The nuclear answer? Economist.com | July 7, 2005 http://www.economist.com/opinion/displayStory.cfm?story_id=A51435
If global warming is to be tackled, nuclear power may be part of the solutionbut only part Aflo / naturepl.com WHEN rich-country summits are held in remote places, to which the official delegations will mainly travel by helicopter and the media circus by plane and car, it is hard not to be sceptical about the summiteers' professed desire to do something about global warmingdespite their claims to be "carbon-neutral". Such scepticism is fuelled by the fact that the host of the G8 meeting in Scotland on July 6th-8th, Tony Blair, almost completely ignored the topic of climate change during his general election campaign in May, despite having recently nominated it as one of the planet's most pressing problems. These annual summits long ago lost the ability to generate real discussions, let alone decisions. On a subject such as aid for Africa, the publicity and the implicit deadline do seem to have had an effect, galvanising officials and finance ministers to reach agreement prior to the summit both on technical matters and on grander ones. But on almost everything else the summits are ineffectual: too big, grand and orchestrated to permit serious debate, but too unrepresentative to carry genuine weight in today's world. Without China, India and Brazil, for example, how can such meetings pretend to address economic policy, financial flows, trade or indeed global warming? The developing countries' effective absence from the Kyoto Protocol on climate change is one of the main reasons given by Americans for not ratifying it. The reviving nuclear industry Jul 7th 2005 Europe's new pollution-permit markets are growing fast. Jul 7th 2005 The environment Nuclear Energy The G8 summit at Gleneagles has targeted climate change as a key policy issue. See also the British prime minister. The White House has information about its energy policies. The US Department of Energy describes the "challenge of climate change". Yet just because the summit will do little or nothing to deal with global warming does not mean that nothing can be done. Both Mr Blair and Mr Bush have recently given hints of how a new sort of solution is gaining ground. During Britain's election campaign, Mr Blair's government gently floated the idea that it might be considering a fresh wave of investment in nuclear-power generation. And this week Mr Bush stressed that he thinks the best solution lies in investment in "alternative energy technologies"by which he doesn't mean wind turbines but rather fuel cells and, in particular, nuclear power. How green is my Geiger counter Nuclear power seemed a dying industry just a few years ago. Not one new nuclear plant has been ordered in America in over two decades, thanks to the accident at the Three Mile Island plant in 1979. The much more serious accident at Chernobyl in Ukraine in 1986 led to a dramatic backlash in many European countries, with Sweden, Italy, Belgium and Germany banning future nuclear plants outright. For sure, a remarkable reversal of fortunes seems to be in the works. Public opinion and even green opinion, once universally hostile, is softening. The industry argues that the improved economics of nuclear power can justify new plants (see article). In Europe, concerns about energy security and climate change together are boosting nuclear power. Eastern European countries, worried about reliance on Russian gas, are mostly pro-nuclear. Germany's opposition conservatives now say they will rethink the country's hostility to nuclear power. Finland is forging ahead with a new nuclear plant. In Asia, nuclear power never really died: it has remained an important part of energy thinking in countries such as Japan (despite accidents), Taiwan, South Korea, India and China. Now, however, China's plans to build 30 new nuclear plants are gaining the technology fresh attention. But does nuclear power merit such a radical rethink? This newspaper harbours especially sore nuclear memories: the cover of The Economist bore the headline "The charm of nuclear power" shortly before the Chernobyl disaster took place. That said, the former Soviet Union should not stand as a benchmark for the industry's safety standards, which have greatly improved during the past 20 years. Waste disposal remains a huge and controversial problem, but it is not insoluble: a consensus seems to be forming around the burial of waste deep underground. The harder nut to crack is that of the industry's economics. Low interest rates, dear oil and fat subsidies Compared with other forms of power generation, nuclear stations do look more attractive than they used tobut not by as much as the industry claims. Existing plants, sometimes cited by the utilities, are no guide: the marginal cost of their power is cheap, but that is because the capital costs have long been written off. New plants require huge amounts of capital and the payback comes over several decades. That makes any economic assessment extremely sensitive to assumptions about borrowing costs and about prices for oil and natural gas. Today's high oil and gas prices make nuclear look good, but by the time new plants start producing electricity things could be different. So could the political climate: the recent swing in favour of nuclear power on the part of politicians and environmentalists could just as easily swing back. Together, these make investment in nuclear energy extremely risky. Which probably explains why bankers in New York and London are not exactly queuing up to lend to private nuclear consortiums, and why the industry is demanding hefty subsidies from governments. The nuclear business has already received half of all the subsidies lavished on the energy industry in OECD countries over the past 50 years, in inflation-adjusted terms. Now it wants more: to defray licensing costs and to insure itself against construction delays or switchbacks in the regulatory process; and to kick-start a process of technological innovation. In principle, this ought not to be dismissed out of hand. If fossil fuels impose upon us all the social costs of pollution and global warming, then subsidising other, cleaner forms of energy could be one way to deal with those costs. Other "alternative technologies" already receive subsidies on that basis, including wind farms in many European countries. In practice, though, subsidies are not the best solution: they largely ignore motor vehicles, whose exhaust emissions are among the main offenders; and they are a blunter tool than direct penalties levied on pollutersin other words, taxes. The better ways to deal with pollution and with the dangers of global warming are by taxing the use of carbon, in order to deter it and to encourage energy consumers to switch to other sources; and by facilitating the trading of carbon emissions. Given the uncertainties of climate science and thus about the true speed of global warming, such measures have the added virtue of applying a steady, incentive-based squeeze on polluting activities that can be adjusted as knowledge improves, rather than draconian quantitative controls. As those carbon taxes rise to reflect more fully the environmental costs of fossil fuels, so nuclear and other non-carbon energies would become more financially appealing. Like any other form of power, nuclear ought then to be able to compete in the marketplace, without subsidies. Politically, though, the odds are tilted against the full use of carbon taxes: motorists represent a huge block of voters; but also the utilities represent a huge source of campaign donations, especially in America. It will take brave politicians to levy carbon taxes intensively. To offer big subsidies to the nuclear industry may currently look green, but would be an admission of defeat. Governments that feel defeatist can thus consider subsidising nuclear power, for safety concerns should no longer rule it out altogether. But it should be part of a portfolio of different options, with fuel cells, biomass, solar, wind and various sorts of micropower playing their part too. Putting a bet of billions on a single, risky solution would make no sense at all. This article was to have been the print edition's cover leader, until the bomb attacks took place in London on July 7th. -- This is ZESTGlobal. 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