World Nuclear Association

Financial Times
Internet: http://www.ft.com/cms/s/65aff49e-0a2f-11db-ac3b-0000779e2340.html

A Changing Climate for Nuclear Energy

The government has been dropping broad hints of its new enthusiasm for privately funded nuclear power plants. The latest one was implicit in last week's announcement of unexpectedly tough caps on carbon dioxide emissions from 2008-12.

The government is steadily restricting the supply of tradeable permits to emit carbon. This is the most cost-effective way of reaching any given emissions target because it means that those who can easily clean up their act will do so while those who are producing valuable products will instead buy permits.

The government has given away many of these valuable permits to the big industrial polluters while forcing electricity generators to buy many of theirs. There is no environmental reason for this; the permits, after all, are tradeable. How much emissions are reduced and by whom will be un-affected by the initial allocation, which is merely a handout to whichever industries are in favour. Ideally, all permits would be auctioned.

But the government's focus on the electricity industry seems to be another sign that it is preparing the ground for new nuclear power stations. As a way to deal with climate change, nuclear power has much to recommend it. Nuclear power stations provide baseload capacity; they are always on, while fossil fuel power stations need then be switched on less often, at peak times, minimising carbon emissions.

Mining uranium and building nuclear power stations does generate carbon dioxide, but much less than the constant burning of fossil fuels. Carbon permits, therefore, rightly tilt the playing field in favour of nuclear but, unless the price of permits rises much higher than it is at present, that will not be the factor that persuades private investors to build nuclear power stations. They will be looking at political risks, capital costs and the cost of competing fuels.

The government also announced that some of the revenues from permit auctions will be used to fund renewable energy projects. This looks like a sopto the environmental lobby, but it need not be. Renewable technologies will have a role to play in reducing climate change if they are applicable in China, Brazil, Mexico and India. Some renewable energy schemes - including offshore wind farms - have dealt with the parochial concerns of small, rich nations. The innovation fund should concentrate on ideas that will work all over the world.

Nuclear power stations produce radioactive waste and this has an environmental cost. Generators should not be able to produce this pollution for free. But new nuclear power stations produce much less radioactive waste than earlier models. If waste can be stored safely for a few decades, this problem is likely to become easier to resolve over time. We cannot have the same confidence about climate change.