March 2006
Questions pile up for UK energy review
Prospect’s work on the energy review got truly under way on 9 March with a lively seminar at the union's headquarters in London that brought members from around the UK together to hear the government’s point of view, get across their opinions, and feed their comments into the union's official response to the energy review.Government questions
Paul McIntyre, head of the Department of Trade and Industry’s energy strategy unit, set the scene, reiterating the review’s four main goals:- cutting CO2 emissions by 60 per cent by 2050
- maintaining reliability of our energy supplies
- promoting competitive markets not just here but in the EU and abroad
- making sure that every home is adequately and affordably heated.
“The scale of the challenge we’ve got means we can’t just look at one or two solutions,” he said. “If I have one problem with the report from the Sustainable Development Commission earlier this week [which advised against nuclear new-build] I think its title was: Is nuclear the answer?
“I would say that is not the right question because given the scale of the challenge, we have got to look at a number of different things, including potentially nuclear, to see whether we can make progress towards those four goals.”
Five challenges faced the government. First, rising energy demand and emissions in UK and globally; second that UK was becoming a net importer of oil and gas, third the sharp rise in prices and fourth, the need for a big replacement element in the cycle of investment for electricity delivery and networks over next 10-20 years.
“Maybe a third of our generating plant is going to be replaced, so the question is, what kind of framework should we have for that investment to take place? What will be the composition of that generating plant and what are the implications for networks?”
Fifth was the uncertain international context, in terms of energy security and the carbon challenge, particularly as post-2012 there was no global framework for managing the problem.
McIntyre showed slides indicating that on present policies, by 2020 80 per cent of UK gas demand would need to be met with imports.
Along with a big increase in the share of gas, and 15 per cent renewables would come a big decline in the use of nuclear and coal to meet Britain’s energy needs. “The question is are we happy with that?
“Are there things we should be doing to influence the generators when they come to make their decisions about new plant, which might lead them to make different decisions based on our public policy goals for carbon and security of supply?
“Do we want that much gas? Do we want nuclear share to fall? What do we think about coal?”
During discussion he left his slide on the screen, summarising five key questions of concern to the document – on the government’s role, how the market framework should be developed, what considerations should apply to nuclear, and to carbon abatement and carbon capture technology, and finally the fuel poverty objective.
Questions from Prospect members
Prospect members had plenty of questions of their own for McIntyre.NEC member Tasos Zodiates, from British Energy, asked: “The government is going through this consultation process but I wonder what it is prepared to do at the end?
“What instruments or tools is it prepared to put in place to give effect to whatever policy it decides, given the European legislation we have in place and the international commitments. How much room does government have to manoeuvre?”
Prospect general secretary Paul Noon asked if there was not some contradiction between the attitudes of British government at European level – pressing for greater liberalisation of markets – and the need to meet the policy objectives that might arise out of the energy review?
Shawn Mills, a Prospect member at British Energy’s Sizewell B nuclear power station, said: “One of the bullet points in your presentation was that 30 per cent of generation is going to be retired in 10-20 years. Big power stations have a lifespans of 30 years, so what happens after 20 years? Is it going to get better or worse?”
Carl Foulkes, EON UK, said: “Our colleagues in Germany are giving us feedback that governments look at the liberalised markets in the UK and see it as a disaster. We have a gas supply situation, we an impending electricity shortage In UK, yes you’ve got liberalisation but this is a market that is out of control.”
Mike Williams, Prospect NEC, British Nuclear Fuels, said: “Obviously I support nuclear power but I also support a balanced energy policy, which is Prospect’s policy and I think is correct. Everybody has got a part to play. I don’t think we can do without any of these things.
“At the moment my concern is: people see Buncefield and say ‘I don’t what big oil tankers’ or they say, ‘I don’t want nuclear power it’s dangerous, I don’t want wind turbines, they are ugly.’ What is the government going to do incentivise the general public to accept something in their area?”
John Goldsack, retired chief boiler design engineer, Babcock, said: “I am shocked at the slide showing how much gas will need to be imported in the future, while coal and nuclear are going down. It seems to me that overdependency on imported sources of energy is a potential disaster, to say nothing of the effect on balance of payments. We ought to do these things indigenously.”
David Simpson, Prospect NEC and Scottish Power, said: “If we take seriously that the government’s primary criteria is to reduce CO2 emissions we should incentivise all forms of generation that don’t produce carbon. We know that the renewables obligation system works. It has encouraged investment in off the shelf renewables, ie wind turbines. Extending that to all low-carbon generators could incentivise nuclear, carbon sequestration, etc. It would be a sensible mechanism that could eventually take away many of the problems.”
Nigel Titchen, NEC and Prospect SET group president, said: “There are planning assumptions that underpin the key questions raised. We talk about climate change – but what assumptions have you for temperature rises, and with what implications for energy demand?
“If there is a global increase in temperature it is likely to drive population movements from sub-Saharan Africa towards EU countries. One the one hand, UK birth rates are dropping, but there will be large-scale migrations.”
Allan Bickley, of Serco Assurance, said: “The government is very clear that it wants the private sector to invest in energy, but it is not going to invert unless there is a persistent framework that makes it look like a good bet in the long term.”
Graeme Henderson, Prospect vice-president, and from the Health and Safety Executive, pointed out: “One area where the government has potential influence is in reducing demand, for examples by homes being adequately insulated. It strikes me that with the exception of a few minor changes in building regulations, most governments pay lip service. Our new union building will be environmentally friendly but lots of new buildings are being allowed to go up that are not.”
Marcus Swift, from BNFL, said he agreed that the emissions trading scheme was the way to go forward, “but is the government then going to review the climate change levy? It seems to me that taxing people as well is damaging to investment.”
Dave Scott, from National Grid, said that this winter, gas had once more propped up the market and provided the electricity baseload. He felt that by 2012, more coal would be needed. “Would the government authorise this post 2012 if it meant keeping the lights on?”
John Ridd, of BNFL Magnox Sizewell B, asked how the government could account for the costs of nuclear power, which had been quantified in so many different ways.
Craig Watson, from Scottish Power, asked what contingencies the government had made north of the border, if nuclear was to be included in its future energy mix. “The current Scottish parliament is Labour/Liberal Democrat. The LibDems are against any involvement of nuclear unless the waste issue is resolved.”
Nuclear industry skills needs
The seminar also heard from John Haddon of Cogent, the sector skills council that encompasses the nuclear industry.Haddon said that Cogent had recently carried out work assessing the skills needs and training provision of the nuclear industry and would be developing an action plan by June.
It found, unsurprisingly, that the workforce is dominated by white males working full time. While tending towards older workers, the age profile was more encouraging than expected – though the research had only captured 50 per cent of the workforce. The oldest group were process and machine operators.
Seventy-two per cent of companies reported skill gaps, 39 per cent in project management and 22 per cent in technical and practical skills. Sixty three per cent of companies reported gaps in critical areas of business and 40 per cent in meeting customer service objectives.
The good news was that 61 per cent of companies questioned had increased training and 50 per cent had increased recruitment. Highly skilled workers were three times more likely to receive training than lower skilled workers.
Haddon said the energy review consultation document had made no mention of skills and provided no clarity on the nuclear scenario. He pointed out that for the next 15 years the main skills issue would be in manufacture and construction of new nuclear plants.
There had been a major shift from generation and operation, which would continue.
In its scenario planning Cogent had shown that even if nuclear new-build were to begin in January 2007, with new start-up every 18 months, by 2025 Britain would not be generating as much nuclear energy as it is at the moment.
The Prospect perspective
The conference also heard from Mike Clancy, assistant general secretary, who outlined Prospect’s perspective on the market/policy balance, pointing out that there were limitations on the market delivering the requirements for a long-term sustainable energy policy.Clancy said that he supported the call by economist Dieter Helm at the previous week’s TUC/CBI Carbon trust energy conference for the government to set up a new energy agency.
While Prospect did not believe in looking back with rose-tinted glasses to the old days of nationalisation, it was important to focus on the good aspects.
For the present day, the key question was, can you leave the choice of energy mix to the rate of return and profit? Can pure market solutions achieve emissions targets?
There was also an important issue around language. The phrase ‘market instruments’ was used, but “what we are really talking about is subsidy. The government has to subsidise those forms of energy it wants to see.”
Head of research Sue Ferns gave an overview of Prospect’s perspective, including the union’s work to date and the key questions it felt needed answering.
In its response the union would comment on demand/supply side measures to cut CO2 emissions and, as well as dealing with regulation, targets, voluntary agreements and economic instruments, would discuss the trade union role in changing behaviour.
On the supply side, crucial to government energy policy must be investment in a range of generation sources and investment in skills.