Review keeps nuclear option open

1 March 2002

The UK's Performance and Innovation Unit (PIU) has published its long-awaited energy review.

The report was commissioned by prime minister Tony Blair to set out a strategy for future energy policy to 2050. Following a period of public consultation, the report will form the basis for an Energy White Paper due to be published by October.

Although the report recommends a big shift to renewable energy, with a target for the proportion of electricity generated from renewables of 20% by 2020, it suggests that the option of new investment in nuclear power should be kept open. In the light of its findings, the report says that the government should initiate a national public debate about sustainable energy, including the roles of nuclear power and renewables.

The 20% target for renewables - an increase of the existing aim of producing 10% of power by renewables by 2010 - would mean an increase in prices of about 5-6%. The review says that windfarms would have to be installed at a rate of 1-2GW a year between 2010 and 2020 to meet this proposed target. The PIU says that hitting the current and less onerous 10% target by 2010 is "by no means guaranteed." The PIU recommends similarly demanding targets on energy efficiency, with a 20% improvement by 2010 and a further 20% in the following decade. As with the renewables target, the review does not give any details on how to achieve this target. The authors state that the cost savings due to increased efficiency would more than offset the extra cost of electricity due to the proposed increase in generation by renewables.

The report states that the UK will need to make very large carbon emission reductions. As a zero carbon source of electricity on a large scale, the case for nuclear would be strengthened "if existing approaches both to low carbon electricity generation and energy security prove difficult to pursue cheaply." In addition, "within a new framework for encouraging a low carbon economy, the government should ensure that, as methods to value carbon in the market are developed, additional nuclear output is able to benefit from them." The report argues that there is no current case for further government support for the nuclear power industry, because it is a "mature technology within a well established global industry." However, "given that the government sets the framework within which commercial choices are made, it could, as with renewables, make it more likely that a private sector scheme would succeed." One way in which the government could help would be in taking action "to allow a shorter lead-time to commissioning, should new nuclear power be chosen in future." The PIU highlighted its concern over the nuclear skills shortage. "In particular the government should ensure that the regulators are adequately staffed to assess any new investment proposals," the report says.

Regarding public concerns over nuclear power, the report says that the main focus is on the "unsolved problem of long-term nuclear waste disposal, coupled with perceptions about the vulnerability of nuclear power plants to accidents and attack." It adds that public acceptance would be "more likely if progress could be made in dealing with the problem of waste." The nuclear industry welcomed the report. Hugh Collum, chairman of BNFL, said: "We have been calling for clarity on the future of energy policy in this country for a long time. We welcome this report which confirms that nuclear generation will continue to remain an integral part of UK's future energy mix." Norman Askew, CEO of BNFL, commented: "The report is quite clear in stating that we must keep the nuclear option. However, if we do not act now on some key policy issues and in a more timely way than recommended by the PIU, nuclear generation will not be an option for the future." Robin Jeffrey, executive chairman of British Energy, said his company was "ready to play a key role with major nuclear and renewable energy generation developments." He added: "It's a promising start and the issues are clear - but it's now time to start taking real decisions. For British Energy, that means taking forward our "Replace Nuclear with Nuclear" programme, and our UK renewable energy projects." Energy minister Brian Wilson, who chaired the advisory group for the review, said: "The report is not about renewable versus nuclear, it is about balance and promoting innovation in new technologies. It stresses the potential for renewables and energy efficiency, but also argues that the options of new investment in nuclear power and cleaner coal should be kept open. The government will consider these recommendations carefully over the coming months in producing its White Paper."

• Meanwhile, the government's Trade and Industry Committee has published a report on the security of energy supply in the UK. The report acknowledges the significant contribution made by nuclear power to both energy security and the achievement of carbon emissions targets. But, it points out that "the issue of waste management has yet to be resolved in the UK." In the absence of new capacity, the report states: "nuclear power's share of electricity generating capacity is likely to decline from the current level of about 21% to possibly less than 17-18% by 2010 and to 7-8% by 2020. The resultant shortfall will be met either by a return to carbon-based fuel sources (gas and coal), with a resulting negative impact on environmental targets, or by renewables." The authors noted that the government's plan for a nuclear Liabilities Management Authority may boost confidence in the industry. In addition, it says that changes to the planning system and any future amendments to the Climate Change Levy to exempt a greater variety of non-carbon producing generating technologies would also increase confidence in nuclear generation. "There should be no further delay in decision-making - the government should make a clear statement on the future of nuclear energy as quickly as possible," says the report.

Chairman of the trade and industry committee Martin O'Neill said the UK had recently increased its dependency on gas for power generation. As a result, concern was growing over the future of extracting gas from the North Sea, meaning that the UK may be forced to import gas.

As with the energy review, the nuclear industry was encouraged by the findings of the report. Robin Jeffrey said: "The committee has reached some very fair and balanced conclusions - and those conclusions, if they are reflected in policy, could open up some real opportunities for nuclear generation, and for British Energy."
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