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Response to "Our Energy Challenge" |
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Written by SONE
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Thursday, 20 April 2006 |
The response of Supporters of Nuclear Energy to “Our Energy Challenge –
securing clean, affordable energy for the long-term” falls into three
parts:
1 – First, we address the five key questions posed in the document and respond to most of the invitations for comment.
2 – We enclose a pamphlet that was sent to all members of the
Government and MPs in the immediate aftermath of the general election
last May. It sets out the Supporters of Nuclear Energy case for the
development of nuclear power in the interests of greater security of
electricity supply at competitive cost and reducing carbon emissions.
The case has been reinforced by events since it was prepared a year ago
but it remains a document on which we can confidently rely in setting
out our position.
3 – An elaboration on a number of points germane to the case and taking account of developments over the past 12 months.
ELABORATION ON SONE’s CASE FOR NUCLEAR DEVELOPMENT
GENERAL
British energy policy, as set out in the 2003 White Paper, suffers from a lack of focus and conflicting objectives. The function of energy policy is – or should be – to ensure security of a sustainable energy supply at competitive cost. Instead, the 2003 White Paper gave primacy to an environmental goal – a 60% reduction in greenhouse gases by 2050.
That environmental goal cannot simply be achieved through energy policy. It requires a comprehensive approach bearing upon, for example, taxation, transport, building control and R & D policies across Departments to encourage conservation, cut out waste and raise the energy efficiency not merely of fuels but also of vehicles, plant, appliances and buildings. A more rational energy policy would require, as an over- riding priority, security of supply at affordable cost. The Government should then calculate how much extra cost it can afford to pay to promote sources of energy that would reduce carbon emissions, and the calculation should be transparent.
Within energy policy, electricity supply is becoming increasingly important to sustain modern economies. Nuclear power is uniquely placed to generate electricity with the objectives of obtaining security of supply at affordable cost and carbon abatement.
We would submit that the elimination of so-called fuel poverty has no place in energy policy. It should be an objective of social policy and that is where responsibility for it should lie in consultation, as required, with those responsible for energy policy.
In short, we would argue that there is a fundamental need for energy policy to
be allowed to concentrate in the world in which we find ourselves on obtaining security of supply at a competitive cost in as clean a way as possible.
NUCLEAR ECONOMICS
One of the curiosities of the energy debate is that every fuel or source of energy apart from uranium is credited with the ability to improve its efficiency, reduce its costs and generally become ever more irresistible. This is taken for granted even among sources of energy that have yet to be proven let alone made available commercially. The result is that many energy supply scenarios fly on a wing and a prayer whereas nuclear has been generating bulk – and a substantial part of our baseload – electricity for 50 years. A viable energy policy cannot be founded on hope or supposition. It has to be firmly rooted in established performance.
Another feature of the energy debate is the touching belief in the ability of technology to turn dreams into reality regardless of cost. Few, if any, alternative sources of energy or such techniques as carbon sequestration come with price tags. Wind was embraced originally in an experimental way to see if it could be made economic. It has now had 15 years to prove its worth. It has signally failed to do so yet its development continues to be encouraged at very substantial cost in subsidy for little return in reliable electricity and carbon reduction. This underlines the extent to which the fundamentals of energy policy – security at an acceptable price – have been swamped by “green” tokenism.
Meanwhile, nuclear power’s performance and economics in the UK continues to be judged by our first and second generation reactors – for that is what Magnox and AGR reactors are – and not by the realities achieved by international developments over recent decades. This is an unacceptable approach. New types of reactor being built across the world incorporate not merely new, passive (natural) safety measures but also major reductions in site footprint and requirements for equipment such as valves, pumps, piping and cable. Much of the building of a nuclear power station is now the assembly of proven components manufactured off site.
Modern nuclear power stations produce only a tenth of the waste from old reactors currently in use in the UK. They are now designed with decommissioning in mind. and these developments greatly reduce the cost and complexity of both waste management and decommissioning.
Costs
Modern nuclear electricity generating costs are now generally reckoned to fall between 2 and 3p/kWh. The independent Royal Academy of Engineering, using a discount rate of 7.5%, put them at the lower end of that range – 2.3p/kWh in 2004. This compared with CCGT (gas) at 2.2p/kWh. But that was long before the huge increase in gas prices. It therefore seems reasonable to assume that nuclear is the cheapest (and cleanest) option available to the market. There has been no suggestion in the two years since the RAE study reported that other generators’ costs have fallen.
The RAE’s findings - related solely to generation costs and including no benefit for security of supply or carbon-free generation - have been broadly confirmed by several other studies.
An OECD/IAEA study last year found that with a 5% discount rate nuclear generating costs came out at EUR 2-4c/kWh; coal 3-5c; gas 4-6c and wind 8c. The RAE used a 7.5% discount. The OECD/IAEA said that even with a 10% discount rate nuclear remained cheaper in seven out of 10 countries.
Nuclear’s economics alone should ensure its inclusion in any future energy policy. Its carbon-free generation of electricity is a major bonus.
Decommissioning costs
We know of no justification for your suggesting that nuclear decommissioning and waste management can amount to up to 15% of the lifetime cost of nuclear plants. The figure contrasts starkly with the 4% of the price of nuclear electricity currently charged to cover decommissioning and waste management costs. It looks even more inflated when it is recognised that 1-2% would be prudent decommissioning and waste management cover in the price of electricity from new generation reactors.
It should also be pointed out that the nuclear industry has traditionally – and uniquely – set aside an allowance for decommissioning and waste management in the price charged to consumers. The sums accrued were appropriated by the Treasury on the privatisation of the electricity industry. A substantial fund therefore exists – or should exist – to cover this work and the public should be told what it amounts to so that they can put the no doubt grossly gold-plated sum of £56bn quoted by the NDA in perspective. We have objected to the NDA’s figures because they are built on a false premise: the end of all nuclear activity – whether defence, industrial, power generation, medical and research – in the UK. The economics of decommissioning could be greatly improved if a more realistic strategy of on-site disposal of low level wastes could be adopted.
Reactor efficiency
There are undoubtedly improvements in reactor efficiency to come, especially if the rising price of uranium makes the application of breeder technology viable. Fast breeder reactors, under development elsewhere in the world, are probably sixty times more fuel efficient than existing conventional reactors and offer a long-term prospect of secure supplies of clean electricity.
In short, nuclear power has already been substantially developed to another evolutionary stage even before advanced designs of conventional reactors are widely deployed. That is another reason to regard nuclear as a long-term work-horse for a viable economy.
Finally, on costs, we recognise that nuclear power stations are initially more expensive than other albeit “dirty” sources of power such as gas and coal and their costs are therefore sensitive to discount rates. But the first generation of nuclear power stations have generated electricity for up to 50 years and future generations will be built to operate at high loads for 60 years or more. Given reasonable access to the electricity market, this raises questions about the appropriate level of discount rate when the capital cost is spread over such a long period.
SECURITY OF SUPPLY
Nuclear power offers a greater measure of security of supply of electricity. This is because it is an economic form of electricity generation largely under our control. Its fuel is in plentiful supply (see below) and comes from mainly stable democracies, such as Australia and Canada. It can also be stockpiled. It also comes with the prospect of vastly increased fuel efficiency with the commercialisation of breeder reactors. Reprocessing of spent fuel can also recover 96-97% of the uranium and a small amount of plutonium for recycling with new fuel.
Nuclear thus offers long-term security of supply at a stable cost. This is a major asset in a world heavily reliant on oil and gas that are predominantly in the hands of unstable regimes, notably in the Middle East and Algeria and Nigeria. Nuclear becomes even more attractive after the recent use of gas as a political weapon by a Russia seeking greater global status.
It may be that, in spite of the temptations, oil and gas suppliers will honour their contracts, but no one knows the price they will charge, given the increasing demand for oil and gas with the rise of China and India. Against this background, nuclear is a “must” in strategic and economic terms.
LOAD FOLLOWING
One of the limitations of current nuclear power stations in the UK is their “load following” ability – ie to adjust output to demand. Magnox and AGR stations have consequently been used to provide base load electricity with great success. PWR stations such as Sizewell B have, however, greater load following ability and this – and not just access to a Continental market – explains why France now generates more than 83% of its electricity by nuclear means. Future generations of reactor are likely to be PWR technology and will have considerable ability to follow demand. This should be borne in mind in formulating policy.
THE GOVERNMENT’S ROLE
We divide our comments here into what the Government should and should not do.
It is generally recognised that any future nuclear power stations will be built not by the Government, as in the past, but by private enterprise and most probably by a consortium of companies. In these circumstances, we think it is important to state what the Government should NOT do:
It should NOT select the technology, fund the investment or try to manage the project. Government’s role is solely to facilitate the development of the nuclear industry because it serves the national purpose. It will best do this by ensuring that:
• investment in new nuclear plants is possible through market arrangements that allow for long term contracts;
• licensing of reactors and planning arrangements work effectively and for the purposes they were intended;
• the NDA makes a sensible contract available to investors to take on final waste liabilities and decommissioning of the specific power station;
• Ministers, where appropriate, challenge alarmist and irrational fears on the safety and cost of nuclear reactors and radioactive waste disposal.
It follows that it is not enough for the Government to state unequivocally that Britain needs to replace its ageing nuclear power stations. That would change the atmosphere but nothing would necessarily happen – and certainly not in the timescale required to replace plant closures – if the Government were not to complement its declaration by the necessary supportive action for private developers.
Long-term disposal of waste
We do not consider a scheme for the storage or disposal of longer-term nuclear waste to be crucial to the development of nuclear power but it would make a decision presentationally easier. We have, however, to wonder why the Committee on Radioactive Waste Management has been allowed to spend several years investigating the long-investigated issue of methods of long-term disposal of nuclear waste without any requirement to recommend a site for the chosen method. This suggests that so far Government policy has been designed to make a pro-nuclear power decision more difficult by building in delay over resolving the management of long-term waste. It is generally accepted that the next generation of nuclear reactors will volumetrically produce a tenth of the waste generated by those designs currently in use. Moreover, there is a large body of evidence to support the claim that this waste can eventually be disposed of safely by deep burial in suitable geological formations at an acceptable cost.
A WAY FORWARD
Private developers are already in a position to order nuclear power stations incorporating guarantees over completion to time and cost and subsequent performance. Long term contracts for fuel supply are also available as should be long-term contracts for waste management through the NDA. Such contracts should provide considerable reassurance for developers who would be in a position to offer long-term supply contracts to major consumers and thereby create a form of new-build consortium being pioneered in Finland. The key to minimising costs by minimising delays would be Government action as canvassed above, plus the active and accurate promotion of nuclear power if it considers it to be necessary in the national interest..
URANIUM SUPPLY
We note that you do not share the latest anti-nuclear scare story about a shortage of uranium. We would broadly concur with your view that there are enough known recoverable reserves to last for 50 years, quite apart from the 30 years’ supply available from decommissioned plants and weapons. The availability of uranium, a mineral about as prolific as tin in the earth’s crust, depends on demand and price. As compared with gold and silver, we have been exploring for uranium for a very limited period. Highly probable deposits are already put at 12m tonnes compared with the 3.1m tonnes of known economically recoverable reserves. A doubling in the price of uranium could be expected to result in a ten-fold increase in resources. The impact on nuclear electricity’s costs would be limited because nuclear, in contrast to gas generation, has low fuel costs.
CARBON EMISSIONS
It is true that the full nuclear fuel cycle results in the emission of some carbon dioxide (CO2), though the actual generation of electricity by nuclear means is greenhouse gas free. Studies by the Government’s Energy Technology Support Unit showed in 1999 that over its life cycle – from mining to decommissioning and waste management - nuclear remains the cleanest fuel – and at 4 grammes per unit output of electricity twice as clean as wind. The processing of poorer uranium ores will raise the carbon requirement but not so significantly as to make nuclear less than the cleanest fuel.
TERRORISM
Terrorists pose a threat the world over and security at nuclear sites, like other energy operations and terminals, is crucial. But nuclear power stations are not bombs waiting to go off. Their systems are entirely different from nuclear weapons. As “Our Energy Challenge” outlines, close attention is paid to overseeing safety and security at nuclear power stations. Nuclear materials are also widely used in industry and medicine. It is difficult therefore to understand why terrorists should target a nuclear power station to steal such difficult-to-handle material when they have global access to a vast array of non-radioactive weapons.
Nuclear reactors are operated within robustly thick concrete containment vessels designed to withstand massive impact. In computer simulations an aircraft flown into a nuclear power station containment at 500mph evaporated but the containment was undamaged.
PROLIFERATION
We agree with your assertion that current nuclear designs, operated within an effective security and safeguards framework such as the UK’s, should create very little risk of proliferation. That is the view of experts who have examined the issue. The late Professor J H Fremlin, a leading radiation scientist, stated in his book, Power Production: “I can see no way in which the building of further nuclear power stations in Britain can make the probability of proliferation of weapons elsewhere either greater or smaller”.
It is often forgotten that the object of the international community is to facilitate not to stifle the peaceful use of nuclear power. The Non-Proliferation Treaty (Article IV2) says “All parties undertake to facilitate, and have the right to participate in, the fullest possible exchange of equipment, material and scientific and technological information for the peaceful use of nuclear energy. Parties to the Treaty in a position to do so shall also co-operate in contributing alone or together with other States or international organisations to the further development of the application of nuclear energy, especially in the territories of non-nuclear-weapon States party to the Treaty, with due consideration for the needs of the developing areas of the world”.
In other words, the peaceful use of nuclear power is seen internationally as desirable. What has to be prevented is the use of nuclear technology for menacing purposes. That is the objective of existing protocols which have, on the whole, worked well under UN supervision. The UK is – and we are confident will remain – a strong supporter of effective non-proliferation measures.
It is also germane to the case for the peaceful use of uranium that abolishing nuclear power, as advocated by many, would bring down the main international instrument against proliferation because it is naïve to suppose that this would be supported by the many nations who rightly see electricity as the key to their advancement. It is far better to concentrate on strengthening the current elaborate safeguards regime.
Reprocessing, which will become much more attractive as demand and price for uranium increases, is also relevant to the argument. The recovery of uranium and plutonium from “spent” fuel for re-use in new nuclear fuel reduces the risk of plutonium being diverted. “Burning” it up in power stations is a much more effective and economic way of dealing with the proliferation problem.
OTHER MEASURES
We believe that the Government’s current “renewables” policy is too heavily slanted towards intermittent and expensive wind power. This is partly because so few other renewable sources of energy yet offer substantial electricity supplies. We agree that a substantial R&D programme should be mounted into the more promising technologies to try to prove that they can make reliable electricity available at reasonable cost. But we consider the governing criteria for operating the programme should be the prospect of those technologies delivering reliable, continuous power at a cost which does not impose an indefensible burden, as wind does, on the consumer.
We believe that the Government’s promotion of energy conservation compares unfavourably with efforts in the past to secure the elimination of waste and the far more efficient use of energy. So far as we can see there is no coherent, still less high profile, energy conservation programme aimed at the public. This is perhaps understandable because until recently energy prices have been historically cheap. The rise in prices offers a more encouraging background for a major exercise in educating and informing the public about energy and its use.
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Last Updated ( Thursday, 20 April 2006 )
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