Considered in Grand Committee
My Lords, I beg to move that the Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) (Amendment) Regulations 2021, which were laid before the House on 25 February 2021, be approved.
This is an uncontroversial statutory instrument, which is required to implement a protocol, signed by the Governments of the United Kingdom and Japan on 16 December 2020, to amend the 1998 nuclear co-operation agreement between the UK and Japan. The statutory instrument amends regulations to ensure that the United Kingdom can comply with the provisions of that protocol.
To understand the importance of this statutory instrument, one first needs to understand the background to, and purpose of, the nuclear co-operation agreement and the protocol. Nuclear co-operation agreements are commonly used international agreements that give legal underpinning to civil nuclear co-operation. They provide key non-proliferation assurances, including in respect of nuclear safeguards, and a framework for nuclear trade. In 1998, the United Kingdom signed a nuclear co-operation agreement with Japan, reflecting Japan’s position as an important partner in nuclear co-operation and non-proliferation for the United Kingdom. Both countries collaborate in the areas of nuclear regulation, research and development, decommissioning and advanced nuclear technology development.
On 16 December 2020, the United Kingdom and Japan signed a protocol to the nuclear co-operation agreement. The primary aim of the protocol is to maintain this mutually beneficial relationship between the United Kingdom and Japan on civil nuclear trade and co-operation. It achieves this by ensuring that the United Kingdom-Japan nuclear co-operation agreement, which it amends, is fully operable now that the United Kingdom operates its own domestic safeguards regime and is no longer part of Euratom.
However, it also goes further by including provisions that strengthen the mutually beneficial relationship between the United Kingdom and Japan. These additional provisions cover issues such as co-operation in research and development, intellectual property, safety and the expansion of the scope of the nuclear co-operation agreement to include information. The protocol therefore maintains and builds on both countries’ commitments on non-proliferation and ensures the continued peaceful uses of nuclear materials and information.
Until this protocol comes into effect, the current nuclear co-operation agreement remains operable through an exchange of notes, which was agreed as an interim measure between the UK and Japan in February 2019. This exchange of notes came into effect at the end of the transition period.
I shall now explain the purpose of this instrument and what changes it effects. The statutory instrument amends regulations to ensure that the United Kingdom can comply with the provisions of the protocol and ensure that its objectives can be achieved. First, it amends the Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2019, so that the protocol is included under the definition of “relevant international agreement” for the purposes of the Energy Act 2013.
This concerns primarily the role and responsibility of the UK’s nuclear regulator, the Office for Nuclear Regulation. One of the Office for Nuclear Regulation’s statutory purposes is to ensure that the UK complies with relevant international agreements. These regulations ensure the protocol is captured as such an agreement. Failure to pass this statutory instrument would therefore mean that the Office for Nuclear Regulation’s role would not include any reference to what has been agreed in the protocol, leaving the UK at risk of breaching this agreement. That, clearly, is not acceptable.
The second change effected by this statutory instrument is the inclusion of the protocol under the definition of “specified international agreement” for the purposes of the Nuclear Safeguards (EU Exit) Regulations 2019. This is achieved by extending the requirement in the Nuclear Safeguards (EU Exit) Regulations 2019 for operators to provide information to the Secretary of State relating to qualifying nuclear material or other relevant items in respect of the protocol.
For the purposes of the Energy Act 2013 and the Nuclear Safeguards (EU Exit) Regulations 2019, the Office for Nuclear Regulation and operators are currently required to fulfil certain reporting obligations relating to the UK-Japan nuclear co-operation agreement. Operators are therefore already required to provide information on nuclear material to the Office for Nuclear Regulation, and information on non-nuclear material and equipment to the Department for Business, Energy and Industrial Strategy. As a result, there are existing reporting mechanisms that will allow them to meet the additional obligations detailed in these regulations, specifically on information. We therefore expect the administration costs associated with implementing new requirements under the protocol to be very low.
There is a statutory requirement to consult the Office for Nuclear Regulation and others that the Government consider appropriate on these regulations. The Government have therefore worked closely with the Office for Nuclear Regulation and the civil nuclear industry to implement the new domestic safeguards regime and to ensure that the appropriate mechanisms are in place to implement obligations contained in international nuclear agreements such as this protocol. It has been of utmost importance to ensure that their interests and concerns were reflected throughout the policy process.
Moving forwards, we will continue to work closely with the Office for Nuclear Regulation and to engage regularly with the civil nuclear industry, highlighting the guidance available and addressing any questions and concerns. The Government have also engaged with the Business, Energy and Industrial Strategy Committee, the Lords EU Environment Sub-Committee, and the Lords EU International Agreements Sub-Committee, informing them of the protocol and the changes it makes.
The territorial extent and application of the statutory instrument is England and Wales, Scotland and Northern Ireland. The Government have shared it with our colleagues in the devolved Administrations so that they are aware of the obligations it creates.
I conclude by emphasising that I see the measures contained in these regulations as important but uncontroversial, since they will ensure that the United Kingdom can comply with the provisions of the protocol to the UK-Japan nuclear co-operation agreement. I hope that noble Lords will support these measures.
My Lords, this is one of those SIs that you cannot find any reason to object to, so I will be extremely brief. While it talks about co-operation, it is unfortunate that Toshiba cancelled the Moorside project in 2018. Since then, two further projects have been cancelled at nuclear power plants.
Of course, this SI is relevant to the EU exit regulations. One of the issues raised was that, by moving away from Euratom and joint co-operation with our EU partners, we are in effect increasing costs to those organisations that would want to undertake development of nuclear power plants in this country. It seems that EDF is the only viable alternative for nuclear power plants at the moment, but could the Minister give an indication of how much the new regulations are costing industry, or maybe write to me?
My Lords, I thank my noble friend the Minister for introducing these regulations. I declare my interest as a consultant to the Japan Bank for International Cooperation and as a member of the advisory board of Penultimate Power.
The introduction of our own nuclear safeguards regime, supervised by the ONR, should enable us to comply with IAEA standards in a less cumbersome and less expensive manner than when we were able to while a member of Euratom. We no longer need to rely on complicated verification processes that do nothing to ensure full compliance with IAEA standards. Our NCAs of course ensure that our independent safeguards regime will permit no diminution whatever in the maintenance of the highest possible standards.
However, can my noble friend the Minister confirm that under our independent regime we no longer have issues such as those faced by Urenco in the past? These included the requirement for Euratom’s approval of any new contract and firm declarations on end use for the material. All that required much expensive bureaucracy, which added nothing to the agreements with, and undertakings to, the IAEA, which were not needed by non-European competitors.
Of course, UK companies remain fully covered by the Government’s undertakings to the IAEA, and any shipments from the UK have to meet the requirements of UK export controls. However, it is not clear yet whether, after the inevitable teething problems, the Government have got to grips with the need to ensure that costs and bureaucracy are reduced to the maximum extent compatible with the necessary maintenance of the highest international standards.
I welcome the introduction of these regulations, whose effect is to add technology to the scope of the UK-Japan NCA through its amending protocol. This will enable the ONR to ensure the UK’s compliance with the amending protocol. Will the Minister confirm that the Government agree that co-operation with Japan in civil nuclear power is even more important than it has been until now? The energy White Paper recognises the need for at least one more major large new nuclear power station project, besides confirming the Government’s intention to continue to support the development of SMR and AMR technologies.
As the Minister is aware, Wylfa is perhaps the best available site for a nuclear power station in the country, if not in Europe. Is she also aware that Hitachi waited some 18 months after its decision to suspend the project before cancelling it, and that if the Government had come forward with additional financial support and a committed operator within that time, the project might have been rescued as a tripartite UK-Japan-US project? Would that not also have sent a very positive message about our trade and investment relationship with Japan, coming hard on the heels of the signing of the CEPA, and provided strong support for our tilt towards the Indo-Pacific, so important for the success of global Britain?
Does the Minister also agree that it is important that, where possible, major investors in our nuclear energy projects should be from countries whose security and defence interests are aligned with our own? What steps are the Government taking to revive the Horizon project? Does she agree that it is in our interests for them also to support other UK-Japan nuclear projects such as that on which Penultimate Power is collaborating with the JAEA to commercialise its high-temperature gas-cooled reactor technology in this country?
I am delighted to follow my noble friend Lord Trenchard. I welcome my noble friend the Minister to her position and thank her for her clear and lucid explanation of the SI before us, which I very much welcome.
I note in the Explanatory Memorandum that the UK already has a number of bilateral nuclear co-operation agreements with countries such as Australia, Canada and the USA, which is very welcome in addition to the measure before us. Are any other agreements in the pipeline of which we should be aware? That would be welcome news indeed.
I particularly welcome the extension that my noble friend outlined in her introduction. She said that the mutual co-operation will continue to exist, but that it will be extended to R&D, international property and the other items that she mentioned. That is very positive.
I really have only one question, which I appreciate is not directly relevant to the SI before us. It deals with civil nuclear co-operation but, in view of the Government’s recent announcement that we are to increase—I presume unilaterally—the number of nuclear warheads in this country, has her department had any negative feedback in relation to civil co-operation? It is interesting that my noble friend dwelt quite positively and strongly on this being a key nuclear non-proliferation safeguard. Obviously, it could be a potential setback, so I would be very interested in that regard, particularly in view of the sometimes tense relations that we have with my home country of Scotland, the place of my birth.
With those few remarks, I thank my noble friend for giving us the opportunity to consider the SI before us. I would very much welcome hearing more broadly of other co-operation agreements. I hope that we will continue to co-operate with Japan and the other countries along the terms that she outlined to us this afternoon.
I thank the Minister for her introduction to the instrument this afternoon on the relevant international agreements on nuclear safeguards. The UK regime was one of the crucial elements necessary for having effective and coherent UK controls in place during the Brexit process. The Nuclear Safeguards Act 2018 gave powers to the Office for Nuclear Regulation to monitor and regulate the nuclear co-operation agreements, one of which was with Japan.
I am very happy to approve these regulations today, which amend and update the original 1998 UK-Japan agreement with the December 2020 amending protocol. They provide a framework for further trade in nuclear materials and technology, and facilitate research, development and exchanges of information. Without the details of the updates with Japan, can the Minister advise the Committee whether this amendment to the 2019 agreement is made further to the position under Euratom? As I understand it, the 2019 amendment merely confirmed the NCA with Japan in the original Euratom protocols under the IAEA. If my hunch is correct in any way, do the Government intend to update other NCAs, most notably with the US, Canada and Australia, in a similar fashion? Have the Government received any comments from the IAEA?
When the Nuclear Safeguards Bill, now an Act, was before the House in 2018 one of the concerns was the recruitment and training of nuclear inspectors for the ONR to undertake what was then its new task to the high IAEA standards. For interest, it would be helpful if the Minister could give any update on the operations of the ONR. Maybe she can confirm whether any ONR review or report is intended to focus on the nuclear safeguards part of its responsibilities.
I thank noble Lords for their valuable contributions to this short debate. The points that we have been discussing today highlight that these regulations will ensure that the United Kingdom can comply with the provisions of the protocol agreed between the Governments of the United Kingdom and Japan. The amendment ensures that the protocol is captured under the Office for Nuclear Regulation’s statutory purpose: to ensure compliance by the UK with relevant international agreements, and that operators provide information on qualifying nuclear material or other relevant items to the Secretary of State.
In response to the questions from the noble Lord, Lord Redesdale, and my noble friend Lord Trenchard regarding the Government’s commitment to minimising cost and bureaucracy, I must emphasise that a number of requirements already existed through the agreements between the UK and Japan which this protocol amends. Under the new regime, operators are required to provide information on nuclear material to the Office for Nuclear Regulation and information on non-nuclear material and equipment to the Department for Business, Energy and Industrial Strategy. There is no requirement to provide information to Euratom. We therefore expect the administration costs associated with implementing new requirements under the protocol to be very low.
My noble friend Lord Trenchard also asked whether co-operation with Japan in civil nuclear is more important than ever, and whether it is important to have major investors in our nuclear energy projects from countries whose security and defence interests are aligned with our own. Japan is a significant strategic partner for the UK and we regularly discuss a range of issues, including nuclear energy. Both countries collaborate in areas of nuclear regulation, research and development, decommissioning and advanced nuclear technology development—although it would not be appropriate to comment on the detail of these discussions. As Japan requires a nuclear co-operation agreement with countries before it will conduct nuclear trade with them, the protocol in this secondary instrument is an important enabler of co-operation between the UK and Japan on any future nuclear projects.
Both noble Lords mentioned the Wylfa project. We recognise that Hitachi’s decision to pull out of the proposed project at Wylfa and wind up Horizon Nuclear Power was disappointing for local communities, and personally for me as the spokesperson for Wales. Ultimately, though, these were commercial decisions, and the future of the site is a matter for Hitachi. However, as my noble friend Lord Trenchard rightly pointed out, the energy White Paper is clear that nuclear remains an important part of the UK’s energy mix. We have committed to at least one more 1 gigawatt power plant and we will continue to discuss new projects with other viable companies and investors wishing to develop sites, including the one in north Wales. The civil nuclear sector continues to be of key strategic importance to the UK and we welcome foreign investment in our infrastructure, subject to thorough scrutiny and the need to satisfy our robust legal, regulatory and national security requirements. I point my noble friend to the National Security and Investment Bill that is going through the House this week.
In relation to the question on high-temperature gas-cooled reactors, in 2019 the UK and Japan signed a memorandum of co-operation on energy innovation. This is the beginning of discussions on what the UK-Japan collaboration on advanced nuclear might look like. The joint NNL and JAEA report was published in October 2020 to provide a technical basis to establish and agree the next phase of collaboration, which will be welcome.
In response to my noble friend Lady McIntosh of Pickering, I will say that the UK Government are considering NCAs with other countries. We cannot comment on any ongoing negotiations, but we are of course keen to put in place NCAs with any country where such an agreement would be mutually beneficial. All the NCAs that the UK has in place are operable and we review them regularly.
With reference to the change in the UK’s overall weapons stockpile, the UK Government have consistently stated that we will both keep our nuclear posture under constant review, in light of the international security environment and the actions of potential adversaries, and maintain the minimum destructive power needed to guarantee that the UK’s nuclear deterrent remains credible and effective against the range of state nuclear threats from any direction. We regret that the security environment has necessitated this change, but we must recognise that the security situation has worsened since the previous Government’s declaration of their intended nuclear warhead stockpile ceiling in 2010, since when we have seen an increase in nuclear challenges. Against this backdrop, the UK must ensure that its nuclear deterrent remains credible and effective against the full range of state nuclear threats from any direction.
I thank the noble Lord, Lord Grantchester, for his question about the interests of the IAEA in relation to this SI. The IAEA seeks to promote the safe, secure and peaceful use of nuclear technologies. The nuclear co-operation agreement between the UK and Japan seeks to do the same. As a former chair of the Nuclear Suppliers Group, I am sure that IAEA director-general Grossi will be pleased to see that we have brought our agreement up to date and in line with NSG guidelines.
To close, I will underline that the protocol, and by extension these regulations, reaffirm the importance that the Government place on ongoing co-operation with the UK’s international partners in the civil nuclear sector. It highlights the continued value we place on mutually beneficial co-operation on the peaceful uses of nuclear energy. I commend these regulations to the Committee.
The Grand Committee stands adjourned until 4.40 pm. I remind Members to sanitise their desks and chairs before leaving the Room.