the part-developed Rumaila oilfields which have a combined potential output capacity of half a million barrels a day.
Indeed the process is already moving to the next phase which is the sale of oil leases. The aim is for this to be done privately using American-appointed Iraqi agents. The argument is that Western oil companies already have valid leases for most Iraqi oilfields from decades in the past. They may have expired, but since they were illegally cancelled – it is contended – the new lawful Iraqi Government has no alternative but to accept an extension, even though they were unduly generous. The argument may go even further – that billions of barrels of oil have been illegally extracted from these fields over the past few decades by the Iraqi Government, and since these oil companies held valid production-sharing contracts, they are entitled to billions of dollars in compensation. If the Iraqi Government were to claim it lacks funding to pay, the oil companies would then withhold the Government’s share of oil export revenues until reimbursement was made in full, which could take decades.
Against this scenario the condemnations hurled at the US occupation can be seen in a rather different light. The indifference to nation-building has virtually ensured that Iraq will remain a US protectorate for some considerable time to come – exactly as required for the extraction of its oil wealth. Dissolving the army and de-Baathification, so far from being a blunder, has pre-empted the threat that they would have created once it became apparent that the Americans would never leave. If the civil war gradually leads to Shias, Sunnis and Kurds retreating into separate enclaves, then a Balkanised Iraq and a weak federal government presided over by a Pentagon-size US embassy in Baghdad and five US military super-bases provide the best conditions for foreign exploitation of the country’s oil.
In the eyes of Bush and Cheney, even if no-one else, this invasion has achieved almost all it set out to do.
Memories of the oil tanker drivers’ strike in September 2000 remain very poignant for having brought the country so close to breakdown. But it had another disastrous effect too. It led to the ignominious despatch of the fuel duty escalator, the Government’s only effective instrument for discouraging use of the car where alternatives were available. Since then cars have become the fastest rising cause of UK greenhouse gas emissions – now 38 million tons a year – and look set to go much higher as road traffic continues to grow by 2% a year.
There is no policy in place to contain, let alone reverse, this trend. It is true that train and bus use has increased, but this is unlikely to have a decisive impact on car use when train and bus fares continue to rise strongly while the average annual costs of motoring are actually falling in real terms. It is also true that a car tax differential has been introduced between small-engine cars and gas guzzlers, though at the last Budget the charge for SUVs was increased by a footling £1.73 a week which as a disincentive for owning a £25,000 vehicle is risible.
So is the Government’s goal to cut emissions by 60% by 2050, about to be made a statutory target in the Climate Change Bill published on 12 November, doomed when the fastest rising source of those emissions is still being allowed to rise uncontrollably? Not necessarily. The obvious way out of the car impasse is to incentivise a switch away from the petrol-driven internal combustion engine to an electric or hydrogen fuel cell car.
It has been well understood since the early 1990s that widespread adoption of plug-in electric drive technology could be practical since most cars on the road could be replaced by plug-in electric cars having equivalent performance and amenities to today’s fuel-powered cars, without having to build additional generation and transmission infrastructure. The only barrier to implementation at that time was the lack of safe and affordable high-power batteries with a vehicle lifetime service rating. However, as a result of materials innovations in the laboratory, high-power long-life batteries that recharge in 10 minutes are now being manufactured in the US which can power both electric plug-in vehicles and plug-in hybrids.
Several models are now coming off the production line. A Canadian company in Ontario has produced a no-holds-barred all-electric, five-passenger sports utility truck with a 130 mile range that cruises at motorway speeds with the air conditioner running. Phoenix Motors has announced it is about to introduce a family version SUV with an extended range and a 0-60 performance in less than 10 seconds. Moreover the electricity costs will be less than a third, maybe a fifth, of a conventional petrol-driven equivalent. More striking still, the maintenance costs of battery electric vehicles are only a quarter of even the most durable internal combustion configurations.
The reason is that electric engines are much simpler. They need no routine oil and oil filter changes. They require no muffler, no oil pump, no water pump, no radiator, no transmission, no spark plugs, and no catalytic converter. By comparison the petrol-driven car is a noisy, heat-blasting, pollution-spewing machine with far too many moving parts. And electric cars can compete not only in comfort and convenience, but also in speed (sadly, a necessity to achieve a mass market). The electric Tesla Roadster has a giant lithium-ion battery pack which gives it the power to hit 60 in just 4 seconds, to run 250 miles without a recharge, and to charge rapidly at its home charging base. The company even claims energy costs as low as a few pennies per mile.
So why haven’t electric cars taken the market by storm? There are two basic reasons – cost and lack of Government support, and (more insidiously) resistance by the oil industry. In 1996 the California Air Quality board required car manufacturers to offer electric cars for sale as part of an effort to reduce air pollution. The big carmakers began to produce electric cars in very small numbers which proved wildly popular because they were fast, clean, quiet and sporty. The carmakers then sued the state of California to have this requirement repealed, and the Federal Government joined this lawsuit on their side – inexplicable until one recalls how close are the Bush ties to the oil industry and that his former chief of staff, Andrew Card, was previously a General Motors executive. The US Government rapidly won and all carmakers stopped producing electric cars. Not only that, they then demanded that those who had bought the cars under lease should return them, and even took legal action to recover some. They then shredded them for scrap.
Yet the reality remains that electric cars are much more energy efficient because the powering system is much lighter, and also much safer than petrol-driven cars where car accidents regularly cause a large number of deaths each year from burning fuel or terrible burn injuries. Petrol-driven cars need imported crude oil or, as the oil gradually runs out over the next 40 years or becomes prohibitively expensive, oil extracted from coal or possibly shale, but this again is very expensive and consumes huge amounts of energy. By contrast, electric cars may be charged from any power source, including renewable energy like hydroelectric, solar or wind.
So why doesn’t it happen? The era of the electric car will not prevail till Government, in defiance of the oil industry, forces carmakers to produce them. Government should start by requiring that, say, half the cars and light trucks bought by national and local government and State agencies are electric powered. They could also require that an equal number be produced for sale to the public at the same price. Once this production line begins, it should unleash a huge demand for electric cars and as the mass market takes off the high current price would rapidly tumble. This could offer a breathtaking advance not only in tackling climate change – an end to all CO2 emissions from cars – but a huge gain too in safer and more efficient consumer transport.
John Hutton’s statement on nuclear power today was the woolliest, least explicit, and feeblest intoning of generalisations that I have heard in a Ministerial statement for a long time – presumably because the Government knows just how precarious and fragile their case is.
The statement failed to give any specific answers at all on all the key issues:
1 Cost. I asked: Bearing in mind that taxpayers will pay more for nuclear electricity in order to cover decommissioning costs and will still have to pay for any shortfall which could run into billions of pounds, and secondly that taxpayers will pay the massive construction costs for storing hundreds of thousands of tonnes of highly radioactive waste, and thirdly that taxpayers will be charged if necessary to guarantee a minimum price for carbon, and bearing in mind above all that the last round of nuclear build forced taxpayers to pay out £5bn to bail the nuclear industry out of bankruptcy as well as over £70bn to deal with waste, isn’t this whole nuclear project the mother of all white elephants?
None of these facts were denied. I was merely told it would be different next time.
2 Nuclear waste. As a result of existing nuclear power stations the Government-sponsored Nuclear Decommissioning Authority (NDA) thinks there will be 500,000 tonnes of radioactive waste accumulated by the end of this century. How will it be disposed of safely?
John Hutton didn’t know: leave it to the experts, even though the experts have been exploring this matter for the last 50 years and still haven’t got an answer. Storing it in repositories deep under Sellafield is the conventional answer, but that failed the Nuclear Installations Inspectorate’s safety test back in 1997, and no better solutions have been offered since.
3 Too little, too late. At present nuclear provides 19% of UK electricity but by 2020 as a result of closure of ageing nuclear power stations, that will be down to 7%. So there will be a gap of 12% or so by 2020. But not a single new nuclear power station will have been built by 2020 – even Hutton admitted that the industry’s target of 2017 was ‘optimistic’. Significantly the only nuclear plant being built in Europe at present, at Olkiluoto in Finland, is already 3 years behind schedule.
4 Climate change. Even on the best scenario, nuclear will only deliver a 4% reduction in carbon emissions by 2025 because nuclear is only relevant to a small part of Britain’s primary energy needs, i.e. for electricity generation, not for travel or space heating. Renewables have much wider application.
5 Security and safety. Hutton rather lamely said: “We are confident we have a robust regulatory framework”. In that case, how was it that two years ago there was a very serious leak of radioactive liquid at Sellafield that was large enough to fill an Olympic-sized swimming pool, yet went undetected for 8 months?
6 Better alternatives. Britain is currently at the bottom of the EU league for generating electricity from renewables, at just 4%. Germany, France and Italy are at 10-25%, and Scandinavia is at 35-50%. Given our unique offshore island location and access to windpower capacity unparalleled in Europe, the UK could readily reach 20% by 2020 if the Government gave renewables the same backing and drive as Governments elsewhere have done in Germany, Denmark and Spain. Even the research arm of IAEA Technology admits that renewables could provide 25% of UK electricity by 2030. And combined with a 30% improvement in energy efficiency which the Government’s own advisory body, ETSU, believes is both practicable and affordable, that would provide a solution to Britain’s energy requirements which is cleaner, more competitive and more sustainable than nuclear will ever do.
Jack Straw’s amendment to today’s Criminal Justice and Immigration Bill aimed to prevent industrial action by prison officers opens up a hornet’s nest.
In May last year the Prison Officers Association (POA) gave 12 months’ notice, expiring on 8 May this year, that it intended to withdraw from the voluntary agreement made in 2001, replaced in 2005 by a joint industrial relations procedural agreement (JIRPA) which provides for resolving disputes between the POA and the Prison Service, including binding arbitration. Significantly, an equivalent agreement remains in place in Scotland.
It is true that the Prisons Minister stated in Hansard on 4 September 2006, long before the present dispute arose: “If the POA gives notice to terminate the agreement with no alternative arrangements being in place, the Secretary of State would ask Parliament to reintroduce statutory constraints such as existed prior to disapplication of section 127 (of the Criminal Justice and Public Order Act 1994).
The Government’s case is that the public’s safety has to be their primary consideration, and that it cannot be acceptable for prisoners to be locked in their cells for an indeterminate period, with great uncertainty about when they will next get a meal, exercise or medication, and with serious risks to their welfare.
What the Government is now seeking is a reserve statutory restriction on industrial action by prison officers. However, Jack Straw made it very clear that he was still hoping that in the 4 months till next May the Prison Service and POA can agree a new trade union dispute resolution and recognition agreement that would be binding on both parties, perhaps along the lines recommended by Ed Sweeney, a senior member of the TUC General Council and now chair of ACAS. That would obviously be the best solution.
The real problem however is the very poor state of industrial relations at national level which has poisoned trust. The Government complains that in a wildcat strike at the young offenders institution Lancaster Farms on 29 August last year the voluntary agreement banning industrial action, which was still then in force, was broken. The POA complains that they would accept a no-strike agreement if the Government agreed to binding arbitration, not arbitration that can be changed as over questions of pay.
The Government’s retort is that the JIRPA does not deal directly with pay which continues to be dealt with under the pay review arrangements, and that under those arrangements Government is always minded to accept the recommendations of pay review bodies, except where there are overriding economic considerations in the national interest.
This is where the whole relationship sours. It was the public sector pay policy of keeping awards below 2% that sparked the walkout last August, on the grounds that the Government reneged on binding arbitration. What is, basically, so damaging to the Government’s case is that imposing a less-than-2% pay policy for public sector workers in order to hold back inflation simply cannot be justified on the facts. The real causes of inflation are sharply rising oil and gas prices, fast-rising food prices, higher mortgage costs, higher chances for consumer credit debt, energy companies’ unregulated determination to maximise their profits from rising energy bills. Public sector pay isn’t in it.
There are two ways out of this atmosphere of distrust and mutual suspicion. One is for the Prison Service (ie Government) and the POA to use the next 4 months in genuine and positive negotiations to produce a new and improved JIRPA with a voluntary agreement by the POA not to undertake industrial action as a quid pro quo for a genuinely binding arbitration. Secondly, the Government should drop its untenable discriminatory public sector pay policy and concentrate on tackling the real causes of inflation.