It’s an exciting time to have joined Optio’s specialist nuclear insurance vehicle, Northcourt, as Senior Advisor and I very much hope that I can put my experiences and knowledge of geopolitics, risk management, the nuclear industry and my seven years at Pool Re as Chief Resilience Officer to good use. As with any difficult-to-insure risk, such as nuclear, the insurance industry has a key role to play and at Northcourt, we believe that there is much more that the private sector and the insurance industry can do to remove some of the contingent liability that the Government currently holds on its balance sheet.
The ongoing drivers of global insecurity and uncertainty clearly demonstrate the need for increased energy and supply chain security for the UK economy and by extension our national security. Covid, the enduring war in Ukraine, mass migration and immigration, population growth, extremism and the consequences of climate change have all shown the impact catastrophic events have on businesses, supply chains, the economy and wider society.
It is encouraging that the UK Government has pledged to decarbonise all sectors of the economy to meet the target of net zero by 2050. Admirable progress has been made toward this and 2022 was a record-breaking year for the UK, with 40% of electricity produced by solar, wind and other renewable sources. Nuclear power is an essential part of the energy-production mix needed to achieve net zero, as the constant crucial to maintaining reliable electricity supplies. Of note, the 2023 Integrated Review Refresh’s[1] first priority in addressing the UK’s vulnerabilities is energy security and the Government’s British Energy Security Strategy proposes to accelerate the UK towards a low-carbon, energy independent future. Both of these are certainly welcome, as is the Chancellor’s announcement, in the recent Budget, of the launch of Great British Nuclear.
The UK, alongside the US, has been a leader in nuclear energy since the 1950s and to sustain this expertise more investment is now needed in our current and future nuclear energy capabilities. When I joined the Licensee board at EDF Generation in 2017, nuclear power was providing around 25% of the UK’s electricity. Since then, output has dwindled to around half of that, with the pace of decommissioning outstripping investment in new facilities.
The construction of Hinkley Point C and the Government's commitment to Sizewell C is encouraging but more needs to be done if the UK is to have a financially sustainable and resilient nuclear ecosystem. Advanced Nuclear Energy, in the form of Small and Advanced Modular Reactors (SMRs and AMRs), along with developments in thermal fusion, fast fusion and uranium granules all provide huge opportunities to enhance a secure, sustainable and versatile nuclear energy platform within the UK.
The Chancellor’s decision to launch a competition for SMRs, as well as co-funding this capability is encouraging and the private sector is standing by to deliver. This investment needs to happen now if we are to have any chance of meeting our 2050 net zero goals.
The insurance industry has a key role to play in underpinning our current and future nuclear energy programme. We can do more to improve the knowledge and understanding of nuclear, in particular breaking down the perception that nuclear is inherently dangerous, as well as advising on risk mitigation strategies. As an example of this, Northcourt has been hosting webinars to improve stakeholder understanding of the risk and their knowledge of nuclear.
Northcourt, with its extensive experience in nuclear insurance, sees an opportunity to leverage the private sector to manage this risk and ensure a sustainable UK nuclear industry, by removing more of the contingent liability from the government’s balance sheet and, by extension, moving the taxpayer further away from the risk of a nuclear event. These initiatives are driven by the January 2022 amendment to the Paris Convention on Third Party Liability, which extended the 10-year prescription period for death and injury claims to 30 years, as well as opportunities presented by developments in new nuclear technologies and global demand for nuclear power.
We should be in no doubt that global insecurity, resource wars, climate change and supply chain vulnerabilities will, unfortunately, increase over the coming years. Nuclear energy has a key role to play in creating a resilient, safe, sustainable and independent economy for the UK. The Government does not have the bandwidth, nor the access to all the key stakeholders and financial resources to deliver this on its own, which is why the private sector - in particular the insurance industry - has such an important part to play in underpinning the future of our energy needs and energy security.
[1] https://www.gov.uk/government/publications/integrated-review-refresh-2023-responding-to-a-more-contested-and-volatile-world