Battle against emissions gives nuclear a new chance - Business News - Business - The Independent

Battle against emissions gives nuclear a new chance

Global sentiment bounced back after the Japanese meltdown and Britain is set to join the push. But a plan is needed if ambitions are to be realised

This time last year, Britain was in the midst of a global nuclear power renaissance. Then the earthquake hit. The Tohoku quake triggered a tsunami which caused a reactor meltdown at the Fukushima Daiichi power plant in east Japan and became the worst nuclear energy disaster for 25 years.

Within days, a large number of the 500 reactors planned or proposed in about 40 countries, were thrown into doubt. In the ensuing panic, Japan switched off all but three of its 54 reactors and Germany announced plans to exit nuclear power completely by 2022 (see box).

As the world's third and fourth-biggest economies, Japan and Germany consume a huge volume of electricity and have traditionally been fierce advocates of nuclear power. The sense that the world was staging a mass exodus from nuclear power was intensified by their strong reactions and industrial profiles.

Support for the technology in the UK tumbled by 11 percentage points to stand at a record low of 36 per cent last June, according to a survey by Ipsos MORI.

"Always, when you get a major disaster, people instantly stand back with a lot of antipathy," says Angelos Anastasiou, an analyst at Investec. "But it doesn't usually last."

He's right: in the UK and much of the rest of the world, it didn't. Almost as quickly as the opposition to nuclear power had increased, it evaporated, more or less in line with television coverage of the disaster. In fact, according to a poll taken in December and published last month, UK support for nuclear had not only rebounded, but actually hit a record of 50 per cent. It was as if the relationship had emerged stronger as a result of the doubt.

"After the body blow suffered by British public opinion following the Fukushima incident in Japan last year, support for nuclear newbuild has recovered robustly in just a few months," said Ipsos MORI's director, Robert Knight, as he unveiled the survey results. "It seems the public see Japan as a long way away and memories are short, but concerns about the future of the security of energy supply closer to home are ongoing and persistent."

Nuclear sentiment in the UK was turbo-charged by the results of the hugely influential Weightman report, commissioned by the Government to determine the future of Britain's fission-generated energy in the aftermath of Fukushima.

Reporting his findings in October, Her Majesty's Chief Inspector of Nuclear Installations, Mike Weightman, concluded: "I remain confident that our UK nuclear facilities have no fundamental safety weaknesses."

Mr Weightman observed that the extreme natural events that preceded the accident at Fukushima – the nine-magnitude earthquake and massive resulting tsunami – were not credible threats to the UK.

"We are 1,000 miles from the nearest faultline and we have safeguards in place that protect against even very remote hazards," Mr Weightman said, while reassuring the public that the British nuclear power industry is "not complacent ... Our philosophy is one of continuous improvement."

Nor was Britain alone in being able to shake off the horrors of Japan's meltdown. Only five of the 40 countries with existing civil nuclear programmes changed their plans following the disaster.

And, although its switched-off reactors remain dormant for now, Japan isn't one of those countries which have turned away from nuclear power. Instead, it is conducting a review which could eventually result in safety changes.

Of the five who changed their ideas, by far the most significant is Germany with its plans for a full-scale retreat from an entrenched tradition of nuclear power. Italy and Venezuela are re-evaluating their nuclear policies, but only from tentative proposals to enter the industry for the first time. Switzerland has decided not to build any new reactors, while Bulgaria has cancelled plans to extend the lives of existing plants.

"The fact is that the fundamental drivers of the nuclear renaissance have not gone away, not just in Britain but across the world," says Rebecca Holyhead, a former project manager at the World Nuclear Association and now senior consultant at PricewaterhouseCoopers .

"The demand for electricity is growing rapidly and will double by 2050, which is making energy security an even bigger concern. At the same time, governments are fighting to reduce carbon emissions," she added.

For its part, the British government has signed the country up for legally binding carbon emissions-reduction targets of 34 per cent by 2020 and 80 per cent by 2050, against 1990 levels. Nuclear power presently generates 16.5 per cent of the UK's electricity and the Government wants to increase that to 30 per cent by 2030. With analysts believing the UK will struggle to replace existing nuclear capacity over the next decade, many are sceptical that its longer-term target will be met. Renewable sources such as solar and wind will go some way to producing a secure, low-emission energy supply, but are expensive and intermittent, making nuclear a vital component of the power mix.

The global nuclear power industry has been shaped by three key events, starting with the Three Mile Island meltdown in Pennsylvania, in 1979. The fear factor prompted by the world's first major civil nuclear disaster effectively closed down the industry. It was just starting to recover in 1986 when the Chernobyl disaster struck in the Ukraine, which is widely considered to be the greatest civil nuclear disaster. Again the industry battened down the hatches, but eventually recovered.

Fukushima was shorter-lived and less dramatic and it emerged that the main issues that caused the problems with the 40-year-old plant are no longer a threat, analysts have said.

Now that the battle for hearts and minds appears to have been won, the big challenge is the small matter of raising the estimated £50bn needed to satisfy Britain's lofty nuclear power ambitions and getting the new capacity in place not too many years and billions over budget. The UK got off to a good start last week, with an Anglo-French civil nuclear agreement that included a £500m investment at Hinkley Point in Somerset.

But the agreement only scratches the surface of what needs to be done, an enormous task made all the more pressing because a quarter of the UK's aging generating capacity is due to close by the end of this decade. Centrica is the only UK energy generator proposing to invest in the next generation of nuclear power but has yet to make a final decision. Its chief executive, Sam Laidlaw, says: "It is vital that the Government provides the clarity and assurance that will be needed if the [nuclear] industry is to step up and deliver the massive investment that the country requires."

Centrica is deciding whether to help EDF build four nuclear power stations at an estimated cost of £20bn. Mr Laidlaw praises the performance of the recently departed energy secretary Chris Huhne for "setting the nuclear power industry off on the right path". The challenge for Mr Huhne's successor, Ed Davey, is to "get the investment framework for the next generation of power stations sorted out", he says.

Three consortiums of companies, including Centrica, Germany's EON and RWE and France's EDF, currently have options to build on five sites, but no final decisions have been made on any of the projects.

Two government decisions will be crucial. The first relates to the level of "price support" that nuclear power generators can expect to get.

The other is the "carbon floor price", to be introduced in April next year. This will determine the minimum amount that the big coal and gas power plants must pay for their carbon emissions, which, in turn, will influence the price of electricity – and which will dictate the profits made by low-emissions nuclear power plants and, in turn, their viability.

With both decisions expected in the first half of the year, it's "make your mind up time" for the Government.

How leading nations are responding post-Fukushima: Japan on hold while Germany changes course

Japan: The one most likely to reassess its nuclear future post-Fukushima, Japan is doing just that. Some 51 of its 54 reactors remain shut, while the country has put three reactors that should have started construction – and plans for a further nine – on hold. However, construction continues on the two reactors already being built when the earthquake struck and Japan's nuclear future is still very much up for grabs.

France: France has always been one of the most gung-ho nuclear power advocates and excels on the engineering side. However, there is a sense that the country may lose some of its enthusiasm for nuclear if, as seems increasingly likely, President Nicolas Sarkozy is ousted by the Socialist challenger, François Hollande, at the elections this year.

Germany: Germany's reaction has clearly been the most extreme, not least because its decision to exit nuclear power entirely came less than a year after the Chancellor, Angela Merkel, had decided to extend the life of existing nuclear plants into the 2030s. The closure of 17 nuclear stations will turn Germany from a net exporter of energy to a net importer.

UK: The UK's nuclear power programme is entirely unchanged by Fukushima. It still has the hugely ambitious target of almost doubling nuclear power's contribution to Britain's energy by 2030, when the Government hopes it will be supplying about 30 per cent of our needs. With an estimated price tag of £50bn – and in an industry that notoriously overruns on time and money – this is indeed a lofty ambition.

Sweden: Although Sweden has been generating nuclear power since the 1970s, a large part of the population has traditionally been opposed to it. In a 1980 referendum, Swedes voted to phase out nuclear power by 2010, although the decision was overturned in February 2009, amid mounting fears about energy security and carbon emissions.

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