Monday, November 28, 2005

The case for going nuclear

The case for going nuclear >>

The case for going nuclear

November 27, 2005

ENERGY policy in Great Britain has been a shambles, with disaster avoided thanks to lucky escapes rather than good stewardship and a cowardly government choosing to turn a blind eye to repeated and increasingly desperate warnings over prices and supply. In the last few weeks alone, natural gas spot prices have more than doubled, partly because shipments from the European Union (EU) have been held back; factories have temporarily shut down; business leaders have expressed outrage at the government?s dithering; warnings of 1970s-style three- or four-day weeks proliferate, with fears mounting about looming winter electricity shortages as a bitterly cold winter looms; and the National Grid is suffering an increasing number of breakdowns, especially in the North of England, which means away from the glare of the metropolitan media classes. Readers will be forgiven for concluding that this confluence of events amounts to stumbling towards an unnecessary energy crisis, even as ministers blithely assure us that the country is ?awash? in energy.

None of this should be happening, of course, in the world?s fourth-largest economy. But, like its transport system, policing and much of its public sector, Britain?s energy infrastructure and policies are a national disgrace. After eight years of complacently behaving as if self-sufficiency in oil and gas thanks to the North Sea would continue for ever while simultaneously refusing to risk political difficulties by pressing the case for more nuclear power, the government is now scrambling to find ways of keeping affordable electricity flowing �? an astonishing position for a major Western government to be in. Prime Minister Tony Blair was right to come out publicly in favour of building new nuclear power stations last week, though his intervention was at least two years late, he has bottled out of giving his support before and even now he is only doing so under cover of the need for a ?national debate?.

Under Mr Blair?s uncertain watch (and that of his successor-in-waiting, Chancellor Gordon Brown) nuclear energy, the only power source that can rival fossil fuels in providing national grids with an efficient ?base load? of electricity generation, meet greenhouse gas emission standards and satisfy global demand for energy, has been deliberately condemned to wither from neglect. In 2003, bogged down by the war in Iraq and at a time when British Energy, the main nuclear operator, was filing for bankruptcy because energy prices were so low, Mr Blair decided it was not worth picking a difficult fight to promote nuclear power, thus blowing his best opportunity to establish a rational energy policy. Instead he endorsed what was probably the most intellectually defective White Paper ever produced on the subject. Given that it will take at least a decade before any new nuclear plant would start producing electricity, the lost time could be devastating.

That Mr Blair, a former member of the Campaign for Nuclear Disarmament (CND), which did so much to ensure that no new nuclear station has come on stream since Sizewell B in 1994, now supports nuclear energy will come as no surprise to readers of this newspaper, since we revealed as much on 9 October on our front page (the rest of the British media finally caught up last week). We already know (though it has not been widely reported) that the Prime Minister would like the new reactors to be built on existing nuclear sites and replace those to be decommissioned in the near future. We also know that the nuclear industry is willing to proceed without any government money on three conditions: that it is supported with planning applications; helped with nuclear waste disposal; and offered some kind of protection against an energy price crash. So, while potential investors will not commit the money without some form of government guarantees, which is not ideal, they would be more limited than many critics realise.

Since the summer, meetings have taken place between the Department of Trade and Industry (DTI) and some of Europe?s largest energy companies about a new nuclear power programme. Those involved include Electricit� de France (EdF, which, by coincidence, employs Andrew Brown, the Chancellor?s brother, as its head of media affairs in Britain) and Germany?s Eon and RWE, which already trade in the British electricity markets as Powergen and npower. These companies will want to bid for new contracts. But they will want to know what Mr Blair is planning to do next and whether his forthcoming announcement of a review of nuclear energy will act with speed and have teeth.

The case for new nuclear power stations is strong. Britain?s existing 12 nuclear stations currently provide 22% of electricity generation, already too little, with most set to shut over the next 15 years. Unless they are replaced ? something for which there are as yet no concrete plans ? there will be only three nuclear power stations left in operation by 2020 producing just 7% of electricity demand. Many other European countries depend more heavily on nuclear power: in France about 75% of all electricity is nuclear-generated, in Belgium 55%, Finland 27%, Switzerland 40% and Sweden 50%.

The decline in Britain?s nuclear energy capacity would not matter if a simple and secure alternative source of electricity were available; until now, coal, oil and North Sea gas have done the trick. But thanks to increasingly stringent environmental regulations, coal is becoming much more expensive (new rules coming into force to ensure that carbon dioxide (CO2) is captured at source through chimney-scrubbing technology will skew the cost �argument more in favour of nuclear); and with supplies of North Sea gas running out, Britain will be forced to rely on imported natural gas to produce its electricity (gas is supposed to account for a dangerous 60% of UK electricity by 2020, much of it coming from some of the most unstable and unsavoury regions of the world).

The problem is that, as Britain discovered the hard way last week, gas supplies are not reliable. The prospect of a little cold weather (Britain cold in winter ? now there?s a surprise!) was enough to send spot gas prices surging temporarily to �1.70/therm last week, the equivalent to $160 for a barrel of oil, two and a half times the natural gas price in the United States and four times more than Dutch spot prices. The price spike caused chaos for those large industrial users which, to save money, take gas on special contracts which allow cuts in supplies if prices surge or supplies are scarce. The Interconnector, a sub-sea pipeline from Belgium to England, failed to work the way it was supposed to, operating at no more than 58% of capacity because foreign providers refused to pump gas under the English Channel.

Why? Because other EU countries decided to preserve their supplies by fiat, sending prices soaring in Britain and triggering chaos in the markets: instead of responding to market forces, Europe?s huge energy monopolies are more focused on domestic political considerations, which means they would not dream of doing anything that would put up prices at home, even if it allowed them to make more money in Britain, for fear of demands for greater competition at home. The EU?s failure to tackle these blatant abuses of monopoly power in cross-border trade confirms yet again the inherent flaws in the single market and Brussels? inability to deliver any reforms of value to the British economy.

As the nuclear debate hots up the Greens will push an alternative agenda, to which the government has already paid lip service. In its 2003 White Paper, ministers said they wanted 10% of UK electricity generated from renewable sources (such as wind farms, burning organic material or harnessing tidal waves) by 2010 (up from 3%-4% today) and even expressed the hope that the figure might rise to 20% by 2020. As with most government targets, it stands no chance of being reached, despite a massive, subsidised programme to build wind farms; and it distracted the government further from acting on nuclear power and pushing for a truly competitive EU energy market.

The goal at the time was not to secure energy supplies but to pursue environmental goals even more strict than the Kyoto protocol on global warming which, if implemented in full, would have devastating consequences on the economic output of rich countries while doing almost nothing to slow climate change. Not content with its Kyoto commitment to cut CO2 emissions by 12.5% below 1990 levels by 2010, the government puffed up its Green breast and promised to cut emissions by 20%, a pledge it repeated this year even though it knows it cannot meet it. Emissions did stabilise at about 1999 levels in the dash from coal to cleaner gas but have now started to go up again (as expensive gas encourages a return to coal); hence ministers? obsessions with renewable sources of energy which, like nuclear, do not produce CO2 emissions ? but which, unlike nuclear, are beloved of Greens and their anti-globalisation allies.

But renewable sources of energy suffer from two major problems: they are very expensive to set up; and they are intermittent ? ie they do not produce energy on demand, which means they are unreliable at providing a base load for the national grid. Wind turbines, for example, do not produce electricity when there is no wind. There are already about 1,000 wind farms in operation in the UK, with a maximum theoretical combined capacity of 1,000 megawatts, though they normally operate at only about 26% of capacity due to lack of wind. By contrast, a single coal station produces about 1,000 megawatts, with reliability, as does the Sizewell B nuclear plant.

So Mr Blair should press ahead with a new nuclear power construction programme if he does not want to be blamed for serious energy shortages and high prices in the years to come. Contrary to Green propaganda, usually swallowed whole by an unthinking media which too often acts as the Greens? mouthpiece, the new generation of nuclear plants (such as the ones France is about to build) can be made safe enough to withstand even extreme events such as earthquakes, aircraft crashes or even a terrorist attack. The nuclear industry accounts for less than a thousandth of radiation exposure; almost all of our exposure to radiation comes from natural sources.

But the biggest improvement in nuclear technology has been the drastic reduction in the volume of waste it produces: if modern plants were commissioned to replace the existing stations, Britain would be able to maintain its 20-25% share of nuclear-generated power and add only roughly 10% to the UK?s volume of existing nuclear waste over their 60-year operating lifetime. Current levels of electricity output from nuclear power could be maintained by ten 1,000-megawatt nuclear stations based on the latest techniques. There is a good case for increasing Britain?s reliance on nuclear power to European levels. Mr Blair?s review needs to find in favour of a large-scale and speedy nuclear station construction programme. Failure to do so risks devastating consequences for the British economy.


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