Our Director Stephen Tindale gave oral evidence on the economics of UK energy policy to the House of Lord’s Economic Affairs Committee on 15 November. He argued for a more diverse energy mix, more consistent policy and more rapid decision making on key issues.
The Chancellor’s Autumn Statement said little about energy. The spring 2017 Budget therefore becomes a crucial event: for advanced nuclear, tidal lagoons, energy efficiency, CCS and several other climate and energy issues. In our work for Climate Answers, we will continue to urge the UK government to make the necessary public investment to move beyond research, at which the UK is very good, to demonstration and deployment, at which the UK is much less good.
Lord Tugendhat: A completely straight-up question: can you please explain the work you are doing and how it fits into the UK energy system?
Stephen Tindale: I work for two days a week running the Alvin Weinberg Foundation, which is the only pro-nuclear charity in the UK. Specifically we are pro-advanced nuclear generation for nuclear—fast reactors. We have tried fast breeder reactors in the UK at Dounreay, and that did not work economically. We now need to look at fast burner reactors, because there is no shortage of plutonium and so on. That is one form of advanced nuclear. The other is molten salt reactors, one of which Alvin Weinberg, the US physicist after whom we are named, was building in the 1960s and early 1970s until President Nixon shut it down. It is an advanced technology—it is not just a paper reactor—but it has not been implemented or built more recently, so there is much work to be done there. The rest of the week I am a consultant, and I work particularly for Tidal Lagoon Power. You have just had a discussion about possible new forms of renewable energy. I would say that tidal lagoons are a very good example of that, and I am very happy to talk about that.
Lord Sharkey: Can I ask you two more questions about technology? First, what impact do you expect your own technologies to make over the next 10 years? Secondly, which other technologies will have the most transformative or disruptive effect on the energy sector and which areas should be priorities for research, apart from your own technologies of course?
Stephen Tindale: Over the next 10 years, advanced nuclear will not be a major player in energy systems. Commercialisation is possible over the next 10 years, but there will not be many advanced nuclear reactors operating in 10 years’ time. That does not mean that we should go slow on it, because over the following 10 or 20 years they could become major players, but a decade is too short a period. One of the companies I am working with, Terrestrial Energy, a Canadian-based company, has said that it aims to commercialise by the mid-2020s, so it is possible, at least in its view. That is why further generation 3 existing reactor designs are necessary as a kind of bridge technology to get us to advanced nuclear, which will be a major player not only in electricity but in heat. Industrial heating cannot be delivered by electricity, as I understand it, so some other form of heating is necessary. Bioenergy is possible, but that has lots of downsides relating to land use and biodiversity, so advanced nuclear for industrial heating seems a sensible way forward.
The other company I mentioned, Tidal Lagoon Power, could be a major player in the next 10 years. I very much hope that following the Hendry review the Government will authorise and support the pathfinder proposal for Swansea financially through a CFD. That is necessary, learning by doing and so on, but the company says that it will then build a 3 gigawatt lagoon off Cardiff, and the Welsh Government are very supportive; they have given it a commercial loan. It is therefore possible that by 2026 more than 3 gigawatts will be generated by the Severn.
Lord Layard: I wanted to ask you about Britain’s record in clean energy research compared with other countries’, and in particular about the implications of the Government’s announcement in the spending review that they would double public expenditure on clean energy research by 2020. How would that money be best spent? What kind of co-ordination is needed to produce value for money from that kind of expenditure?
Stephen Tindale: In the nuclear field, the UK remains quite good on research but not good on research and development, or at least not on the development bit, because we have built no nuclear power stations since the early 1990s. What is needed now is to co-operate with the US, depending on what happens there; certainly the Obama Administration was allocating money and giving it out to research and development for advanced nuclear, and the Trudeau Government in Canada are doing likewise. It would be good to talk to Oak Ridge National Laboratory, for 25 example, to learn how to make progress on delivering advanced nuclear in a way that not only helps with energy security and climate protection but is a major economic opportunity.
Baroness Wheatcroft: One of the reasons why we have not developed any nuclear power stations over the last decades is presumably because there was a perception that the public were not in favour. We are told in your biography that you spent two decades campaigning against nuclear. Can you tell us where the change of heart came from?
Stephen Tindale: That is a perfectly fair question. Indeed, I spent two decades campaigning against nuclear and drafted the Labour Party’s environment policy in 1994, which said, “No new nuclear”. It took Tony Blair in No. 10 and Gordon Brown some time to shift away from that. I then went to work for Greenpeace. I was always worried primarily about the weapons proliferation risk of nuclear rather than radioactive discharges or waste. At least the nuclear industry is required to look after its waste, whereas the fossil fuel industry just puts it out into the atmosphere. I remained concerned about weapons proliferation. My change of heart occurred in August 2006, when the permafrost in Siberia had a massive melt and released vast quantities of methane, at which point I thought, “Oh dear”—to put it politely—“What can we do about this?”. I then concluded over several months, during which I ended up leaving Greenpeace, that we needed to stop arguing only for “the best”, which in terms of energy supply would be renewables, but we need the good as well. Nuclear, because it is low carbon, is in this sense good.
Baroness Wheatcroft: Climate change trumps nuclear arms.
Stephen Tindale: Correct
Lord Forsyth of Drumlean: An easy question: should the Government treat investment in energy technology as part of their so-called industrial strategy? If you think they should, do you really think that government is well placed to start picking winners and deciding where that money should best be deployed? I just wonder whether the experience to date with the very generous subsidies for renewables may have deterred some of the work that should have been done on new technologies.
Stephen Tindale: I agree that energy has to be a central part of the industrial strategy. That is why I welcomed the creation of BEIS. Many of my colleagues in the climate movement were very unhappy that DECC was abolished, but in my view the name of the department is less important than its clout in Whitehall. BEIS has the potential to be a significant player in Whitehall, which I am afraid DECC never was. Industrial strategy should cover not only the job creation potential of energy, or how to promote energy security, but, crucially, innovation. On innovation, as well as the issues I have talked about, carbon capture and storage should be restarted. George Osborne’s cancellation of that competition not only was bad in content but sent appalling signals to the potential investors—actual investors in that case—that there was no regulatory stability in the UK. This is one of our major challenges and obstacles: that energy policy changes too often, even when there is no change of Government. To reinsert carbon capture and storage, maybe not for coal but certainly for gas, would be very good not only to protect the climate and keep up with other countries that are developing CCS but to reassure potential investors. On picking winners, if the market was working well, it would not be necessary for the Government to pick winners. By “working well” I mean if all relevant externalities had been internalised—so not only a carbon price but toxic pollutants, such as sulphur dioxide and nitrogen dioxide. We are nowhere near that. The carbon price floor in the UK can be argued many ways, but it is about a third of the external costs of greenhouse gas emissions. The EU ETS is about a tenth of the cost, so it is a complete waste of time. So we are doing better than continental Europe but not nearly well enough. In my view, the major achievement of the coalition was the emissions performance standard—the regulation to prevent new coalfired power stations without carbon capture and storage. It is not low enough in that it allows unabated gas to be built or to continue, and it does not use a regulatory system to shut coal down quickly, but the market appears to be doing that for other reasons. The role of the Government, given the lack of sufficient carbon prices and other green taxes, is to set the framework, which is what Greg Clark said in his speech to Energy UK earlier this week.
The Chairman:. Can I bring this session to a close by asking you what steps you think the Government need to take to encourage private investment in your particular businesses and in the sector generally?
Stephen Tindale: On nuclear, the Government have started on the right course with their promise of £250 million over five years on nuclear R&D innovation funding. That is part of the mission innovation commitment which the UK has made in the international climate agreement context. It has made a start and it is now running two competitions, but the experience of potential investments in carbon capture and storage competition, as I said, was not great. The Government need to set out a timetable and make some awards as soon as possible—give some money. That will encourage investor confidence. There is no lack of potential investors, but there is too much regulatory uncertainty and instability at the moment. The Government definitely need to counter that. The other thing the Government could do on nuclear is encourage the Office for Nuclear Regulation to assess some of these generation 4 designs. Clearly, the Government cannot tell it to say yes, but they can indicate that they are priorities for UK energy policy: that some of these generation 4 reactor designs should be assessed by the Office for Nuclear Regulation.
The Chairman: It seemed that there was a lack of enthusiasm to invest in what turned out to be Hinkley C. The Government have ended up paying a very high price for it.
Stephen Tindale: Indeed. My view of the European pressurised reactor—the design that might be built at Hinkley, and now that the decision has been made I hope it is built—is that it does not have a great track record. It is quite an old-fashioned design and very complicated. More and more safety features were added to it, rather than a more holistic approach of starting from scratch and building safety intrinsically into the design.
The Chairman: So we are paying a high price for yesterday’s model?
Stephen Tindale: Yes.
Lord Burns: What prices are you expecting for the Swansea lagoon?
Stephen Tindale: Are you asking about the strike price?
Lord Burns: Yes.
Stephen Tindale: It is roughly £120. Okay, that is higher than Hinkley, but it is a global first of its kind. I know that the Treasury does not like talk of global firsts of a kind, but La Rance, the barrage in France that uses broadly the same turbines, was built 50 years ago. Turbine technology has advanced somewhat. We need to test it. That is why the argument that we should go first for a three gigawatt one, to invest in an undemonstrated technological approach, is asking investors to be a bit too brave. If the Government wanted to do three gigawatts, they would probably have to provide all the capital themselves. That is not, apparently, on offer.