Sunday, September 18, 2005

Wicks's long march to nuclear power - UK

Telegraph | Money | Wicks's long march to nuclear power

Filed: 18/09/2005)

The new energy minister marched to Aldermaston but hints that he may be in favour of nuclear generation. He also tells Sylvia Pfeifer that it's unfair that British utilities are effectively prevented from buying their continental rivals

The hottest issue in the Government's in-tray - one might even call it radio-active - is whether to build new nuclear power stations to help Britain meet its climate change targets.

So an obvious question to ask the new energy minister is whether he has ever pronounced himself for or against nuclear power. Malcolm Wicks heaves a sigh of relief: no, he has never given that hostage to fortune, except . . .

In an interview in his glass-walled office at the Department of Trade and Industry in Victoria Street, he divulges a little secret about his adolescence: he marched to Aldermaston to demonstrate against Britain's nuclear deterrent.

"At 14 I did go once to Aldermaston with 20,000 other people and they didn't welcome me in: they should have seen I was going to be a future energy minister," he chuckles.

He quickly adds that he has so far always managed - "intellectually" - to separate nuclear weapons and nuclear energy. "I have said that I am open-minded but not empty-headed on the issue," he says.

Wicks will have to make up his mind sooner rather than later as the nuclear question will dominate the energy debate in the coming months.

In a report published last week, the influential Commons Public Accounts Committee warned that the UK will fail to meet its climate change targets unless ministers give much more thought to how to replace the dwindling output from the current generation of nuclear power stations - whose principal advantage is that they do not generate CO2.

Renewable energy sources such as wind power are expected to provide up to 20 per cent of the country's electricity needs by 2020, compared with 23 per cent provided by the current generation of nuclear plant. So a move to renewables will not lead to any cut in noxious emissions from Britain's power generation.

In a clear sign that the nuclear question is right at the top of the Government's priorities, Tony Blair is taking the chair of the cabinet committee on energy and the environment. However, as a sign of the difficulty of that question, the first meeting of the committee was postponed from the summer to an unspecified date in the autumn.

The prime minister has said that the Government will have determined whether to build a new generation of nuclear plant before the end of this parliament and, according to Wicks, "that is soon enough".

Issues that need to be taken into account are cost and how to deal with the poisonous waste. "My view on this is that it's been an absolute disgrace the way in which successive governments and parliaments have not tackled the issue of nuclear waste," he says.

The newly established Nuclear Decommissioning Authority is a step in the right direction, and dealing with the legacy issues before contemplating new nuclear plants is vital.

"Unless we can convince ourselves and the public and Parliament that we have a solution to these things, I don't think it's going to be that easy to talk to the public about new [nuclear] generation," he says.

And there is a hint that he may want to glow in the dark. "At the moment, you would lose the argument. Some of the opinion polls show that it is not clear which way public opinion would go. So there is an argument to be won, if one wanted to go in that direction."

The nuclear question is just one of a number of interrelated energy problems vying for his attention. Before starting in May he was minister for pensions, so he knows all about matters that induce strong opinions.

Recalling a recent visit from John Cridland, the deputy director-general of the CBI, the employers' organisation, Wicks says: "I don't think [Cridland] was trying to make a comment about my move from pensions to energy, but he said, 'Look, last year company directors' big worry was pension costs. Now it's energy costs.' "

As it happens, soaring energy costs, driven up by record crude prices that have topped $65 a barrel, have hit British manufacturers hard.

"Security of supply and the price you pay would be the number one issue [for our members] by a mile," says Sir Digby Jones, the director-general of the CBI. Some of his members, he adds, have paid over 150 per cent more for their gas and electricity over the past two years.

Consumers too are hurting. Household gas and electricity bills have soared, as has the price of petrol. Last week hauliers staged a series of protests at refineries and petrol -stations.

Wicks insists that the Government can't simply step in and force prices down. But it could do something about fuel duty. The chancellor has already postponed - twice - a planned increase in the duty and will review it again later in the autumn in the pre-Budget report. Wicks, conspicuously wary of intruding on the Treasury's turf, won't say what he thinks about all this.

However, he is concerned about dwindling domestic supplies of oil and gas and the UK's increasing dependence on imports.

The outlook for this winter is bleak; if there is a very cold snap, industrial users fear that their supply will be interrupted.

"As is known, we are going through two or three fairly difficult winters where gas isn't coming in in the volume that we need," Wicks says.

Jones of the CBI is more blunt. "If we have anything more than a moderate winter, our members are worried that the country won't be able to keep the lights on," warns Jones. "Why? Because two to three years ago the planning system was so full of delays that not enough storage capacity was built."

Another anxiety for Wicks is the chronic failure of the European Union to complete the creation of a single market in energy. At a time when the UK has to import energy from opaque European markets, this is bad for confidence in the system.

When demand for gas is high during cold weather, it has to be sucked in via the so-called interconnector, a two-way pipe that carries gas from Europe. Last winter many in the UK energy sector suspected that European companies contributed to price rises by deliberately withholding supplies during times of shortage. But three separate inquiries - by the Government, Parliament and Ofgem, the energy regulator - failed to unearth any evidence of market manipulation.

Nevertheless, the European Commission has responded to the concerns by launching its own inquiry into possible anti-competitive practices in European energy markets.

And although both Wicks and Claire Durkin, his energy adviser, insist that the UK's investigations found nothing untoward, Durkin is blunt about the state of Europe's energy markets.

"All the evidence we've got is that gas followed the market, which is what is supposed to happen. . . But the longer Europe remains opaque, the longer we are not going to be confident," she says.

A draft report from the European Commission inquiry is due soon and Wicks says he will push the issue at the European Council in December. And he has another beef with his continental peers:

"At the moment. . . EdF [the French energy group] are here, the Germans are here, and that's the logic of the market and that's fine. But are there similar opportunities for British companies in Germany and France and elsewhere? The answer is no, and that is not a level playing field. That is not cricket."

So he will be pressing hard to make it easier for British utilities to buy their continental rivals.

He certainly doesn't shy away from contentious areas. "Geopolitically, does it matter if we are very very very heavily dependent on foreigners for our gas and our coal?" he asks.

But, relatively new to the job, he insists he can't yet answer his own question.

He's more forthright about the collective responsibility of companies, households and the Government to take steps to reduce CO2 emissions. "Why is the motor car industry so slovenly about producing more energy-efficient cars?" he says, noting that he is the proud new owner of a Toyota Prius, the energy-saving hybrid car.

The entire DTI, adds an official proudly, operates without any air conditioning - which, although environmentally friendly, means that Wicks's office is unpleasantly stuffy.

If it feels like a kitchen, Wicks is quite happy to stand the heat, in a Trumanesque sense. And he's alarmingly frank about why he has been given his second ├╝ber-tricky job in a row. "Maybe," he says, "they want somebody to blame."


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