Pushing the nuclear button
Who is leading the growth in nuclear energy? And why? Derek Brower reports
"Nuclear has to be part of the mix," said Claude Mandil, executive director of the International Energy Agency (IEA), when the think tank launched its latest World Energy Outlook last autumn.
His sentiment is matched in most of the large economies. "It's in our vital interest to diversify America's energy supply," said President George Bush in his State of the Union address in January. To applause in the House Chamber, he added: "We must continue changing the way America generates electric power, by even greater use of clean-coal technology, solar and wind energy, and clean, safe nuclear power."
Two weeks earlier, the European Commission had said much the same thing. Although Jose Manuel Barroso, its president, claimed to be "agnostic" about nuclear power, the Commission's own energy review was not quite as neutral. It suggested that the EU's ambitions to reduce greenhouse gas (GHG) emissions and increase its energy security could be hampered by any fall in its use of nuclear reactors to generate electricity.
A boon for the sector
It all adds up to a boon for the nuclear sector and its companies. According to Petroleum Economist research, spending on nuclear power plants under construction now could be as high as $90bn by the time all 30 of the new reactors – mainly in Asia – are on line. The figure is likely to be lower, but given the poor record in the industry of meeting any but the most pessimistic cost forecasts, no one should discount it being higher.
In any case, it is good news for any company hoping to secure a share of that business. There is even evidence that some of the large oil firms are turning their eyes to fission and its growth potential. France's Total has declared its hand, with its incoming chief executive, Christophe de Margerie, saying last month that the company would "one day have to be part of this adventure".
The nuclear "adventure" to which de Margerie was referring is being enjoyed more in the developing world than in the West, where only one new nuclear plant is under construction, in Finland. For Western governments, nuclear's three main attractions – low carbon emissions, cheap electricity and what is assumed by many to be an abundance of the uranium feed stock – continue to sparkle, but the bulldozers have not cleared much land for the plants.
Not yet, anyway. The World Nuclear Association (WNA), an industry group, says: "With electricity demand expected to double from that of 2004, there is plenty of scope for growth in nuclear capacity in a GHG-conscious world."
The IEA, whose counsel is more independent, agrees, predicting that by 2030 nuclear's generating capacity will have grown to 416 gigawatts (GW), compared with 368 GW now (see Table 1) – positive growth for any industry. However, with the spur of policy from governments favouring nuclear – in what the IEA calls its "alternative policy scenario" – its capacity would rise to 519 GW by 2030.
The US and UK are two of the West's most enthusiastic proponents of nuclear energy. In the US, the Nuclear Power 2010 programme, launched by Bush in 2002, was designed to boost nuclear by removing many of the obstacles that prevented its growth in the past. The government created more incentives – including a generous limitation, to $10bn, of the total liability an operator could face; tax credits; and hefty loans for up to 80% of capital costs – into its Energy Policy Act of 2005.
The UK's plans, which took an embarrassing judicial hit last month (see box), are for the time being a twinkle in prime minister Tony Blair's eye. Nonetheless, British Energy, the state-controlled nuclear power firm, last month called for partners to join it in building a new generation of plants. The company says the best site for the new plants will be on sites with existing nuclear plants: Sizewell, in Suffolk, and Hinkley Point, in Somerset.
The UK's task of expanding nuclear capacity, which supplies some 22% of generation now, will be doubly hard. All 13 of its operating plants are due to be closed by 2035; more than a dozen reactors have already been decommissioned. That means the next generation of nuclear plant will be charged with replacing lost capacity and adding more.
British Energy's chief executive, Bill Colley, bullishly predicted last month that the first new plants would be on line by 2018, with Electricité de France and Germany's two largest utilities, RWE and E.On, probably among the (unnamed) companies with which British Energy says it has already talked.
Meanwhile, a number of oil and gas producers remain keen to add more nuclear capacity. Russia's Federal Targeted Programme calls for nuclear to increase its share of generation from 16% to 25% by 2030. That would allow Russia to reap more value from oil and gas exports.
Similar thinking in Canada's oil sands could also mean a new plant is built in Fort McMurray, Alberta. That would help solve the problem of Alberta's dwindling gas reserves, which are being drained to heat water to inject into the oil sands. But building a plant that makes clean energy in order to produce more dirty oil belies Ottawa's claim that a nuclear plant in the oil sands patch would be built for environmental reasons.
Iran and Saudi Arabia also want nuclear reactors for the same reason: to increase their exports of expensive hydrocarbons. however, both countries' prospects are likely to be limited for political reasons.
China's and India's plans are as ambitious as Russia's. Beijing wants to build 40 GW of capacity by 2020, although the IEA says it will not meet its earlier target of 20 GW by 2010. India wants to reach 40 GW of nuclear capacity by 2030, although it, too, has failed its previous targets, despite having 3.6 GW under construction now.
Russia has emerged as an eager promoter of India's nuclear sector, realising that close friendship between Moscow and New Delhi will help Russian companies take market share from US firms in India's nuclear technology market. Rising demand for uranium in India will also be good for Russia.
Is there enough uranium?
But all of this forecast growth will depend on a number of factors. The first is the most fundamental: the world's reserves of uranium. The political security of those supplies is not really in question. Uranium is distributed relatively evenly across the world and the countries that hold the biggest reserves are not, with few exceptions, given to making political statements through their energy exports. Canada, in short, is hardly going to hold the world to ransom by shutting in exports from its uranium mines.
But are the reserves sufficient? The world's nuclear generating capacity of 360 GW, from some 440 reactors around the world, says the WNA, needs 77,000 tonnes a year (t/y) of uranium-oxide concentrate (also known as yellowcake – the product of milling uranium ore, which can contain 0.1% uranium; yellowcake contains around 80% uranium). Demand for uranium per kilowatt hour (kWh) of generation, however, has fallen by some 25% since 1970 through improvements in plant efficiency, it says. In future, every new GW of added capacity will need 180 t/y of uranium production.
But anti-nuclear campaigners say the world does not have enough uranium to supply that kind of growth – or the extra capacity groups such as the IEA want to see built. Even the WNA concedes that an increase in the spot price for uranium – to $43 a pound – in May last year was triggered by "the perception of imminent scarcity".
Nonetheless, perception is not reality, argues the WNA. The IEA agrees. "Proved resources are sufficient to meet world requirements well beyond 2030," it says, even in the event of its alternative-policy case. That means sufficient output exists to meet cumulative demand from existing, planned and projected reactors of up to 5.1bn tonnes by 2030. All demand to 2030 can be met by "reasonably assured resources" at production costs of below $80 a kilogramme, says the IEA. But it adds that investment in uranium-production capacity, like nuclear plants themselves, must increase if demand is to be met.
Whether the uranium is scarce or not the right kind will become unsustainably costly to the environment as capacity grows, says Helen Caldicott, an anti-nuclear campaigner (see p48). As the reserves of concentrated uranium are drained, producers will turn to uranium in lesser-concentrated ore veins. And mining that uranium and turning it into the kind that can be used in a nuclear power plant is a far more intensive process.
So intensive, say its detractors, that its production uses more energy than the uranium itself can generate, becoming a net contributor to GHG emissions. According to a 2004 study by Jan Willem Storm van Leeuwen and Philip Smith (Nuclear Power – the Energy Balance), "so limited are [the rich uranium ores used to produce the low-carbon emission statistics claimed by the nuclear industry] that if the entire present world electricity demand were to be provided by nuclear power, these ores would be exhausted within nine years".
Meanwhile, the energy costs of nuclear, from mining the ore through reactor construction to dismantling (and excluding storage), are 10 times those of gas-fired generation, making nuclear a large net contributor to the consumption of hydrocarbons. Such a claim, which is vigorously challenged by the industry, would be a blow to nuclear's most cherished boast – that its low-carbon emissions make it the most effective weapon in the fight against global warming.
So far, the blow has not landed. Most scientists – and many environmentalists, such as James Lovelock, one of the world's most prominent campaigners on climate change and the author of the Gaia theory – back nuclear on environmental grounds. The comparison with other forms of energy is startling. If it replaces coal-fired generation, 1 GW of nuclear capacity emits 5m-6m fewer tonnes a year of carbon dioxide (CO2).
But at the same time, nuclear also produces a host of other nasty chemicals, say its opponents. The enrichment of uranium makes "large amounts of now-banned chlorofluorocarbon (CFC) gas", says Caldicott. CFC, she notes, is 10,000-20,000 times more efficient as a GHG trapper. It also helps to destroy the ozone layer. Furthermore, nuclear plants routinely emit "hundreds of thousands" of curies of radioactive gases into the environment every year.
Convincing Gordon Gecko
The biggest obstacle, however, remains financial. Investors around the world are still reluctant to support projects that typically involve numerous contractors, high political and economic risk, large up-front capital investments, tricky management and, historically, embarrassing cost overruns. Nuclear's main financial problem is the yawning gap between its low operating costs (fuel, operation and maintenance) and capital costs (building the reactor) that are described by one analyst as "scary". While the construction costs for a combined-cycle gas-turbine (CCGT) plant amount to some 20% of its total price, for a nuclear plant it is 75%.
Moreover, nuclear plants are much bigger – Areva and Westinghouse, two of the leading reactor builders, install plants as large as 1.6 GW – than, say, the average CCGT plant, leaving the investor much more exposed to the risks associated with one. And it is not just the price tag that is frightening – it is also how much it differs from the pre-build estimate. A study from the US' Department of Energy has shown how plants built from 1966 to 1977 often ended up costing almost twice as much as the developers predicted. That kind of bad reputation does not tantalise investors.
There is an upside, however: once the plant is built, the power comes cheaply. Depending on how much was sunk into the costs of building the capacity, a nuclear reactor produces electricity at a cost of around $0.049-0.057/kWh over the plant lifetime, says the IEA. That makes it competitive with gas-fired generation at a gas price of $4.70-5.70/m Btu (or with oil at a price of $40-45 per barrel) – and helps explain why nuclear's popularity has increased. And if governments effectively punished polluters by how much carbon they released, a price of $10 a tonne of CO2 emitted – much lower than carbon is likely to trade once a genuine market has emerged – would make nuclear competitive even with coal-fired plants, says the IEA.
For those two reasons – high capital costs and cheap operating costs – it makes sense for governments, if they believe nuclear will save the world, to subsidise the building of new capacity. That might not always be a sweet pill for taxpayers to swallow. In the UK, the government had to bail out British Energy three years ago, leaving many asking why the country had bothered to privatise its energy sector in the first place, if taxpayers were going to have to rescue companies when their managers failed them. The state retains a 65% stake in the company, whose profits are well and truly back in the black, arousing rumours that the government might even try to cash in on the state's stake.
Even so, anti-nuclear activists say such a situation exposes the hypocrisy of Western governments that demand liberalisation in other sectors, but not in nuclear. That accusation sticks most when it is thrown at politicians in the US, one of the main critics of subsidies in other countries. The heavy government support – some $13bn in subsidies – that the US' 2005 energy programme unveiled, says one anti-nuclear campaigner, was essentially a shift of money from taxpayers to the nuclear industry.
However, put all the other pieces in place – abundant uranium, low emissions and less to worry about in terms of supply security – and the question of subsidies should be a red herring. Give those advantages, resurgent government support is no surprise. But first the nuclear industry and pro-nuclear governments need to satisfy a doubting public that the claims of the nuclear lobby are true.
|UK plans: not so fast, say the courts
THE UK was due to publish a White Paper this month, which most analysts expected would endorse a full-scale programme to develop a new generation of nuclear power plants. But those plans suffered a set-back in February when the High Court, the country's highest judicial entity, upheld a challenge to the White Paper's consultation process from Greenpeace, an environmental pressure group.
The judge in the case said the consultation process of the White Paper had been "misleading", "seriously flawed" and "procedurally unfair".
Sarah North, head of Greenpeace's anti-nuclear campaign, said the government's "so-called consultation on nuclear power was obviously a sham, and we're pleased that the government has agreed with us [by agreeing to re-consult]". She added that the ruling had forced the government "back to the drawing board to conduct a proper and lengthy review".
The government claims Greenpeace's victory could be a pyrrhic one. Alastair Darling, the secretary for industry, said nuclear remained the government's preferred option to fight climate change. He said that while the government would re-consult, the country faces a "race against time" to develop energy supply that would help stop global warming and allow the UK to meet its target of cutting carbon emissions by 19m-25m tonnes by 2020.
"Over the next two decades, the UK is likely to need around 25 gigawatts of new electricity generating capacity," the department of trade and industry said in a statement. "We need as much of this as possible to be low carbon. Everyone involved in this debate needs to answer how we do that. Ignoring the problem will not make it go away. A balanced approach is needed – a greater role for renewables and other low-carbon energy sources, allied to a strong focus on energy efficiency." n