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Government gives green light for new nuclear

Energy companies were invited today to bring forward plans to build and operate new nuclear power stations as part of the UK's strategy for a secure, diverse, low carbon energy mix.

The Government's response to its nuclear consultation, in the form of a White Paper, was published alongside the Energy Bill which sets out a range of measures to address the twin challenges of tackling
climate change and securing energy supplies.

Energy Secretary, John Hutton, said:

"Giving the go ahead today that new nuclear power should play a role in providing the UK with clean, secure and affordable energy is in our country's vital long term interest.

"Set against the challenges of climate change and security of supply, the evidence in support of new nuclear power stations is compelling.

"We should positively embrace the opportunity of delivering this important part of our energy policy.

"I therefore invite energy companies to bring forward plans to build and operate new nuclear power stations.

"With a third of our generating capacity coming offline within the next twenty years and increasing reliance on imported energy it is clear we need investment in a range of new energy infrastructure.

"Measures in the Energy Bill will drive a greater deployment of renewables and enable investment in carbon capture and storage and offshore gas infrastructure. These will help build our energy
security, reduce emissions and place the UK at the forefront in the development of low carbon energy technology."

Engineers immediately backed the plans.

The Government believes it is in the public interest that new nuclear power stations should have a role to play in this country's future energy mix alongside other low-carbon sources; that it would be in
the public interest to allow energy companies the option of investing in new nuclear power stations; and that the Government should take active steps to open up the way to the construction of new nuclear power stations.

It will be for energy companies to fund, develop and build new nuclear power stations in the UK, including meeting the full costs of decommissioning and their full share of waste management costs.

The Energy Bill includes measures to ensure adequate funding provision is made by potential
developers of new nuclear power stations, to drive greater and more rapid deployment of renewables, creates the framework for investment in carbon capture and storage, which has the potential to reduce the carbon emissions from fossil fuel power stations by up to 90%, and enables investment in new offshore gas infrastructure projects.

NUCLEAR WHITE PAPER:

To encourage nuclear investment the Government over the coming months will be taking forward the following steps:

* Publishing today the Energy Bill, which contains clauses to ensure adequate funding provision is made by potential developers of new nuclear power stations for the full costs of decommissioning and
their full share of waste management costs;

* In Feb / March 2008 publishing a consultation on waste and decommissioning financing provisions guidance. This would set out the proposed arrangements for ensuring the full costs were met by
companies;

* Starting to scope a new independent advisory body, the Nuclear Liabilities Financing Assurance Board (NLFAB). This will provide public advice to the Secretary of State on all aspects of the
financial arrangements operators plan to put in place to cover waste management and decommissioning;

* Further strengthening the Nuclear Installations Inspectorate to enable it to meet a growing workload.
The Government will work closely with the regulators to explore ways of enhancing the
effectiveness of the regulatory regime in dealing with new nuclear power stations;

* Make use of the provisions of the Planning Bill to ensure that nuclear development projects are treated like other critical infrastructure projects. The Planning Bill will make the new system
fairer - but it will also be faster. By establishing the national need for infrastructure first, delays will be reduced later on;

* In March 2008 issue a call for Justification applications. This Justification process meets requirements of EU regulation that new nuclear processes should demonstrate that their benefits outweigh any
possible health detriment;

* In March/ April 2008 publishing a consultation on draft Strategic Siting Assessment criteria. This would be used to rule out those areas of the country in which there are no suitable sites and
establish the framework for assessing the suitability of proposed sites. We expect that applications will focus on areas in the vicinity of existing nuclear facilities;

* In spring 2008 announcing the start of the process for selecting reactor designs for the next stage of Generic Design Assessment (GDA). GDA is intended to ensure that the technical aspects of
designs for nuclear power plants are considered ahead of site specific applications; and,

* Working with EU to strengthen the EU Emissions Trading Scheme so that investors have confidence in a meaningful, long-term carbon price when making decisions. This will benefit all forms of low carbon generation.

In addition, progress continues on the Government's Managing Radioactive Waste Safely process. DEFRA has today published a summary of responses and their analysis of the Managing Radioactive
Waste Safely consultation. A White Paper is planned to follow in spring which will set out the framework for implementing geological disposal.

ENERGY BILL:

The purpose of the Energy Bill is to update and strengthen the legislative framework so that it is appropriate for today's energy market and fit for the challenges we face on climate change and
security of supply.

Key elements of the bill include:

Nuclear

* Measures to ensure adequate funding provision is made by potential developers of new nuclear power stations to pay the full costs of decommissioning and their full share of waste management costs.

Carbon Capture and Storage (CCS)

* The Government has announced details of a competition for the first commercial scale demonstration of CCS - this will help reduce costs and risks for future projects and put the UK in the lead on the design, construction and operation of CCS.

* CCS has the potential to reduce the carbon emissions from fossil fuel power stations by up to 90%.

* Creation of a regulatory framework to enable private sector investment in CCS projects while also protecting the environment - for example by putting in place a licensing regime for storing carbon
dioxide offshore.

Renewables

* Strengthen the Renewables Obligation (RO) to drive greater and more rapid deployment of renewables in the UK. For example we will amend the RO to give more support to new and emerging
technologies such as offshore wind, wave and tidal by banding the Obligation. Our proposals will also enable the RO to provide additional support to microgenerators (50 kW or less).

* To support the growth of offshore renewables the government is to create additional powers enabling Ofgem to administer an efficient and effective regulatory regime for offshore electricity transmission to connect large scale offshore renewables projects to the onshore electricity network.

* With our new proposals in place the government expects a tripling of electricity supplied from renewable sources to around 15% by 2015.

Offshore gas supply infrastructure

* The current offshore regime for gas infrastructure projects is complex and a barrier to investment.

* The Bill will strengthen and simplify the regulatory framework to give investors more clarity and certainty, reducing costs and risks for private sector investment in offshore gas supply projects such as offshore storage and LNG infrastructure.

* This will help maintain reliable supplies of gas given we expect the UK will need to import well over half of its gas supplies by 2020.

Offshore oil and gas decommissioning

* The Energy Bill will update legislation in this area to reflect that there are more small players in today's oil and gas market and to ensure adequate environmental and tax payer protections.

Offshore renewables decommissioning

* Similar tax payer protection measures will be brought forward in the context of offshore renewables decommissioning, ensuring that companies have adequate decommissioning funds so that both the tax
payer and the offshore environment is protected.

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