Is nuclear energy needed? A Green Alliance briefing

is nuclear energy needed? a Green Alliance briefing

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Designed by Upstream Published January 2003.

is nuclear energy needed?

The Government will publish an energy White Paper in early 2003. One of the crucial questions that it will address is the issue of nuclear power. A quarter of the UK’s electricity is currently produced through nuclear power, but many nuclear stations are nearing the end of their life. A decision must be made about whether to continue our reliance on nuclear energy, or whether to pursue a strategy based on renewable energy and energy efficiency.

This briefing draws together evidence from a range of independent and government reports to demonstrate that nuclear power is not a necessary or useful part of the UK’s energy system. The following issues are addressed: • Do we need nuclear energy to meet our CO2 targets?

• Security of supply • Intermittency of renewable energy supply • Cost and spending implications • The employment effects of nuclear energy and renewable energy • The export potential of renewable energy • Can nuclear energy and renewable energy coexist?

• Public opinion

1 is nuclear energy needed?

Green Alliance is one of the UK’s foremost environmental organisations. An independent charity, its mission is to promote sustainable development by ensuring that the environment is at the heart of decision-making. It works with senior people in government, parliament, business and the environmental movement to encourage new ideas, dialogue and constructive solutions.

do we need nuclear energy to meet our CO2 targets?

is nuclear energy needed?

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Climate change requires a fundamental shift away from fossil fuels, to achieve 60 per cent cuts in CO2 over the long term. There is a view that the protection of the climate and the creation of a low carbon economy will require nuclear power. There is little evidence for this view, and there is a large body of work which suggests that renewable energy and energy efficiency can achieve deep carbon cuts without nuclear power. Some experts would go further and suggest that carbon emissions would be lower without nuclear power because of its distorting effect on the regulation and economics of carbon saving.

• Looking over the long term, to 2050, the Royal Commission on Environmental Pollution published an in depth report in 2000 on how the UK could meet ambitious long climate change targets. It developed two scenarios in which 60 per cent cuts in carbon dioxide could be achieved by 2050 without nuclear power. As well as concluding that the UK should commit to 60 per cent cuts, it stated that: “New nuclear power stations should not be built until the problem of managing nuclear waste has been solved to the satisfaction both of the scientific community and the general public.”1 • Over the medium term, to 2020, a working paper produced for the Performance and Innovation Unit (PIU, now renamed the Strategy Unit) modelled four scenarios. It was two non nuclear scenarios which achieved “significant reductions in carbon emissions [by 2020], in line with what would be needed to meet the Royal Commission on Environmental Pollution’s suggested target of a 60 per cent reduction from current levels by 2050.”2 • The Energy Saving Trust, commenting on these PIU energy scenarios in its submission to the Energy White Paper, said: “…with reasonable advances in energy efficiency and renewables, it is clear that a carbon reduction of 30 per cent or more can be achieved even with the expected rate of closure [of nuclear stations].”3 • The PIU estimated carbon abatement costs for 2020 for domestic, service sector, industrial and transport energy efficiency, micro and large CHP, and onshore and offshore wind of between –£300 to +£150 per tonne of carbon. Nuclear costs were +£70 to +£200 per tonne of carbon.4 • The Carbon Trust, in its submission to Government, reinforced this analysis: “ºGovernment funding should be focused on energy efficiency and renewables, as they have the highest long-term potential to deliver a low carbon economy at the lowest overall cost.”5 More immediately, over the next seven years to 2010, existing nuclear capacity will gradually be closed as the plants reach the end of their working life. Over this timeframe, how will CO2 targets be met without the contribution from nuclear power? The nuclear contribution to current carbon savings is widely overestimated. Although nuclear capacity currently makes up a quarter of electricity production, the electricity sector only contributes 34 per cent of the UK’s emissions. Direct use of oil, coal and gas makes up two thirds of emissions.6 The energy baseline used by government to plan its programme to meet carbon targets also takes into account the decline in nuclear output over the next ten years.

The UK Government has already outlined a plan to deliver a 20 per cent cut in CO2 emissions through the Climate Change Programme. If an additional seven MtC of carbon savings can be found, additional to the plans in the Climate Change Programme, both environmental objectives – reaching the UK CO2 cut and shutting nuclear power – can be delivered.

There are a large number of measures from the supply side, transport sector and in energy efficiency, not currently included in the governments current climate change programme, which could be used to meet this gap. Measures include: • A proposal from British Sugar to replace 5 per cent of current petrol consumption with bio-ethanol from agricultural waste, which would be mixed in with conventional petrol, and would require no engine modification. This measure would save an estimated 1.2 MtC annually.

• The Institute for European Environmental Policy, IEEP, conducted an analysis of the voluntary European commitment of car manufacturers, ACEA, to a Europe-wide improvement in the fuel efficiency of new vehicles. It indicated that tightening the target from 140g CO2/km to 120g CO2/km would deliver an annual saving in the UK of 1.5 MtC. • The Energy Savings Trust estimate that a more comprehensive programme on domestic energy efficiency could deliver an additional 1.2 MtC per year.8 • Reducing the assumptions about coal output in 2010 from 60 tWh to 30 tWh will reduce annual carbon emissions by 3.5 MtC.9 • Further additional savings could be made through combined heat and power, and through industrial and service sector energy efficiency.

security of supply Over the long term, the debate on security of supply centres around different perceptions of the “riskiness” of becoming more dependent on gas imports. The pessimists perceive that gas pipelines will be very vulnerable to sabotage and political instability in Russia and the Middle East. Pessimists often advocate nuclear build as a way to reduce this risk. Given that even the most ambitious proposals for new build only maintain a 25 per cent nuclear contribution, though, it does not change the likelihood that gas will fuel the majority of electricity generation over the next 20 years. The optimists, including BP and Shell, point out that gas and other commodities like it have been traded seamlessly around the world for many years, and believe that the risks of major disruption of supply are small.

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If all nuclear power is replaced by gas-fired CCGT plant before 2010, the carbon ‘penalty’ by that date would be seven million tonnes of carbon (MtC), assuming that nuclear power would have produced 66 Terawatt hours(tWh) in 2010 as forecast in the Governments energy projections.7

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• In its submission to the PIU review BP said: “…the EU is surrounded by an abundance of potential supplies of gas, which it is very much in the interests of suppliers to make available to European consumers. These suppliers are in competition with each other, which provides individual EU gas purchasers and aggregators with the opportunity to diversify suppliers and thus reduce risk. Added to this is the increasing diversity of LNG sources which are now coming from Trinidad and Nigeria to complement North African supplies. Both these projects have significant expansion potential, while new Atlantic basin projects in Egypt, Angola and Venezuela are also looking for a firm home in Europe. Even more encouraging is the fact that distant LNG exporters in the Middle East are looking to Europe for both short-term and long-term contracts.”10 • The PIU report pointed to the contribution that renewable energy can make to security of supply: “These sources of energy [renewables] are indigenous and generating units are largely small scale. They also tend to be decentralized and dispersed, making them less vulnerable than larger units.”11 Looking at security of supply over the short-term, there is a need to look at how a capacity margin can be maintained on the power system if British Energy reactors where closed.

• Excess generating capacity on the system, and the existence of large amounts of gas plant ready to be built, with consents already secured, means that BE stations can be closed quickly whilst an acceptable security of supply margin is maintained. ILEX Energy Consulting analysed system margins and concluded that “All of British Energy’s nuclear power stations could be withdrawn from service by the winter of 2005/6, and an acceptable level of security of supply maintained, providing only that: none of the other power stations currently in service are withdrawn, except for the announced planned closures of Magnox nuclear power stations by BNFL-Magnox; and prospective new capacity, whether or not fully consented, is commissioned according to a feasible timetable as envisaged by NGC.”12 • In addition, ILEX concluded that all of British Energy’s and BNFL-Magnox’s nuclear power stations could be closed by the winter of 2006/7, under the same conditions and with the same caveats.

intermittency of renewable energy supply Renewable energy sources such as wind power do not produce a constant output of electricity. The variability of renewable energy output has been seen by some as an major barrier to its uptake, and to its ability to displace nuclear power. There is no inherent obstacle to variable output generators, but there are two significant components that have to be addressed as renewable output increase – the ability of the system to balance variable supply and demand, and the allocation of costs to achieve the equivalance of “firm” power. The current transmission system can absorb reasonably large changes in output from particular generators because of standby capacity on the system. This is why the lights did not go out when British Energy’s Torness nuclear power station had an emergency shut down in autumn 2002. The system would be able to absorb greater fluctuations if the electricity network was managed more actively:

• Figures produced by a later report by ILEX Energy Consulting for the DTI calculated that system costs could be between 0.3 and 0.9 p/kWh at 20 per cent renewables penetration and between 0.4 and 1p/kWh at 30 per cent penetration.15 The wind industry has questioned the plausibility of the upper end of the ILEX range because it is based on massive wind development in Scotland, and ignores the offshore wind resource in Southern England, where the majority of large developments are expected to be constructed. Whilst the debate about the plausibility of different cost scenarios continues, the wind industry believes that it can absorb reasonable intermittence costs within the business planning of individual developments.16 • A diverse portfolio of sustainable energy technologies will reduce intermittence because of their different generation profiles. The University of Oxford Environmental Change Unit has carried out modelling to assess this effect. Its main conclusion was that optimising the distribution of renewables reduced impacts of intermittency significantly. They also found that aggregating the output from complimentary technologies, in this case wind, domestic combined heat and power (CHP) and photovoltaics, massively reduced the backup needs of renewable supply.17

costs and spending implications The future costs of both nuclear power and sustainable energy technologies are a function of engineering innovation, learning & scale effects, and political support. This is why estimates of nuclear power vary significantly, and why the cost ranges of renewable technologies are large. Nevertheless there are a number of key conclusions that can be drawn from the debate about costs: • Observed “learning rates” (a measure of innovation and efficiency gains) for nuclear power are likely to be quite low, because it is a mature technology with a 50 year history of development; long construction times make feedback slow; and the scope for economies of scale is less with a technology based on short runs of large components. Empirical support for this view comes from a recent assessment from the OECD, which suggested a learning rate of 5.8 per cent during the 18 year period between 1975 and 1993. By contrast learning rates for most energy technologies lie in the range 15-20 per cent, and those observed for wind energy and photovoltaics are in the 18-20 per cent range.18 • In 2001, British Energy proposed a ten unit programme of the AP1000 reactor.

Generating costs at 8 per cent discount rate are claimed to range from around 3p/kWh, for first twin unit, to 2.5p/kWh for later twin units.19 BNFL’s views are similar: it suggests a cost range of 2.2-3 p/kWh.20 However as the PIU pointed out, nuclear industry estimates of cost “are predicated on assumptions of series build,

5 is nuclear energy needed?

• The PIU had high confidence that the power system could be adapted to renewables: “the design and operation of the electricity network can be modified to accommodate increasing levels of intermittent power… The costs are small”.13 This conclusion was based on research by David Milborrow which concluded that at 10 per cent wind penetration, technical penalties would be 0.1p/Kwh and 0.3p/Kwh at 50 per cent penetration.14

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rapid construction and very good operating performance…. a range of 3p/kWh to 4p/kWh is a more realistic range of likely future nuclear costs”.21 These costs are 50 per cent below the PIU’s cost estimate for Sizewell B, the newest power station in the UK, which it estimates at 6p/kWh excluding “first of a kind” costs.

• On the waste issue, there is little consensus on potential costs, as the PIU Working Paper shows: “Currently waste policy is possibly even more uncertain than it was in 1995 (given the abandonment of the NIREX Rock Characterisation Facility in 1997).

It is therefore impossible to estimate waste management costs in any useful way at present.”22 • Current costs for renewables differ substantially, from 2.5-3.0p/kWh for onshore wind in good sites, through 5-6p/kWh for offshore wind, around 8p/kWh for energy crops, to around 70p/kwh for PV. However the PIU estimated that the prospects for cost reductions were very good: “In general, renewable energy sources are expected to be subject to substantial reductions as volumes of plant rise. This is because learning effects and economies arising from large-scale manufacture of small devices should lead to large reductions in unit costs. The feedback loop from experience in deployment to improvements in design and cost reduction is rapid for most renewables.”23 • A PIU working paper states that there is little potential for further economies of scale in the nuclear industry: “The scope for economies of large-scale manufacturing production is less in the nuclear case, where components are large and production runs short, (even in series build), than they are for renewables.”24 • The PIU confirmed that energy efficiency measures have either negative or low cost because there are significant resource savings. Overall they concluded that: “Investments [in economic potential] could reduce energy demand by 30 per cent in the economy as a whole, equivalent to a potential annual saving worth £12 billion.”

• In the domestic sector the National Audit Office has confirmed that existing regulatory programmes are highly cost effective.25 They save electricity at 22 per cent of the purchase price and less than half the avoidable cost of supply. In the business sector, the investments stimulated by the Energy Efficiency Best Practice Programme are now estimated to save over £800 million annually, with a typical payback period of two to four years.26 • The costs of meeting 20 per cent or 30 per cent renewables targets by 2020 were estimated for the PIU by OXERA consultants. The costs depend on assumptions made about whether the targets are met by the Renewables Obligation, and whether the obligation is met or whether ‘buy-out’ penalties are incurred. This creates a large range, with costs to customers of the 30 per cent target from 2-12 per cent of household bills, and 1.4 per cent -8.3 per cent for the 20 per cent target. However the actual cost of construction of the necessary renewable capacity is the lowest end of the range. For the 30 per cent target this implies construction which imposes a maximum annual cost to consumers of £500 million, or 2 per cent on domestic bills.27 In a market dominated by vertically integrated energy companies, it is reasonable to expect that costs of compliance will not be greater than costs of construction (because they have their own renewables construction arms), and that competition for customers creates an incentive to pass on the smallest amount of these costs possible whilst making an acceptable rate of return.

the employment effects of nuclear energy and renewable energy

• BNFL, in its application to decommission the Bradwell Nuclear Power Station, says “340 worked there when it was open. This figure reduced initially to around 250, then would go down to around about 220 for the first phase of decommissioning which will last about 10 years.”28 (Note however that Bradwell is a small station. AGRs tend to employ around 400 people, going down to around 300 during decomissioning.)

• Replacing decommissioned stations with new AP1000s would not replace lost jobs, as new stations with new technology employ less people. Exact numbers are hard to judge as BNFL does not offer data. One unsubstantiated report in the Scotsman last year,29 referring to a possible new reactor at Chapelcross, said that a replacement reactor would only employ around 90 people.

• In Germany, nuclear firms Eon and EnBW have also announced that they will not make anyone redundant when the Stade and Obrigheim plants close. Those who do not get a job with decommissioning their old plants, will get a job at another Eon site. Others will be offered early retirement.

• A study by ERM Economics for the BNFL National Stakeholder Dialogue30 looked at the potential for employment in renewable energy in the region around the Sellafield reprocessing facility. It identified a number of options including development of 180 MW of offshore wind energy: “We estimate that this could create about 2000 person years of construction employment and 120 during the operational phase”, and development of biomass energy production: “Around 20 MW could be developed in West Cumbria. This would generate 60 person years of construction employment and 180 in operation”. Whilst this study was obviously specific to the West Cumbria region, it shows the employment potential of renewable energy in remote parts of the country where nuclear plant is located.

• An EU study, commissioned through the Altener programme, The Impact of Renewables on Employment and Economic Growth,31 looked at the employment effects if energy produced by renewable sources increases by a factor of 2.4. They state that “The overall impact on employment from the predicted increase in renewable energy penetration is a net increase in jobs throughout the EU. This increase takes account of the direct, indirect and subsidy effects on employment, and jobs displaced in conventional energy technologies.” In terms of numbers of jobs, “the modelling predictions estimate that this increase in energy provided from renewable sources can result in the creation of over 900,000 new jobs by 2020”, of which 15,000 are in the UK. Job gains are greatest in the agriculture and manufacturing industrial sectors.

7 is nuclear energy needed?

There will inevitably be job losses caused by closures of nuclear plant, but the numbers are small, and a large proportion of jobs will be kept for essential maintenance and decommissioning. New nuclear plant would employ fewer people than old plant because of changes in technology. A shift to renewable energy would create jobs. The remoteness of nuclear plant means that there are inevitably few other sources of employment nearby, although some areas may be suitable for renewable generation, such as wind or biomass.

export potential of renewable energy

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It is widely acknowledged that a strong domestic renewables industry offers the UK considerable export potential. To achieve this potential, however, there would need to be considerable investment in renewables, backed by favourable government policies.

• Trade Partners UK, using FCO and DTI data, states that “There is a new and rapidly growing market for renewable energy technologies and services in Europe and beyond which UK industry has the opportunity to service. There are over 700 UK companies involved in renewable energy, from research bodies and consultants to manufacturers and developers. The majority are SMEs who face considerable barriers not least staff and financial resources, in attempting to exploit overseas markets.

British renewable energy exports have risen from an historic level of £10-15 million in the early 90s to around £80-100 million per annum in the last two years.”32 • In June 2002 energy minister Brian Wilson said that within five years, the world market for offshore renewable energies could be £8 billion.33

can renewable energy and nuclear energy co-exist?

Some believe that a possible solution would be to push forward with new build of nuclear stations alongside an ambitious renewables programme, in order to spread the risk. However, this argument does not take into account the effect that nuclear build would have on the development of renewables capacity. Given limited amounts of time, money and political attention, this “twin track” approach is unrealistic. Further support for nuclear could also damage the prospects for renewables because of scale issues – nuclear power is a large-scale, centralised source of power, and needs a centralised energy supply system. Renewable energy, on the other hand, will work best if there is room for small-scale, decentralised power, such as solar PV and micro-wind power.

Evidence for this is as follows: • The PIU review states that “A large nuclear programme could in practical terms ‘crowd out’ other options including renewables”.

• The PIU also states that nuclear investments are large-scale and inflexible, and risk harming the potential for small-scale solutions: “Nuclear investments are large-scale.

Moreover, costs are best reduced if a series of stations can be built to the same design. Nuclear power tends, therefore, to be a relatively inflexible source of carbon savings as a programme of series build would entail considerable investment in largescale and long-lived plant. A sustained programme of investment in currently proposed nuclear power plants could adversely affect the development of smallerscale technologies.”

• The Non-Fossil Fuel Obligation (NFFO), a policy in place in the 1990s, gives an indication of how support for nuclear power can crowd out renewable energy. The lions’ share of NFFO funding went on nuclear. The House of Commons Environmental Audit Committee points out the missed opportunity of NFFO for renewables: “It is... a matter of considerable regret that most of the proceeds from the Fossil Fuel Levy were provided as a direct operational subsidy to the nuclear industry, rather than being used to promote the development of renewables.”34

public opinion

• A MORI poll commissioned for Greenpeace in May 2002: “Respondents were asked whether, in principle, they would prefer nuclear power or renewable energy sources, such as wind, wave and solar, to supply the UK’s energy needs in the future. The majority of respondents would prefer the use of renewable energy sources (67 per cent), with 54 per cent saying they would much prefer renewable energy. Less than one in ten say they prefer nuclear power (7 per cent) and one in six have no preference (16 per cent).”35 • NOP and Energy Saving Trust found that whilst only 10 per cent thought the government should invest time and money into building new nuclear facilities, 85 per cent wanted government investment in renewable energy such as solar and wind.36 • The consultation process for the energy white paper similarly shows clear public support for renewable energy and no consensus on nuclear, with particular worried about nuclear waste issues.37 • An October 2001 study by BMRB International for RSPB, examining the public’s views on energy issues: “nuclear power is the least popular of the power station types. Fewer than one in ten (8 per cent) of the public said that nuclear power stations should be built in Britain during the next ten years, while two thirds (68 per cent) said the should definitely not be built.”38 • In the same BMRB survey, 72 per cent identified radioactive waste as a ‘significant disadvantage’ of nuclear power, with 64 per cent seeing the risk of a major explosion as a significant disadvantage.

• The BMRB survey also asked whether respondents would want different sorts of power station near their home. 82 per cent said they didn’t want a nuclear power station within three miles of their home, compared with 45 per cent for coal, 50 per cent for energy from waste, and 14 per cent for wind farms on land.

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Polling data shows that renewable energy is much more acceptable to people than nuclear. Renewable energy is consistently popular, whereas opinion on nuclear power is generally negative, with a small amount of support. There has been local opposition to wind power, but it is likely that there would be stronger local opposition to new nuclear build. Evidence is as follows:

notes and references

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1 Royal Commission on Environmental Pollution(2000) Energy - The Changing Climate.

2 PIU working paper, for the 2001 energy review: http://www.strategy.gov.uk/2002/energy/workingpapers.shtml 3 Energy Saving Trust ( 2002) Putting Climate Change at the heart of Energy Policy.

4 PIU (2002) The Energy Review, Cabinet Office. p108.

5 Carbon Trust (2002) Submission to the Energy Policy Consultation.

6 Department of Environment, Transport and the Regions (2001) Climate Change, the UK programme.

7 Department of Trade and Industry Energy Statistics Division (2002) Energy Paper 68: http://www.dti.gov.uk/energy/inform/energy_projections/ep68_final.pdf 8 see note 3 9 see note 7 10 BP(2001) Preliminary Submission by BP to the PIU Energy Review, http://www.cabinetoffice.gov.uk/innovation/2001/energy/submissionshome.shtml#b 11 see note 4, p101 12 ILEX Energy Consulting (2002) The Closure Of British Energy’s Nuclear Power Stations, for Greenpeace.

13 see note 4, p101 14 Milborrow, D (2001) PIU Working Paper on Penalties for Intermittent Sources of Energy, http://www.strategy.gov.uk/2002/energy/workingpapers.shtml 15 ILEX Energy Consulting (2002) Quantifying the System Costs of Additional Renewables in 2020, DTI. 16 British Wind Energy Association (2002) Comments on the ILEX report ‘ Quantifying the System Costs of Additional Renewables in 2020’ http://www.bwea.com 17 Sinden, G (2002) Renewable Energy in the UK – Diversification and Optimisations.

18 International Energy Agency (2000) Experience Curves for Energy Policy Assessment.

19 British Energy (2001) Replace Nuclear with Nuclear. British Energy’s submission to the PIU review.

20 BNFL (2001) BNFL submission to the PIU review.

21 PIU Energy Review Working Paper (2001) The Economics of Nuclear Power. p.6. http://www.strategy.gov.uk/2002/energy/report/working%20papers/PIUi.pdf 22 see note 21, p10 23 see note 4, p100 24 See note 21, p4 25 National Audit Office (1998) The Office of Electricity Regulation (1998): Improving Energy Efficiency Financed by a charge on Customers. Report by the Comptroller and Auditor General, HC 1006 1997/98.

26 See note 4, p191 27 OXERA Environmental ( Nov 2001) for the PIU review, Renewables Cost Modelling.

28 BNFL (2002) The Bradwell Nuclear Power Station Environmental Statement Non Technical Summary in support of the application to decommission.

29 Secret plan to close Chapelcross early, Scotland on Sunday 17th February 2002, by Stephen Fraser 30 ERM Economics (2002) Socio-Economic Study:West Cumbria – Final Report, ERM Economics for BNFL National Stakeholder Dialogue. www.the-environmentcouncil.org.uk/dialogue.pdf_report_bnfl_socioeconomicfinalreport.pdf 31 Altener Programme of the Directorate-General for Energy of the European Commission (No date of publication), The Impact of Renewables on Emploment and Economic Growth, http://www.eufores.org/Employment.htm 32 http://www.tradepartners.gov.uk/energy/profile/index/overview.shtml 33 speaking at the Strategic Alliances in Wind conference, 11 June 2002 34 House of Commons Environmental Audit Committee (2000) Fifth Report, paragraph 42 35 MORI for Greenpeace(2002) Forms of energy: A survey of public opinion on nuclear and renewable sources 36 NOP for Energy Saving Trust (February 2002) 37 DTI (2002) public and stakeholder consultation, http://www.dti.gov.uk/energy/developep/int_public_and_stake_con_rep.pdf 38 BRMB for RSPB Market Research (2001) RSPB Market Research Project 0136:The GB public’s views on energy issues.