Public acceptance-is it causing nuclear cost escalation?

20 April 2012

In the aftermath of the Fukushima accident, it is clear that public acceptance of nuclear power has taken a severe hit in certain countries, while in others the impact has been relatively mild. It may be contended that the German government overreacted by immediately shutting down the eight oldest operating reactors and imposing severe financial costs on local industry via moving to a renewables-heavy energy strategy. Nevertheless, they were only responding to substantial public fears about nuclear from the German public. In the UK and USA, however, plans for new reactors are proceeding and the general public seems unconcerned about Fukushima, seemingly accepting that it was caused by an extreme natural catastrophe that was a long way away and held little relevance for them. Perhaps more surprisingly, nuclear plans in Southeast Asian countries that have previously experienced severe tsunamis are also proceeding with only minor delays. Speakers at the Nuclear Power Asia conference in Kuala Lumpur in late January 2012 explained a possible solution to that riddle: achieving a better level of public acceptance for nuclear has always been a key concern for them, and the publicity in the media about Fukushima has allowed them the opportunity to educate their stakeholders about nuclear matters.

The argument that achieving better public acceptance for nuclear is the key issue affecting the industry today may therefore be correct in some countries, but in others it may not. The alternative point, that achieving better nuclear economics is the key challenge facing the industry, has frequently been advanced in these columns, most recently in the January 2012 edition. The high and apparently rising capital investment costs of nuclear plants in the western world are a key barrier to more reactor orders. The disparity with the cost levels achievable in East Asia, in China and Korea, has become notable. But perhaps there is a link between the two. Could it be that public acceptance issue is at least partly to blame for the high costs of nuclear; indeed, perhaps not only the capital investment costs but also the operating costs of plants? What if this issue applies rather more broadly than in just the nuclear sector? Is it becoming difficult to carry out major infrastructure projects in the developed world because poor public acceptance of them effectively impose such great additional costs on projects that they may become uneconomical?

The UK government recently announced plans to build a high-speed railway line between London and the north of England. This will be the first major expansion of the UK rail network since Victorian times in the late 19th century; although the years since then have undoubtedly seen major investment in the network, the number of rail lines has shrunk substantially. Another plan, albeit at a very early stage in UK, is the idea of building a new London airport to be located on the sea coast to the east of London. (This idea is not new; it was taken up by a commission in the 1970s, but a similar coastal location was eventually rejected).

Both of these projects have, of course, brought forth an immediate flurry of objections from vested interests, principally on grounds of environmental impact and on cost. The costs are indeed huge, running into many tens of billions of pounds, and we also know that such major projects (in line with many nuclear projects) usually end up costing substantially more than was originally planned, such as, for example, the Concorde aircraft and the Channel Tunnel. It seems to have become rather easy for opponents to argue that projects on this scale are unaffordable.

Such projects are even more sorely needed in China, for example, because of its relative lack of economic and infrastructural development compared to Western Europe. In such countries, need is not enough to get the project going; they need financing too. But China’s capital markets are also surely rather less developed, and channelling funds into big projects should therefore be more difficult. Indeed, for most developing countries, obtaining finance for projects is a big barrier to completion.

Yet when we look at East Asia, we find that investment capital for such major infrastructure projects seems to be readily available. China has managed to build both a substantial inter-provincial highway system and a high-speed rail network in a very short period of time. Each major provincial city also now has a modern airport. These are not on the scale proposed for London, but in Beijing, work has already started on a huge new airport to the south of the city to add to Capital Airport to the north, which was expanded substantially prior to the 2008 Olympics.

One might counter that China is not a democracy, and therefore any public objections to these projects (and indeed China’s major nuclear power plans) do not have an effective voice. But this argument doesn’t really stand up. Inside the country, there is little evidence that the Chinese population harbours substantial opposition. There have been problems with public opinion in Chinese cities when old housing areas have been ruthlessly set aside for developers of high rise buildings, but resistance to infrastructure projects outside that area would not seem to be so intense. Outside the country, South Korea, a strongly participative democracy, also seems fully capable of making such large-scale investments.

The argument that is being made here is that there is something wrong in the developed world that makes it difficult for countries to make major infrastructure investments. We surely can’t get by solely by patching up what we already have. We need to replace old-technology electricity generating units, and invest for rising numbers of air and rail passengers. The problem is that people will complain about the inconvenience and delays to their journeys but will not act to improve them, either because they don’t like the sound of the huge sums required to fund the projects, or they don’t want the projects to intrude on the immediate area where they live. The NIMBY (not in my back yard) attitude to development has now often become BANANA (build absolutely nothing anywhere near anyone—or anything). These objections add substantially to the cost and the time it takes to develop such projects, so they often don’t happen.

Looking at the plans for the new high speed rail line in the UK, it is clear that taking account of potential environmental objections has already added substantially to the costs. The plans call for the line to be sited underground through areas of substantial natural beauty and densely-populated areas. Where such considerations should be allowed to begin and end is always difficult, and planning commissions have to come up with the best answers. In developed countries, the higher levels of income per head should make it possible to take environmental considerations into account and compensate people if they are adversely affected by a new project. But there surely comes a point where the nation’s needs (for all) have to override those of the few.

Returning to nuclear, we can see that even where public opinion is not strongly opposed to new reactor plans, such as in the UK and USA, gaining and maintaining public acceptance is arguably adding to the costs, which everyone accepts is the biggest barrier to project completion. Could it be that a sizeable part of the gap between the capital costs of new plants in East Asia (at about $2000 per kW installed) and the West (about $5000 per kW) can be explained by the need to keep the public on side?

The Unit by Alexey Kovynev
"Yes, our reactors are twice as expensive as Asian ones, but we also include a package of democracy."

The burden placed on nuclear plants by the national regulators is clearly substantial in financial terms. Regulators are essentially the representatives of the general public. If the public has a deep fear of nuclear power, perhaps enhanced by observation of accidents in other countries, the regulator is likely to act on their behalf by raising the bar for either new or operating plants. The erratic course of development of standards is a historical artefact, and does not really have to do with public opinion. The industry has recognised that easing the regulatory burden by seeking harmonisation of codes and standards will save substantial sums of money. But moving towards a wider internationalisation and simplification of the regulatory effort (where real cost savings will be achieved for the industry) has to overcome strong national forces. These want to maintain expensive national regulatory provisions, which are justified by the need to protect ‘their people’.

A lot has been made by the apparent but as-yet unproven improvements to the nuclear regulatory regime brought in by the combined construction and operating licenses (COL), as in the USA. Without the need to seek an operating license once the plant is completed (which brings with it the risk of the regulator at that stage seeking various expensive plant improvements) the process should arguably be simpler and cheaper. But it remains to be seen how the construction process goes under the new regime with the first new plants. Without the backstop of a second licensing phase after the plant is completed, there must be a risk that the regulators are going to be particularly forceful during the construction phase, with the possibility of very expensive delays. Long delays during the construction phase have unfortunately been the experience of both EPR reactors currently under construction in Western Europe, in Finland and in France. How much of this has been caused by ineffective project management or poor-quality components is currently difficult to say, but there is at least a suspicion that the regulators have been over-prescriptive in their role of protecting the public. The only relevant test is whether (once completed) the plant is safe to operate, and one wonders if this sometimes lost in the process.

The twin EPRs under construction at Taishan in China appear to be still on schedule and the first could actually come into operation before either of the European units, despite starting construction several years later. Will the Chinese units be any less safe to operate than the European units? Almost certainly not. At this point, we should begin to be able to explain what caused the differences in the construction times, where delays are crippling financially to a nuclear project. Was it down to better project management, how hard the labour force worked, the zeal of the regulator, or something else?

Apart from the regulatory effort during the construction phase, the local planning process in a particular country is also vital; here again, time is money. Here nuclear projects become just like any other major infrastructure investment. In the UK at least, long processes have bedevilled the industry in the past. With national design certification of particular reactor designs today, the new UK planning regime should in theory be able to concentrate solely on local issues, but how well it works in practice remains to be seen. Anti-nuclear forces know that simply delaying a reactor project can cripple it financially. It is therefore important for the industry to achieve a high level of general public acceptance for new projects, so such forces can be marginalised.

In conclusion, there is definitely a link between public acceptance and cost in nuclear development projects. But nuclear can be viewed as only a particular case of a wider issue affecting major investment projects today. The first need is for the nuclear industry to achieve overall public and political support for its activities and ensure that this will be long-lasting. Then it must push further ahead to ease any additional costs that are being imposed by public fears. Ultimately, the developed world will have to make up its mind about development.

Author Info:

Steve Kidd is deputy director general of the World Nuclear Association, where he has worked since 1995 (when it was still the Uranium Institute). Any views expressed are not necessarily those of the World Nuclear Association and/or its members.

This article was published in the March 2012 issue of Nuclear Engineering International magazine.

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