Nuclear sector set for change of climate

Date: 25/06/1998

By Chris Johnstone

MOST of industry will have looked at the deal struck by EU governments last week to share out the burden of cutting greenhouse gas emissions and asked how much it will cost them.

Europe's nuclear sector, however, sees the 2010 targets - and the demands which will inevitably follow from them - as a lifeline which could guarantee its future.

The industry is playing the climate- change card in a big way. It would like the transfer of nuclear technology to be included as one of the 'clean development' options which can be offered by industrial to industrialising countries as a means of easing their own pollution-cutting burden.

Under the agreement reached at last December's climate change conference in Kyoto, governments can count direct help to developing countries in cutting their greenhouse gas emissions as a contribution towards meeting their own reduction targets. "This could be an important incentive," says Linda Gunter, of the European nuclear grouping Foratom.

At the moment, the nuclear industry is in need of incentives. Only one nuclear power plant is currently under construction in western Europe, at Civaux in France, with a worrying delay before any new orders are likely to be announced.

The European Commission's climate change policy side-steps the delicate issue of nuclear power's contribution, favouring instead a sharp increase in renewable energy.

Commission officials predict that nuclear's current share of European power generation, which stands at around 34%, is likely to remain unchanged in the run-up to 2010.

At the moment, companies with nuclear know-how such as Framatome, Electricité de France (EDF), Siemens and Alcatel are pinning their hopes on Asia filling the gap.

Framatome and EDF are currently building two groups of nuclear power stations at Ling Ao and Daya Bay in China, and GEC Alsthom and Framatome are trying to persuade Beijing to order a further six units, arguing that bulk orders can reduce costs. A decision is expected by the end of the year.

Whether Asia's economic crisis will close off this avenue for nuclear development remains to be seen, given the questions it raises over the economic and financial desirability of such investments.

The nuclear industry is not, however, relying solely on Asia for its future.

The sector's big hope in the EU is the European Pressurised Water Reactor (EPR), a Franco-German venture backed by Framatome, Siemens, EDF and Germany's biggest electricity producers which aims to deliver a new generation of safer and more competitive power plants.

Work is going ahead to fine-tune the basic design so as to convince potential buyers, such as EDF and German utility Bayernwerk, to give the go-ahead for a pilot plant.

That decision could be taken later this year, but risks being delayed as key player EDF (Europe's biggest nuclear producer with plants providing 82% of its power) appears to be in no hurry to commit itself even to an experimental plant.

EDF currently has a lame-duck president, Edmond Alphandery, who will leave as soon as another job can be found for him. The man tipped to succeed him is François Roussely, an industry outsider who is currently head of the French defence minister's cabinet. He will need time to master the dossier, even if his final role is only to rubber-stamp what will be a highly political government decision.

Strategic decisions about EDF's future energy production mix have to be taken over the next five years, in anticipation of the large-scale phase-out of nuclear plants, approved by Paris in response to the first oil crisis in the 1970s, which will reach their 40-year decommissioning date after 2010.

EDF is already trying to assess its options, with one eye on the efficiency claims made for the EPR and the other on the likely evolution of gas prices over the next ten to 15 years.

A Commission study into the competitiveness of nuclear power in relation to gas predicts a dash for gas as the likely short-term scenario ahead of 2010, but gives nuclear power a fighting chance in the longer term.

"Where new investments are necessary, even for short-term demand, priority in the short term should be given to installing gas turbines in combined cycle and combined heat and power plants," it says. "Natural gas prices remain attractive for the moment and supplies are abundant, even though economic and political stability of certain suppliers cannot be guaranteed."

The report's authors point out that the initial investment cost of a power station fed with natural gas is approximately one- third of that required for an equivalent nuclear power plant, and that it would take only two to three years to build a natural gas station compared to anything between five and ten for a nuclear plant.

Another study by France's General Commissariat for Economic Planning sees gas competing strongly with nuclear energy by 2020, when the former could be supplying 60% of Europe's energy needs.

The Commission believes, however, that with a competitive Europe-wide electricity market due to be in place by 2010, the energy sector as a whole could develop differently.

Its study points out that investment decisions will in future be made with an eye to supplying the whole continent.

"In this new situation, increased load demand for large consumer supplies could justify new investment in nuclear capacity," it says.

Greater emphasis on the security of the power supply - with the EU likely to be dependent on imported energy to meet more than 70% of its needs by 2010 - and post-2010 climate change targets could give nuclear power extra appeal.

Major feature.