Energy policy: fact and fission

Date: 19/07/03

Nuclear energy does not merit more investment

NO NUCLEAR or new nuclear? It is a big question for energy policy these days. In Britain, where managerial incompetence and negligence over safety have fuelled a crisis of confidence in two big nuclear operators, an anti-nuclear lobby is calling for all nuclear plants to be shut. In Japan, similar problems have led to a temporary shutdown of most nuclear plants that could trigger a wave of blackouts this summer. But in China and South Africa, governments have given their blessing to new nuclear plants; and the Bush administration's energy plan also supports the idea.

The case for nuclear today has two main components: energy security and climate change. The first argues against shutting nuclear plants, and for opening new ones, on the ground that getting rid of nuclear would make the rich world even more dependent on imported fossil fuels. The second argues that, unless nuclear plants (which produce no greenhouse gases) are replaced with new ones when they go out of service, more fossil fuels, notably coal, will be burnt, making it impossible for governments to tackle global warming.

On the basis of these two claims, the nuclear lobby is vociferously demanding more government support for new plants. In America, the industry will partially get its way: Congress is shortly to extend the Price-Anderson act, which provides unlimited government insurance for nuclear operators in case of catastrophic accidents. In Britain, the government has stopped short of proposing new plants, but it has bailed out British Energy rather than letting it go bust. France continues to subsidise its nuclear industry; several other European governments are thinking of building new plants.

Should governments be embracing nuclear as a clean energy source of the future? The short answer is no. Arguments based on energy security do not stack up. Even if nuclear power were replaced by fossil fuels, the main substitutes would be coal and natural gas; unlike oil, these are plentiful and not subject to the control of OPEC. The right approach to energy security is through deregulated markets and diversified sources of supply, not via subsidies in the name of “energy independence”. Besides, as today's troubles with Iran and North Korea suggest, encouraging the creation of more fissile material is a poor way to pursue any kind of security.

Let the market decide

The reliance on climate change to save nuclear is also misplaced. Nuclear plants do not have to be replaced with carbon-intensive fuel: if plants are phased out over time, more renewable energy and greater energy efficiency could fill the gap. In any case, the right way to encourage climate-friendly energy is not to subsidise specific alternatives such as nuclear or, as the British government proposed this week, wind power, but to send a technology-neutral signal to the market that greenhouse gases have costly side-effects. And the way to do that is to impose a tax on all carbon emissions. Yet even a heavy carbon tax would not make new nuclear plants economically viable without big public subsidies.

There is thus little case for throwing good public money after bad to build new nuclear plants. But that does not mean it makes sense to shut nuclear plants permanently. The proper response to safety concerns is for regulators to police nuclear operators with renewed vigilance. The many that have strong and even improving safety records should be rewarded, as regulators in America and elsewhere have done, with extensions on their plants until the end of their useful lives. Those operators that are shown to be unduly lax or reckless should be put out of business.

None of this needs to mean that the lights have to go out across Tokyo. The good news is that Japan, following European and American examples, is liberalising its power industry, which should make it more efficient and more reliable. Why not let the state-owned, but highly safety-conscious, Electricite de France take over Japan's nuclear plants?