Expert View; It's better to go nuclear than ask people to be nice

Winter has arrived in Britain with a vengeance and with it the realisation that UK energy policy is in a complete mess. Mother nature has exposed the foolishness of policymakers who have spent the past few years discussing the need to consume less energy to save the planet, while ignoring the reality that people are keen that everybody else should make the sacrifice but them.

Thus we are closing down nuclear and coal-powered stations without any real plan for making up the lost output. And simultaneously, we are devoting large amounts of time and (human) energy to policies such as wind farms.

The latter are enthusiastically embraced by greens and the rich investors getting tax breaks from them, but their contribution to the need for energy right now is, well, almost nothing. Gas prices, meanwhile, have trebled in recent weeks, leaving large parts of gas-hungry industry talking of the need to close down production.

A few months ago, I wrote an article that produced a flurry of angry emails when I dared to suggest politicians were going to abandon Kyoto and that nuclear energy would once again appear on the agenda. All of the emails focused on the problem, and expressed their authors' certainty of impending environmental disaster, when in fact I was discussing the practically of the Kyoto treaty as a solution.

My expertise, such that it is, is not as a scientist in discussing the problem, but as an economist in discussing the solution. Sorry to say it, but the "if only everybody would be nice" route never works. People are selfish. Fact. Adam Smith recognised this back in the 18th century, and the underlying philosophy of his work is that incentives matter and that society is best served if selfish interests are channelled for the common good. The role of government here is to prevent the abuse of this - the formation of cartels and monopolies - but also to allow innovation to deliver the solution. In effect, carrots are better than sticks.

Of course, we now find Sir David King, the UK's chief scientific adviser and the man who said global warming was a bigger threat than terrorism, admitting that no government in the world would switch off its power stations to hit C0₂ targets, if this seemed to threaten the country's economy. In effect, he has described Kyoto as unrealistic. The real world is pushing the politicians to adopt the US approach - voluntary reductions combined with technology.

As for incentives, the current high level of energy prices is producing a lot of carrots to develop alternative energy. It is also providing the cash for the oil companies to spend billions to reduce the pollutants in petrol and diesel and to develop "clean coal".

Some are looking enviously across the channel, where the state control of energy "prevents" this price volatility, but to do so, some honesty is required. One reason why the French, for example, have not seen their energy prices rise so rapidly is that 80 per cent of their electricity generation is nuclear. That's right, nuclear - the source that is currently causing such anxiety among the environmentalists in the UK, Italy and Germany, although, as I noted earlier in the year, it continues to be adopted in countries such as Sweden and Japan. It is also going to be an important part of China's growing energy output.

If it's C0₂ you are worried about then here's an answer and, whatever the politicians say in the UK, it is going to be a significant part of the medium-term solution to the world's need for energy.

That's one of the reasons why uranium prices are up around 75 per cent so far this year.

Mark Tinker is a director of Execution Stockbrokers. Mark.Tinker@Executionlimited.com