Nuclear generators set out stall on CO2 reduction

New nuclear power stations are needed if the Government is to meet its target to reduce carbon dioxide emissions, British Energy told a parliamentary inquiry in February. But the nuclear industry's claim to be the only energy source that pays its full environmental costs has been challenged by an independent assessment of its liabilities.

The nuclear industry's long-running efforts to present itself as the answer to global warming were knocked down by the last Government's 1995 White Paper (ENDS Report 244, pp 26-29 ). This found "no evidence...that new nuclear build is needed in the near future on emissions abatement grounds," though there "might be a role" beyond 2010 if substantial emissions cuts were needed. New nuclear capacity was seen as a more costly and inflexible solution than measures such as energy efficiency.

The debate has been revived by Labour's more ambitious target to cut CO2 emissions by 20% from the 1990 level by 2010. In particular, the nuclear industry has seized on a report by the DTI's Energy Advisory Panel which suggested - on the basis of a controversial model of energy demand - that a major nuclear programme might be needed to meet the target (ENDS Report 272, pp 29-30 ).

On 11 February, British Energy told the House of Commons Trade and Industry Committee that "investment in replacement nuclear necessary" if the Government is to meet its CO2 target. BNFL, which now operates all of the UK's older reactors following a merger with Magnox Electric, took a more cautious line - saying "it is certainly plausible that some new nuclear build could be competitive if emission targets are to be met at lowest cost."

In 1996/97, British Energy generated some 21% of Britain's electricity, with a further 7% coming from Magnox Electric. Based on planned lives for the Magnox stations, British Energy says it will be the only nuclear generator in 2005, with a 17% market share. The company says its share will fall to 7% by 2010 on current plans for reactor closure.

In practice, nuclear's share may well remain much higher as British Energy is sure to seek permission to extend the lives of its stations. The most recent official forecasts, currently under review, predict that nuclear will retain a 20% market share even in 2010 (ENDS Report 242, pp 23-26 ).

Nevertheless, both nuclear generators told the Committee that the Government should intervene to encourage new nuclear build. Peter Warry, British Energy's Chief Executive, said that designing, winning planning permission and constructing a new reactor would take roughly ten years - and suggested that work would need to begin soon to have an impact on emissions in 2010. The favoured project would be a pressurised water reactor adjacent to the existing Sizewell B plant - but Deputy Chairman Robin Jeffrey said that this "would probably not be a financeable option" unless it was part of a large-scale programme "to avoid one-off costs".

Mr Warry claimed that "in today's market, nuclear is the only energy source that presently pays its full environmental costs." Green taxation would, he said, "significantly move the economic attractiveness of new nuclear build" - though he was unable to say what an "appropriate" level of taxation might be.

British Energy's claim that its environmental costs are covered is based on annual payments of £16 million to a segregated fund to cover the later stages of station decommissioning, at an undiscounted cost of £3.7 billion. The firm says its decommissioning cost estimates are "very robust and conservative", and points to cost savings during the early stages of Magnox decommissioning. It also says that fixed price contracts with BNFL cover its waste liabilities.

However, a recent report by Sussex University's Science Policy Research Unit (SPRU) for the Coalition of Opposing Local Authorities painted a very different picture.1 It puts total UK civil nuclear liabilities at an undiscounted £41.8 billion. But it warns that higher costs for management of plutonium and high-level wastes - together with general project cost escalation arising in part from the collapse of plans for an intermediate-level waste repository (see pp 32-35 ) - could increase the bill to £70 billion.

British Energy and Magnox Electric presently have liabilities of £12.9 billion and £18.5 billion, respectively, according to SPRU. It concludes that more than 60% of this total is "currently unfunded".

British Energy's segregated fund does not cover £5.3 billion of liabilities for waste and spent fuel management and contributions to BNFL's decommissioning costs. SPRU sees "a substantial risk that a significant proportion of these costs will fall to the future taxpayer." And it estimates that "a further £13 billion (undiscounted) of future taxpayers' money will be needed to meet [Magnox Electric's] liabilities."

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