Saturday, July 30, 2005

Study ties fatalities to nuclear power site 07/30/05 - The Augusta Chronicle

Study ties fatalities to nuclear power site 07/30/05 - The Augusta Chronicle

By Rob Pavey | Staff Writer
Saturday, July 30, 2005
A national radiation research group contends that cancer deaths in Burke County have risen dramatically since Plant Vogtle went online in the 1980s, but the nuclear power plant's operating company dismisses the findings as "erroneous."

The study by the New York-based Radiation and Public Health Project used mortality statistics from the U.S. Centers for Disease Control and Prevention to compare death rates before and after Plant Vogtle's two commercial reactors went online in 1987 and 1989 respectively.

The study compared cancer deaths from the 1982-1990 period with those occurring from 1991 to 2002, said Joe Mangano, the organization's national coordinator.

The death rate per 100,000 population from all cancers in Burke County rose 24.2 percent during that period, while the same rate fell 1.4 percent for all of Georgia, he said. The average number of Burke County cancer deaths rose from 34 in the 1980s to 43 by 2002.

The group also examined deaths among infants younger than 1 year old in Burke County - and in 13 other communities around the country where nuclear facilities went online in the 1980s.

Those findings, which compared the 1985-87 period with 1988-90, included a 70.1 percent increase in Burke County infant deaths. The death rate per 100,000 population went from 13.71 to 23.31, reflecting an increase from 16 to 28 deaths, Mr. Mangano said.

During the same period, the statewide rate across Georgia went from 12.63 deaths per 100,000 population to 12.41 for a decrease of 1.7 percent.

The same study at 13 other counties with nuclear reactors found infant death rates declined as much as 27 percent in some areas and rose as much as 35 percent in others.

"That 70 percent we saw in Burke County was not matched by any others," he said. "It was far and away higher than any other community we looked at."

Steve Higginbottom, the communications director for Southern Nuclear, which operates Plant Vogtle, said the report is meaningless and draws "erroneous conclusions."

Residents of Burke County are not exposed to ambient radiation, and monitors throughout the region detect nothing more than naturally occurring "background levels," he said.

He cited a 1990 National Cancer Institute study that found no correlation between nuclear power plants and cancer rates among residents.

"That study covered 62 nuclear installations, 107 counties and 900,000 cancer deaths," Mr. Higginbottom said.

"The RPHP information references one plant, one county and 520 deaths. It is neither statistically valid nor scientifically credible," he said.

He also noted that Burke County might have a high number of residents with unhealthy lifestyles.

"The group fails to take into account the prevalence of important cancer risk factors, such as cigarette smoking and diet, which could account for the difference in rates," he said.

Mr. Mangano acknowledged there is no specific evidence of excessive or inappropriate radiation releases in Burke County, but he said the statistics are nonetheless troubling.

"I'm saying it is unusual and should be fully examined," he said.

The Radiation and Public Health Project is a nonprofit educational and scientific organization established by scientists and physicians dedicated to understanding the relationships between low-level nuclear radiation and public health.

The group has been involved in a controversial study known as the "tooth fairy project," in which children's baby teeth are analyzed for the presence of strontium-90, a radionuclide produced by nuclear reactors that also remains in the environment from nuclear bomb tests conducted in the United States.

"This material attaches to bones in teeth and stays a long time," Mr. Mangano said.

"We haven't done it in Georgia yet, but we know it helps calculate a dose. In other areas, we've found that counties closest to reactors can have 30 to 50 percent higher levels than distant counties," he said.

According to an article on the topic in E, an environmental magazine, strontium-90 enters human bodies through cow's milk, water and produce grown in soil exposed to radioactive runoff or contaminated rain.

Because it mimics the calcium needed to form teeth and bones, it easily permeates growing bodies and can can disturb bone marrow, where the white cells that ward off cancer and germs are created.

Although workers in the nuclear industry are closely monitored, Mr. Mangano said those workers also have access to better health care and generally have a healthier lifestyle.

"When you have a reactor in a poor, rural area, you are offering this radioactivity to an indigent population with poor housing and poor medical care," he said. "One would expect to see a greater increase in disease and death than other areas, and that's what came out."

Although nuclear industry officials and some scientists have long held that low levels of radiation are not harmful, a recent finding by a panel commissioned by the National Academy of Sciences concluded otherwise, according to The Associated Press.

After five years of study, the Committee on Biological Effects of Ionizing Radiation concluded in a report released in June that even low doses of radiation pose a risk of cancer, and that there is no threshold below which exposure can be viewed as harmful.

"It is unlikely that there is a threshold below which cancers are not induced," said the report, although it added that at low doses "the number of radiation-induced cancers will be small." And it said cancers from such low-dose exposures might take many years to develop.

Reach Rob Pavey at (706) 868-1222, ext. 119, or

New Brunswick nuclear power plant to get second life | N.B. nuclear power plant to get second life

In the end, the province decided to take the financial risk and move forward with the $1.4-billion overhaul.

Updated: Fri. Jul. 29 2005 11:44 PM ET

The aging New Brunswick Point Lepreau nuclear power plant that was set to be closed in 2008 will have its life extended.

The province has picked Atomic Energy of Canada Ltd. to carry out the refurbishment, which could keep the nuclear reactor operating for another 25 years.

A deal with Bruce Power was rejected because the company would have sold electricity back to N. B. Power. David Hay, the president of N.B. Power, told the Canadian Press the deal would have cost New Brunswick an additional $450 million.

The 22-year-old Lepreau plant is located near the city of Saint John, and gives the province 30 per cent of its power.

The plant has 700 workers, whose jobs would have been in jeopardy if the plant had closed.

Saint John Mayor Norm McFarlane told CTV News that the majority of the plant's employees live in the city and that the loss of the plant would have hurt the city.

Earlier this month, the federal government refused to pay for the plant's much-needed refurbishment, saying it would set a costly precedent.

Premier Bernard Lord had threatened that he would build a coal-burning plant in place of the nuclear reactor, if Ottawa refused to help pay for the refurbishment.

When federal officials denied the province funding, Lord said he would consider whether the province could pay for the refurbishment itself.

In the end, the province decided to take the financial risk and move forward with the $1.4-billion overhaul.

"We acknowledge that New Brunswick is taking on more risk than we had originally intended,'' Lord told a news conference Friday. "I think it's important for everyone to realize that.''

Steve Carson of Enterprise Saint John applauded the decision, saying it will fuel the economy of the area for decades to come.

Greenpeace, the environmental protection organization, had earlier applauded Ottawa's refusal to help fund the project.

"Point Lepreau should be replaced by green energy that is cleaner, cheaper and safer. Nuclear power leaves a deadly legacy of radioactive waste that is toxic for a million years," Shawn-Patrick Stensil, Energy Campaigner for Greenpeace Canada, had said in a press release.

There are several other nuclear power plants in Canada that were built around the same time – about 25 years ago – that also need refurbishments. Three of them are in Ontario, and one in Quebec.

Friday, July 29, 2005

N.B. Power faces costs of aging plant

The Globe and Mail: N.B. Power faces costs of aging plant

N.B. Power faces costs of aging plantBy KEVIN BISSETT

Friday, July 29, 2005 Page A6

Canadian Press

FREDERICTON -- The New Brunswick government is expected to announce today its plans for a $1.4-billion refurbishing of its aging Point Lepreau nuclear power plant near Saint John.

The question is: How will the province do it without jolting consumers and businesses with hefty rate increases.

Earlier this month, the federal government rejected the province's request for a $400-million contribution to the project, saying such a grant would set an expensive precedent that would prompt other provinces to seek a similar deal.

Premier Bernard Lord said the federal government misled and betrayed the province.

With Ottawa out of the picture, the province will need a partner with deep pockets to get the job done. Atomic Energy of Canada Ltd. and Bruce Power of Ontario have said they could help.

In a deal with Bruce Power, the company would shoulder most of the refurbishment risk in exchange for a long-term contract to operate the plant and sell its electricity back to New Brunswick Power Corp.

With AECL, the province would take on most of the risk while the Crown corporation would be contracted to do the retrofit, extending the use of the plant 25 years beyond its projected lifespan.

Point Lepreau came on-line in 1983, and it generates one-third of the province's power. It was to be pulled from service in 2008.

Tom Adams, executive director of Energy Probe, says if N.B. Power sticks to its business philosophy, it won't take on a money-hungry project like the retrofit of Lepreau.

"The project is not economic. It doesn't stand on its own, and can't pay for itself. . . . New Brunswickers simply can't afford it."

Energy bill stokes nuclear power

Philadelphia Inquirer | 07/29/2005 | Energy bill stokes nuclear power

Energy bill stokes nuclear power

Tax breaks and other incentives are offered.

By Chris Mondics

Inquirer Washington Bureau

WASHINGTON - After years on the defensive, the nuclear-power industry has come out a big winner in the energy bill passed yesterday by the House.

The measure, which passed, 275-156, and is expected to win Senate approval today, includes hundreds of millions of dollars in tax breaks, loan guarantees, and government-provided insurance for operators and builders of nuclear plants.

The incentives reflect a consensus among Republicans in Congress and the Bush administration that the nation needs more nuclear plants to meet a growing demand for power.

"It is going to help; there is no question that these provisions provide investment stimulus," said Steve Kerekes, a spokesman for the Nuclear Energy Institute, the industry trade association representing the nation's 103 operating nuclear plants.

Its advocates once promoted nuclear power as a source of inexpensive, nonpolluting energy.

But interest in it collapsed after the 1979 accident at the Three Mile Island nuclear plant spread low-level radiation over much of Southeastern Pennsylvania, and cost overruns at other plants forced sharp increases in electric rates.

The catastrophic 1986 explosion of the Chernobyl reactor in Ukraine - the worst nuclear accident in history - and a series of safety lapses at U.S. reactors added to public anxieties.

No new nuclear plants have been ordered since the 1970s, reflecting intense public skepticism about the safety and costs of nuclear power.

President Bush and other officials in his administration have regularly cited the potential advantages of nuclear power. Notably, Vice President Cheney's energy task force in 2001 recommended that the government take steps to encourage construction of plants and increase the output of existing ones.

Although cost overruns for a time had dampened enthusiasm for nuclear power, the task force said improved efficiency had made the cost of such power competitive with other sources.

The bill passed by the House yesterday would provide tax credits of up to $125 million per company on the energy produced by the first six plants to be built after the legislation becomes law.

It would also provide government-funded insurance for plant operators against financial losses from delays in obtaining federal government approval to build and operate the plants.

Those provisions, along with streamlined application procedures before the Nuclear Regulatory Commission, could prove a boost for the industry, Kerekes said.

But it is far from clear that the industry is on the verge of revival.

The issue of long-term disposal of nuclear waste - the spent nuclear fuel currently stored on site at plants around the country - remains unresolved.

Although Congress has endorsed Yucca Mountain in Nevada as a disposal site, a facility there is still years from opening, if it ever does.

Moreover, environmental groups remain deeply opposed to nuclear power, and promise to put up a fight.

Phil Clapp, president of the National Environmental Trust, contended that nuclear power remained more expensive than other sources. He also said it was not needed because energy companies were building enough plants to meet the nation's energy demand without them.

Of the subsidies in the bill, he said: "It's a huge waste of taxpayer money."

Thursday, July 28, 2005

Uranium surging on healthy numbers

Uranium surging on healthy numbers - Breaking News - Business - Breaking News

Uranium surging on healthy numbers
July 28, 2005 - 4:10PM

Once the problem child of the Australian resource sector, the uranium mining industry has experienced a massive resurgence in popularity over the last few years.

Shares in uranium focused companies - from the giant diversified miners to small explorers - have soared on the back of higher prices, rising demand and dwindling world supplies.

With 28 per cent of the world's known uranium reserves, Australia is in a perfect position to take advantage of the boom.

And regardless of the high politics and ethics involved in the uranium and nuclear industries, companies big and small are riding the wave - many in anticipation of the rewards to come rather than with feasible mining projects.

Rob Brierley, head of research at Patersons Securities, believes the industry has "got a little bit ahead of itself".

"It's a little bit reminiscent of the tech boom, perhaps, with some of those guys going hell for leather," he said.

"A sure sign of this is when companies change business direction and start to realign themselves to the boom commodity.

Regardless of cautionary tales, the share performance of many of the lesser known uranium explorers and miners has been startling.

Shares in Paladin Resources, which has a mine in Namibia and exploration rights in Australia, have risen from 16 cents to a recent high of $1.74 in 12 months.

While Paladin and other companies have proven deposits and are working towards mining, other firms' shares are more based on expectation.

This is especially the case for small explorers like Queensland-focused Summit Resources, whose shares have risen from 5.5 cents to a high of 70.5 cents.

Hindmarsh Resources, with only a few exploration licences in South Australia, listed in July and is now trading around 50 cents - almost double its initial public offer price.

And there's a healthy set of circumstances backing up this enthusiasm.

The spot price of uranium is currently trading around $US29 per pound compared to $US8 to $US10 four years ago.

The jump in price has been sparked by the general acceptance internationally of uranium as a cheap alternative to fossil fuels and as well as an environmentally friendly source of power generation.

Uranium mine production has been in deficit for over a decade and the shortfall has been made up by dwindling supplies of weapons-grade uranium from the United States and the former Soviet states.

But these stockpiles are slowly fading and there are fears miners cannot keep up with demand from the world's 441 nuclear power reactors.

Meanwhile, China plans to build 30 new reactors by 2020 while the United States, Britain, South Korea, Russia, Ukraine, India and Chile also looking at increasing their reactor programs.

Australia, with its reserves, is well placed to help fuel an expansion in nuclear power generation.

Currently there are only three working uranium mines - BHP Billiton's Olympic Dam, Heathgate Resources' Beverley mine both in South Australia and Energy Resources' Ranger mine in the Northern Territory.

There are also several advanced projects like Jabiluka in the Northern Territory, Honeymoon in South Australia and Yeelirrie in Western Australia.

But they remain on hold because of cultural and political reasons.

Mr Brierley said the uranium issue was now back on the agenda in Australia despite still being caught up in a regulatory regime stemming from the ALP's three mine policy in the 1980s.

While the federal government remains quietly supportive of an expansion in uranium mining the stance of state governments, which have the power to grant mining and exploration licences, is mixed.

South Australia and the Northern Territory are very supportive while resource rich Queensland and Western Australia tend not to favour the uranium industry.

There is the remaining concern over the possibility a nuclear accident of the scale of Three Mile Island in the US in 1979 or Chernobyl in Russia in 1986.

There is also the issue of nuclear waste disposal.

"A lot of the uranium resources are tied up in a regulatory regime that doesn't allow it to be commercialised," Mr Brierley said.

"But despite the lack of clear direction, there appears to be a growing chorus from all sides of the moral and political fences recognising the time is nigh to bring the issues to the table for debate."

Energy bill could spark national nuclear power surge

Portsmouth Herald World/National News: Energy bill could spark national nuclear power surge


Energy bill could spark national nuclear power surge

By John J. Fialka
The Wall Street Journal

WASHINGTON - The energy bill nearing passage in Congress could be the best news the nuclear-power industry has seen in many years. The question now is whether it will be enough good news to produce what the industry and the Bush administration both want: a genuine revival of nuclear power.
The bill contains at least $1.5 billion in direct subsidies to promote a new generation of nuclear power plants, plus the potential of billions of dollars more in government commitments to ensure that the plants will get financial backing on Wall Street.

"This is a great bill," said John Kane, a senior vice president for the Nuclear Energy Institute, which represents the utilities that run the nation’s 103 operating nuclear power plants. He said the bill, which provides a legal foundation and financial incentives for new nuclear plants, "will set the stage for nuclear to play a role in supporting our future economic development."

The package took months of lobbying, including last-minute intervention by President Bush, who successfully pushed for a new government-backed insurance program - "standby support insurance" - that would protect plant owners against losses caused by delays in the lengthy regulatory approval process required to win a plant operating license.

Whether this will be enough to launch construction of plants promising to be safer, easier to operate and more secure against terrorist threats remains to be seen. No new nuclear plant has been proposed since the 1970s, and there is skepticism on Wall Street and elsewhere that the new models will ever get built.

But some utilities already familiar with nuclear power are moving ahead. "Congress is to be congratulated," said Curt Hebert Jr., executive vice president of Entergy Corp. The New Orleans company runs 10 nuclear plants that produce 52 percent of its electricity, and it hopes to be the first to license a new one, with site selection possible in October. No final decision has been made, he said, but the company is "optimistic and hopeful."

Entergy currently has invitations from counties in New York, Louisiana and Mississippi to locate the new plant there. "This is the opposite of NIMBY," he explained. "This is, please build the plant in my backyard." In rural areas hosting nuclear plants, he noted, the facilities represent a good portion of the tax base.

The nuclear plant Entergy is weighing would cost between $2 billion and $2.5 billion. That is more than a similar coal or natural gas-fired plant, a factor he said the company is weighing against others, including the possibility that Congress may pass mandatory regulations on carbon dioxide over the next decade. Nuclear power plants don’t produce carbon-dioxide emissions, which are thought to be a cause of global warming.

Nuclear power will also be a hedge against the possibility that the price of natural gas - which fires some of Entergy’s other plants - will continue to rise. The downside, Hebert said, is that the plants take a long time to permit and build. If Entergy is first in line to build a new plant, as he hopes, the process could take a decade or more.

That’s where the energy bill comes in. It extends the coverage of the Price-Anderson Act, which limits the liability for current nuclear-power-plant accidents to $9 billion each, to new plants. Its "standby support insurance" will ensure the first six plants to go through federal and state licensing processes can recover up to $500 million for delays caused by regulatory logjams or lengthy legal challenges during construction.

It also provides production tax credits for the first half-dozen plants, giving them the same incentives as power produced by wind turbines, and it has $1.2 billion in tax write-offs to help offset the costs of funds needed to ensure that the plants can be safely torn down, or "decommissioned."

"At this point I think you could crawl out on a limb a little bit and say this will probably be what the industry needs to get started," Hebert said.

Not everyone is ready to get out on that limb, though. Theodore Roosevelt IV, a managing director of Lehman Brothers, said utilities have already started courting Wall Street, and bankers see the possibility of billions of dollars of new investments looming. "We’re all talking about this and there is some enthusiasm," he said.

But he added that financial analysts remain worried about an unresolved nuclear-waste problem and the proliferation of nuclear materials. They also worry about proliferation of government subsidies. "I get nervous and cautious around subsidies. These things should be able to stand on their own two feet."

Nonetheless, he thinks Congress has started a process that others, especially those worried about climate change, may have to "think through." Roosevelt said that "we shouldn’t have old nuclear taboos governing future policies."

Wednesday, July 27, 2005

Looming energy crunch fuels international conflict and instability | Looming energy crunch fuels international conflict and instability | Energy and Peak Oil News

Published on 27 Jul 2005 by Washington Report on Middle East Affairs.

Looming energy crunch fuels international conflict and instability
by John Gee

In March of 1999 the Organization of the Petroleum Exporting Countries (OPEC) decided to cut oil supplies as a means of raising its members’ revenues. The high growth in global production, the conservation and diversification of energy sources, and large-scale rationalization and closure of old energy-intensive industries in developed countries had created a glut in oil markets.

After having slid for years, oil prices dropped 50 percent in 1998, when they hit a low of $10 and averaged $13 a barrel. This left producer countries struggling with large budget deficits and indebtedness. Living standards and expectations, raised after the price rises of the 1970s, were in jeopardy. Only by creating an artificial shortage of oil did OPEC members believe that they could push prices up to a level of around $25. Having failed in their previous attempt to limit production, they knew they had to succeed this time.

They did. Economists warned about the consequences for the global economy of oil prices rising above $30 a barrel for a sustained period. Within 12 months, they had surpassed that level. Five years later, the price is over $50 and gloomy industry analyists are speculating on it hitting $100. The driving forces behind current rising prices, however, are not those that prompted the increase of 1999-2000.

The main factor pushing prices up today is soaring demand, not producer constraints on oil output. Without a determined global conservation effort, the threats of an economic crash and growing friction—both between consumer states and between consumers and producers—are bound to be fundamental elements of international relations over the coming years.

Expanding oil production to meet demand is not a solution, and would only ease the shortfall temporarily: reserves are being depleted three times faster than new oil sources are being discovered, and most older, more easily exploited fields have passed their peak output.

The problem was bound to arise sooner or later: oil is finite, and so is human prudence when it comes to taking care of the future. It arises now in an acute form because of sharply rising energy consumption in developing countries, particularly China and India.

China alone accounted for a third of extra global demand in 2004. According to the International Energy Agency, China’s oil consumption is expected to grow to over 10 million barrels a day over the next 15 years, and India’s will grow by 30 percent over the next five years. (See “The Beginning of the End,” by John Vidal, in the UK’s The Guardian Weekly, April 29-May 5, 2005.)

The main factor pushing prices up today is soaring demand, not producer constraints.


The consequences for the Middle East, as well as for the rest of the world, are far-reaching. Some have argued that one of the reasons behind the invasion of Iraq was Washington’s desire to control the world’s second largest oil reserves—not so much to commandeer them for itself, but to use them as a means to exert pressure upon an oil-thirsty China.

Meanwhile, Chinese and Indian companies have been seeking out possible sources of energy supply and signing exploration contracts. Western companies, already having taken the plum oil resources, are casting around what is left, which explains why they are becoming involved in deals with countries that are in Washington’s bad books (and, in some cases, most other states’ too), as well as going into the less thoroughly developed area of natural gas.

OVL, an Indian company, has three concessions in Sudan, including one it took over after the Canadian company Talisman Energy pulled out of the Greater Nile Petroleum Operating Company (GNPOC) in response to lobbying by human rights groups. OVL is building a $1.2 billion refinery in Port Sudan and a 460-mile pipeline from Khartoum. The Indian Oil Corporation has won a bid for a big stake in Libya’s Gulf of Sirte. India is negotiating to buy from Iran $40 billion worth of natural gas, which it would like to import via a pipeline through Pakistan, if the improvement in relations between the two states permits. (See “India Works Hard to Secure Oil Supplies,” by Yogi Aggarwal, in Singapore’s Business Times of Feb. 25,2005.)

The China National Petroleum Company holds a 40 percent share of Sudan’s GNPOC (in which Malaysia’s state-owned Petronas also has an interest) and a stake in three Sudanese oilfields. China and Iran signed a $70 billion oil and gas deal in October 2004—their largest so far—and Iran is already China’s second largest source of oil after Saudi Arabia. China’s other suppliers include Vietnam, Indonesia, Russia, Angola and even Iraq, although the current level of imports is only 4 million barrels a month. Last year Beijing signed protocols on oil and gas exploration with Egypt and Algeria and agreed to a deal to buy oil from the central African state of Gabon.

Difficulties for Washington

These moves create difficulties for Washington’s present policies in the Middle East. The Bush administration sees the warming of its relations with India in recent years as a very positive development, while, despite a temporary rapprochement following 9/11, treating China as a threat to be contained. It is rather difficult for the White House to signal criticism of China’s involvement in Sudan (bodies such as the Heritage Foundation are more direct) and ignore the parallel Indian role. The administration’s displeasure at China’s opposition to any threat of the use of force against Iran over its nuclear program has been made plain. China’s attitude has been ascribed to its need for Iranian oil and gas, but Beijing’s attitude differs little from that of Washington’s allies in Europe, with which the White House does not want to damage relations following the bruising falling out over Iraq.

The big losers from the energy shortage are likely to be the world’s poor nations. Between them, the U.S., Western Europe and Japan—the old industrial centers—and the rising economies of Asia are driving up prices to levels that most of sub-Saharan Africa and countries such as Yemen and Bangladesh will not be able to afford.

Something needs to be done—quickly.

John Gee is a free-lance journalist based in Singapore, and author of Unequal Conflict: the Palestinians and Israel, available from the AET Book Club.

The Washington Report on Middle East Affairs is a 100-page magazine published 10 times per year in Washington, DC, that focuses on news and analysis from and about the Middle East and U.S. policy in that region.

The Washington Report is published by the American Educational Trust (AET), a non-profit foundation incorporated in Washington, DC by retired U.S. foreign service officers to provide the American public with balanced and accurate information concerning U.S. relations with Middle Eastern states.

AET's Foreign Policy Committee has included former U.S. ambassadors, government officials, and members of Congress, including the late Democratic Senator J. William Fulbright, and Republican Senator Charles Percy, both former chairmen of the Senate Foreign Relations Committee. Members of AET's Board of Directors and advisory committees receive no fees for their services.

The Washington Report on Middle East Affairs does not take partisan domestic political positions. As a solution to the Palestinian-Israeli dispute, it endorses U.N. Security Council Resolution 242´s land-for-peace formula, supported by seven successive U.S. presidents. In general, the Washington Report supports Middle East solutions which it judges to be consistent with the charter of the United Nations and traditional American support for human rights, self-determination, and fair play.

India building 8 more nuclear power reactors

Xinhua - English 2005-07-27 18:21:26

NEW DELHI, July 27 (Xinhuanet) -- India is constructing eight more nuclear power reactors while one reactor in Tarapur has been synchronized with the grid last month, a senior government official said here Wednesday.

Replying to a question of the Upper House of the Indian Parliament whether the government proposed to set up some more nuclear power stations in the country, Minister of State in the Prime Minister Office (PMO) Prithviraj Chavan said that the total capacity addition in the tenth and eleventh plans through the completion of eight reactors would be 1300 and 3160 mega watts respectively.

The percentage of electricity generated from nuclear power was about 2.9 percent of the total generation, compared with 20 percent in the United States, 32 in Germany, 29 in Japan and 19 in the UK, Chavan said.

The generation target for the tenth plan was 82,495 million units, he added.

India and the United States have recently signed a nuclear power deal under which the latter would help India's civiliannuclear program despite its military nuclear capabilities and its refusal to sign the Nuclear Non-Proliferation Treaty (NPT). India remains one of only four states that have not signed the NPT.

Tuesday, July 26, 2005

Debate Nuclear - Real Instituto Elcano


Alejandro Vigil ( 26/7/2005 )

ARI Nº 105/2005 -- Análisis
Alejandro Vigil ( 26/7/2005 )

Ver gráficos en el original

Tema: La energía nuclear vuelve a ser objeto de debate en todo el mundo. Ante la fuerte subida del precio del petróleo y la creciente dependencia energética, muchos gobiernos occidentales plantean mejorar la seguridad del suministro mediante centrales nucleares. En España el debate empieza a plantearse, aunque la postura inicial del Gobierno parece contraria a esta energía.

Resumen: En este análisis tratamos de poner en contexto el actual debate que se está produciendo a nivel global sobre la energía nuclear. Numerosos países occidentales y varias economías emergentes están apostando por la energía nuclear como uno de los vehículos para conseguir mejorar la seguridad del suministro con unos costes más estables que los del petróleo o el gas natural. En la Unión Europea ha sorprendido especialmente el proyecto finlandés de construir una central de 1.600MW que estaría en funcionamiento antes del final de la década. La energía nuclear presenta tres claras ventajas: (1) sus costes variables son bajos y estables; (2) los países suministradores de la materia prima del proceso son estables; y (3) es una energía libre de emisiones de CO2. El principal inconveniente es la gestión de los residuos nucleares en dos aspectos principales: económico y seguridad.

Análisis: Es un hecho incuestionable que la energía nuclear está otra vez de moda en todo el mundo, ya sea por la decisión de algunos países de seguir apostando por este tipo de energía (China, Francia o Finlandia), por el debate abierto en otros para relanzarla (EEUU o Gran Bretaña), por el deseo de acceder a la tecnología nuclear (Irán o Corea del Norte) o por la discusión sobre el cierre acelerado de plantas (Alemania y España). Pensamos que el debate sobre la energía nuclear debe ser considerado una prioridad por parte de empresas, reguladores y autoridades políticas, ya que la decisión que cada país tome sobre lo nuclear puede afectar de forma importante a la competitividad de su mix energético, a su nivel de dependencia exterior y a su medio ambiente. En este documento tratamos de analizar la situación actual de la industria nuclear, los principales riesgos y oportunidades que ofrece y poner en contexto la situación en España con el debate internacional en esta materia.

Factores que explican la vuelta de la energía nuclear

Pensamos que el retorno de la energía nuclear a nivel global está sólidamente basado en cuatro factores: (1) económico, por la subida de los precios de los hidrocarburos; (2) geoestratégico, debido a la inestabilidad política existente en importantes productores de gas y petróleo; (3) medioambiental, con el principal foco en la reducción de emisiones a la atmósfera; y (4) tecnológico, por las mejoras en seguridad alcanzadas en las plantas de tercera generación.

Como principales factores negativos: (1) el riesgo de accidentes en las plantas (veinte años después, el recuerdo de Chernobyl sigue estando presente en la sociedad); y (2) el problema de la gestión de los residuos radioactivos (costes de almacenamiento de los residuos, seguridad, etc.).

Gráfico 1. Precio del crudo (US$, 2004) y peso nuclear en el mix energético global

Fuente: AIE y BP Statistical Review of World Energy 2005.

Económico: el precio del crudo

El desarrollo de la energía nuclear en los años setenta y ochenta estuvo claramente ligado a la evolución del precio del petróleo y la coyuntura actual de precios es obviamente uno de los principales motivos de la “vuelta” a lo nuclear.

En el Gráfico 1 podemos ver cómo la fuerte subida que el precio del crudo experimentó con el embargo de comienzos de los setenta y más tarde con la revolución iraní (hasta 80 dólares en moneda actual) fue uno de los principales catalizadores del desarrollo de la energía nuclear para usos civiles. Desde comienzos de los setenta hasta finales de los ochenta, la energía nuclear pasó de tener un peso insignificante en el mix energético global a representar el 6% del total. Muchos países decidieron reducir su dependencia del petróleo mediante la construcción de centrales nucleares y otras medidas de eficiencia energética como los impuestos especiales en gasolinas y otros derivados del petróleo.

Como se puede ver en el Gráfico 2, los países europeos fueron los mayores inversores en tecnología nuclear, lo cual resultaba lógico en el contexto de altos precios del crudo, debido a su mayor dependencia de las importaciones de petróleo en comparación, por ejemplo, con EEUU. El peso de la energía nuclear en el mix energético europeo superó el 10% a finales de los setenta. Dentro de los países europeos, Francia lideró el proceso inversor con una apuesta clara por alcanzar un nivel alto de autoabastecimiento energético. España adoptó una estrategia similar a la de sus países vecinos alcanzando una máxima contribución de la energía nuclear del 14% a finales de los setenta.

Gráfico 2. Peso nuclear en el mix energético de EEUU, EU-25 y España

Fuente: Fuente: AIE y BP Statistical Review of World Energy 2005.

La situación actual del precio del petróleo parece similar a la de los shocks analizados anteriormente, aunque desde el punto de vista del impacto macroeconómico, las economías actualmente están menos expuestas a esta variable debido al mayor peso del sector servicios y a la mayor eficiencia energética. En cualquier caso, el hecho de que el precio del crudo haya alcanzado niveles de 60 dólares por barril está provocando una revisión generalizada de los modelos energéticos en los países occidentales. En este contexto se puede entender que varios gobiernos hayan lanzado de nuevo el debate de la energía nuclear.

Las plantas nucleares tienen claras ventajas frente a las centrales de gas, petróleo o carbón en términos de costes variables (bajo coste de combustible y mantenimiento) y en términos de emisiones de gases a la atmósfera (que tienen valor económico desde la implantación del mercado de emisiones europeo a comienzos de este año 2005). Los principales inconvenientes son la elevada inversión inicial que implica altos costes fijos financieros y la incertidumbre respecto a los costes totales del proceso nuclear (internalización de todos los costes relacionados con esta energía).

No es el propósito de este documento una comparación exhaustiva sobre los costes de las distintas energías, pero creo importante destacar el impacto que puede tener la subida del petróleo en los precios eléctricos. Si el precio del crudo se estabiliza en niveles de 40-50 dólares por barril, el coste variable de generar electricidad con ciclos combinados de gas (la tecnología que está cubriendo en mayor medida el crecimiento de la demanda) sería de unos 40-50 euros/MWh a los que habría que añadir otros 10 euros/MWh de retorno de la inversión. Como consecuencia de esto, el coste total de producir electricidad se situaría entre 50 y 60 euros por MWh. El precio de las emisiones de CO2 elevarían el total hasta niveles de 55-65 euros/MWh. Debido al bajo coste de combustible de las nucleares (unos 4-5 euros/MWh) el coste total de producir electricidad se podría situar en torno a 35-40 euros/MWh, un 40% inferior a los ciclos combinados de gas. Sin embargo, en esta comparación hay que destacar que existe todavía poca transparencia sobre los costes que se deberían internalizar como resultado de la gestión de los residuos radiactivos de las plantas nucleares. Las energías renovables, la otra gran apuesta inversora de muchos países occidentales, son una buena opción para reducir la dependencia exterior (son fuentes autóctonas), pero en términos de costes todavía son poco competitivas (la eólica necesita precios entre 65 y 75 euros/MWh para ser rentable y la solar en torno a 200 euros/MWh) y no ofrecen, en general, una garantía de suministro de “calidad” (el viento no siempre sopla cuando hace falta).

La principal conclusión es que la energía nuclear tiene lógicamente ventajas e inconvenientes a nivel de costes, pero en el actual escenario de precios del crudo (que podría convertirse en una situación estructural) las plantas nucleares pueden facilitar estabilidad al sistema en términos de costes. La decisión de renunciar a la energía nuclear podría derivar en un sistema energético muy expuesto a las variaciones del precio del petróleo que debería ser finalmente asumido por los consumidores. Por otro lado, la competitividad de la economía de un país, en términos de su factura energética, se puede ver afectada si sus competidores adoptan un modelo diferente respecto a la energía nuclear.

Geoestratégico: inestabilidad política en países productores de petróleo y gas

Aunque está muy asociado al factor anterior, la situación geoestratégica de los principales países productores de petróleo y gas es, por sí misma, otro de los principales motivos de la vuelta de lo nuclear. La caída de las reservas de los países de la OCDE (20% en los últimos 10 años) está reforzando la posición de dominio de la OPEP como principal suministrador de crudo. La inestabilidad política de los países miembros de esta organización es evidente. La situación de grandes productores como Irak, Irán, Arabia Saudí o Venezuela implica un riesgo de suministro de petróleo para los países consumidores, a lo que hay que añadir la conexión existente entre los precios del petróleo y del gas natural.

Desde el punto de vista de diversificación geográfica de las fuentes de suministro es interesante analizar que el carbón y el uranio (materia prima de la energía nuclear) son las fuentes primarias de energía con menor exposición a Oriente Medio y Norte de África. En el Gráfico 3 se puede observar la elevada concentración de la producción de petróleo en Oriente Medio y Norte de África, con un 35% del total. Este porcentaje probablemente seguirá aumentando en los próximos años debido a la caída de las reservas en otras áreas productoras (Mar del Norte, EEUU, México, etc.)

Gráfico 3. Principales productores de inputs energéticos

Fuente: AIE, DoE y BP Statistical Review of World Energy 2005.

La reducción de la dependencia energética de estas zonas geográficas pasa necesariamente por tres alternativas principales: carbón, nuclear o renovables. Cada alternativa tiene sus ventajas e inconvenientes. El carbón ofrece una buena diversificación geográfica, es abundante y competitivo (aunque en los dos últimos años se ha producido también una fuerte subida en precios) pero tiene el inconveniente de sus elevadas emisiones de CO2 y otros gases contaminantes. Las renovables implican una mejora en el autoabastecimiento energético, pero presentan el inconveniente de su alto coste y, en el caso de la eólica, la dificultad de predecir la producción al depender de factores metereológicos. La energía nuclear aporta seguridad al suministro eléctrico, tiene unos suministradores muy fiables (los principales productores de uranio son Australia y Canadá) y unos bajos costes variables, pero tiene como principal aspecto negativo la gestión de residuos en todos sus aspectos (seguridad, costes, etc.).

En general, los países occidentales están estableciendo como objetivo mantener el peso de la energía nuclear en su mix energético, considerando que su principal aspecto negativo (la gestión de residuos) es un riesgo razonable comparado con las ventajas de una energía segura y competitiva. En España se está produciendo una situación diferente ya que se está apostando por los ciclos combinados de gas como principal fuente de generación eléctrica, lo que aumenta la dependencia energética del país. A modo de ejemplo, el 55% del gas que llega a España procede de Argelia y este porcentaje se va a mantener estable debido al incremento de la capacidad de transporte de gas que proveerá el futuro gasoducto Medgaz. La promoción de las energías renovables está dando buenos frutos pero su aportación a la cobertura de la demanda tiene sus límites en términos de costes y de seguridad del suministro. De esta forma el peso de la energía nuclear en el mix energético español se va reduciendo progresivamente desde un 14% a comienzos de los ochenta a un 10% en la actualidad. Teniendo en cuenta la antigüedad de las plantas nucleares españolas (la mayoría construidas entre finales de los setenta y mediados de los ochenta) y el largo proceso que implica la construcción de nuevas centrales (unos 10 años en total) es lógico que empiece a debatirse en el terreno socio-político la posición de España respecto a esta energía.

Medioambiental: Kioto

La entrada en vigor del protocolo de Kioto en 2005 implica un nuevo ángulo en las políticas energéticas, especialmente en Europa donde se ha diseñado un modelo económico asociado a las emisiones de CO2. Los gobiernos y las empresas energéticas se ven ahora obligados a incluir el coste medioambiental como un factor más a la hora de diseñar sus planes de inversión. Aunque la liquidez del mercado es aún poco representativa, el precio de los derechos de emisión de CO2 se ha elevado a unos 20 euros/tonelada en los primeros meses de funcionamiento. Si este nivel de precios se consolida, los reguladores tendrán que reflexionar sobre el futuro del modelo porque su elevado coste puede poner en clara situación de desventaja a la industria europea frente a EEUU y los países emergentes, donde no se han fijado modelos obligatorios de reducción de emisiones.

Cuadro 1. Emisiones de CO2 por tecnología




Ciclo combinado de gas


Fuente: Ministerio de Industria.

En términos de CO2 la tecnología más afectada por los objetivos de reducción de emisiones es el carbón debido a su mayor nivel de emisiones por unidad producida de electricidad. Los ciclos combinados de gas tienen en este sentido una clara ventaja frente a las plantas de carbón. Las centrales nucleares no están afectadas al no tener emisiones de CO2.

Durante el período de transición (2005-2007), fijado por la UE para adaptar el protocolo de Kioto, los gobiernos han hecho asignaciones bastante generosas de derechos de emisión gratuitos lo que está limitando el impacto económico de esta regulación en las plantas que producen con carbón o gas. En cualquier caso, el protocolo de Kioto implica un nuevo factor de incertidumbre, en particular para las plantas de carbón que pueden ver sus costes incrementarse de forma significativa al tener que internalizar el coste de emisión de CO2.

Cuadro 2. Emisiones de CO2 En España


% incremento

sobre 1990

Total España

Generación eléctrica

Otros sectores regulados

Sectores regulados

Sectores no regulados

Fuente: Ministerio de Medio Ambiente.

La situación en España es particularmente difícil en lo que se refiere al protocolo de Kioto debido a que las emisiones han aumentado rápidamente en los últimos años y actualmente se sitúan en torno a un 40% por encima de los niveles de 1990 cuando el objetivo de Kioto para España era de aumentar sólo un 15%. Para el período 2005-2007 el plan nacional de asignaciones español intenta estabilizar las emisiones en niveles similares a los de los últimos años, dejándose para el período 2008-2012 el objetivo de reducir las emisiones en términos absolutos. En cualquier caso parece difícil que España pueda cumplir con los objetivos de Kioto sin un cambio radical de su mix energético (que parece improbable dada la importancia del carbón en la cobertura de la demanda).

En este contexto, parece evidente que la energía nuclear debe seguir manteniendo un papel importante en nuestro mix energético. Si se decide no construir nuevas centrales, al menos se debería tratar de prolongar al máximo la vida de las actuales. Los EEUU están siguiendo esta estrategia de forma sistemática, con inversiones para extender la vida de las centrales de 40 a 60 años. La factura medioambiental de renunciar a la producción nuclear se puede cuantificar de forma sencilla. Si España quiere sustituir la producción de las nucleares (unos 64TWh de producción en base) sólo cuenta en la actualidad con dos tecnologías con similar calidad de suministro: el carbón o los ciclos combinados de gas. Esa sustitución implicaría un incremento de las emisiones de CO2 de 59mn de toneladas y 20mn de toneladas, respectivamente (15% y 5% del total de emisiones de España). Al precio actual de los derechos de emisión, la factura medioambiental se elevaría entre 1.200mn de euros (carbón) y 400mn de euros (gas) al año. Estos recursos irían destinados a países que hubieran sido capaces de reducir sus emisiones de CO2 (¿gracias a nuevas centrales nucleares?).

La conclusión que podemos sacar de este aspecto es que España no puede seguir un modelo muy diferente al de sus socios europeos ya que su factura de costes medioambientales se puede ver incrementada de forma significativa. Aunque para el período 2008-2012 (fase definitiva del protocolo de Kioto) es improbable que haya contribución de nuevas plantas nucleares al mix energético español, la energía nuclear debería tener una aportación importante en la reducción de las emisiones a largo plazo de la economía española o, al menos, en el mantenimiento de las mismas en los niveles actuales.

Tecnológico: tercera generación

A pesar de que en los últimos años la inversión en nuevas plantas nucleares a nivel global ha sido reducida, la tecnología ha seguido mejorando, especialmente en lo que se refiere a aspectos de seguridad. Por este motivo se utiliza la denominación de plantas de tercera generación, para distinguirlas de las plantas construidas en las décadas de los setenta y los ochenta. El factor de la seguridad está siendo decisivo para el relanzamiento de nuevos proyectos de inversión en centrales nucleares, ya que los gobiernos consideran que se han alcanzado mejoras muy significativas en este campo. A comienzos de año había en el mundo 440 plantas nucleares diseminadas por 29 países. Como muestra del resurgir de la energía nuclear destacar que hay en la actualidad 32 plantas en construcción en todo el mundo, de las que 19 están situadas en países asiáticos. Esta región está experimentando un fuerte crecimiento económico y tiene un nivel elevado de dependencia energética exterior, por lo que está apostando por la energía nuclear como vía de diversificación.

En Europa occidental, Finlandia ha liderado la vuelta a lo nuclear con una planta de 1.600MW que fue aprobada por el parlamento finlandés en 2002. Pensamos que las credenciales medioambientales de Finlandia son excelentes, por lo que la pregunta que nos debemos hacer es por qué este país ha decidido romper la sequía constructora de centrales nucleares en Europa Occidental. El mix energético finlandés es de hecho más equilibrado que el español con un peso del petróleo y gas del 51% frente al 70% de España y un 19% de energía nuclear frente al 10% español. Sin embargo, las autoridades finlandesas consideran que su mix energético estaba empeorando debido al aumento de consumo de petróleo y gas que incrementaba su dependencia de Rusia como suministrador y sus emisiones de CO2 a la atmósfera.

La decisión de Finlandia está animando a otros países europeos a relanzar proyectos nucleares. En Francia (39% de peso nuclear en mix energético), la eléctrica EdF ha invitado a diversas empresas europeas a participar en la construcción de una nueva central. En el Reino Unido (8% de peso), el reciente saneamiento económico de British Energy (gestor de las plantas nucleares británicas) ha abierto la posibilidad de nuevas construcciones. En Suecia (36% de peso) se está avanzando en el modelo de gestión de residuos nucleares con vistas a mantener la presencia nuclear en su mix energético. En Alemania (11% de peso), el posible triunfo de los conservadores en las próximas elecciones de septiembre puede modificar el actual programa de cierre anticipado de plantas. En países sin centrales nucleares como Italia y Portugal se debate en los medios de comunicación la conveniencia de invertir en esta energía.

El debate en España parece hoy difícil debido a que el actual gobierno está muy cerrado en la posición antinuclear que incluía su programa electoral. En cualquier caso, hay que destacar que parece extremadamente difícil que esta posición ideológica se pueda sostener ante los graves problemas energéticos que afronta la economía española. España es uno de los países con un mix energético más desequilibrado, ya que el peso del petróleo y gas es muy elevado y además crece a ritmo rápido debido a la apuesta por los ciclos combinados de gas para la cobertura de la demanda eléctrica y a la baja eficiencia energética de nuestro país. El gobierno ha lanzado recientemente un plan para mejorar en este segundo aspecto, aunque de momento faltan detalles para valorarlo adecuadamente. Anteriores planes de eficiencia energética fracasaron en España debido a la falta de recursos para llevarlos a cabo.

Cuadro 3. Plantas nucleares en España




José Cabrera – Guadalajara
100% UNF

Garoña – Burgos
50% ELE; 50% IBE

Almaraz I – Cáceres
53% IBE;- 36% ELE; 11% UNF

Almaraz II – Cáceres
53% IBE;- 36% ELE; 11% UNF

Ascó I – Tarragona
100% ELE

Ascó II – Tarragona
85% ELE; 15% IBE

Cofrentes – Valencia
100% IBE

Vandellós II – Tarragona
72% ELE; 28% IBE

Trillo – Guadalajara
48% IBE; 34.5% UNF; 15.5% EDP

Fuente: REE y Unesa.

Conclusión: El debate sobre la energía nuclear se está produciendo en todo el mundo y muchos gobiernos empiezan a apostar de nuevo por la construcción de plantas nucleares con el objeto de reducir la factura energética y mejorar la seguridad del suministro. La entrada en vigor del protocolo de Kioto a comienzos de este año es un argumento más a favor de esta energía libre de emisiones de CO2 y otros gases invernadero. El principal problema siguen siendo los residuos, que por su duración de varios siglos en actividad plantean un problema no sólo económico sino también de tipo casi moral (es un legado que dejamos a las generaciones futuras). Varios países están planteando la solución del enterramiento a largo plazo de estos residuos, con la posibilidad de revertir el proceso durante un período de tiempo amplio a la espera de avances tecnológicos que permitan una gestión más segura de los mismos. Esta parece una solución aceptable frente a otros problemas ecológicos que afronta el planeta, especialmente si tenemos en cuenta que la energía nuclear puede ser una herramienta importante para frenar el cambio climático.

El debate nuclear es importante también para España, ya que algunas plantas afrontan el final de su vida útil legal (José Cabrera y Garoña) y porque el crecimiento de nuestra demanda energética está elevando la dependencia exterior de nuestro mix, particularmente de las importaciones de petróleo y gas natural. Las obligaciones medioambientales de España en el contexto de Kioto representan un reto importante para nuestra economía. Por otro lado, en un escenario de globalización de la economía la competitividad del mix energético español frente a los socios de la UE y a los países emergentes es un factor importante para la localización o deslocalización de actividades productivas intensivas en consumo energético (metales, química, etc.). En conclusión, la energía nuclear parece aportar una buena relación ventajas-inconvenientes y debe seguir siendo una pieza importante en nuestro mix energético.

Alejandro Vigil, analista financiero, especializado en empresas del sector energético. Desde 1997 ha trabajado en diversas entidades financieras con el cometido de analizar tendencias en los sectores del gas, petróleo y la electricidad; y su impacto en las principales empresas españolas y europeas de estos sectores


AIE: World Energy Outlook 2004

BP: Statistical Review of World Energy 2005

World Power 2004

Euronuclear: Boletines anuales 2004 y 2005-07-10

US Department of Energy: Nuclear Statistical Review

IAEA: base de datos

REE: Informe anual del mercado eléctrico español 2003

UNESA: Memoria anual 2004

UNESA: Las centrales nucleares españolas en 2003

Consejo de Seguridad Nuclear (CSN): Informe 2004

Enresa: Informe 2004

Uncertainties Slow Push for Nuclear Plants

Uncertainties Slow Push for Nuclear Plants

Cost of Building New Facilities, Concerns About Waste Disposal Are Cited

By Shankar Vedantam
Washington Post Staff Writer
Sunday, July 24, 2005; A06

When the nuclear industry looks at the Bush administration's initiatives to promote a new generation of nuclear power plants, it sees a giant dollar sign. Critics see a giant mushroom cloud. For investors and taxpayers, who will have to pony up the cash, the sign may be a giant question mark.

No one has placed an order for a nuclear plant since 1973, but a House-Senate conference committee is weighing an energy bill that includes a clutch of proposals to revive the moribund industry. No matter what bill comes out, however, financial experts and the companies that would order such plants predict that regulatory hurdles and economic risks mean the launch of new plants is at least a decade away -- if ever.

"Moody's would go bananas if we announced we were going to build a nuclear plant," said Thomas E. Capps, chief executive officer of the energy company Dominion Resources Inc., referring to the reaction of credit-rating institutions.

Virginia-based Dominion, which serves nine states and operates four nuclear plants, is among the handful of companies considered most likely to want to build a plant. Capps said the nation should invest more in such plants, but he held out little hope that that would happen without greater incentives than those being discussed on Capitol Hill.

The Department of Energy splits with industry the cost of selecting sites for new plants. Various proposals in the energy bill would have taxpayers share the cost of licensing the first generation of new plants, offer loan guarantees and set caps on industry liability in an accident. A proposal by the White House would protect investors against regulatory holdups by defraying the cost of certain types of delays. Some legislators would give the industry protection against fluctuations in the price of electricity.

Advocates in Congress say such measures are justified because nuclear energy can help reduce the country's dependence on foreign oil, because nuclear energy seems ever more viable as oil prices soar, and because nuclear power does not produce greenhouse gases that are linked to global warming.

Capps said the proposed incentives do not go far enough.

"A new 1,400-megawatt nuclear power plant is going to cost about $2.6 billion," he said. "It is going to take 6 1/2 years to build. While you are building, you have to issue equity, you have to service that equity. You have to issue bonds; you have to service the bonds with interest. You don't have any money coming in. You have an average of $1.3 billion out for 6 1/2 years that is not earning anything."

"We are not going to build one under those financial conditions," he said.

Capps said his main concern is that anti-nuclear activists would tie up the approval of new plants through court challenges, and that such delays would cause unacceptable financial risks. If the nation thinks nuclear power is important enough, he said, Congress ought to eliminate the possibility of lawsuits and decree that the federal Nuclear Regulatory Commission (NRC) will be the final arbiter of concerns raised by the public.

Critics of the new initiatives say the federal government has a long history of subsidizing the nuclear industry, and warn that the proposals would hurt taxpayers -- and undermine public safety.

"If you throw enough money to build four, five power plants at industry, four, five plants may get built, but no one should confuse that with an economically healthy revival of nuclear power," said former NRC commissioner Peter Bradford, an energy policy consultant at Bradford Brook Associates in Vermont.

Anna Aurilio, legislative director at U.S. PIRG (Public Interest Research Group), an anti-nuclear environmental and consumer group, said improving energy efficiency would be seven times as cost-effective as building new nuclear plants. Although nuclear power plants do not emit greenhouse gases, radioactive waste remains dangerous for long periods -- making nuclear energy an unattractive approach to deal with global warming, she said.

Both supporters and critics of the nuclear industry noted that continuing delays over the opening the government's long-term nuclear waste storage plant at Yucca Mountain in Nevada add to the problem. One industry group has sought to build a temporary storage site on the land of the Skull Valley Goshute tribe in Utah, but this proposal has been bitterly opposed, including by states through which the waste would have to pass.

Arjun Makhijani, president of the Institute for Energy and Environmental Research, a nonprofit advocacy group, said it would be dangerous for the government to promise compensation for regulatory delays.

"It puts a lot of pressure on the NRC to hand out licenses, because it will be under pressure financially," he said of the Bush risk-insurance proposal. "Any form of risk insurance to compensate the industry for delays in the licensing process would be very detrimental to safety."

Bradford said market forces, not government incentives, ought to decide which energy sources the nation develops.

"I can tell you with some confidence that it is not sensible," he said. "Picking technological winners is the kind of foolishness that Republicans regularly accuse Democrats of in other areas."

But Wall Street and the nuclear industry say the high capital costs of nuclear power plants, their security needs and the nation's long-term energy needs make it essential that the federal government actively support new plants.

Marvin Fertel, chief nuclear officer at the Nuclear Energy Institute, an industry group, said the average age of the nation's 103 nuclear plants is 22 to 23 years. The oldest plants were built in the 1950s, and it is time to bring a new generation of plants online, he added.

New techniques in design and construction make it possible to standardize plants and make them safer, he said. Although taxpayer support will be crucial for the first few plants, private money would build subsequent plants because investors would see that the regulatory and political climate was receptive, he said.

Caren Byrd, executive director in the global power and utilities group at Morgan Stanley, agreed that for the first time in a long time, Wall Street believes new nuclear plants could be part of the nation's long-term future.

"But without something that indicates a federal policy, it will be difficult," she said. She recalled the fate of the Shoreham nuclear plant in New York, which was shut down after construction in 1985 because of public opposition. Dozens of plants were canceled in the 1980s, and others were plagued with cost overruns as a result of delays. "Tens of billions went down the drain that time," Byrd said.

"We can't take that risk, and the investment community has long memories," she said.

Nuclear Regulatory Commission Chairman Nils J. Diaz said regulations adopted in 1992 ensure that companies that get a license to build a plant will receive an operating license. Companies will have to show the plant was built according to specifications, but new rules ensure that operators will not have to wait for an operating license after sinking billions into construction, he said.

Diaz said some companies were thinking about applying for licenses by the end of 2007 or early 2008. The commission would take as long as three years to approve such applications, Diaz said. Given that construction would take several years, the earliest that new plants could become operational would be around 2015.

Marilyn Kray, president of NuStart Energy Development, a consortium of nine utilities that is considering filing applications for two nuclear plant licenses, acknowledged that much could change in a decade. The companies she represents are optimistic about nuclear power plants, she said, but would ultimately decide which energy sources to explore depending on changes in the economic, financial and political climate.

"There is guarded optimism at this point," she said. "From a power company perspective, you say I am open as long as it is good for the shareholders."

Uranium Production below Consumption

Resource Investor - Blog - Uranium rush hits Colorado and Utah:

In western Colorado and eastern Utah, where salt wash deposits and sandstone hold uranium ore, there's a scramble on for mining claims, a demand for processing facilities and a clamor for miners.
More than 8,500 mining-claim permits have been filed in eight uranium-rich Colorado and Utah counties this year, according to records compiled by The Denver Post.
China and India are leading a worldwide push for more nuclear power with ambitious plans for new power plants. President Bush wants to increase the 20 percent of U.S. power produced in nuclear plants.
The 435 nuclear reactors in the world, including 104 in the United States, need 180 million pounds of uranium annually, but only 100 million pounds have been produced in recent years. With that growing demand, if no new supplies were mined, domestic uranium would run out in three years. "

Namibia Uranium Production @ 188ppm UOx

Rössing Uranium Still Up-Beat Over 2005 Production

Namibia Economist (Windhoek)
July 25, 2005
Posted to the web July 25, 2005

Rio Tinto's Rössing Uranium Mine has reiterated that production for this year will be increased to 3800 tonnes of uranium oxide to counteract the negative impact of the weak US dollar in which Rössing's uranium is priced.

"Planning for the future will continue. Although the official long-term plan foresees closure in 2009, options are being actively pursued to expand the life of the mine to 2017. Marketing efforts are continuing to secure sales for the expansion phase", says a stakeholders' report released this week. Also, a large number of other initiatives are planned and targets have been set for 2005. Managing director Michael Leech says the market price of uranium oxide (or 'yellow cake') increased during 2004, balancing out the continued US dollar weakness that impacts on the mine's earning.

"Although the company made a loss for a second year running, it was minimised by our increased production rate to a level not achieved for more than ten years," says Leech.

In 2004, the life plan of the mine forecast closure in 2009. Leech says the objective of Rössing is to develop and expand its capacity to deliver value to shareholders and local stakeholders for the long term and extend the life of the mine. Rössing operates a large open pit uranium mine located in the Namib Desert close to the town of Arandis. The mine produces uranium oxide for use in the generation of electricity at nuclear power utilities throughout the world.

During 2004, the mine processed 19 million tonnes of rock to produce 3582 tonnes of uranium oxide, compared with 2401 tonnes in 2003. Rössing has contributed up to 10% of the country's gross domestic product (GDP) and up to 26% of Namibia's export earnings annually throughout its 28 years of operation. Last year, Rössing produced about 7.7% of the world's uranium up from 6% in 2003.


3582 TUOx / 19 mT rock = 0,000188 = 188 ppm

7% of world uranium production is @188ppm

(May be it is even lower, as this calculation is for Oxide, not pure uranium)

US Energy Bill backs Ethanol, not Oil Savings Plan

US energy bill backs ethanol, not oil savings plan

By Tom Doggett and Chris Baltimore
WASHINGTON, July 25 (Reuters) - To stretch America's
gasoline supplies, a joint Senate-House conference committee
racing to finish a U.S. energy bill voted late on Monday to
almost double production of the motor fuel additive ethanol to
7.5 billion gallons a year by 2012.
However, the full panel rejected a proposal to reduce U.S.
oil consumption by 1 million barrels per day and also turned
down a plan to require utilities to generate more of their
electricity from renewable energy sources like wind and solar
The ethanol compromise is larger than the 5 billion gallons
approved by the U.S. House of Representatives, but smaller than
the 8 billion gallons called for by the Senate.
Ethanol, derived mostly from corn, is a popular political
cause in farm country, where it is regarded as a homegrown
answer to oil imports and a boon to farm income.
It is usually blended directly into gasoline in a mix of 10
percent ethanol and 90 percent gasoline, which makes motor fuel
burn more cleanly to meet federal air pollution requirements.
Ethanol is more difficult for oil companies to transport
because it evaporates more quickly than conventional gasoline,
requiring refiners to remove more smog-forming emissions.
House negotiators voted against a Senate plan requiring the
president to come up with ways to cut America's oil demand by
1 million barrels a day by 2015.
"We have a relentless addiction to oil. We need to address
it," said Democratic Sen. Byron Dorgan of North Dakota and
sponsor of the oil savings amendment. The United States has to
import 60 percent of its oil to meet its 21 million barrel
daily demand.
House opponents said the proposal would force Americans
into carpools and automakers to boost vehicle fuel standards.
A separate Senate proposal that also failed would have
required 10 percent of U.S. electricity to be generated by
renewable sources by 2020.

Republican Pete Domenici of New Mexico, the chief Senate
energy bill negotiator, said the electricity plan would have
helped reduce U.S. demand for natural gas, which has increased
sharply in price due in part to new power plants fueled by
Yet to be finalized is a multibillion-dollar package of
energy tax breaks and subsidies. The House package totals $8
billion while the Senate's is $14 billion. Both are higher than
the $6.7 billion sought by the Bush administration. Negotiators
are working on a compromise tax package of about $10 billion.
Chances for the bill's passage have improved, after
negotiators on Sunday dropped a proposal for legal protection
for oil refiners that make a rival fuel additive to ethanol --
methyl tertiary butyl ether, or MTBE.
MTBE is added to make fuel burn cleaner, but has polluted
groundwater in many states. It makes water taste and smell like
turpentine and is a possible carcinogen.
Rep. Joe Barton, Texas Republican and chairman of the
energy bill conference committee, proposed creating an $11.4
billion fund to clean up MTBE contamination in return for
shielding refiners such as Exxon Mobil Corp. (XOM.N: Quote, Profile, Research) from
lawsuits. But the plan was roundly criticized by the oil
industry, municipal water officials and key U.S. senators.
While Barton did not win liability protection for the oil
companies, he was able to include language in the bill to
require new MTBE liability lawsuits to be reviewed by federal
courts, setting a higher bar for such lawsuits to proceed.
White House spokesman Scott McClellan reiterated on Monday
that the administration "doesn't think we need to be providing
tax credits to oil companies when the price of oil is above $50
a barrel."
Bush spoke with leaders of the conference committee on
Sunday and urged them to approve a final energy package this
week so the full Senate and House can clear it and then send it
to him to sign into law by Aug. 1.
Other provisions in the bill would:
* Move the start of daylight-saving time in 2007 from the
first Sunday in April to the second Sunday in March, and extend
it by one week to the first Sunday in November.
* Impose a 141-day delay in a U.S. government review of the
Chinese-government owned CNOOC Ltd (0883.HK: Quote, Profile, Research) oil company's
$18.5 billion bid for American-oil giant Unocal (UCL.N: Quote, Profile, Research).
*Repeal a Depression-era law, the Public Utility Holding
Company Act, which prevents certain utility mergers.

* Require the federal government to provide $2 billion in
insurance to cover delays in the building of 6 new nuclear
power reactors.
* Impose reliability operating standards on utilities to
protect the U.S. electric grid from blackouts.

Monday, July 25, 2005

With Bush's help, GE courts Indian PM, nuke sector

With Bush's help, GE courts Indian PM, nuke sector - - Asia - News

By Adam Entous | July 23, 2005

WASHINGTON (Reuters) - Just over an hour after the White House's surprise pledge to help India develop its civilian nuclear power sector, the head of General Electric, the American company that could benefit most from the policy change, sat down for a celebratory dinner.

The host was President Bush; a few feet away was India's prime minister, Manmohan Singh, and his top aides. GE Chief Executive Jeff Immelt, a contributor to Bush's presidential campaigns, had a coveted seat at the president's table.

Bush's announcement on nuclear trade with India -- followed by a formal dinner in the State dining room -- was not just a victory for Singh. For GE, the only U.S.-owned company still in the nuclear business, it marked a possible turning point in a years-long push to re-enter the Indian nuclear power market, which it was forced to leave in 1974 when India conducted its first nuclear test.

"In the short term, it's really business as usual. ... But if things unfold the way it looks they may, then clearly it is a significant opportunity for us," said Peter Wells, general manager of marketing for GE Energy's nuclear business.

While the policy change may benefit GE and other companies in the long term, critics contend Bush's move closer to accepting the world's largest democracy as a nuclear weapons state could weaken decades-old prohibitions against atomic arms.

"This administration's rogue, shoot-from-the-hip move to launch nuclear cooperation with India puts the interests of industry ahead of our national security," said Democratic Rep. Edward Markey of Massachusetts, an arms control advocate.

GE was not mentioned in the joint statement issued by Bush and Singh, but Bush specifically pledged "expeditious consideration of fuel supplies for safeguarded nuclear reactors at Tarapur."

GE built Tarapur and one of its immediate goals in India would be resuming fuel sales to the reactors, Wells said.

Immelt -- who said in May that "all conditions are right to invest in India" and predicted that GE revenues from there could jump to $5 billion by 2010 -- was not the only American executive at Monday's dinner with a reason to court Singh.

Bush also invited Lockheed Martin Corp. chief Bob Stevens and Boeing Co.'s new chief executive, James McNerney. Bush cleared the way in March for the two defense contractors to compete for a potential $9 billion market selling combat planes to India. GE makes jet engines for Lockheed and Boeing.

GE spokesman Peter O'Toole said "tying GE's attending a State Dinner to a political contribution is misleading. We support officials in both parties and have done so for years."

"Jeff (Immelt) wants GE products picked to help solve India's challenges; who better to make the case with than the prime minister?" O'Toole added.


Washington actively promoted nuclear energy cooperation with India from the mid-1950s until the nuclear test in 1974. U.S. nuclear cooperation and exports were later halted, freezing out GE, which built the Tarapur reactor in 1963 and supplied it with low-enriched uranium as fuel.

India has since become the second-largest growth market behind China. In a sign of its growing importance to Washington, Bush on Monday promised India full cooperation in developing its civilian nuclear power program in exchange for New Delhi's commitment to adhere to international regimes aimed at curbing arms proliferation.

Provided the Indians move quickly to fulfill their obligations, congressional sources said, it was Bush's intention to seek congressional approval to implement the agreement on civil nuclear cooperation this year.

"It's the jewel in the crown,"'s John Pike said of the Indian market. "We're the world's two largest English-speaking countries. We're the two largest democracies and we're joined at the hip economically."

Henry Sokolski of the Nonproliferation Policy Education Center said Bush's decision was unlikely to benefit GE any time soon. "This may be cream but it's certainly not gravy train, certainly not for a while." Sokolski said, adding that GE will face stiff competition from non-U.S. suppliers.


In the runup to Singh's visit, GE held a series of meetings at the departments of State, Commerce and Energy, but Wells said the company did not explicitly lobby the White House to change longstanding policy.

"It maybe sounds a little subtle, but we try not to tell the U.S. government what we think their foreign policy should be," Wells said.

At a recent State Department meeting, Wells said, "We wanted to better understand what the U.S. government's view was of the situation and also to put an offer out there to them that was to say, 'We understand you've got a lot of considerations to go through here when you make a policy decision, and if there's anything we can do to help, then let us know."'

In addition to resuming fuel sales to Tarapur, Wells said GE could move quickly to offer technical and maintenance services for Indian nuclear plants, and eventually bid to build new reactors. If Bush succeeds in pushing through the policy changes, "clearly we would look for U.S. government support to advocate on behalf of GE," Wells said.

That support could take the form of government-to-government lobbying or Export-Import Bank loans for future GE projects in India, experts said.

Earlier this year, the Export-Import Bank gave preliminary approval for $5 billion in loans to help British-owned Westinghouse Electric Co. and other U.S. suppliers win contracts to build four nuclear power plants in China.

UK Power Industry Backs Nuclear

Power industry backs future role for nuclear

Power industry backs future role for nuclear
Mon Jul 25, 2005 7:31 PM BST

LONDON (Reuters) - The country's biggest energy suppliers on Monday backed the future use of nuclear power and urged the government to reduce obstacles to the construction of new reactors.

The Association of Electricity Producers, whose members include EDF, E.ON, RWE and Scottish and Southern Energy, said a new fleet of reactors would benefit Britain in terms of supply security and cutting greenhouse gas emissions.

"The generating industry faces a massive programme of investment in power stations," said AEP chief executive David Porter in a statement.

"They will have to be competitive and meet carbon reduction and other environmental requirements. New nuclear power may well play a part in this."

Most ageing reactors are due to start closing from 2010.

The AEP's comments come as the debate over nuclear power in Britain hots up. The government has left the door open to another generation of reactors as it faces pressure to secure future energy supplies while also cutting greenhouse gas emissions.

Nuclear plants produce hardly any carbon dioxide (CO2), the main gas blamed for global warming. Coal-fired stations, on which the UK still relies for about a third of its power, are among the biggest industrial emitters of CO2.

Last month E.ON said it had told the UK government it was ready to explore the possibility of building new reactors.

Peak Oil Rationing

Peak Oil Rationing

Now we see the Falls Church News-Press (a very influential local newspaper from an affluent Washington, DC suburb) do some very hard-edged reporting on Peak Oil issues. This is the second time FTW has reprinted a News-Press story in a month. This is a local paper for the spot where the senior policy makers, intelligence officials and many high-ranking military personnel live and raise their families. They want a local paper that prepares them and that's what they've got. They get "authentic journalism" of sorts.

Contrary to this story's spin however, this plan has more loopholes for black market profiteering, arbitrage and manipulation than a colander has for draining spaghetti. The profit potential here is far greater than it would be with, for example, tax credits and subsidies for renewables. Once again, we're back to the infamous quotation: "It may not be profitable to slow decline." Or, as Catherine Austin Fitts says, "They make money on the way up and they make money on the way down."

On the other hand, mandatory and enforced rationing might be the only way to penetrate a very thick American skull. We do reveal a bovine nature on occasion.

So I think it's time we all put rationing (serious rationing) on our schedule of upcoming events.

When? (Sigh). It could be as soon as this winter. I would say, of a certainty, no later than January or February 2007.

Here's the key quotation: -- "A couple of weeks ago, the British press reported that Her Majesty's cabinet is considering a plan to ration energy consumption. The immediate reason for implementing such a system is to reduce the UK 's emission of greenhouse gases as required by the Kyoto Treaty. The plan's authors, however, claim that if the proposal works, it will deal equally well with equitably allocating dwindling energy supplies caused by peak oil."

What the News-Press tells us is that we should just as well expect rationing here. The British might get there first. That would be a great psychological prep. (We must emulate the Brits as they endured "The Blitz" in 1940-41.) But it is also a certainty that the first and most important wild beast which must be tamed in terms of consumption is the United States of America.

The Peak Oil Crisis: Rationing

By Tom Whipple
Falls Church News-Press
July 14 - July 20, 2005 VOL. XV NO. 19

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

It has to come sooner or later. As oil becomes scarcer and scarcer and price rises higher and higher, pressures will grow for a formal allocation system. Rationing will come, if only to calm the havoc at the gas lines and the social upheavals that are bound to occur as long as rationing is only by price.

America 's most recent experience with rationing goes back to World War II. You have to be nearly 70 to remember the little square "A", "B", and "C" stickers affixed to the windshields of ever car. These stickers, when accompanied by a sheet of rationing stamps, allowed one to buy gas. Everybody got an "A" sticker (a whole 4 gallons a month just for the asking). To get a "B" or "C" sticker, one had to appear before a rationing board and make the case their mobility was vital to the war effort or at least the well-being of their fellow citizens.

If one ponders for a few minutes on how a modern rationing system might be structured, it is soon apparent nearly any scheme is full of inequities and would be subject to massive and, no doubt, ingenious fraud- especially when an American's ability to drive his beloved car is at stake. Do you allocate fuel by vehicle? Buy a yard full of clunkers and drive to your heart's content or until you run out of money. Or allocate gasoline by person, by licensed driver, by commute distance, by adjusted gross income? Problems abound everywhere.

Once again our friends in Europe , this time in Britain , appear to be out in front in thinking about this problem. The ostensible British concern, of course, is global warming and the contribution made to this phenomenon by the combustion of fossil fuels. While we Americans, and particularly our government, seem little bothered by the idea that Florida might one day be under water, the British seem much more upset by the notion the melting artic ice cap will set the Gulf Stream to warming someplace other than Northern Europe.

A couple of weeks ago, the British press reported that Her Majesty's cabinet is considering a plan to ration energy consumption. The immediate reason for implementing such a system is to reduce the UK 's emission of greenhouse gases as required by the Kyoto Treaty. The plans authors, however, claim that if the proposal works, it will deal equally well with equitably allocating dwindling energy supplies caused by peak oil.

Given the seriousness with which the British are taking global warming, it is natural that they should put their finest minds to work on the problem. In this case, the Environmental Change Institute at Oxford and the Tyndall Centre for Climate Change Research, a consortium of ten other British Universities. The current proposal has been in development for ten years and, given the organizations involved in its preparation, has obviously been subject to much intellectual rigor. While the details, pros, and cons of the plan fill many pages, the general concept is simple enough to outline here.

The major feature of the allocation system is that it covers all fossil fuels, not just gasoline; and it makes a real effort to be fair to all, by giving consideration to the needs of the poorer folks.

Under the plan, every adult in the country would be given (for free) an annual "Personal Carbon Allowance" (PCA). This allowance would be measured in "carbon units." One carbon unit would be equal to one kilogram of carbon dioxide emitted into the atmosphere when the fuel is burned. Carbon units can be equated easily to gallons of gasoline, heating oil, diesel, or jet fuel, or to pounds of coal, BTUs of natural gas, or KWh of electricity. For example, one gallon of gas would be the equivalent of about nine carbon units. Thus, for every gallon of gas purchased, nine carbon units would be subtracted from your account.

The annual allowance would be the same for all adults, with possibly a smaller allowance for dependent children, and would be tracked on a central electronic system similar to a credit card account. The size of the annual individual allowance would be based on what a government panel believed would be the total amount of fuel available for consumption in a country during the coming year, divided by the number of energy consumers. Whenever one purchased or consumed fuel, such as on an airplane trip, an appropriate deduction would be made from one's PCA account. With oil depletion, of course, the annual carbon allowance would shrink with each successive year.

The next most interesting feature of the plan is the government would also establish an electronic free market to buy and sell carbon units. Thus, those who have no need for their complete annual carbon allowance would be free to sell their excess units for cash at the market price. Those individuals who want and can afford more than their allocated share can buy as much as they want at the going price. Note that above-allocation consumers would not only have to pay for the energy, they would also have to pay for the right to buy the above-allocation energy. Non-residents visiting a country would not be given an annual allowance, but would have to buy the carbon units they use on the open market as they consume energy. Businesses that consume energy would buy their carbon units on the open market and would pass the cost on to the final consumer either money or in cases such as airplane rides as a PCA debit.

The object of all this, of course, is to force people to cut back on their energy use in a systematic way. With full knowledge of the projected costs and allocations of energy, people could make choices between SUVs or bicycles, McMansions or efficiencies, and train or plane rides.

Way below average energy users could make some money under the plan. While the very rich would not be bothered in the slightest, most people would start making energy saving choices in their lifestyles -- smaller cars, better-insulated homes, less air travel. As demand for energy drops in response to conservation measures, then the costs of energy would drop even in an era of oil depletion.

The plan's developers claim that declining amounts of energy will be allocated equitably and with minimum government interference. For, aside from setting up the system and determining the annual carbon ration, the free market would be left to work out the details of oil depletion.

John Gray reviews Simmons' book

New Statesman - Books - Diminishing returns
Book Reviews
John Gray
Monday 25th July 2005

Twilight in the Desert: the coming Saudi oil shock and the world economy
Matthew R Simmons Wiley, 422pp, �15.99
ISBN 047173876X

During the 1990s it was fashionable to scoff at the notion of limits to growth. A knowledge-based economy was coming into being in which natural resources didn't matter. The future would be driven by a search for new ideas rather than the struggle for control of the planet's assets. We were entering an era defined by information technology, in which rapid economic growth could continue for ever. It was never easy to square this fanciful philosophy with historical reality: the 1990s began with the first Gulf war, which was fought solely to secure oil supplies, and cheap oil was the basis of the prosperity of that feckless decade. Yet somehow or other these facts were forgotten, until Iraq.

With the launching of the second Gulf war, the crucial role of oil in the world economy was exposed. From statements made by a number of its American supporters, it seems clear that the strategic objective of the Iraq war was to enable the United States to withdraw from Saudi Arabia, which had come to be seen as an unreliable ally. According to the game plan, Saddam Hussein would be toppled, Iraq would be pacified in a few months and oil would fall to $10 a barrel. The global economy would then take off in another boom with the US in firm control of the world's second-largest oil reserves.

This was always a far-fetched scenario, and things have not worked out as envisaged. Iraq is a failed state in the grip of an intractable insurgency, and the price of oil is roughly $60 a barrel. The scramble to secure energy supplies is more frenzied than ever. The Great Game has been resumed, not only in central Asia but also in the Gulf. If Iran is attacked by the US in the course of the coming year or so, one reason for this will be to stymie energy supply agreements that Tehran may be planning with America's competitors, notably China and India.

The limits to growth have not gone away. They have re-emerged as classical geopolitics - a condition of continuous rivalry among the great powers for control of the world's most valuable natural resources. In this intensifying struggle, no country is more important than Saudi Arabia. The kingdom is the world's pivotal oil producer. Any disruption in supplies of its oil would be hugely destabilising to global markets. Even more crucially, it is the most important resource base for the oil that will be tapped to meet growing world demand. As emerging countries industrialise, their energy use increases exponentially. Saudi Arabia is the site of the planet's largest low-cost oil reserves, and in effect acts as the energy bank of worldwide industrialisation.

Matthew R Simmons is convinced that Saudi oil production is near its peak, or indeed may have passed it, a development with awesome implications. Simmons, a veteran oil finance insider who has been an important adviser to the Bush administration, has done a huge amount of research and bases his conclusions on carefully sifted evidence, not large theories. Yet his view is consistent with the theory of M King Hubbert, a Shell geophysicist who argued in 1956 that production rates for oil and other fossil fuels exhibit a bell curve: when roughly half the oil has been extracted, production declines. No one took much notice of Hubbert at the time, but he predicted that oil production in the continental United States would peak and start declining in the late 1960s or early 1970s - as it did. Since then a number of large oilfields have also peaked, including the North Sea in 1999. When oil peaks it does not run out - there is usually a slow decline that can be spun out by new technologies - but the unavoidable result is falling production.

Could we be near a global oil peak? Simmons believes that point may already have passed and warns that the idea that technology can arrest the decline may be a delusion. In his view, Saudi oil production has been boosted by the use of technologies which actually reduce the future supply of recoverable oil. The impli-cation is that Saudi production has peaked, and with it global oil production, at a time when demand is rising inexorably.

Twilight in the Desert is not always easy to read. It largely consists of highly technical discussion of the history and condition of Saudi oilfields. Yet its impact is to transform our view of the world. Many in the oil industry - and particularly Aramco, the Saudi oil company - will dispute Simmons's claim that Saudi production is near its peak sustainable volume. For most readers the question will be whether Simmons can be trusted. I am certain that he can. He is not the only oil expert to say that a peak in global production may be near (Dr Colin Campbell of the London-based Oil Depletion Analysis Centre is another) and, unlike many in the oil industry, Simmons has no axe to grind. This is a ground-breaking book by an analyst of unimpeachable authority.

Simmons's analysis suggests that the current phase of worldwide industrialisation is crucially dependent on the uncertain reserves of a single Gulf kingdom facing vast and potentially insuperable challenges. As he shows in a superb digression, the most formidable of these is population growth. The kingdom's current population of roughly 22 million is expected to rise to roughly 50 million by 2030, and unless there is a large and sustained rise in the oil price, living standards are bound to fall steeply - as they have been doing since the early 1980s. The Saudi rentier economy is facing a Malthusian crunch, and against a background of already high unemployment the result so can only be a con-dition of chronic instability. If the most obvious effect of our dependency on oil is a series of resource wars, another could be an upsurge of revolutionary movements in oil-producing countries. While it would be an error to think that the Saudi regime is on the brink of collapse, in a few decades the kingdom could well be an Islamist republic - or, perhaps more likely given its origin as an artefact of the colonial era, another failed state.

Simmons makes a formidable case for the pivotal importance of Saudi Arabia, but he may actually have understated the impact of peak oil. One reason is the central role of oil in intensive farming. Contemporary agriculture relies heavily on oil-based fertilisers, pesticides and herbicides. At bottom, the green revolution was about the extraction of food from petroleum, and a peak in world oil production could trigger a peak in world food production. A second is climate change. As oil supplies are becoming scarcer and less secure, many countries are looking to other fossil fuels such as coal. New technologies can make coal much cleaner, but a large increase in coal use alongside continuing dependency on oil could magnify the greenhouse effect. In other words, peak oil could accelerate global warming.

The conjunction of peaking global oil production with quickening climate change poses fundamental challenges that no section of opinion has adequately confronted - including the Greens. The energy-intensive lifestyle which is now spreading throughout the world cannot be sustained with non-renewable and polluting fossil fuels, but it is sheer fantasy to imagine that a human population of between six and eight billion can be supported on a combination of windfarms, solar power and organic agriculture. As Simmons notes, we may be approaching the limits of growth that the Club of Rome identified more than 30 years ago, and we are no better prepared to adjust to them now than we were then.

John Gray's latest book is Heresies: against progress and other illusions (Granta)

This article first appeared in the New Statesman. For the latest in current and cultural affairs subscribe to the New Statesman print edition.