Mind the energy gap - experts query need for nuclear

The cynics believe Tony Blair has been captured by the nuclear lobby, which has marshalled political, economic and environmental arguments to convince the Prime Minister that nuclear is the way forward. Certainly Mr Blair has been sounding positive about nuclear.

With our current sky-high energy prices, huge concerns about global warming and international political instability, the question of how to keep the lights on and our cars running is high up the political and consumer agenda.

The Energy Review, announced only at the end of November - after a White Paper published as recently as 2003 - makes the case for urgent action, rather than nuclear energy per se. It poses the problem and promises to report to the Prime Minister by the end of the summer. Mr Blair is then expected to speedily declare his solution - according to the cynics, he will say that Britain needs nuclear.

Alan Johnson, the Secretary of State for Trade and Industry (he replaced the decidedly nuclear-unfriendly Patricia Hewitt at the DTI in the last major cabinet reshuffle), set out yesterday how we will face a gap in our energy supply. "By 2020, coal and nuclear power plants generating about 30 per cent of today's electricity are expected to have closed. Companies will need to decide how this capacity should be replaced. These are big investment decisions so the Government needs to provide a clear framework. If gas, as well as renewables, were to fill the gap, how comfortable will we be relying on imports for 80 per cent of our supplies? And what would be the impact on our ability to reduce carbon emissions?"

Nuclear power currently produces about one-fifth of our electricity but most of the UK's nuclear plants will have come to the end of their working lives by 2020. Also, conventional coal-fired stations will come up increasingly against environmental constraints because of their high emissions of carbon dioxide. About one-third of our electricity comes from burning coal.

And, as things stand, that shortfall from nuclear and coal will have to be made good by importing carbon fuels, often from some pretty unstable countries. Britain became a net gas importer in 2004. We will soon also be in oil deficit, as North Sea supplies run down. Most of our coal is imported.

We are struggling to meet our self-imposed targets for reductions in greenhouse gas emissions. Yesterday also brought news that Britain's emissions rose in 2004, for the second consecutive year. Although we will meet our Kyoto treaty obligations, the Government has set an ambitious target of a 20 per cent fall in emissions by 2010, an aim that we will miss by a long way on current performance.

While renewable energy sources, such as wind and hydro power, will no doubt continue to be promoted by the Government, the goal is for these carbon-free technologies to make up 10 per cent of our electricity supply by 2010 and to double that figure by 2020. So renewables are not seen as the main answer.

But not everyone is convinced by the Government's analysis, even by the basic proposition that an energy gap will emerge at all. And many question how yesterday's document takes the debate any further than the 2003 White Paper. Energy experts at the University of Sussex insist there is no reason to assume there will be a shortfall in electricity supply. Jim Watson, of the university, says: "There may not be a 'gap'. Left to itself, the market will provide new generation to replace the generation that goes offline ... to talk of gaps is a rather static way to look at it."

The Sussex researchers fear that any government backing for a nuclear solution will squeeze out other options. So why is Tony Blair so keen on nuclear? His critics say he has been convinced by a coterie of pro-nuclear advisers and by his close association with the Bush administration. Although nuclear energy still fills the public with dread, the technology enjoys a large and influential coalition of proponents. These include unions, business, scientists and security hawks.

Westminster insiders point in particular to the pro-nuclear influence on the Prime Minister of the Government's chief scientific adviser, Sir David King, and Mr Blair's industry expert, Geoffrey Norris. Add to this the problem of getting the US on side in any future Kyoto-style international treaty and Mr Blair's political instinct that it is impossible to ask citizens of any country to voluntarily lower their standard of living by consuming less energy.

Nuclear power means zero carbon emissions and hence no need to comply with international treaties designed to lower emissions or tell people to consume less energy. This logic has the environmentalists in despair. They would like to see renewables promoted to individual households - people would have their own wind turbines or whatever. They also want the Government to convince the electorate to use less energy.

Guy Thompson, a director of Green Alliance, a campaigning group, says: "Politicians are too easily drawn to a quick-fix, large-scale technological solution, rather than a demand-led approach....We need to look at how we can bring this closer to the people."

But, as everyone knows, nuclear comes with its own formidable difficulties. Not only is there the unresolved issue of what to do with nuclear waste and who picks up the bill for decommissioning nuclear power plants, but, even if these were solved, nuclear power would still not draw in City money.

James Cameron, the founder of Climate Change Capital, a specialist finance house, says: "If they [the Government] are absolutely determined to have nuclear, they're going to have to intervene in the market, to make nuclear attractive [to investors]."

The Government has made much of our liberalised energy markets. But volatile prices and uncertain levels of demand do not fit well with nuclear technology, which provides baseload electricity. This was the undoing of British Energy, the private nuclear generator that collapsed.

So, to give investors confidence, the market would probably have to be skewed in some way. For instance, a set proportion of the market could be reserved for nuclear power or the price that nuclear electricity attracts could be guaranteed.

Mr Cameron is keen instead on "clean coal" technology, which captures the carbon dioxide produced when burning coal and then stores it - under the seabed is the favourite destination. But, as he points out, building such a coal plant costs $250m (£140m) more than a conventional dirty coal power station.

Industry is crying out for clarity on our energy future so it can direct investment. Environmentalists want radical change. The public is concerned about safety and having low prices. They can all have their say between now and the middle of April. Then we will see if Mr Blair has the courage to push the nuclear button.