Thursday, 9 October 2014
Topical Issue Debate
I welcome the Minister for Health, Deputy Leo Varadkar and congratulate him on his new portfolio. I am glad to have the opportunity to speak on the decision by the European Commission to give approval to the proposed £24.5 billion or €31.2 billion nuclear power station at Hinkley Point in Somerset. There has been no nuclear power plant construction in the UK in the past 20 years and there has been a very substantial emphasis on renewable energy for a considerable period of time, with Ireland hoping to become a net provider of energy to the UK in the not too distant future and Germany turning its back on nuclear energy. Therefore, the announcement by the European Commission that the UK, in its proposal for a very expensive power station in Somerset, 240 km from Ireland, should be allowed to receive state subsidy for its construction and operation came as a surprise to everybody.
Given that it is very difficult to see how this could be other than contrary to the anti-competition laws, I call on the Government to join Austria in the legal action it proposes against the proposed nuclear power station. There are major environmental concerns regarding the impact of the power plant in relation to the state aid. The Austrian Government's legal action in the European Court of Justice is very specifically on the state subsidy element. The problem is that if the European Commission does not regard a state subsidy as anti-competitive, we could have a new generation of heavily subsidised nuclear power plants across Europe. This plant will provide approximately 7% of the UK's energy requirements and could spark a very large number of similar nuclear power projects and shift the dynamic from renewable energy to nuclear energy.
The power plant will use the unproven EPR technology, which is not operational anywhere in the world, even though France and China are beginning to look at construction there. Nevertheless, it is unproven at this point in time. After all these decades, there is still no satisfactory method for dealing with the considerable quantities of radioactive waste the plant will generate over its lifetime of 60 years.
Under the plan, the British Government would be allowed offer EDF Energy, the company behind the project, a guaranteed power price of £92.50 per megawatt hour for 35 years - more than 50% of the lifespan of the plant. This is more than twice the current market rate. Clearly, this represents subsidisation of an operational plant.
EDF Energy will also benefit from a state guarantee covering any debt which the operator will seek to obtain on financial markets to fund the construction of the plant. The new Hinkley Point nuclear power station will require debt financing of £17 billion and will eventually have a capital outlay of approximately £34 billion. These are massive sums.
Rather than these significant subsidies for nuclear energy, it would seem far more appropriate to support alternative renewable energy sources, which are still grossly underfunded throughout Europe. The scale of the subsidy being given to EDF Energy is significant and it is difficult to understand how such extensive support cannot be considered an illegal state subsidy.
I thank Deputy Costello for raising this important issue. I am taking this debate on behalf of my colleague, the Minister for Foreign Affairs and Trade, Deputy Charles Flanagan, who is on Government business.
The European Commission announced yesterday that is has found revised United Kingdom plans to subsidise the construction and operation of a new nuclear power plant at Hinkley Point in Somerset to be in line with EU state aid rules. During the investigation, the United Kingdom agreed to modify the terms of the project financing significantly. As a result, the Commission indicates that it has decided that the state aid provided will remain proportionate to the objective pursued, avoiding any undue distortions of competition in the Single Market.
The United Kingdom Government published its draft energy national policy statement in November 2009, which signalled its intention to construct ten new nuclear power stations at sites judged by it as potentially suitable. This was subsequently revised in October 2010 when the number of planned stations was reduced to eight. The first of these plants is planned for construction at Hinkley Point in Somerset, on the south-west coast of England.
It is Ireland's position that, where another state chooses either to develop a nuclear power industry or expand its existing nuclear power industry, this must always be done in accordance with the highest international standards on safety and environmental protection. Ireland's priority is the safety of the Irish people and the protection of our environment, including the shared marine environment of the Irish Sea.
Ireland has been recognised by the United Kingdom as a stakeholder in any consultation involving a nuclear development proposal. When the United Kingdom decided to embark on plans to build a new fleet of nuclear power stations, Ireland was one of the stakeholders involved as part of the national policy statement consultation.
Since the original announcement in 2009 of plans to build a new fleet of nuclear power stations, Ireland has written at ministerial level to the United Kingdom Secretary of State for Energy and Climate Change, Mr. Edward Davey MP, outlining concerns about the potential environmental impacts in Ireland and in the Irish Sea. The key issues of concern include the assessments by the United Kingdom of effects on the environment, the management of radioactive waste and the rationale underpinning the proposed justification decision for new nuclear facilities. This engagement has been supported by a continuing dialogue at official level where Irish officials engage with relevant United Kingdom officials on a wide range of nuclear related matters.
It is the United Kingdom's position that Hinkley Point will have no transboundary effects during routine operations. Under the EURATOM treaty, the United Kingdom was required to satisfy the European Commission that the development at Hinkley Point would not result in the radioactive contamination of the water, soil or airspace of another member state. In that context, a Commission opinion, issued in February 2012, considered that in normal operating conditions, discharges of liquid and gaseous radioactive effluents were not likely to result in exposure of the population of another member state, which is significant from the point of view of health.
The Radiological Protection Institute of Ireland, RPII, which is now incorporated in to the Environmental Protection Agency, was asked by Government to prepare a report on the potential radiological implications for Ireland from the proposed new nuclear power plants in the United Kingdom, including Hinkley Point. This report, published on 20 May 2013, concluded that the threat to human health from this new building programme is very low. The report shows that any radioactive contamination in the air, either from day-to-day operation of the proposed nuclear power plants or accidental releases, would be transported away from Ireland most of the time. This conclusion arises from an analysis of weather conditions prevailing in Ireland and the United Kingdom over the past 21 years. The RPII report also shows that the routine operation of the proposed nuclear power plants will have no measurable radiological impact on Ireland or on the Irish marine environment. In the highly unlikely event of a severe accident occurring at one of the plants, combined with unfavourable atypical weather conditions prevailing at the time, the report finds that some food controls and agricultural protective actions would be necessary in Ireland for a period.
The Department of Environment, Community and Local Government will continue to utilise fully existing channels of communication with the United Kingdom authorities to ensure they are fully aware of any concerns that Ireland has in relation to their proposed nuclear new-build programme.
While the Commission announced its state aid decision yesterday, the decision itself has not yet been published. We will be reviewing it carefully as soon as it is available.
I thank the Minister for the reply. He did not indicate whether or not Ireland will consider joining Austria in the legal action in which it has decided to engage, even though there has not been full publication of the decision.
There are the obvious environmental dangers that I mentioned. We have had difficulties in recent times with Chernobyl and Fukushima that arose from man-made and natural disasters. Apart from that, if state subsidisation is allowed for a particular form of energy production, where does that leave the other energy production modes? In renewable energy, on which we have European Union targets to meet, anti-competition laws seem to apply fully, but because this is such a major project, it is allowed to get subsidies, both in terms of the capital funding for its structure and in terms of the cost ratio for its current operations. Both of those seem questionable in terms of EU policy and I understand that is the basis on which Austria is taking the case. From the point of view of best practice and statutory provisions, even though the Commission has made its decision, would it not be appropriate that we should also have recourse to the European Court of Justice to determine whether anti-competition mechanisms are in operation in this case?
We have considerable agricultural capacity here in Ireland. We are building that for the future and expanding to a significant degree. As well as the threat to the people of Ireland, and there is always the danger of a serious threat despite what is said about the prevailing winds likely to be going in the opposite direction, we were affected to a considerable degree when Chernobyl exploded and we could not sell Irish lamb from various areas for a period. Chernobyl is a long distance from Ireland.
All the issues would indicate that it would be well in our interests to ensure we are involved at the highest level in this decision-making process in the European Union.
I reiterate that while the decision has been announced, it has not yet been published. I imagine the Department of Foreign Affairs and Trade will want to see the detail of it before making a decision on how to act.
On the specific question of joining Austria in its legal action, I am advised by the Department of Foreign Affairs and Trade that it is not necessarily the case that we can simply join Austria. Ireland would need to consider its own legal strategy. Once the Commission's decision is published, the Government will consider its implications carefully.
On the issue of state subsidisation, it is worth pointing out that state subsidies are allowed for renewable energy. We have the renewable energy feed-in tariff, REFIT, scheme in Ireland which guarantees a price for renewable energy. They use the renewable obligation certificate, ROC, system in the United Kingdom. To the best of my knowledge, all renewable energy in Ireland is subsidised through a guaranteed REFIT price.
The same goes for peat. Gas, coal and oil are not. I will make the Minister, Deputy Charles Flanagan, aware of Deputy Costello's comments on this. I am sure the Minister will want to talk to him about it again.