The Government’s strategy is underpinned by the principle that “independently regulated, competitive energy markets are the most cost-effective and efficient way of delivering [its] objectives”. The key elements of the White Paper strategy are:
- establish an international framework to tackle climate change;
- provide legally binding carbon targets for the whole
- make further progress in achieving fully competitive and transparent international markets;
- encourage more energy saving through better information, incentives and regulation;
- provide more support for low carbon technologies; and
- ensure the right conditions for investment.
Clearly the most controversial and problematic area in the White Paper is that which deals with nuclear power. The White Paper sets out only the Government’s preliminary view on nuclear energy, and a consultation document has been published alongside the White Paper. The consultation is, currently, expected to be closed on 10 October, 2007, after which the Government expects to publish a further White Paper. This is expected to reinforce the preliminary view that the private sector should be given the option of investing in new nuclear power stations.
Although any nuclear new build projects may appear to be several years away, the scale of the projects — which would include decommissioning and waste disposal as well as building — mean that the budgets involved would be significant. However, before any of this can happen, there are significant obstacles to overcome. Uncertainty over new nuclear projects arises, primarily, from a challenge brought by Greenpeace, which in February successfully argued that the Government’s decision to proceed with the building of new nuclear power stations was unlawful.
The starting point was the energy White Paper, Our Energy Future — Creating a Low Carbon Economy, published on 24 February, 2003. This stated that: “While nuclear power is currently an important source of carbon-free electricity, the current economics of nuclear power make it an unattractive option for new generating capacity and there are also important issues for nuclear waste to be resolved. This White Paper does not contain proposals for building new nuclear power stations. However, we do not rule out the possibility that at some point in the future new nuclear build might be necessary if we are to meet our carbon targets. Before any decision to proceed with the building of new nuclear power stations, there would need to be the fullest public consultation and the publication of a White Paper setting out the Government’s proposals.”
Mr Justice Sullivan held that the Government’s consultation exercise “was very seriously flawed” and that “something has gone clearly and radically wrong”. The consultation document received the most judicial criticism, with the learned judge stating: “The 2006 consultation document contained no information of any substance on the two issues which had been identified in the 2003 White Paper as being of critical importance: the economics of new nuclear build and the disposal of nuclear waste. When dealing with the issue of waste, the information given in the 2006 consultation document was not merely wholly inadequate, it was also seriously misleading as to the Committee on Radioactive Waste Management’s position on new nuclear waste.”
In short, Sullivan held that due to the lack of information (on the economics and the nuclear waste issues), “There could be no proper consultation, let alone ‘the fullest public consultation’” as promised in the 2003 White Paper, if the substance of these two issues was not consulted upon before a decision was made. There was therefore procedural unfairness, and a breach of the claimant’s legitimate expectation that there would be “the fullest public consultation” before a decision was taken to support new nuclear build. It is these ‘errors’ that the Government now seeks to remedy in the current consultations.
The current consultation exercise is ostensibly more robust since it deals with a number of issues. Indeed, there are three consultations:
- the role of nuclear power in a low carbon
- justification and strategic siting assessment; and
- managing radioactive waste safely.
In addition, on 25 June, 2007, The Department for Environment, Food and Rural Affairs launched a related consultation, Managing radioactive waste safely: a framework for implementing geological disposal. This deals with proposals for deep geological disposal of higher level nuclear wastes and covers the technical aspects of disposal as well as the process for selecting a site.
The preliminary view
Most of the existing nuclear power stations are due to close in the next 15 years or so and the Government’s modelling indicates that it might be possible under certain assumptions to reduce the UK’s carbon emissions by 60% by 2050 without new nuclear stations. However, the White Paper is clear that this would leave open the danger that the
The Government’s preliminary view is that the private sector should be given the option to fund, develop and build the new nuclear stations in the
Paving the way
As discussed above, the Government is seeking to create the right conditions so that the private sector can structure its investments. It is examining carbon pricing; long-term energy markets trends; pre-licensing and the planning system. It also established the Nuclear Decommissioning Authority (NDA) which has been operational since April 2005 and is charged with decommissioning the
Interface with planning
In the 2006 Department of Trade and Industry paper, The Energy Challenge, the planning/authorisation process was criticised on three main grounds:
- too much uncertainty, too slow and too costly;
- overlapping consenting regimes; and
- the lack of a policy framework.
The planning White Paper, Planning for a Sustainable Future, published on 21 May, 2007, seeks to address these concerns with proposals for national policy statements, streamlining the consenting process for nationally significant projects by rationalising the different consenting regimes and by improving the overall efficiency and effectiveness of the planning process.
This White Paper reflects key elements of the Scottish planning reforms enacted in 2006, particularly the future role of national policy statements. This is a positive approach that will support
Certainty — or the lack of it — may remain the key planning risk for nuclear development. Although the new planning regime should provide policy certainty through the national policy statements, site specificity will always come down to assessment in accordance with the principles of development control including environmental assessment. This detailed assessment would not readily be undertaken at a national level.
Moreover, the ethos underpinning the new planning regime is a commitment to more effective public participation. So any assessment by the proposed Independent Infrastructure Commission would have to take into account the views of the local community and other interested parties. This raises the age-old tension between speed of process and time taken to engage the local community. Perhaps the industry will take the opportunity presented by the Planning White Paper to explore ways to manage these planning risks in relation to major projects of national significance. Creating the right planning framework could be critical to the success of attracting investors.
The most tangible conclusion, as far as new nuclear power stations are concerned, is that the Government is looking at the private sector to bear the full liabilities of building, funding, operating, waste management and decommissioning. The reform of the planning system forms part of the overall process. The NDA’s decommissioning process, including the parent body organisation competitions, are further evidence of the Government’s desire to pave the way for the private sector to run the new nuclear programme. The downside is that debt and equity providers may not, currently, be satisfied that the financial models and investments can be structured properly — the City may require some more comfort from the Government.
Hamish Lal is a construction, engineering and project finance partner, Stephen McNaught is a planning partner and Colin Boyd QC is head of public law at
