Will the new U.K. government support nuclear energy?
Energy & Climate Minister pledges "not one atom of help" from the government
The future of nuclear energy in the U.K. does not look bright based on the rhetoric coming from Chris Huhne, (right) the new government's Energy & Climate minister and key advisor to Conservative Party coalition partner David Cameron. In a May 13 interview with the BBC, Hunhe pledged there will be no public subsidies for new nuclear power stations in the U.K.
Hunhe has alarmed nuclear utilities who are planning to replace the U.K.'s 19 aging first and second generations of nuclear reactors. He has a history of negative remarks about nuclear energy saying "it has been tried, tested, and failed."
Building new reactors takes enormous political that spans several election cycles. Given the long lead time for planning and construction, work needs to start soon in the U.K. if the nation wants to keep the lights on.
Natural gas fields in the North Sea will reach an end and the nation is supposed to be planning to phase out its coal fired plants to meet global warming goals. The logical conclusion is that the nation would turn to nuclear energy. That may not happen with the new government.
A May 13 editorial in the Financial Times warned that Huhne "is no friend of nuclear power." In the past, the newspaper noted, "he called it a dead end."
Huhne's opposition ignores the fact that current reactor fleet at 10 sites currently generate 20% of the electricity in the U.K. By 2020 the nation will need to have 25% of its electricity coming from non-carbon emission energy sources that can meet baseload demand in order to meet climate change goals. Only new nuclear reactors can fill the bill.
Despite being a highly educated man with a career in finance prior to entering politics. Huhne, has made some rather startling comments. He starts out sounding rational saying in multiple media interviews he favors renewable energy investments and energy efficiency over building new power stations. He also wants to harness offshore tidal power. So far so good.
Then the trolley goes off the track. He tells the Times of London on May 15 the U.K. should rely on its "enormous stocks of coal" for its future energy needs. Paradoxically, during the election he also called for construction of 15,000 windmills saying, "they are beautiful."
Another of his views is that the government should tax air cargo, such as imported coffee beans from Kenya, on the grounds such shipments contribute to global warming. It seems for a Liberal, Huhe is verging remarkably into a propsoal for setting the agenda of peoples' lifestyles using the tax system.
He reserves his most thoughtful, and rational, comments for finance issues concerning new nuclear reactors. He tells the BBC that in addition to a ban on public subsidies, there also will not be any government help for "contingent liabilities."
Mr Huhne told the BBC, “The main point is that there is absolutely no disagreement in the coalition on the key principal that there will be no public subsidy.
“If a consortium for the first time in decades is prepared to build a nuclear power station without public subsidy then in all probability new nuclear will go ahead.”
Huhne has a background in finance which is why he is emphasizing his opposition in his new government past based on the issue of subsidies. In 1997 he became managing director of Fitch IBCA, and from 1999 to 2003 was vice-chairman of Fitch Ratings. It is difficult to square some of Huhne's startling political commentary with his background setting risk and interest ratings for the nation's largest financial institutions and corporations.
His comments about nuclear energy have raised fears that the Liberals in the coalition government will, in a time of fiscal restraint, cut the budget of the National Decommissioning Authority (NDA), which is the U.K.'s massive nuclear waste cleanup program.
What it boils down to is that the Tories want nuclear energy and the Liberals oppose it. A disingenuous political plan has been worked out by the coalition government for Huhne to sound off whenever he pleases in his personal views but to abstain from voting against pro-nuclear legislative measures in Parliament.
Fear, uncertainty, and doubt may have a purpose
This plan may not work due to blow back from the Liberal polticial base that makes up the government. The Financial Times reported that Andrew Warren, an energy advisor to the Liberals during the election, said nuclear plants are not needed if the government will invest enough in energy conservation. Huhne's opposition may create enough uncertainty and delay to open windows of opportunity for other energy technologies including wind and tidal energy.
According to a wire service report by Bllomberg news May 13, Ben Caldecott of Climate Change Capital in London said Huhne's appointment as Energy & Climate minister "could stall nuclear power because he's unlikely to make it a priority." It's a classic British understatement, but there's more.
Keith Parker, the head of the UK Nuclear Industry Association (NIA), told the European Nuclear Assembly meeting in Brussels May 15 the new government is creating "uncertainty which could have an impact on the confidence of investors."
He warned that the new government might abolish the Infrastructure Planning Commission which will make the decisions where and when to build 11 new nuclear power stations.
He also cautioned that undercutting funding for the NDA could erode public confidence in it and subject the program to legal challenges if cleanup commitments are not met. Parker said the future of nuclear energy in the U.K. depends on how well the country deals with the legacy of past contamination. He warned that Huhne's ban on funding for future liabilities could impact decommissioning of the first and second generation reactors which are to be replaced by the new build.
"The public needs to be reassured the nation is capable of dealing with its legacy of radioactive waste," he said.
U.K. massive new build already in motion
The new nuclear build in the U.K. is one of the world's most aggressive programs for developing new reactors linked to climate change commitments. In March 2010 the first two reactor sites were selected for development. Horizon Energy, a consortium of European utilities RWE and E.ON, will build 3,600 MW at Wylfa Wales and another 1,600-2,400 MW at Oldbury in Gloucestershire. Reactor vendors Areva and Westinghouse are in competition to supply equipment for these sites.
Next up British Energy and Electricie de France are proposing to build 3,300 MW of nuclear powered generation capacity at Hinkley Point in Somerset and at Sizewell in Suffolk. All four reactors will be Areva EPRs at 1,650 MW each.
Finally, a consortium composed of Spanish utility Iberdrola, Franch construction giant GDF Suez, and U.K. utility Scottish & Southern has plans for 3,600 MW using an as yet unspecified reactor design at Sellafield in Cumbria.
For their part the nuclear energy utilities planning to build the reactors say they plan to press ahead with their projects which require 40 billion pounds. Vincent de Rivaz, CEO of EDF in the U.K., told the Financial Times May 14 the firm will proceed with the first reactor at Somerset with first concrete poured in 2013 and the reactor entering revenue service in 2018.
What about carbon taxes?
Rivaz says he has no problem with Huhne's rhetoric about a ban on public subsidies as long as he supports setting a useful price on carbon. He added the U.K. should develop a tax on carbon emissions permits similar to the European Union's trading scheme. He called for a "predictable price" in the form of a flat rate per ton of CO2. In particular, Rivaz wants a floor price on carbon that is high enough to shift investment from fossil fuels to nuclear energy.
Paul Golby CEO of E.on, which also plans to build reactors in the U.K. dismissed Huhne's talk as just that. He told the BBC May 16 that the "talk of individuals" is not the same as government policy. However, Golby also said that the nuclear industry needs to demonstrate to the nation that "nuclear has to be in the mix if we are going to keep the lights on and reduce carbon."
Dan Yurman publishes a blog on nuclear energy titled 'Idaho Samizdat' http://djysrv.blogspot.com. It covers the nuclear energy industry globally including new reactor investments, economics, politics, and technologies. He is a frequent contributor to the ANS Nuclear Cafe http://ansnuclearcafe.org and to Fuel Cycle Week http://fuelcycleweek.com
Other Posts by Dan Yurman
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