Friday, March 17, 2006

EC official questions nuclear as efficient, economic choice

EC official questions nuclear as efficient, economic choice

London (Platts)--16Mar2006

The costs for new nuclear power are "huge," and from an economic perspective
it may not be the best choice for helping to reduce greenhouse gas emissions,
a European Commission official told Platts March 14.

"From a pure market perspective, you have to look at what is really economic
and efficient," said Lars Mueller, a policy officer with the EC Environment
directorate general. "There are huge costs for nuclear power, if you include
the costs for waste, and the waste problem is not solved in any country.
Neither is the problem of decommissioning." He did not give any cost figures.

As a policy officer, Mueller ranks just below EC commissioners. He is involved
with negotiations with European Union states about areas such as emissions
trading and makes recommendations to the EC commissioners.

Mueller was in Stockholm speaking at a public hearing on climate change
organized by members of the Permanent Standing Committee on Environment and
Agriculture in the Riksdag, or parliament.

Mueller said he was doubtful of Finnish claims that the 1,600-MW EPR being
built at Olkiluoto for Teollisuuden Voima Oy, or TVO, is the most economic way
to get more baseload power. "I would be interested to hear how they justify
the investment," he said.

Finland has said that nuclear is economical since TVO is a cooperative that
sells power at cost to its owners and that the owners would be willing to pay
a small premium for security of supply. TVO also has said it can run the unit
as least as efficiently as its existing reactors, so electricity from the new
unit would not cost any more.

Mueller added that the decision to build a new unit in Finland was made for
"policy reasons, not economic reasons," noting Finland's desire to reduce its
energy dependency on neighboring Russia.

Finnish political and utility sources admit that they want to reduce
dependence on Russian electricity and are willing to pay a premium for that.
But they also say they believe that a new nuclear unit can be cost competitive
for the cooperative shareholders in TVO, compared to their other choices for
buying electricity.

Mueller said, however, that given the lack of commercially viable renewable
technology, nuclear cannot simply be ruled out. But countries that choose not
to use it, and opt instead for renewables, must "seriously step up investment
in these technologies."

The market, he said, "should play a major role in giving the answer as to what
type of energy we have in the future."

He also called for "big money" to be put into programs for energy efficiency
in countries such as China and India where economic growth is creating huge
demand for more power.

During his talk, Mueller said that European Union, or EU, states must do more
to cut greenhouse gas emissions, as well as develop plans for adapting to a
certain amount of climate change which he said is inevitable.

While he said that one way to cut emissions may be with carbon capture and
storage technology, he noted that it carries "many legal questions. There are
liability issues that need to be sorted out."

EU states also need to be thinking now about what kind of program should be
set up to combat climate change after the second phase of the EU Emissions
Trading System ends in 2012, Mueller said.

Despite uncertainty over what will happen to the system after that date, and
worries about whether the EU can sustain the system if countries such as the
US don't participate, Mueller said he is convinced that "we will have
emissions trading after 2012. The question is what kind of trading we will
have. But the directive is there and this is one of our key measures."


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