Graham Stuart – 2022 Speech on Government Funding for Small Modular Reactors

The speech made by Graham Stuart, the Minister for Climate, in the House of Commons on 7 September 2022.

Thank you, Mr Deputy Speaker.

I want to begin by congratulating my right hon. Friend the Member for Bournemouth East (Mr Ellwood) on securing this important debate and speaking so passionately about the benefits that can come from this fascinating development of a UK capability in nuclear power. Tonight’s debate gives us the opportunity to build on the discussion on small modular reactors and energy security in the UK convened by my hon. Friend the Member for Ynys Môn (Virginia Crosbie) in January this year.

As Climate Minister I am proud to support not only the Government funding but the private investment that we are sometimes seeing facilitated by that Government funding in the nuclear sector. As my right hon. Friend the Member for Bournemouth East has said, the global energy crisis created by Russia’s invasion of Ukraine underlines our resolve to develop new nuclear capacity in order to boost our energy security. I am sure that all of us who take an interest in this will have been gladdened by the fact that there is such strong support for that across the House this evening.

As we make strides towards delivering net zero, the demands on our electricity system will increase. Electricity will be increasingly important, potentially providing around half of final energy demand as its use for heat and transport increases. That would require a fourfold increase in clean electricity generation, with the decarbonisation of electricity underpinning the delivery of that overall net zero target. Our analysis shows that all low-cost, low-emission solutions that will take us to this net zero-compliant electricity system are likely to require a combination of new nuclear, combined cycle gas turbines and carbon capture, utilisation and storage, in addition to growing levels of renewables. It is a complex piece, but we need all the bits to come together to meet the challenges that my right hon. Friend has set out.

Nuclear power is important for the UK’s energy security. As the world has emerged from covid-19, global demand for energy has risen significantly, and this has been exacerbated by Putin’s malign invasion of Ukraine. But secure, clean and affordable energy for the long term depends on the transformation of our energy system, and that means more home-grown energy from increasingly diverse sources in order to reduce our dependency on imported fossil fuels and our exposure to the high and volatile prices in international markets that we can see today.

Hon. Members will be aware that in April 2022 we announced the British energy security strategy. This set out our ambition to deploy up to 24 GW of civil nuclear power by 2050, which will meet around 25% of our projected 2050 electricity demand. New nuclear generating capacity is an important part of our plans to ensure greater energy resilience as well as having a crucial role to play in net zero. I am delighted that the British energy security strategy set out the Government’s intention to take a large-scale new project to final investment decision during this Parliament, and that two projects will reach that point in the next Parliament, subject to the necessary approvals.

I remind Members that SMRs will play an important part, as well as those larger nuclear installations, and will be a critical part of delivering new nuclear for the UK. They offer the opportunity for flexible deployment options—we have already heard various bids to host them—and could bring regional and socioeconomic benefits, including the creation of high-value manufacturing and engineering jobs on site and on the site of manufacture.

In November last year, as my right hon. Friend has said, we announced £210 million in match funding for Rolls-Royce SMR Ltd to develop the design for one of the world’s first small modular reactors. Funding for this project was predicated on Rolls-Royce matching the Government’s contribution with private investment, which has been found, giving the design the capability of being deployed in the UK by the early 2030s, if not before. The Government funding for Rolls-Royce is part of the advanced nuclear fund, which is a significant Government commitment of up to £385 million, both to develop domestic SMR design and to demonstrate the viability of innovative advanced modular reactors by the early 2030s.

In addition to investment in SMRs, the Government plan to invest in the AMR research, development and demonstration programme, which, as I say, should get something going by the early ’30s. It is focused on high-temperature gas reactors for low-carbon electricity generation and would allow the production of very high-temperature heat that could be used, for instance, for the increasingly efficient production of low-carbon hydrogen, to help to decarbonise industrial process heat, or even for synthetic fuel production.

I am pleased to remind Members that we launched the future nuclear enabling fund, or FNEF—I have realised, on my first day, that BEIS is full of acronyms galore—on 2 September 2022. The FNEF—they are never terribly well crafted—is a £120 million fund announced in the Government’s “Net Zero Strategy: Build Back Greener” in 2021. It aims to help mature potential nuclear projects ahead of any Government process to select future projects. We expect to make awards from the fund at the end of this year or at the start of 2023.

Alongside the launch of the FNEF, we are setting up Great British Nuclear, a body to enable nuclear projects and get us on a pathway to meeting our ambitions for new nuclear, with the aim of ensuring the kind of rapidity that my right hon. Friend is right to press for from Ministers such as me. We intend to initiate a selection process in 2023, with the intention that we will enter into negotiations with the most credible projects to enable a potential Government award of support as soon as possible.

I was pleased that Parliament backed the Nuclear Energy (Financing) Act 2022, which was granted Royal Assent in March and established a new regulated asset base—or RAB—funding model for all new nuclear projects.

Mr Ellwood

I hope my hon. Friend will forgive me for not having congratulated him on securing his new position. He is a round peg in a round hole; I know how passionate he is about the environment. Will he join me in paying tribute to my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), who was previously in charge at BEIS? He is now in the Treasury and therefore perfectly placed to advance this idea. During the war there was an effort to create munitions, and we leant into that project because there was a necessity, and during covid there was a necessity to create personal protective equipment. Does my hon. Friend agree that there is now a necessity for us to lean into this idea and expedite it—within the safety parameters—to make sure that we can become more energy resilient?

Graham Stuart

I thank my right hon. Friend, and I am happy to do that. He will forgive me, perhaps on this one day only, for not leaning in to chastise any other Department or the Government in general on day one, self-confident though I always try to be. If we look at what we have done, we see that we have reduced our emissions by more than any other major industrialised nation, and offshore wind has been a triumph.

I am looking forward to learning more about the detail of these programmes, but I have no doubt that with the right will and the proper prompting by colleagues from across the House we can ensure that we move with the speed necessary. We need to, because as he rightly says, we are not alone in pursuing and seeing this opportunity, and there have been instances in the past when this country has been in a position to lead and has not moved quickly enough, and multibillion-dollar opportunities—let us call them that—have ended up going elsewhere.

I am determined that we shall not only deliver on our green obligations in this country, but build our industrial capability so that even the most sceptical person comes on board as we say, “Look, we are not just dealing with climate and not just cleaning up our domestic situation. We are developing major industrial capability so that we can sell that to the rest of the world, help it with the net zero challenge, and also produce jobs and prosperity here.” It is not a hairshirt that we want; we want to get the policy right so that we are part of a global solution, and to do so in a way that boosts jobs and prosperity and carries the support of everyone, regardless of their views on climate-related matters.

We believe that the RAB could cut the costs of financing these projects, enabling companies to finance new ones and ending our reliance on overseas developers for finance, resulting in savings for consumers. On day one, I can reassure my right hon. Friend that a lot of work is going into making sure not only that we can move at pace, but that we do so with the most solid base possible.

We fully support the development of small modular reactors and the exciting opportunities that they can offer the UK in energy security and reaching net zero. We have demonstrated our intent to build new nuclear capacity in the UK over the past year, and we have made the decisions that we believe will provide the confidence needed for investors and businesses to get behind it. From the energy White Paper to our landmark British energy security strategy to funding for small modular reactors and the future nuclear enabling fund, I hope we have shown our dedication to energy security, net zero and nuclear. I thank my right hon. Friend and other colleagues once again.