I am delighted to have the opportunity to debate the economic costs of the Severn barrage. I am delighted also to have secured a debate of an hour and a half. I hope that all right hon. and hon. Members have the chance to speak.
The topic was carefully chosen. I do not want to discuss the biodiversity impact; that has been debated both here and in the other place. The Westminster Hall debate was instigated by the hon. Member for Northavon (Steve Webb), and there was a debate in the other place in December. I want to concentrate on the costs.
I bring to the attention of the House a report—the Minister knows of it—by Frontier Economics, which is a wonderful name for such an organisation. The report was commissioned by eight non-governmental organisations that are opposed to the barrage. I shall speak a little about some aspects of that report. I know that some hon. Members will want to talk about other matters.
I am delighted to see my hon. Friend the Member for Bristol, North-West (Dr. Naysmith) in his place. If my hon. Friend catches your eye, Mr. Weir, he may want to tell us about the views of the port of Bristol and the impact of the barrier on that important organisation, which will save me the effort.
I hope that this will be the third of my recent successes—I like to help the Government whenever I can. The Minister was gracious enough to find time to allow the Climate Change and Sustainable Energy Act 2006 (Sources of Energy and Technologies) Order 2008 through last week. That order will allow ground source pumps to be part of the panoply of wonderful microgeneration activities that are now possible, and I am eternally grateful to him for that. I am also grateful to the Department for Communities and Local Government team, which listened to my pleas for community land trusts to be included in the Housing and Regeneration Bill. I am now going for a hat trick. The Minister will hear me appealing for changes to be made in the way in which we consider the barrage. I hope to move the debate forward. However, I am aware that others want to speak, so I shall not take too long.
In my part of the world, the barrage is controversial. Of all its possible effects, my constituency will probably face the greatest impact. We have a port—the wonderful port of Sharpness. I suspect that it would not survive, even if the great port of Bristol does, because of where the barrage is likely to built—if it is to be built. Even if it were built upstream, the barrage would still have an impact on Sharpness.
We also have the wonderful facility of Slimbridge, home of the Wildfowl and Wetlands Trust. Although I do not want to discuss biodiversity, one cannot help seeing the downside of the probable impact of the barrage. I know that we have said that there are likely to be advantages as well as disadvantages, but we will not be able to recreate those wetlands. Tomorrow I shall be taking a canoe trip on the wetlands. That is completely irrelevant, except for the fact that I might come back if I am supportive of the wetlands; that would be better than being tipped out if I were to make horrible comments in support of the barrage.
We know the background. We have to do some big things to combat the threat of climate change. Whether we include in the Climate Change Bill an emissions reduction target of 60 per cent., or, as I hope, 80 per cent., we have to do those things at the very latest by 2050. We are therefore looking for a change in policy.
The Government are right to consider the various factors that need to be dealt with, including the entire range of renewables. I am always ready to argue the case for the regeneration of the nuclear industry. It is good to see the hon. Member for Bridgwater (Mr. Liddell-Grainger) in his place; he is a kindred spirit in that regard. We must regenerate at least the amount of electricity that we currently produce from nuclear power. As someone who has seen the Berkeley power station live and die, I recognise that nuclear has a part to play. That is not the subject of today’s debate, but it acts as a backdrop to what we should be considering, and affects how we can stack up the figures.
With the best will in the world, what is proposed is enormous. There are two main barrage proposals, the Weston to Cardiff and the Shoots barrages, and a number of alternatives. Even the more minimalist barrages will be huge projects. Huge capital expenditure will be involved, and they will give rise to huge obligations in terms of the amount of electricity that will have to be produced to get the right payback.
I do not have fears about that, although I tend to be an incrementalist. I believe that small is beautiful. However, there are times when we have to go for big solutions, as with the re-harnessing of nuclear power. I look back to my epiphany on this issue, which was the 1989 report. Sadly, I read it, but I cannot recall much of it. However, it was good. It was not like the latest report.
In researching for today’s debate I have looked at the papers that accompany it, and earlier investigations took place as far back as the early part of the 20th century, so the idea is nothing new. We have considered the possibility of a barrage many times. However, the 1989 report taught me two things. First, we were talking then about something that was impossible—it was make-believe—because energy prices then would not have allowed us to recover the construction costs.
I remember that the only way to bridge that financial gap would have been to build massive housing developments further up the vale. Thank you very much, we get 50,000 extra houses. Of course we need houses, and we need them in ever greater numbers in some parts of the country, but it was hardly an acceptable aspect of that proposal for houses to be built in order to get the barrage in order to get cheaper electricity. Of course, if we had built the barrage we might now be thinking slightly differently.
The biodiversity issue, which will always be at the back of people’s minds, keeps returning. The Severn is a very special water course. I would argue that it is the most important in Europe. It has the second highest tidal range, which is what makes it a good prospect for generating electricity, but the flora and fauna of the estuary is so important that we tinker—dare I say tamper—with it at our risk and with considerable concern.
I have been leading up to the Sustainable Development Commission report. It makes an interesting analysis, which will inform the later study. We are led to believe that it will take two years, but perhaps the Minister will tell us more about the schedule. I do not say that we should scrap that investigation, but I want to change its nature. I want it to put far more emphasis on alternatives to the barrage. However, the Government would look rather silly if they were suddenly to do a volte-face and say that they do not want an investigation.
I would like to know more about gaining access to the team, and how we might work with it. Those of us who do not want a barrage will want to ensure that we are able to make representations. At this stage, however, I am not saying that it would be wrong for the investigation to go ahead, because even though we had an investigation some 20 years ago, the figures need to be updated, and new techniques and new approaches ought to be considered.
Although the details were wrong, the SDC report included some interesting work on alternatives, as well as an examination of the implications of the barrage. It was long on words and short on recommendations, which is why the Government had to set up their own feasibility study, which will go into much greater detail on technical necessities, finance and biodiversity, which is always the backcloth.
To move away from the pure biodiversity arguments, the NGOs—including the Royal Society for the Protection of Birds, the Slimbridge Wildlife and Wetlands Trust, the WWF and the National Trust, which are all reputable—commissioned the Frontier Economics report. Frontier Economics was asked to address the relatively narrow question of the justification for the barrage. In particular, it was asked to examine two questions regarding whether any justification could be contextualised within the current debate on the feasibility study. First, it looked at the Government’s role, and asked how they could or whether they should instigate such a project. Secondly, it looked at the costs of the project—we are talking about the economics of the Severn barrage—in relation to the alternatives and other forms of energy production. The study was not simply a sterile, limited analysis of the barrage versus other uses of the Severn, but asked whether we could find other ways to generate electricity.
It is important to separate the Government’s role of worrying about climate change and altering people’s mindset, and their role of driving the project forward. Of course—this will come as no surprise—Frontier Economics sees the Government’s role as crucial, saying that there can be no barrage unless the Government sign up to it wholeheartedly. However, there is a subsidiary question: to what degree must the Government consider whether they are doing the right thing at the right time? This is the premise of my argument: I do not want to leave the Severn alone, and I do not believe that the Severn is anything other than a wonderful opportunity for the generation of energy, but I have a big thing about the barrage. I do not see it as the solution, especially because I want much more activity and proactivity immediately.
I can offer the Minister an opportunity. There is a wonderful way to pull all the different threads together—we could look at the different possibilities on the Severn at the moment, which include using smaller-scale technologies on the river, lagoons, booms, river streams and underwater turbines. To pull those different technologies together, we need a location, to get synergy between companies. I have a wonderful location in mind—the old Berkeley nuclear laboratory site. Myself and others discovered that it is currently in splendid isolation and that the laboratory is all but gone. We looked at the idea of a renewable energy park, but, sadly, that has not yet got off the ground.
The site would be an ideal location for the kind of industries and firms that could generate alternative energies on the Severn. The offer is genuine and those things could happen now. We would have to talk to our colleagues in the Nuclear Decommissioning Authority, but the Government can talk to themselves sometimes, even within the same Department, so we could make some progress on that. That is the offer. Will the Minister say whether that will be considered as part of the feasibility study? We cannot expect companies to operate virtually—we need locations and facilities in which they can work together. That could and should be happening.
We can look at the cost of the barrage in two ways. Clearly, we are simply staggered by the sort of figures that are thrown about for the initial, construction costs. The lowest estimate that I have seen is about £14 billion, but I gather that a figure of £23 billion has been introduced by Halcrow, which was commissioned by the Institution of Civil Engineers. That is pretty big money, and it would have to be justified. We must ask not only whether the project is technically possible and whether the money can be found in such difficult times for the building industry, because it would need to be properly funded—perhaps the building industry is looking for such a project at the moment—but whether there is a payback.
All the evidence shows that the barrage is a very expensive project. I am told—this is reinforced by the Frontier Economics study—that electricity will be produced at about twice the cost of solar energy, which is the most expensive renewable option. It does not compare at all with the nuclear option, which should be used as a benchmark. The barrage could be a very expensive form of electricity generation. I hope that we will get some definitive evidence on that, which is why I do not want to destroy the feasibility study, but to push it in the direction in which I think it should be going. There is a big question mark against the cost, which will be the kernel of the argument on whether we should push on with the project.
Like other hon. Members in the Chamber, I have been approached and lobbied by a variety of organisations, including the Bristol Port Company, Natural England—as the Government’s experts on the environment, it has considerable worries about biodiversity in relation to the project—and the different NGOs, representatives of which I have met individually and collectively. The Bristol Port Company said that, even at this stage, it has had no assurances or guarantees that ships will get through easily even if we go for the larger barrage between Weston and Cardiff. I am sure that my hon. Friend the Member for Bristol, North-West (Dr. Naysmith) will talk about this, so I shall not go into any great detail, but the company is about to launch a huge investment project. It welcomes the barrage like a hole in the head, because it casts doubt on whether it can make Bristol a deep port. The terminal is probably the most important gateway to the country—much more important than any on the east coast—because it is not only close to the Bristol hinterland, but offers a rapid route to Birmingham.
I shall take no hostages to fortune on the issue. We should not look at the barrage as a barrage. We should look at alternatives and push the feasibility study in that direction, and recognise that the biodiversity costs are too great. We have a useful account from Frontier Economics, which I hope will feed into the process. We cannot avoid our responsibilities, however, and we have to do something; it is just that I would prefer to do something now. I am happy to work with other hon. Members, the Minister—obviously—all those companies that we want to generate electricity along the Severn and NGOs prepared to work with anyone provided that the threat of a barrage does not hang over them and the Severn itself. That is the offer, and I hope that the Minister will make some clear statements about how we can engage with the feasibility study team to ensure that there is a balance and to counter the belief that this is a done deal.
Some of the statements from the Secretary of State for Business, Enterprise and Regulatory Reform have intimated at the fact that we have to do something. The target of 4 per cent. plus of electricity generation is too good an opportunity to turn down, but I hope that we approach the problem with an open mind, because we could be producing more electricity sooner and at a lower cost than would be the case with the barrage.
I look forward to engaging on this matter, and I hope that the Minister will say how that can be done. I also look forward to hearing what other hon. Members have to say. I promised to mention my other kindred spirit, the hon. Member for Salisbury (Robert Key). On this matter, he and I are one—or rather we are twins. Like me, he feels that the barrage is not a good idea. He would have liked to have been here, but he is chairing a Committee somewhere else. However, if he were here, he would be arguing very strongly in support of my case.
I congratulate the hon. Member for Stroud (Mr. Drew) on securing this important debate and on the very fair way in which he set out much of the background to the issues that we are here to debate. I disagree with him on two points only—one small and the other slightly more substantive.
The small one is this: the hon. Gentleman said that his constituency is likely to be the most affected if the barrage is built, but I suspect that many would take issue with that. I am sure that his constituency will be greatly affected, but speaking as the Member for Weston-super-Mare, I can tell him that if the Weston to Cardiff barrage is built, a hulking piece of civil engineering will come ashore on the border between my constituency and that of my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory). That could have a dramatic impact not just on biodiversity, but on the economy of a seaside town such as Weston-super-Mare. I am sure that we all agree that there is a great deal to play for—the potential impacts are both positive and negative, economic and environmental. It is essential that we appreciate that the stakes riding on this decision are incredibly high, and that it is therefore vital that the correct decision is made.
I respectfully disagree with the hon. Member for Stroud on a second, slightly more substantive point. He said very clearly that he starts from a position of feeling that the barrage is wrong. I, on the other hand, think it imperative that we find substantial sources of renewable energy in this country, and it is clear that the Severn estuary and the Bristol channel constitute one of the largest potential sources of renewable energy in Britain. However, I would like to keep my powder dry and wait until the Government’s two-year feasibility study has been concluded before deciding which of the potential technologies for harnessing that power would be best.
I think that the Government were right to realise that much of the work done up until now, by previous generations, on both the economics of the Severn barrage and the environmental impacts—let us not forget that the latter have very severe knock-on economic effects—is now out of date. That is partly because, as the hon. Gentleman said, construction techniques have changed and construction prices have altered out of all recognition, as we can all understand. Furthermore, our understanding of the engineering and environmental challenges surrounding the Severn estuary have also moved on dramatically.
Clearly it is right and sensible of the Government to say that, before rushing to judgment, we need a modern, up-to-date and scientifically and economically robust analysis of the different technological alternatives to harnessing the power of the Severn. It is vital that we get this right and take the time to evaluate the pros and cons of the different options, because the stakes are so high and because not only our children and grandchildren, but their grandchildren and future generations will be living with the consequences of the decision that the Government take at the end of the feasibility study.
I start from a different position from the hon. Gentleman’s, and think that the Government’s approach is right. However, I press the Minister to give us a couple of reassurances. It is clear from many of the submissions, including the one from Frontier Economics, which the hon. Gentleman mentioned, that it is neither right nor good enough merely to consider the alternative means of harnessing the power of the Severn. I accept that we need to understand the implications of each of the alternatives, but having done that, we must put our conclusions into the context of the other available sources of renewable energy that could be created, given equal amounts of investment, elsewhere in the UK.
We all know that many other potential sources of renewable energy are available—from offshore and onshore wind to biomass, biogas and so on. If a great many better options are available away from the Severn estuary, it is not good enough to say, “This is the best option for the Severn estuary, so let’s build it.” If we have what I suspect will be a fixed pot of money—resources never match the ideas on which they could be spent—we must remain open to the possibility that the feasibility study might conclude that the barrage is the best option for the Severn estuary, but that plenty of other options are available elsewhere in Britain, all of which are better, and that therefore nothing should be done on the Severn. We must consider that for the sake of intellectual clarity and honesty with ourselves and our constituents.
As I have said, I am coming at this subject with the preconception that we need to harness the power of the Severn. However, in spite of that preconception, let me say for the sake of accuracy, clarity and logic, we owe it to ourselves and to future generations who will be living with the consequences of this decision to ensure that we can look people straight in the eye and say, “We made the comparison not just in the Severn, but more widely.” I hope that the Minister can give me that assurance when he gets to his feet.
I would like to press the Minister on section 2, article 5 of the proposed European directive on the promotion of the use of energy from renewable sources. He and I have corresponded on and debated the directive already, but so far our discussions have amounted to an exchange of views without conclusions. In case people do not have the directive as their bedtime reading—if they do, they will almost certainly have nodded off trying to get through it—I shall provide a brief summary. If adopted, it would effectively give the Government credit for energy generated from a very large renewable energy project, such as the Severn barrage, which would be put towards the Government’s commitment to produce 15 per cent. of Britain’s energy from renewable sources by 2020.
The Severn barrage, however, is almost the only project that could qualify under the proposed directive: none of the other proposals for harnessing the power of the Severn could qualify under the terms in which the directive is written. The credit would start from the moment that construction of the barrage began, which would be about 10 years before the first watt of renewable power energy flowed from it. However, given that that would apply only to the barrage, and not to the other potential sources of renewable energy from the Severn, it might create a slanted playing field and an obvious incentive for the Government to choose the barrage, even if it is not necessarily the best answer, because of this accounting trick that would allow the Government to put the power generated towards their adopted target early.
It is clearly not in the interests of the credibility of this Government or any democratically elected Government to be open to a charge of fiddling their figures or indulging in accounting trickery. There will be no solid basis for justifying what will be an incredibly difficult and important decision if everybody looks at it from day one through the prism of believing, “Well yes, they would choose the barrage, wouldn’t they? They have this accounting trick, which predisposed them towards the barrage in a way that didn’t apply to any of the other options.” That would be an incredibly corrosive perception, which would undermine the validity of any decision that the Government took.
As I said, the Minister and I have discussed the matter and exchanged letters. Let me summarise the Minister’s response thus far—he will correct me if he thinks that I am mis-stating his position. While looking at me in a slightly pained fashion, he says, “Perish the thought that Her Majesty’s Government should ever take a decision on such a basis. That would clearly be wrong.” Obviously, that is very reassuring, but I am afraid that it does not necessarily deal with the problem that I am describing, because it will not convince many people outside this place or solve the problem of corrosive doubt—the belief that the system is fundamentally slanted in favour of a barrage. Given the low esteem in which politicians of all parties are held in this country, it is in the interests of everybody, including the Government, to ensure that justice is not only done, but seen to be done when Ministers take their decision.
I therefore ask the Minister when he replies to give me an assurance that the Government will seek either to change the directive so that it applies equally to the barrage and the other options that they are considering for the Severn estuary, or to ensure that it applies to none of them. It cannot apply only to one and not to the others. I am told that the directive is still in draft, and it is essential that no accusation of bias can possibly be made on this vital subject. I therefore hope that the Minister can reassure me of his good intentions.
It is a pleasure to follow the hon. Member for Weston-super-Mare (John Penrose), who made some interesting points—particularly the last one about the EU directive, with which I fully agree.
I congratulate my hon. Friend the Member for Stroud (Mr. Drew) on securing this important debate, particularly given its focus on the economic aspects of the proposed Severn barrage, which are often downplayed. It is important to emphasise the economic aspects because building a barrage is understandably an attractive option at first sight. It seems to offer in one big leap an answer to many of the questions about how we meet our commitment to generate much more of our electricity from carbon-free sources. The Government have an obligation to help the EU reach its target of producing 20 per cent. of its energy from renewable sources by 2020. Although estimates for the proportion of the UK’s energy that would be produced by the Severn barrage vary between 4 and 7 per cent., that would still go a long way towards meeting our target. When people throw in extra, often uncosted possibilities, such as new road and rail routes in addition to the barrage, the proposal becomes even more attractive.
It is not difficult to see why various proposals have regularly been suggested over the past 100 years or more and then dropped on economic grounds. The most recent large-scale assessment began in 1983, when the Severn tidal power group carried out an interim study; that was followed by another research programme, which reported in 1989. There followed five years of heated debate locally and nationally, in which I took part as the then chairman of the Port of Bristol authority. My task then, as now, was to remind people that an economic enterprise known as the port of Bristol underpinned thousands of jobs in an area far wider than just Bristol and that that enterprise would be markedly affected by a Severn barrage, particularly one that was constructed without locks of a size sufficient to accommodate large bulk-carrier ships.
In 1994, the then Government decided not to proceed with the proposal. In “Energy Paper 62”, they stated that that was largely because the scheme was thought to be uneconomic following the privatisation of the electricity industry, and because the environmental consequences were too great. It was also thought that the development of tidal energy would be very capital intensive and that predicting the outcome would be very risky, and both of those problems still apply.
I shall concentrate mainly on the effects of building a barrage on the Severn downstream of the port of Bristol, probably between Lavernock point near Cardiff and Brean near Weston-super-Mare. It should be noted that I am talking not just about potential effects, but about current effects, in the sense that today’s proposals introduce a note of uncertainty into development plans and therefore investment in the port, as my hon. Friend the Member for Stroud noted in his excellent speech.
Although I was either chairman or vice-chairman of the Port of Bristol authority between 1985 and 1991, when the port belonged to Bristol city council, I currently have no interest to declare in the port, other than as an honorary trustee of its pension scheme, which was put in place by the trade unions, by the way. In addition, the port system is partially located in my constituency, at Avonmouth, which also houses the headquarters of the private Bristol Port Company, which now owns and runs the port.
There can be little doubt that renewable energy sources are the way forward in terms of energy security and sustainability, and that the UK has vast wave, wind and tidal power resources at its disposal. I fully support research and development in those areas, as well as in alternative sites and different methods of capturing the strength of the tides in the Severn, such as lagoons. However, a project of this size, which has not been tried before, makes it essential that we first assess the full financial and environmental implications and costs.
In addition to concerns about the environmental and possible legal implications—particularly in relation to the EU birds and habitats directives—there are major concerns about the costs, which are estimated at £14 billion to £15 billion, as well as about the impact on the local economy. However, it is important to note that Bristol and the surrounding area have a thriving and diverse economy, on which the Severn barrage proposals would clearly have an impact.
Changes to tide levels and patterns could have a serious impact on local tourism. High tide levels mean that beaches are often far from the water at low tide—the hon. Member for Bridgwater (Mr. Liddell-Grainger) will no doubt mention that. The threat of flooding could also increase if the barrage raises water levels in some areas. Equally, a barrage would stop the Severn bore, which is a tourist attraction further up the river, towards Gloucester.
The estimated cost of £15 billion does not take into account land acquisition costs or the cost of creating new habitats, as EU law would require. As my hon. Friend the Member for Reading, West (Martin Salter) recently highlighted in this very room, a barrage across the Severn would create another economic and environmental problem by blocking the path of thousands of fish returning to the Severn and its tributaries, the River Wye and the River Usk.
As I said, however, my main concern is the impact on the Bristol Port Company and its customers. Bristol port is the largest bulk-cargo port in the southern half of England. It relies on its ability to accept very large, deep-draught ships to import materials at economic rates. It also has good transport links to the UK’s major population centres. The port handles 27 per cent. of UK imported aviation spirit, and changes to that could affect the aviation industry, to which Bristol has close links—Airbus and Rolls-Royce, which are heavily involved in the aviation industry, are both in my constituency. Bristol is also the UK’s second largest import facility for power station coal, and 30 per cent. of total UK animal feed capacity is located at the port of Bristol. In terms of deep-sea volumes handled, Bristol is the leading UK port for the import of motor vehicles. Also planned—this will mean further additions to trades at Bristol’s port—are a £500 million deep-water container terminal and several biomass power stations, which will be fuelled with imported woodchip. All those cargoes are viewed as important because of their strategic significance or the nationally significant volumes handled—or sometimes both.
It is not possible today to go into great detail about the potential and likely effect of a barrage on the port’s trade, as much of the argument is very technical. There is a lot of evidence from previous and current studies about the risks of deleterious effects on the trades that I have mentioned, and other more local ones. It is well known that there is considerable movement of both sediments and sands in the Severn estuary, and that the capability to model the estuary’s transport systems for sand and sediment remains rudimentary. However, there is a clear expectation that post-construction there will be increased deposition of silts, clays and sand banks, which will be bound to affect the deep-water navigation channels, which are, at present, self-scouring. There will also be changes in the sand banks and post-barrage reduction of water density and levels of water on high tides. It is only on those higher tides that deep-draft ships can access Bristol’s two major docks.
Any effective reduction of water would have an immediate adverse impact and make the port economically unattractive to a cargo owner. That is currently the case for fewer than 30 per cent. of tides, but the figure could rise to more than 50 per cent. of tides post-barrage. Should such an adverse impact arise, cargo owners would be faced with two alternatives. Those customers could use other ports, but many of the facilities needed for strategic bulk cargoes, such as deep water, storage land, pipelines, and inland road and rail transport simply do not exist at other ports. The second option would be to continue to trade through Bristol in smaller ships at a much higher cost per tonne per kilometre. That would certainly have an impact on the wider UK economy, but since Bristol’s trade is unsubsidised and operates in a competitive free market, it is not easy to predict what would occur in such circumstances. Those elements of the regional and national logistics chain that depend on the existence of a shipping route in the Bristol channel surely have a right to expect that that will continue to exist in a post-barrage era.
The effect of a Cardiff-Weston barrage will be to incur very substantial additional costs for navigation infrastructure—mainly for the adequate provision of locks, one of which may have to be in the middle of the structure and not landward as in previous proposals—maintenance dredging and shipping transits of the barrage. All that will almost certainly mean that the £15 billion cost currently suggested will be very much on the low side. In the light of the risks that I have just outlined, in addition to guarantees of adequate locks at the construction stage, it would be necessary to protect and/or compensate the Bristol region and port for unforeseen and unquantifiable post-barrage effects.
I realise that the current study includes other possibilities, such as lagoons and smaller barrages in other locations, and I look forward to the outcome of the deliberations. I have no wish to try to stop or affect any of that process, although I know that the Minister has said there will be an opportunity later this year to examine the proposals for anything that would stop them going ahead altogether, and lead to a decision that it is not worth while to proceed. I hope that a realistic assessment will be made later this year. Many of the points that I have made would apply to some of the other options, although not to all of them.
I look forward to hearing what the Minister has to say on the matter. I had the pleasure of accompanying him to the port of Bristol a couple of weeks ago. Unfortunately it was very much a flying visit and we did not have a chance to talk about some of the things I have discussed this afternoon. I am grateful for the opportunity to do so, and to my hon. Friend the Member for Stroud for securing the debate.
It is a delight to follow the hon. Member for Bristol, North-West (Dr. Naysmith). I know that his heart is absolutely in the right place; we talk about the wonderful coastline that runs between my constituency of Bridgwater, Weston-super-Mare, Bristol and on towards Stroud.
One thing that concerns me about the proposal is not whether it should happen, but the idea, which I do not like, that something is to be created to affect targets. Targets leave us all cold in this place, for obvious reasons. I have just spent two and a half years of my life trying to get the Crossrail Bill into a workable form, which we have now done. That comes to £16 billion; it is funny how everything costs £16 billion. We know perfectly well that that is not going to be the true cost.
The cost of the Severn barrage is low. It must be low. No infrastructure project in this country has ever—regardless of Government—come in on time, and the cost will probably double. Let us say that the project does not commence for another decade, for all the reasons that we know so well; I shall come on to the Planning Bill. It is not possible to guarantee any costs at the moment.
I had a chat to Sir Robert McAlpine, which, at the moment, is one of the companies that would like to take part. Even that company said that in its experience of building many nuclear power stations and other huge infrastructure projects, none of the process goes smoothly. What worries me is that perhaps not this Government or the next, but a future Government, will use the fact that we must hit our targets under son of Kyoto—or daughter of Kyoto—as an excuse, as my hon. Friend the Member for Weston-super-Mare (John Penrose) said. I do not expect the Minister to be able to answer that point, because it will not be on his watch. [Interruption.] The Minister, from a sedentary position, makes a valid point, and makes me blush. However, Members of Parliament representing constituencies around the coastline will have to bear the situation for generations to come: this project is long term, not short term.
I am interested in the fact that, already, the chattering classes are taking to the barricades. It is like “Les Misérables”. The Royal Society for the Protection of Birds says, “Oh no, shock horror!” and the Environment Agency says, “Oh no, you can’t do it.” Everyone is appearing already, and we have not even got to the White Paper. They are all saying, “No, you mustn’t do it.” Well, hang on a minute—they are non-governmental organisations. They should be saying that we can do it if it is the right thing to do and we do it in the right way. Through the Minister and through you, Mr. Weir, I ask those bodies to shut up until we have given time for consideration of what is proposed. Like many hon. Members, I am sick to death of NGOs—before anything has been talked about or decided—telling us what we are going to do. This matter is another example of that.
I want to talk about tourism. Tourism is the life blood of the south-west, especially Weston-super-Mare. It is the same for much of Bristol, Stroud and Bridgwater and across the Somerset levels. The barrage would be an iconic tourist attraction. I know that that is not, and should not be, the main reason for building it. The point was ably made by the hon. Member for Bristol, North-West when he talked about the idea of sticking a road on it being uncosted. However, if it were built, it would be iconic. There is no doubt about it. It would put the south-west, with Cardiff on one side and possibly Weston-super-Mare or Wells on the other—my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) is not here—on the map. That should not be taken lightly.
A barrage would bring people to the south-west in the same way that Glastonbury tor does, or the docks in Bristol. Why not use that as part of the reason to consider the proposal? The financial input of the creation of the barrage would be phenomenal for parts of the south-west, Cardiff bay and all the rest of it. Cardiff would not have to rely only on “Dr. Who”. It could have something else to look forward to.
There would also be long-term problems. The flooding issue has been ably described, and it must be of concern. Bridgwater, in west Somerset, covers most of the levels, the gateway to which runs through my constituency and that of my right hon. Friend the Member for Wells. If there is any change to the water level or any dramatic change to the sand banks or how the water flows, it will come through our constituencies. I hope the Minister agrees that that is not acceptable in any way, shape or form.
Much of the levels—I do not mean to teach the Minister or you, Mr. Weir, to suck eggs—is at or below sea level. We have a finite time when the back tide and the wrong wind will prove to be disastrous for us. That is one area that the study must examine. As to the longer-term study, I plead with the Minister to look not only north of the barrier, up to Stroud, but south of it. One reason for me saying that is that the intakes for water at Hinkley Point, about which the Minister and I have endless conversations, are next to the River Parrett.
The Minister has been helpful with Hinkley Point, for which I thank him. I welcome all decisions that he is making in that direction at the moment, but it would be a shame to jeopardise what is an important infrastructure project in my constituency in relation to the long-term energy security of this country, or to do anything else that we might live to regret. Having said that I am castigating the NGOs, I am also arguing the other way round: we do not want the proposal to stop other things that are vital.
This comes down to the Planning Bill. No hon. Member can be in any doubt that the Planning Bill will go through. It will happen. That means that there will be a mechanism to force this proposal through, no matter what the chattering classes say. When that happens, we must be absolutely sure that it is exactly the right thing to do, so I come full circle.
The Planning Bill will be crucial in forcing the proposal through, because there will be many people who do not want it. People will be concerned about everything from a frog with one leg to what happens north of Stroud. They will also be concerned about the Severn bore. Those are all admirable things, but I suggest that security of supply of electricity for this nation is more important.
If we use the Bill to force the proposal through, which I think ultimately we will, I urge the House not to do so for the sake of expediency, for the reasons that hon. Members have given and those that I am sure my hon. Friend the Member for Wealden (Charles Hendry) and the Minister will give. This is a long-term commitment. If we get it wrong now, at all stages beyond we will get it disastrously wrong. The Severn barrage might not be built on our watch, but my hon. Friend the Member for Weston-super-Mare is right: we are building for the future, securing supplies and securing the future of energy. If we get it wrong now, the legacy, which we will have to live with, will be disastrous.
I am grateful for your indulgence, Mr. Weir, and that of other hon. Members. I was chairing a Committee upstairs and I apologise for missing most of the debate, which is on a subject dear to my heart. I shall be brief.
The decision facing the Government is so great that, although it is of course entirely proper that they will consider all the evidence that they can possibly get, in the end it will be a political decision, and I bet it will be taken at Cabinet level. The decision, I believe, will be that the damage caused by building a Severn barrage, which would irreversibly and for ever change one of the most special estuaries in the British isles, will be rejected. That does not mean that I oppose the principle of generation of energy by water—far from it. I think, however, that the Government would be much better advised to avoid any serious consideration of blocking the Severn estuary in favour of concentrating efforts on various kinds of tidal barrage and tidal flow technology, which is short of development at the moment.
We must consider not only the biodiversity, but the history, the archaeology and the culture. It is the poetry. It is Shakespeare. Everything about England is tied up in the debate about a Severn barrage. Hon. Members on both sides of the House and from both sides of the Bristol channel have strong views about it, but it also affects every citizen of this country and, indeed, of the United Kingdom.
There is another practical thing that impresses me. Forgive me if my colleagues have already said it, but I do not believe that we will find an electricity generator willing to do this. Let us consider the experience of Électricité de France at La Rance in Brittany, where people are quite clear about the fact that they would never do it again. If the generators are not prepared to do it because it is not cost-effective, no one else will, and it would be quite wrong for the taxpayer to pay for the whole thing.
We also need to consider the consequences for the landscape of other parts of the United Kingdom, especially the western highlands of Scotland, of shipping aggregate on the scale necessary to build a Severn barrage. There is nowhere else it could come from unless we brought it in by sea from China or somewhere. In the western highlands recently, I was devastated to see the damage done to the landscape by the decision to allow quarrying on a grand scale on the west coast of the highlands, which is one of the most beautiful parts of the world, let alone the United Kingdom.
If this proposal were to proceed, I would be one of those who was protesting very loudly indeed, and I believe that the public protest would far outweigh the arguments of those who think it a good idea. I am grateful to the hon. Member for Stroud (Mr. Drew) for giving us the opportunity to air our views.
I join other hon. Members in congratulating the hon. Member for Stroud (Mr. Drew) on securing and introducing the debate. The issue has been around for an awfully long time. I went to school on the Welsh side of the Severn. It is curious that no Welsh Member of Parliament is seeking to take part in the debate. I am now a Member of Parliament for the other side of the Severn, in Bristol, and it has been a hot political issue locally for the past two years. I was pleased to take part in a discussion that involved politicians from both sides of the estuary in the summer of 2006—appropriately, it took place on the paddle steamer Waverley right in the middle of the Severn.
We have to balance many factors when considering this issue. There is the topic of climate change, which is easily the most significant contributor to my postbag and e-mail inbox. There is the UK energy mix and security of supply. There are the costs of any scheme. There is the opportunity cost in terms of the effect on habitats—the natural environment—and of course, there is the debate on the different engineering solutions that may be appropriate. I hope, however, that there might be agreement on the fact that it would be foolish not to have a serious exploration of whether it is possible to balance all those things and harness the power of the Severn. The very challenging targets that we have to meet have been mentioned. It is commonly accepted that the barrage or any other solution may contribute 5 per cent. of the United Kingdom’s electricity supply in the future.
The hon. Member for Stroud focused today on costs. The Government have commissioned their own feasibility study, which has several strands. Different consultancies and pressure groups will be considering engineering, the habitat and the transport opportunities, but the Government have specifically engaged PricewaterhouseCoopers—incidentally, I obtained my professional qualifications with PWC 15 years ago—to consider the questions of ownership and finance. Can the Minister give us an early indication this afternoon of when he expects some of the strands of the feasibility study to report to the House? Will they all come together in 2010, or can some progress reports and interim studies be laid before the House to inform our debate over the next two years?
We have already heard from one set of Government advisers—the Sustainable Development Commission, which recommended last year that the barrage should be entirely owned and managed by the public sector. Will the Minister say whether he or the Government accept that premise, or whether PWC is considering the questions of ownership and commissioning as well as the actual costs, wherever they may fall?
Many other factors and constraints will need to be weighed up that are relevant to the economic viability of a barrage, lagoons or any other engineering solutions. One factor is the capacity of the national grid to transmit the electricity that could be generated from such a major scheme to the places where it is needed. You may be aware, Mr. Weir, that there is already a fear of a capacity constraint in relation to bringing power down from Scotland—where there is great potential for harnessing the power of the wind and perhaps waves as well—to the centres of population much further south of the border. I wonder whether the national grid is geared up now to transmit 5 per cent. of the UK’s energy to the areas where it is needed, which may be well away from the Severn.
Another capacity constraint relevant to the economics of all this will be skills. Various figures have been bandied about for the number of jobs that could be created as a result of the construction and operation of the barrage. One press report that I read in preparation for today’s debate even mentioned the figure of 40,000 jobs, but does the UK have sufficient engineering skills to carry out such a major operation? It will probably be the biggest construction project that this country has ever carried out. Arguably, it will be bigger than the channel tunnel, and it will probably be the biggest construction project since Victorian times. Have we enough young people who are enthused enough to take on the subjects relevant to engineering, and are we doing enough to ensure that engineering graduates go into the profession for which they have trained, so that they will find it a lucrative career?
Frontier Economics has recently published a report, which was the impetus behind the hon. Member for Stroud initiating the debate. The report was commissioned by organisations such as the National Trust, the WWF—both of which I belong to—the RSPB and a coalition of angling organisations, all of which the hon. Member for Bridgwater (Mr. Liddell-Grainger) rather disparagingly referred to as the chattering classes. Those organisations have made an incredibly important contribution to this debate and to the national debate, and they would be failing in their duty to their members if they had not commissioned such a report. We should thank them for doing so.
There were two central headlines in the report, one of which referred to the estimate of the cost, which is £15 billion. Once a large figure is quoted in public, it often gets repeated over and again and it begins to gain currency. Will the Minister comment on whether £15 billion fits within the window of the Government’s current cost estimate and whether PricewaterhouseCoopers could produce an assessment of the cost? However the scheme is financed, the budget for the cost will remain the same.
Frontier Economics also says that there should be no Government subsidy or involvement in the operation of the barrage, in direct contradiction to the findings of the Sustainable Development Commission last year. Matthew Bell, the author of the report, said:
“It is hard to think of reasons for the public sector to build or operate a barrage which would not be equally applicable to many other projects and assets that sit in the private sector.”
Given the pressing economic conditions, will the Minister tell us the Government’s current assessment of the private sector’s ability to finance such a major infrastructure project, especially as the private sector is expected to finance a new generation of nuclear power stations, along with other renewable sources of energy? Will there be enough private sector investment around in the next 10 to 15 years to bring this project to fruition?
The hon. Member for Bristol, North-West (Dr. Naysmith) —perhaps I could call him my hon. Friend—referred to local economic conditions of the Port of Bristol, about which he and I care. I am also a former member of the docks and airports committee of Bristol city council. He and I used to disagree on whether it was suitable for the city of Bristol to own the Port of Bristol or Bristol airport. I am pleased that both are now prospering in the private sector. There are ambitious plans for the Port of Bristol to expand still further. The Bristol economy could benefit from another £3 billion of investment, which I would not want to jeopardise.
Will the Minister give both myself and the hon. Member for Bristol, North-West the local assurance that the feasibility studies will consider the effects of a barrage, lagoons or any other engineering solution on the viability of the ports that lie upstream from the likely line of a barrage? That would include Bristol and, presumably, Cardiff and Newport as well. In particular, will the studies consider the effects on the silting of the channel, the depths of the channel and the morphology of the mud banks?
This debate, which has been running in its new form for the past two years, has been given more impetus by the serious way in which we are tackling the challenge of climate change. Many previous debates on the subject, going back to Victorian times, have closed down with no action. I hope that we have made a decision on whether to proceed with the scheme by 2010. I am completely open-minded about the engineering solution, but I hope that, in 10 or 15 years’ time, we will see the natural power of the Severn contributing to the sustainable power that this country needs for the future.
I congratulate the hon. Member for Stroud (Mr. Drew) on securing the debate and on the very balanced way in which he introduced it. We have seen the House of Commons at its best this afternoon. We have seen a thoughtful, well informed and impassioned—if one can be thoughtful and impassioned at the same time—debate that has dealt with the real issues in a constructive way. Hon. Members have been willing to consider both the evidence and the facts. That is the right way for us to proceed at this time.
My hon. Friend the Member for Bridgwater (Mr. Liddell-Grainger) was perhaps a little harsh toward non-governmental organisations. A consultation process is under way, which is exactly the time when people should be expressing their views, especially if there is a cut-off point in the course of that consultation at which the project might be brought to an end, and therefore they would wish their views to be known at an earlier stage.
Nevertheless, it has been a very good debate. There has also been a sense of déjà vu—a feeling that we have been here before. My hon. Friend the Member for Salisbury (Robert Key) has probably seen these debates many times over his long service in the House. Some 20 years ago, in the 1980s, millions of pounds was spent on studies considering these matters, and here we are, at it again.
During the course of the debate, we have heard that there are two principal themes. The larger one, costing some £15 billion, would produce about 8.6 GW, or 5 per cent. of our electricity supply, and would save about 5.6 million tonnes of carbon dioxide emissions, based on a comparison of gas and electricity generation being displaced. That does not take account of the immense amount of carbon that would be emitted in the course of constructing the project. The second and smaller plan would cost about a tenth of that amount, but would generate about an eighth of its power—about 1.5 GW. Therefore, we have two alternative schemes, but we need to add in the other options as well, such as the lagoons and the cost of doing nothing.
The Government’s approach has been broadly correct. They have considered those options and are deciding on a way forward—if there is to be a way forward. We must recognise the extent to which this is an issue that divides opinion among experts, environmentalists and public opinion. We must have a thorough and watertight case—probably not very watertight, otherwise it would not work very well—that stands up well to careful scrutiny.
The hon. Member for Stroud said that the Government must do some big things if they are to achieve their renewables target. We need to be convinced that the Government will do those things for the right reasons and they will not be giving the go-ahead to massive investment in technologies that are there to meet an artificial and arbitrary target agreed with the European Union. We need to know that they are doing it because it is the right thing to do.
There is a suspicion that the Government have already made up their mind about the project. My hon. Friend the Member for Weston-super-Mare (John Penrose) made the point that that was because they would be allowed to have a credit with the EU which would start on the first day of construction, years before the scheme produces any energy at all. The Minister must allay that suspicion, because people need to be clear in their mind that the decision will be based on facts, and facts alone.
The Government are right to consider all the options, such as the two main barrage options and the lagoon prospects, and then to make a decision that takes into account their impact on both local communities and the environment. The importance of tourism to the area has been mentioned. The Government need to look at the benefit that extra tourism would bring and at the costs of putting in place the infrastructure that it would generate as well. Infrastructure would include new rail links, road links and the facilities that would be required to make tourism sustainable. They also need to consider the economic implications for other businesses in the area.
I take on board the comments made by the hon. Member for Bristol, North-West (Dr. Naysmith) about the port of Bristol, which is a very important facility. As he said, it is probably the port closest to the centre of England, so many miles of road usage are avoided by using the port. If we find that the port cannot get the new freight coming in because of the draft level being reduced, that would be very damaging indeed. I know that there are plans to build the largest container port in Europe there. The risk of jeopardising that potential investment and the great environmental benefits that that could bring has to be taken into account as well.
The hon. Member for Bristol, West (Stephen Williams) talked about the national grid connection costs. The total costs of those projects need to be taken into account, and I hope that that is what the Government will do.
It would be interesting to look at the scope for tidal lagoons, as some people say that they may be the way forward. It is an intriguing possibility. Not one has been built, so many people are trying to estimate what their value and cost would be. People’s views differ: some say that they would cost less but generate more electricity for the scale of the investment; others say that they would be less efficient. We need some clarity from the Government’s consultation process that will enable us to understand exactly the different benefits of different systems. We need robust answers, and I hope that they will be provided.
It is absolutely clear that opinion settles on two different sides on the matter. There are those who say that the barrage will create an enormous number of construction jobs—perhaps 35,000—of which, it is estimated, half could be in the greater Severn area. On the other hand, although the barrage could be the greatest building project ever undertaken in this country, a lot of the work would be done overseas. My understanding of the construction process is that massive cement structures would be built around the world and then floated in, anchored to the sea bed and gradually drawn down. The project would involve an enormous proportion of Europe’s cement construction facilities and would last for many years. There may be no carbon price for the electricity generated by the Severn barrage, but by that time, as the emissions trading scheme moves into its later stages, there would almost certainly be a carbon price for the production of cement.
We know that the construction costs will be high, but there are those who argue that because the lifespan of the barrage would be 100 to 120 years, the average lifetime costs would be quite low compared with other technologies. On the other hand, there are those who say that barrages are an inefficient and costly way of generating power. The load factor is expected to be 22 per cent. That does not compare favourably with offshore wind, which could have a load factor of 35 or even 40 per cent.
The comparative costs must be taken into account. Frontier Economics has estimated that electricity from the Severn barrage would cost £127 MWh compared with £55 MWh for wind. Tidal stream technology is thought to indicate a cost of between £60 and £100 MWh, according to the Carbon Trust, and it could provide up to 10 per cent. of the UK’s electricity demand. Greenpeace and others suggest that tidal lagoons would involve lower costs. Indeed, only solar photovoltaics and fuel cells are thought to have a higher cost per megawatt hour than a large barrage. According to Frontier Economics, producing 17,000 GW of output—the installed capacity of the barrage—from wind or from combined heat and power would cost £900 million, at a cost per unit about half that of the Severn barrage. Many issues must be taken into account and assessed in the course of the study.
I hope that the Minister will also be clear about his attitude to public funding for the project. If the evidence is that there is a case for the project but that it cannot be done with private sector investment alone, would the Government be inclined to give support? I realise that we will be in government by the time the decision is made, but I would be interested to know what the Minister’s view is now. Does he see funding being delivered through the system of renewables obligation certificates, or through feed-in tariffs? How does he think the project should be funded? At this stage, we need some clarity about how the Government think that it could be done.
Will the study also take account of how the money could be used in other ways? The Royal Society for the Protection of Birds has estimated that £15 billion to £20 billion spent on things such as energy efficiency measures would make a much more significant contribution to solving energy demand problems in this country. Has the Minister considered whether the money could be spent on energy efficiency measures and what the reductions in demand would be?
There are those who claim that the Severn barrage will help against flooding. Again, there are two sides to the argument. Some say that a barrage would reduce flood risks, and some say that it would increase the risk in other areas. We can make decisions on the project only if the Government reach a final conclusion on which of the positions is correct.
We also need to be clear about how electricity would be generated. The barrage would produce two surges a day. Peak flow would be for about one and a half to two hours during those surges, which will often come at the wrong time of day. As power cannot be readily used at 3 o’clock in the morning, we would have to find a way to store it. That could mean converting it into hydrogen or holding the flow back and then allowing it through later, by which time the tide may be coming in again and its impact would be massively diminished. Alternatively—this seems bizarre—the base load nuclear power stations could be turned off to allow the surge to come through at that moment. Those issues all have to be taken into account.
We are entering an exciting and constructive debate. The idea has caught people’s imagination. As a boy, I heard about the Severn barrage—I am obviously younger than the Minister, who was probably a teenager at that time. It was thought to be an idea that was bound to come in good time, but the more one thinks about it and the more evidence one takes, the more one realises that there are real challenges that need to be overcome and assessed.
The Frontier Economics report concluded that
“under a range of plausible scenarios, a large barrage on the Severn is expensive compared to alternative ways of generating renewable electricity…there appears to be sufficient capacity to use other technologies to meet the barrage’s output and Government’s targets.”
We must ensure that this investment decision is made because it is the right one, not because it is part of a design to meet European targets. The onus is on interested parties to prove the case for a barrage, not the case against it. We have seen a great deal of evidence from those who are concerned about it, and we have seen an enormous amount of enthusiasm from those who are in favour of it. Most of us want to be open-minded and to judge the project on the facts. We must judge it on the facts and not on emotion.
This has been a useful debate. I noticed that the hon. Member for Wealden (Charles Hendry) in his characteristic way asked me a question and then predicted that he would be in government by the time it was answered, but he was clearly too modest to publish the answer in a White Paper. That would have been immodest but consistent with his aspirations for government.
I congratulate my hon. Friend the Member for Stroud (Mr. Drew), as others have done, on securing this debate. His thought-provoking speech prompted a useful short debate, which has been entered into in the right spirit.
Our decision on a tidal power scheme on the Severn is some way down the line yet, for good reasons which I shall outline. We are carrying out a feasibility study to look at the costs, benefits and impacts of a tidal power scheme, which could be a barrage in one of several possible locations, or a lagoon or lagoons. It could involve another technology—ideas are being put to us about other technologies—or a combination of schemes. My hon. Friend asked for reassurance that we are not looking only at a barrage. As for successes with the Government, he was looking for his hat trick. I think that he is probably on about two and a half out of three, but I should not encourage him much further, given his well articulated opposition to the barrage.
Only when we have completed our study and analysed all the issues, including the costs, will we make a decision on whether to support a scheme and, if so, on what terms. The decision will be taken in the context of our wider energy and climate change goals. I shall not say too much about them, but there is always a danger that if we discuss one approach, whether nuclear power, windmills, the Severn barrage or lagoons, people think that we are forgetting the other things. Of course we are not.
For fundamental reasons relating to the nation’s energy security as well as the need to tackle climate change, we have made a bold and right decision about nuclear power. We are demonstrating the technology of carbon capture and storage, and we have published ambitious targets, but the targets will not distort the decision-making process for the barrage. I heard the concerns voiced about renewable energy, and we should consider the barrage in that context.
I shall not say more to the hon. Member for Salisbury (Robert Key) about climate change, because I am sure that he will agree that unless we tackle global warming, the geography, climate, flood levels and poetry of Shakespeare’s England will be rudely unsettled by climate change. Doing nothing is not an option, but I am not sure whether in respect of this project it would be right to consider the flood tide in the affairs of men—and, to be up to date, women.
Let me say more about where we are on the Severn tidal power scheme, which is certainly an important option to consider. Come the time, the decision will be an important one. As we heard, with its 14 m tidal range—the second highest in the world—the Severn estuary has the potential to provide 5 per cent. of the country’s electricity needs from a renewable, indigenous resource. We need to examine the estimates, but that would be a huge contribution to our goals. Of course, once a barrage is built—if it is built—it could no doubt be there for a century or more, producing clean and green energy.
That is why, back in 2006 when I was running the energy review, I asked the Sustainable Development Commission to look again at the potential for tidal power in the Severn estuary. Its report last year concluded that tidal power can indeed be generated in the estuary within sustainable development principles. However, as the commission advised, much more work needs to be done before a decision can be taken on whether or not to support a tidal power scheme, hence our feasibility study.
We need to do much more work on the potentially considerable environmental impacts of such a scheme, and I take the ecological issues involved here most seriously. The estuary is, after all, of international nature conservation significance and we must take the time, through our strategic environmental assessment, to gather a detailed evidence base to ensure that we understand the impacts of any barrage scheme. We also need to consider the regional, social and energy market impacts. Of course, we also need detailed, up-to-date—I emphasise that they must be up to date—cost estimates for the potential schemes, and therefore a new economic assessment.
Let me say a little more about the economics. The SDC report began the process for us. The SDC estimated the key costs and benefits of two potential barrage schemes using the data available; however, those were old data. Construction costs were £15 billion for a Cardiff to Weston barrage and £1.5 billion for a Shoots barrage. The SDC considered the unit cost of electricity relative to other renewables, in a similar approach to the Frontier Economics study that my hon. Friend the Member for Stroud mentioned, along with potential ownership options. The SDC also began to consider the regional economic impacts.
However, as the SDC made clear, there are significant limitations with these assessments, as much of the available information is out of date and in some cases incomplete, with the last detailed studies dating back, after all, to the 1980s, as we have heard today. The SDC called for further work to address the gaps in information and that is what we are doing through the feasibility study.
We are revisiting in detail all of the issues that the SDC looked at: costs; financing and ownership options; and regional economic impacts. As I said at the outset, we are not just examining two barrage options; we are considering a full range of possibilities, including lagoons and other technologies for which there are no current cost estimates. In the course of the study, we will also be making detailed assessments of all shortlisted schemes, considering all the associated costs and benefits, such as environmental impacts, flood benefits and regional impacts.
The hon. Member for Wealden asked about the economics. When we have the final arithmetic about which we can be reasonably confident, of course we will assess it against other uses of that money that could produce renewable energy or, more broadly, policies that help us to tackle climate change. That will be a sensible approach and I hope that people will accept that that will be the Government’s approach. It is worth noting here that the Frontier Economics report only considered one barrage option—the Cardiff to Weston option—using previously produced cost estimates in reaching its conclusions. An analysis that includes other options and that uses new estimates may reach different conclusions. We will have to wait and see.
The report does not “scale up” the International Energy Agency cost estimates for wind. To meet our 32 per cent. central renewable electricity scenario, we are likely to need an additional 28 GW of wind, of which 14 GW is offshore. At this scale, some higher-cost installations will be needed, beyond those included in the estimates calculated by the IEA. This is not a criticism of the IEA; rather, it is a reflection of how radical our renewable energy goals are. Our analysis for the renewable energy strategy suggests that the costs of electricity from a Severn tidal power scheme are comparable with the costs of offshore wind, but we need to refine and revisit that judgment. Having said that, before we can make an accurate comparison we must, of course, complete all of our work through the feasibility study.
The Frontier Economics and SDC reports both presented views on the roles that the public and private sectors should have in any potential tidal power project. Those are important matters, and that is why we have already appointed PricewaterhouseCoopers to consider options for ownership and finance. With respect to the hon. Member for Wealden, I cannot say more about those options today; we need to do the work first. We will be looking at a range of potential ownership and delivery options, from publicly led, as the SDC recommends, to private ownership, as the Frontier Economics report suggests. We need to assess how best to manage the different risks associated with each project, to ensure that it is delivered in a framework that results in value for money, and to take account of the implications for wider energy policy in terms of delivery and ownership structures. We need to acknowledge that, owing to risks that may be best managed by Government, the private sector would be unlikely to develop a project on its own. I therefore believe that it is right that the Government lead the feasibility study, but that does not necessarily imply Government ownership.
I expect to have some early cost estimates and findings from the financing and ownership report in the autumn. These findings will feed into our internal decision later this year on whether to proceed with phase 2 of the study. I will happily discuss the new information, when it is available, with hon. Members through our Parliamentary Forum on the study. We will also publish the report, following that decision. What I am saying is that, fairly soon, if we see any big show-stoppers, the show will stop. We will not continue with the feasibility study if it is clear that that would be foolish.
Of course, we also need to consider the regional economic impacts of a tidal power scheme, and we expect to appoint consultants later this month to lead this work for us. We will look at both the construction and operational phases and investigate the impacts on the regional economies of Wales and south-west England, and on specific sectors and activities, including, importantly, the region’s ports.
Let me say something now about Bristol port. As my hon. Friend the Member for Bristol, North-West (Dr. Naysmith) said, we both met representatives of the Bristol Port Company; we had some useful discussions with the owners and took a good look around the port, which I found invaluable. One of the issues that the owners raised with me was the need for locks in a barrage. That is clearly an important matter and one to which I am sympathetic. I am looking into what is possible in terms of committing to locks soon, but we cannot provide guarantees on lock specification without considering the consequences for the technical and engineering aspects of a tidal power scheme. After all, we also cannot say at this stage that the tidal power project, if it goes ahead at all, will be a barrage.
I listened to my hon. Friend the Member for Stroud talking about a possible testing site. We are investing in other testing sites, but I am happy to discuss his ideas further.
The hon. Member for Weston-super-Mare (John Penrose) also spoke. I looked across at his beautiful constituency from Brean down only recently and I think that I waved to him on the beach; I am not sure about that. No, no—he was attending to his duties; local reporters could be here. He is very concerned about the draft directive, and I want to reassure him. It is a draft directive. We are looking at the 5 GW threshold, perhaps to argue that it could be reduced to less than even 1 GW. The feasibility study will look at seven tidal power projects against other options, based on standard cost-benefit analysis.
In brief, I want to reassure the hon. Gentleman that it would be outrageous for anyone to think that, just because we need to hit a target and to be flexible about that, we would somehow give the go-ahead or favour a project on this scale. I am happy to discuss the matter with him, because I really want to reassure him that that is not where we are in our considerations. What we are saying is that, if large projects in Europe that are being built are a year or two late surely it is not unreasonable that they could count before the target, but not before time. They would not provide full benefit until the project is commissioned.
Can we talk later, because I have only got two minutes left and there were one or two other things that I wanted to say?
One thing that I wanted to say to the hon. Member for Bridgwater (Mr. Liddell-Grainger) is that I heard what he said about non-governmental organisations. I think that it is a pity that any serious organisation can make up its mind about a project of this sort now, in advance of the feasibility studies. In the long term, the environmental impacts of climate change will be devastating and the more of us who can keep an open mind, the better. However, I will not say more about that issue, because I think that I ruffled a few feathers, when I spoke about it the other day. I ask all hon. Members and all those with an interest to keep an open mind, as I will, until we have developed our evidence base and are in a position to make an informed decision on whether the huge potential of the Severn estuary should play a part in meeting our energy needs.
Finally, as we approach the hour, I would like to say that I want to keep in contact with all the various interests, including all the voluntary organisations and industry interests. I certainly want to remain involved with Members of Parliament and I look forward to our continued dialogue through the Parliamentary Forum, the next meeting of which is likely to be on 24 October in Cardiff.