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The Nuclear Begging Bowl

It has become fashionable, since the Financial Crisis was admitted to publicly, for high net worth individiuals to propagate Public Relations campaigns in support of their industry of choice. Normally the industry that makes all their money for them.

In the United States they call this process a “bailout”, making it sound like a worthy rescue of a valued affiliate. In the United Kingdom, it’s called “public support”. It all amounts to the same thing : tax revenue from the public thrown at the private corporations.

At the conference “The politics of climate change : From economic crisis to business revolution” on 5th June 2009, I heard an interesting series of remarks from one Vincent de Rivaz (see below).

He was essentially trying to argue that Nuclear Power is a Low Carbon form of electrical generation. Well, it possibly is fairly Low Carbon if you just count the emissions from day to day operation.

But that excludes the Carbon emissions from the mining and refining of the fuel, the building of the reactors and plant, the maintenance of the plant, backup generation in the event of outages, maintaining security at the plant site, the decommissioning of the plant, and the treatment and storage and guarding of radioactive waste. So, no. Nuclear Power is not Low Carbon in the full “lifecycle”.

Vincent de Rivaz reckons that he can build and run New Nuclear projects in the UK without subsidies; without explicit “public support” from the Treasury.

But he is not reckoning on a couple of practical problems with a New round of Nuclear Power.

First, New Nuclear Power is likely to be 10 to 15 years in development. However we need to have concrete action on Climate Change within the next 5 to 10 years.

Nuclear Power is not going to be helping with containing and dropping Carbon Emissions in the near-term future when we need to be making clear and decisive first steps on de-Carbonising.

Second, it is unlikely that EdF will be able to persuade investors to put their money behind New Nuclear without some kind of pledge from the UK Government on a price guarantee for the electricity that will eventually (with luck) be generated.

And yet, at present, it is highly unlikely that such a pledge could be extracted, what with the whole Government in turmoil, and with international negotiations on Climate Change set to be turbulent and impactful on Energy provision (in December 2009 in Copenhagen).

It seems that only around 11 New Nuclear plants will ever be commissioned in the UK. This amounts to a “replacement programme”. As the current 19 Nuclear plants are retired, supposedly by 2023, the New Nuclear plants will be commissioned to operate (with luck), hopefully matching the generation capacity of the retired plant (with luck).

The UK New Nuclear programme will therefore have absolutely no impact on Climate Change in total, since it won’t reduce overall Carbon Emissions.

There is clearly a back room relationship between the Nuclear Industry and the British Government. Vincent de Rivaz said on 5th June, after a session where Tony Blair spoke :-

“I’m interested the word “Nuclear” was not pronounced in the last [previous] presentation – without Tony Blair’s support Nuclear will not be on the agenda. I hope he hasn’t forgot. I know talking about Nuclear is not as fashionable as talking about wind turbines…[but for] affordable bills and Energy Security there is no solution without Nuclear.”

Four questions arise : what is it that Vincent hopes Tony has not forgotten ? Has it something to do with all the schmoozing that EdF and other Nuclear players have done with British politicians ?

Further : how does Vincent de Rivaz know that Tony Blair’s support is key to the New Nuclear revival, presumably worldwide ?

And also : if New Nuclear is so good, why does it need political support ?

Additional note : during the conference it was asserted that the French have cheaper Energy bills than the UK because they rely on Nuclear Electricity. Oliver Tickell pointed out later to me that French subsidise their Nuclear Power industry heavily, which keeps final bill costs low.

EDF Battles Miliband Over Nuclear Investment

A month ago Ed Miliband announced the next generation of nuclear power that is going to provide a sizable chunk of our energy – 11 new sites to be operational by 2017. But the fanfare over Britain’s nuclear future has been muffled somewhat by the head of EDF Energy, Vincent de Rivaz, in an interview with the FT today.

While the government clearly supports the idea of nuclear, it doesn’t really want to support it financially – they claim that a free electricity market, combined with the EU emissions trading scheme, will be impetus enough for private investment. But de Rivaz is calling for a “level playing field”, saying that to give wind farms subsidies and not nuclear just isn’t cricket; he’s also said that without subsidies, maybe he won’t invest at all in the UK come 2011. It’s a classic bit of provocation, and expect a bit of a stand-off over the coming months between Miliband and the big nuclear players. The fact that reactors cost over £4bn to construct, along with the uncertainty of steady revenue thanks to all the other potential new players going online in the coming years, does mean that de Rivaz has a pretty fair point.

EDF bought British Energy last year, the previously semi-nationalised company that owns most of the UK’s nuclear plants and the sites for proposed new ones. 85% of EDF is owned in turn by the French government – having such a large chunk of energy revenue given to the frogs will no doubt have the right-wing press in a flap soon enough.

In other green news today, China has pledged $440bn for investment in renewables, mostly wind power, to take the share of renewable energy to 6% of total output by 2020, rather than the 1.5% it is today. And Vattenfall and DONG energy, the companies who are building our Thanet and London Array wind farms respectively, have been named two of the worst offenders for greenwash, the practice of pretending you’re being green when actually you’re on Captain Planet’s to-do list. I’d take it with a pinch of salt though – the fact that two Danish companies are on a list compiled by a Danish renewables activism group might hint at a bit of PR-mongering of their own.

Nuclear power warning for UK

By Ed Crooks in London

Published: May 26 2009 03:00 | Last updated: May 26 2009 03:00

New nuclear power stations will not be built in Britain unless the government provides financial support for the industry, the head of the country’s biggest nuclear generator has warned.

Vincent de Rivaz, chief executive of the UK subsidiary of EDF, told the Financial Times a “level playing field” had to be created that would allow the nuclear industry to compete with other low-emissions electricity sources such as wind power.

His comments call into question the government’s plans for a new generation of nuclear power stations, which ministers have insisted can be delivered without any additional subsidy.

In recent months, the government has promised more generous subsidies for offshore wind power and new support for “clean coal” power stations that can capture and store their carbon dioxide emissions. But it continues to resist the idea of similar assistance for nuclear power.

EDF, which last year paid £12.5bn to buy British Energy, the nuclear generator, plans to build at least four reactors in Britain at a cost of up to €5bn (£4.4bn) each.

However, Mr de Rivaz said the company still needed to assure its investors, which include the French government with an 85 per cent stake, that the investment made commercial sense.

“We have a final investment decision to make in 2011 and, for that decision to give the go-ahead, the conditions need to be right,” he said.

Mr de Rivaz suggested the best way to support the nuclear industry would be to make sure penalties paid by rival fossil fuel power generators under the European Union’s emissions trading scheme were kept high enough to make nuclear investment attractive.

He said such a move would be necessary before companies were confident enough to invest tens of billions of pounds in new reactors. He added that the government needed to put a floor under the price of carbon permits in the European Union’s emissions trading scheme.

Since the emissions trading scheme began operating in 2005, however, the price of the permits has proved highly volatile and has fallen sharply in the past year. Mr de Rivaz said: “We will not deliver decarbonised electricity without the right signal from carbon prices.”

EDF is also concerned that the additional incentives for renewables will lead to so much wind capacity being built that nuclear power stations will have to be shut down at times of high wind power output, jeopardising the economics of new reactors.

Ed Miliband, the UK energy secretary, recently told the Financial Times the government’s policy was not to subsidise nuclear power. “I think we are right not to subsidise new nuclear power stations because we have an obligation to get to a low-carbon future at the lowest cost to the billpayer,” he said.

The revival of nuclear power gathers pace in Europe, but will a free market finance it?
May 13, 2009 10:12am
by Ed Crooks

Monday’s deal for EDF to sell a 20 per cent stake in British Energy, the nuclear generator, to Centrica, which is Britain’s biggest domestic energy supplier, marked an important step forward in the revival of nuclear power in Europe.

While the US debates the controversial plan for a nuclear waste repositary at Yucca Mountain in Nevada, European countries including the UK, Italy and France are pressing ahead with plans for new plants, even though they often don’t know what they are going to do with their waste.

This progress in Europe has been welcomed by supporters of nuclear power as evidence that nuclear power is an investment opportunity that interests many profit-driven businesses, and that the commercial partnerships that the nuclear industry needs are coming together.

However, there is still a missing piece of the jigsaw.

Pierre Gadonneix, EDF’s chief executive, talks a good game. He wants his company to be “the leader of the nuclear revival worldwide”, he says, and he has been doing deals in the US, in China, and in several other countries to make that happen. In the UK alone, he plans to lead an investment programme worth up to €20bn to build four of the new French-designed European pressurised water reactors. The deal with Centrica, bringing it in as a partner in up to 20 per cent of that investment, will help to get those plants built.

EDF says everything is still on track for it to hit its target of having the UK’s first new reactor for 25 years on stream by the end of 2017. Safety approvals are under way, the planning system has been reformed to help push through nationally important infrastructure projects such as new reactors, and EDF is putting its UK new build team together.

The big problem remaining, however, is that the economics of new nuclear are still not clear. Vincent de Rivaz, EDF’s chief executive in the UK, has often protested that nuclear power will not need government support. He likes to ask: “Look at my business plan and tell me, where is the line for government subsidy? It is not there.”

The British government takes the same view: a free electricity market, supported by the support for low-carbon electricity provided by the EU’s emissions trading scheme, will be sufficient to bring forward that huge investment in new reactors.

Yet without support of some kind, it is hard to imagine private sector investors – or indeed the French government, EDF’s 85 per cent shareholder – wanting invest those tens of billions that will be needed.

GDF Suez and Total have invested in EDF’s new reactor in France at Penly, but they are, of course, both French – and GDF Suez is part publicly owned. Enel has also invested in the other new reactor, now under construction at Flamanville, but it has particular reasons for wanting to gain expertise, to begin Italy’s nuclear revival after a 25-year hiatus.

Nuclear plants are not only expensive, but the costs can be difficult to predict as the Areva plant being built in Finland demonstrated, and the industry has taken note of this example. Revenues are also uncertain over the 40 to 60 year life of a plant, and the prospect of a future government with an anti-nuclear stance also makes investors nervous.

Renewables and now clean coal have been given their own support mechanisms: guaranteed feed-in tariffs or other special subsidy regimes.

The question is: can new nuclear investment, backed by the private sector, go ahead without similar financial support?

Vincent de Rivaz, Chief Executive of Electricité de France (EdF) in the United Kingdom, speaking at the conference “The politics of climate change : From economic crisis to business revolution” on 5th June 2009

“The UK has set a mission – difficult but necessary…When Ed Miliband’s newly born son is 40 years old [many changes will have been made]. Our common agenda. We will not achieve it unless we de-Carbonise generation [of electricity]…[We need] a framework to encourage investment in Low Carbon technologies. Also Energy Efficiency. We must acknowledge the effect of the Economic crisis. But those who say we cannot affford [de-Carbonisation] are wrong. We cannot afford not to act. We must make decisions now to withstand the rising tide…There are lessons to be learned from the Economic crisis. One thing is that regulatory regimes must be kept up to date. [Reference to Adair Turner]. Regulatory decision must take into account long-term Low Carbon [goal]. [We need] strong and clearsighted leadership. Now Ed Miliband realises, accepts [the need for] intervention in the Energy sector, [we] must set goals [aims]. I don’t see a difference between the Government and the opposition [on this]. I advocate a “new deal” – accountable [to the] regulator. We ned a pathway that everybody can deliver to – not many competing targets and distorting subsidies. Peter Mandelson has talked of new [] activism…not limited to mining companies [those who mine for Fossil Fuels]…lots of changes [that will] help to deliver. The Energy Act. The Planning Act and elsewhere. [It is] particlularly vital need to address the way the Carbon Market works. [It is] meant to be the cornerstone [of Carbon policy]. So far the Carbon Market has not advanced in line with its objectives. Instead, we need a Carbon Market – a level playing field – a signal for investment without subsidies for the taxpayer [to pay]. [We need] a robust Carbon price – to deliver Low Carbon at affordable prices. Peter Mandelson said that market dogma must will not create sustainability. Intervening to raise the price of Carbon forces change in behaviour. About Carbon pricing – this is not a subsidy. It is a cost Carbon emitters should pay and will creating a level playing field for all technologies. We need a plan we need the tools to deliver the plan. We believe the mechanism that will be found [will be to] firm up the European Union Emissions Trading Scheme (EU ETS) in the UK. I strongly urge the Government and the Opposition not to make political points [on this] – but to come together…supporting the de-Carbonisation of electricity. We need a framework that encourages investment in Low Carbon technology so that we can make staps to de-Carbonise electricity by 2050. We are planning for investment in new Nuclear…I’m interested the word “Nuclear” was not pronounced in the last [previous] presentation – without Tony Blair’s support Nuclear will not be on the agenda. I hope he hasn’t forgot. I know talking about Nuclear is not as fashionable as talking about wind turbines…[but for] affordable bills and Energy Security there is no solution without Nuclear. In asking for a Carbon price we are not asking for a subsidy. We are asking for the right signal for investment in Low Carbon.”

One reply on “The Nuclear Begging Bowl”

Ah, so it was “third party” begging…from Rolls-Royce :-

“Labour put too much faith in City, admits Mandelson : Business secretary announces £150m of aid for manufacturing and says industrial sector crucial to UK economy : Heather Stewart and Emily Martin :, Tuesday 28 July 2009 19.52 BST : Business secretary Lord Mandelson conceded that Labour put too much faith in the economic prowess of the City over the past decade, as he announced £150m-worth of government aid for manufacturing, with most going to the engineering firm Rolls Royce. Saying that taxpayers’ support would secure or create 800 jobs in aerospace and nuclear power, and bring four new Rolls Royce factories to deprived areas of Britain, Mandelson said a healthy industrial sector was crucial to building a successful British economy…”

They can finance Nuclear Power jobs, but not Wind Power jobs. Where’s the logic ?

“Energy secretary Ed Miliband, who was heckled by Vestas protesters in Oxford yesterday , announced the UK government has awarded £6m to Vestas Technology, to help fund a turbine research centre at the Newport site.”

“Vestas claims it has to close its manufacturing unit with the loss of 600 jobs because the UK onshore wind market is not growing fast enough. It says projects are slowed down by planning objections. It will move production to Colorado in the United States.”

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