Tuesday, December 02, 2008

Il Ritorno di Salter's Ducks in Patria

The London opera houses have had more taxpayer money than the British marine power industry over the past few years.
writes Chris Goodall.

It should not, of course, have to be either/or, and neither I nor, I am sure, Chris Goodall would want to suggest such a thing.

But in these straitened times, how about those in the performing arts concerned about climate change (on which, for example, see Ashdenizen) twin up with enlightened actors and investors in areas like marine renewables?
Der Fliegende HollÀnder und das Sea snake.

Les PĂȘcheurs de Perles, brought to you by tidal power.

Riders from the Sea, powered by offshore wind turbines.

1 comment:

Clive Bates said...

The weakest arguments against nuclear power are the financial ones. This is because states are generally backing away from financing, building and operating themselves. The Finnish example much cited by Chris Goodall does show scope for the costs to go through the roof. But these are costs to the constructors as the construction risk is (rightly) allocated to them. Coal and CCGTs have also had very large overruns carried by the constructors.

The financials of nuclear construction are market-tested and if they can't be built at a sensible price then they won't be built.

The question of nuclear economics really only arises when public money is committed (to ensure there is value for that in €/tonne CO2 or other public purpose) and where there are guarantees or regulatory/policy decisions that affect the costs.

These draw us to three areas:

1. The value attributed to its low carbon electricity. Nuclear is far less well rewarded than renewables are under the RO, which I think is worth nearly £200/tonne. (An additional 'innovation' argument might also be made for renewable - though this is of dubious validity in my view). Nuclear's fossil competitors do not bear full costs of carbon - the ETS and other instruments come nowhere close to properly pricing the externality. And I think it remains the case that what could and should be a carbon tax is levied as an undifferentiated energy tax.

2. Its back end costs. These are actually very small in the project finance calculation for a nuke (the financing is dominated by construction cost and time to first power). There are important decisions about discounting and financing liabilities and transfer of risk to the state. Nevertheless we should note the objective of decommissioning and nuclear waste management is to reduce risks arising from these facilities to tolerable levels - basically clean it up. This is quite unlike fossil fuels where the combustion wastes are dumped in the atmosphere. A better economic comparison for nuclear is with fossil plants with CCS and all the coal mines sealed and slag heaps removed. All the debates about inter-generational fairness apply as much to C emissions as they do to N waste.

3. Safety regulation. One reason why nuclear doesn't get cheaper is that any productivity gains are taken in improved safety or environmental impact... the regulatory regimes generally follow "as low as reasonably achievable" philosophy. I f that was applied to other risk-producing energy producers then their productivity gains would similarly consumed. Does regulation apply an equal tolerance of risk across energy technologies? (I know there are dread risks, low prob/high impact etc that greatly complicate such simple questions - but climate change also has a lot of that)

Finally, there are other factors - for me, nuclear proliferation is important. Some renewables have externalities (hence battles in planning system). Intermittancy is a bigger challenge than generally recognised... etc etc.

As well as subsidies, much optimism has been lavished on renewables, especially solar PV - I remember Greenpeace declaring in 1995 that it would be competitive with grid electricity by 2000! It's still bloody expensive (see my solar cost calculator). Chris Goodall's book is pleasingly sceptical about solar costs but also engages in heroic forward-looking assumptions. Look back at what was said before and where we are now, and you would take the projection of technology companies with a great deal of salt.

So - this is a lengthy way of saying all energy technologies are problematic and should be expensive...

Renewables are inherently expensive broadly because of the low intensity and intermittancy of the primary energy source

Nuclear is expensive because of the inherent danger in fission and because efforts have been made to internalise its internal costs

Fossil fuels are under-priced because they do not fully internalise external costs and the mechanisms to do this are too weak and/or biased.

But then you would expect that from me... I think the overwhelming focus should be on energy efficiency and resource productivity - usually the poor relation or footnote in a green group press release.