Is nuclear energy cost-effective?

By Guy Robarts
BBC News Online business reporter

This sight conjures up mixed emotions for the British public

The debate over the future of nuclear power is set to reach meltdown as the UK prepares to decide how to keep the home fires burning over the next few decades.

Advocates of splitting the atom have been at loggerheads with the anti-nuclear movement for half a century.

Old passions die hard.

But is the nuclear option as scary as it was in the 1950s?

Or is it now vital in the drive to stop global warming and meet the Kyoto targets for reducing carbon emissions?

It depends which side you are on.

The pro-nuclear lobby is keen to show the public how things have changed in the industry, particularly on the safety front.

Doubling nuclear power in the UK would reduce greenhouse gas emissions by no more than 8% Friends of the Earth

And Tony Blair says he is ready to consider the nuclear power option if he can convince the public that it is safe and cost-effective.

More importantly for politicians, nuclear-derived electricity is estimated to be less than half the cost of coal and wind power.

Fear factor

Opponents to the use of nuclear fuel often brandish three haunting reminders of nuclear power's fallibility: Sellafield, Three Mile Island and Chernobyl.

No new nuclear power stations have been both planned and built in either the US and Britain since these incidents.

Meanwhile, a recent poll by BBC 2's Newsnight found that more than half of Britons are opposed to an expansion of nuclear power.

In its general election campaign, the Green Party warned that while nuclear power produces energy from 30 to 40 years, it produces nuclear waste for thousands and thousands of years.

NUCLEAR POWER Nuclear power accounts for about 16% of the global electricity supply One tonne of nuclear fuel is equivalent to burning about 120,000 tones of coal Uranium, unlike fossil fuels, can be recycled Source: World Nuclear Transport Institute

However, radioactive waste has been stored in the UK without any problems or loss of life since the 1950s, the nuclear industry says; while engineers say that they have learnt their lessons from previous accidents at nuclear power plants.

Nuclear power already supplies 20% of UK electricity and, crucially for the pro-nuclear lobby, this form of power is "carbon neutral", meaning it does not contribute to global warming; nor does it spew out the sulphurous chemicals that cause acid rain.

Britain needs to cut its carbon emissions by 20% by 2010 and alternatives such as hydroelectric and wind power are very dependent on geographical factors.

Friends of the Earth (FOE), however, is adamant that investment in a programme to construct new nuclear power plants is not justified.

"Doubling nuclear power in the UK would reduce greenhouse gas emissions by no more than 8%," it says.

Shut-downs

From this maelstrom of argument, the government has to decide whether to support the crisis-hit UK nuclear industry as the country faces becoming a large net importer of energy.

Nuclear power will not be enough to service our other energy needs

It may have to learn the lesson of Sweden, a country which voted to phase out its own nuclear industry 25 years ago but, hit by the lack of a cost-effective alternative, is now Europe's third largest consumer of nuclear-generated energy.

Of the UK's 14 ageing nuclear power stations, all but one will have shut by 2023 and the share of nuclear-generated electricity is expected to drop to just 7% by that time.

Government ministers need to act fast if they choose to expand the industry. It takes a good 10 years to plan and construct a nuclear reactor.

"Wind turbines and wave power can be approved very quickly," says Roger Higham, from Friends of the Earth (FoE).

And the cost of the nuclear option is likely to be at least £10bn over a period of about 20 years.

Oil quandary

Part of the difficulty of making such a major decision can be blamed on rising oil prices and the impossibility of predicting the future.

Nuclear electricity has been reported to be cheaper than gas as long as oil is more expensive than $28 a barrel. It's currently above the $50 mark.

In this climate, nuclear power looks very cost-effective indeed, but who can tell what the price of oil will be in a year's time, never mind in three or four decades from now?

Another factor is the financial state of British Energy, the company which runs Britain's existing nuclear power stations.

It desperately needs investment having nearly collapsed in 2002 in the wake of a slump in wholesale power prices.

And the cost of decommissioning the older Magnox nuclear power stations has bedevilled BNFL, the government-run company that reprocesses nuclear fuel at Sellafield which has taken over that financial responsibility.

However, investors may be loath to put money into a reactor that could be unprofitable in a few years' time, so government support is vital to offset such a huge financial commitment.

Planning problems have already hampered the industry. The Sizewell B reactor in Suffolk had to wait six years for approval - too long for a country with dwindling domestic energy supplies.

Chain reaction

At next month's G8 summit in Gleneagles, Scotland, the US is expected to push its "Generation IV" plans to "broaden the opportunities for the use of nuclear energy".

I think the cost of nuclear will be higher than for fossil fuels Dr Keith Melton, NaREC

Public support in the US for the continued use of nuclear energy in the US now stands at a record high of 70%, according to the Nuclear Industry Association.

And Prime Minister Tony Blair's scientific advisers are known to consider new reactors as the only way for the UK to meet targets for cutting greenhouse emissions.

One major allay for the pro-nuclear lobby has come, ironically, in the form of James Lovelock, the "father" of the environment movement and author of the Gaia hypothesis.

Mr Lovelock came out and declared that nuclear energy was the only practical answer to the challenges of global warming, but regarded it as a necessary medicine rather than a cure to the problem.

Meanwhile, Dr Keith Melton, at the New & Renewable Energy Centre, believes the CO2 advantages of nuclear energy outweigh any cost-effectiveness issues, but dismisses claims that the atomic option is a cheaper one.

"I think the cost of nuclear will be higher than for fossil fuels. If oil goes up to $100 a barrel and drags up gas and electricity with it, that could be different. But at the moment, the argument is CO2s," Dr Melton says.

Cheaper alternatives

According to the Nuclear Industry Association, if the government acts quickly a new generation of nuclear power stations could be in place to help the UK meet its target of a 10% cut in emissions by 2010.

At the moment all our cars, all our aeroplanes and most of our central heating systems all depend on fossil fuel Roger Higman, Friends of the Earth

But the political and financial costs may take years to ascertain.

Interestingly, the last time the government had a debate about the economics of nuclear energy in 2002, it concluded that nuclear power was going to be much more expensive in 20 years' time than wind power, while solar and hydroelectric prices were coming down.

As Friends of the Earth points out, nuclear power can only address a fraction of our energy needs.

"At the moment all our cars, all our aeroplanes and most of our central heating systems all depend on fossil fuel," says Roger Higman.

"Nuclear power is not all that relevant anyway."