Should Europe’s Energy Future Include Nuclear Power?

June 15, 2011 by  

The third of the CSS Europe Debate Series focused on European energy security, one of the most important issues that shape national and international policies. The disaster of Fukushima and the recent decision by Germany to shut down its nuclear power plants and turn its energy sector nuclear free, renewed the attention to this decades old question, “Should Europe’s Energy Future Include Nuclear Power?” András Deák (Center for EU Enlargement Studies), Ada Ámon (Energiaklub) and Michael LaBelle (Center for Climate Change and Sustainable Energy Policy) addressed the question of Europe’s energy dependency and whether it should include nuclear power during their remarks.

Special thanks to the Allianz Kulturstiftung for sponsoring this debate.

Scroll down for the edited transcript of the event.

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ANDRÁS DEÁK: Actually debates on nuclear energy are centered around four basic issues or aspects. The first issue usually is the security of technology. I don’t want to go into this too much, I just would like to point [out] the fact that if supporters speak about secure nuclear energy, there’s much more to speak about technology. And this is true. Nuclear technology has developed a lot in the last 3-4 decades. Opponents at the same time speak or point much more to the human calculus issue. How [do] we apply this technology? Whether we implement really, practically those security measures? And this is also an open question. So this is basically a debate where technology versus the human calculus is debated, of course for secure technology you need both.

The second issue usually mentioned in favor of nuclear technology is security of supply. Nuclear technology decreases foreign energy dependence.  Well, again it is worth differentiating a little bit. So nuclear fuel production is one of the most complex production chain what we have in energy industry. This is a four stage process – not like gas or any industry – it is a really complex industry where you might have – if you have a bottle neck in one of the production chain stages you have a bottle neck in the whole system.

And well, actually here we also have the Russian factor. So Russia has half of the global uranium enrichment capacity. They have a 30% share in the supply of nuclear fuel elements. This is higher than in gas or oil industry. This is where we have a question mark. On the other hand, nuclear fuel elements, say, for a nuclear plant like Paks can be stored for ten years ahead. The storage is cheap and practically it can be done. So this if you have storage. [Whether] it is secure if not, well you never know.

Secondly we have the Fukushima factor. I think Fukushima has two basic consequences for the nuclear industry in Europe. The one that nuclear security became a moving target. At every major accident new security measures can be introduced in the industry. Secondly, that nuclear security does not fully belong to national jurisdiction anymore. So it is also German or if you like French citizens who are going to have a say in standards of nuclear security. Whether we need, we trust a nuclear facility or not. And we have already seen the EU insisting on the common sharing of nuclear plants. So this is again an issue questioning the security of supply.

The third argument is usually that nuclear energy is cheap, so the financial issue. Well, nuclear energy has the longest leading; this means the longest construction time, the highest capital expenditure so at the beginning you have to invest a lot into the facility. And later on you will have a relatively low operational cost. Well, it is very difficult to compare to other sources of energies. Gas has a three years leading in contrast to nuclear where you have 10-15 years of contraction time but at the same time, of course a gas and electricity production unit has very high operational expenditures.

Very much depends on the financial risk of whether you will be able to get cheap credits, very much depends on the management risk, whether you will be able to keep the cost down in the management phase. We have seen in Slovakia or in Finland where at the beginning they had very nice numbers in the budget and later on in the construction phase these caused troubles. And of course you have a technology risk. That the pay back period for a nuclear plant is 20-30 years, you never know what might happen in the world, in the technology industry. Maybe electric cars became a reality and than you need lot more electricity, maybe you will have solar cells, and that can be very competitive.

So if you look at the financial issue there is no doubt that countries that have the full nuclear cycle like France, Russia, U.S., Great Britain, this is a cheap solution. But others who don’t and cannot produce these industrial synergies, well this question is open. And the last aspect and maybe this is the most important aspect is the climate issue. Of course nuclear electricity with a low probability but have a high impact pollution but coal and other fuels have certain emission, so if you don’t like the nuclear energy you have to ask what else [you have]. And the debatable nuclear energy because of this is very much a debate about your vision for future energy solutions.

ADA ÁMON: Thank you very much and thank you for this invitation it’s a very rare occasion actually to have moderate and decent debate on this issue in Hungary.  So it’s always a pleasure for us and for me to have such real discussions. First of all I think when we are talking about the future of nuclear energy in Europe we are talking about two things. One is the lifetime expenditure of already existing nuclear power plants, and the second is building new nuclear power plants.

In the first case I mean expanding lifetime is purely a safety question. If you are looking at Paks nuclear power plant, the main question is not economy the main question is whether it makes sense, whether it is acceptable to expand the lifetime knowing the safety level of these four reactors. Since I am economist I wouldn’t go into details of reactor safety questions but it is clearly a very important issue, especially in small countries like Hungary where the regulatory body and the authorities – I wouldn’t say fully independent -, that independent outsiders would come and see how this so called stress test after Fukushima or the safety revision of this old nuclear power plant and reactors is done.
Building new nuclear power plants in whole Europe and in the whole world, is rather a financial issue. It’s a financial question and knowing the EU regulation on energy and the liberalized energy market is essential to make sure that governments are not involved in financing or giving any financial aid to new energy construction, energy projects. Knowing this, it is very important to look at the financing aspects, what would – as András already emphasized – influence the economic future, the economic aspects of a nuclear project.

First of all the lead time, of course we know that many of the nuclear projects usually take much longer than expected. Over the time of the nuclear development the lead times of building new nuclear power plants were constantly growing, increasing. And by the beginning of 2000-2005 it exceeded 10 years. So even though it was planned to rebuild something within 5 or 6 years basically it turned out to be a much longer project than it was going to be or it was expected, which of course influence the economic viability and kilowatt-hour price of the nuclear projects.

The other thing is that over time nuclear energy was the only energy technology which became much more expensive than any other energy technology. So if we are talking about solar, wind, natural gas technology it went all down, decreased in terms of investment, construction price, per kilowatt construction expenditure. If a reactor is, like after Fukushima, proved to be not that safe as we believed before, then it is of course a very very big cost on the investor side. The other issue is of course one of the most important issues in terms of financing, the actual and real price of the construction of a nuclear project. Looking at historical data is more than double the expected cost of a nuclear project. So if we are talking about the latest project, the only one in the EU-15, the Finnish Olkiluoto, it is close to double the price of the expected or the planned budget at the moment. And of course it doubled the time already what they believed the project can be done. So I think looking at the financing experience of the last 2 or 3 years of any energy projects and looking at the energy investments in Europe, the nuclear renaissance which is often quoted is simply not existing, it is a not existent phenomenon. In Europe renewable investments are ahead of any other energy projects, last year I think it was 62% of all new investments that went into renewable projects in conventional energy technologies.

One more thing for the end, as you may know in Hungary there is a new nuclear energy development project, the government decided to build a new nuclear power plant and I would like to always remind everybody that we don’t know much about this project. First of all we don’t know how many nuclear reactors the government would like to build, we don’t know what size of these reactors would be if more than one, we don’t know the price of it, we don’t know how they would like to finance it and we don’t know what are the aspects they included in this non-known prices. 

MICHAEL LABELLE: I take a very much long term approach András’ second, or fourth category that he mentioned about climate change. That’s where I am heading in this discussion tonight. Because I have three main points I’d like to start off with. Nuclear power is needed because of the failure of society and politicians to come together and develop a clear strategy of implementing effective technologies to reduce carbon emissions.

Europe and the world need nuclear power for two reasons. Zero carbon emissions or zero green house gas emissions and that is an improvement in the technologies. So my argument is essentially based on two other factors too, time and technology. Time, as in fact we must act now to reduce carbon emissions. The goals that we have set in Copenhagen were only a two degrees rise in global temperatures. And this is problematic because already there are studies suggesting, based on evaluation of national energy plans, that the global temperature will probably increase more than three degrees Celsius, and it is more likely, it is over a 50 percent chance that will occur. So these numbers are quite striking and the fact is that we have to act now to reduce our carbon emissions for the growing economies of the world. So time is of the essence here. And also we have technological limits. So we are rolling out new renewable energy systems, we are introducing energy efficiency measures but not quickly enough. So essentially we have a transition period that needs to occur that needs to work itself out.

Steven Chu, the U.S. Energy Secretary and he puts the evolution of the energy systems in context, ‘Look, at how long it took to make the transition from wood to coal, coal to oil and gas…50 to 60 years. So we cannot make this transition in another 50 to 60 years or it will be too late for the climate.’ And this is quite essential. Because these are based on how technology is developed how society accepts that technology and how it’s widely implemented for to fuel the economy.  And so when it comes to a renewable energy, energy efficiency measures that are definitely needed and definitely can be built on a wide scale, just like what Germany wants to do; it’s political and social effort that makes that happen and this is what needs to occur but it’s not occurring in a large enough scale. And there are two scales that we need to talk about; while I know that our the discussion here is European energy policy and European scale but it is important when we are talking about climate change to look at the global scale. And is one significant number we are talking about: it’s 100 000 years. In Finland for the Finnish nuclear power projects, they are building a storage facility there to last for 100 000 years. So in geological terms essentially it’s a blink of an eye, in human terms, for humanity it’s forever. So they are building for 100 000 years and it needs to store nuclear waste for that long. But the fact is that paleo-climetologists now are coming out and saying that climate change will actually effect the entire ecosystem of the world for 100 000 years. So we have this dramatic increase in temperature and a dramatic cooling off period too as well; the next ice age is not expected to happen. So I know my discussion is at a fairly high level, and maybe a bit away from the actual financing operation of nuclear power plants; but we are definitely at there that we have to reduce somehow – quite dramatically – our reliance on carbon based energy sources.

Fukushima, we have to include that in our discussion, is really one of the worst case scenarios that we have, a total failure, a total meltdown actually of three nuclear reactors. And two of the reactors the radioactive material is contained in the reactor vessels and one of them, the third one is leaking to the extent that nobody quite knows but it certainly is going into the environment. And I’m oversimplifying for time’s sake but the event itself, the tragic event there in Japan is contained more or less within the local area. Now there are certain scenarios certainly for nuclear accidents that could be much broader, Chernobyl is a case and point, but still the long term effects of that is localized.

What is interesting is that when we talk about advancing to a third generation of nuclear power plants – the Fukushima was the older, second generation – is that these are much saver and more efficient, they have extra containment vessels designed around the single containment vessel, like in Fukushima. What’s also important is that there is an improvement in technology, it has been through regulatory and approval procedures, it is well known technology and how to work with it, there are modular designs to take care of more widespread implementation uptake of nuclear technology. And this is one of the reasons why nuclear technology is so well positioned to fuel at least the next 50 to 100 years the energy demands of the world.

And in fact what is important too is to look at the EU second strategic energy review, because this lays out that by 2050 the European Union, the electricity system should be carbon free. Now, to get there, I mean it’s only 40 years from now, that’s an evolution in energy system terms and to get there we are relying on nuclear power. Six countries in the European Union – including Hungary- rely heavily on nuclear power. So in conclusion, because of lack of social and political dialogue in the past, we’re in this bad position essentially where we don’t have enough renewable energy on a very broad scale, so to replace carbon based energy sources we’re going to have to rely on nuclear power. And it is a global discussion that we need to have because since there is a 50 percent chance of the global temperature going above three degrees Celsius, we really have to look at some technologies we may not want not want to use but are really essential when we think about climate change and ecological impacts across the globe. 

ADA ÁMON: I would like to concentrate on two issues. One is this categorical statement about “We have to act now”. I agree. But we have to take into account that a nuclear project or any nuclear project is really slow. So if we know from climate studies that within the next 10 or 15 years we have to reach the tipping point of CO2 emissions and then it has to go very sharply down in order to not increase the two or three Celsius or whatever we agree on. But it’s for sure 2030 – or let us say around 2020 – that we have to come to that point. And I am pretty sure that nuclear will not give us solution into this problem. But it would slow down the other technologies which are essential in fighting climate change. For example if there is a new 2000 megawatt nuclear capacity in Hungary, there will be no space whatsoever for renewable projects, there will not be capital for that, there will not be space for renewables, it would decapitalize energy efficiency in Hungary, it would eat up all the capital, which would be needed for putting the energy industry on the sustainable path. I think therefore nuclear is rather against climate, even though we know that there is no CO2 emission from the operation of the nuclear power plant.

The other thing is this proven technology. It is proven that in every 25 years there is a very big nuclear catastrophe. And actually it was in the books of nuclear science before it happened. Because they said that 10 000 reactor year – I mean this is the 10 on minus 55 risk  of a nuclear reactor melt down. And actually it happened. And we have Fukushima, so it was actually a nuclear scientist form the Budapest Technical University who said we were not lying to you, that was the thing what we promised. So I don’t know whether society ever thought of about this when we are talking about proven technology.

MICHAEL LABELLE: I’m purposefully will not touch in the financial issues. I think there are some strong financial concerns. In Hungary building a new nuclear power plant does displace and will displace renewable energy projects. And it has to… and then it’s really a given in the Hungarian political system that this next power plant is going to be built with  different units whatever size it is, so without really much social dialogue and actually that’s much more your area.

But to defend my position, the evolution at least in Europe if we see the effort is to interconnect their electric system too. And so the Hungarian market will over time become less isolated and in fact it’s very important to integrate renewable energy and generation sources and to give it the flexibility that is needed to balance out the load-curve in fact for renewable energy and nuclear power can play an essential role like it does now, as a base power load, and for the Hungarian, the small Hungarian electricity market it does actually rely on a lot of imported electricity too. It might discourage some of the investment too. So there has to be some other measures in place to make sure that the nuclear power least in Hungary in this example does not overpower other investment.

It’s important to consider the integration of the grid itself, there is a big, strong push for the smart grid that will occur in Europe. And so therefore the energy mix becomes even more mixed, it doesn’t become so nationalized. So the over 90% of the power that is produced in Poland is from coal base sources. They are from coal. And so they’re looking at nuclear power to display some of the coal there. So that’s a country that could use actually nuclear power. The idea that Germany that could be a strong push for pushing out nuclear power is definitely there. And I think it sets the bar high and it’s a great example of when there is common agreement where people want energy system to heading.

I think the current problem with nuclear power, and the financial setbacks, some of the regulatory approval setbacks on that, and the political discussions are technical in nature. But also there is that kind of, especially in the United Sates, not knowing where the energy system should go, which kind of sources should be relied on. And now gas is becoming the new bridging fuel they say. Because, it’s there and available but again that’s carbon based, even though is much better to use than coal. But it’s a bridging fuel.

ANDRÁS DEÁK: I just have three very short concluding remarks in the end. One is that the share of coal has been growing and the global energy balance in the last 10 years again. So it is not oil, not gas not renewables, it is Chinese coal. So while I very much fear that this fight against global warming will be a much longer process. Secondly we discussed today Europe, Europe is a problematic place from the nuclear aspect, other places in the world has much easier, has much less skepticism towards nuclear issues. Well, I can mention China, it is quite important, no problem with the leading, its rather short, no problem with the regulation – Russia where in the US it was the shale gas and the financial crisis which basically killed the nuclear projects so Europe is a bit complicated place for nuclear projects. And what was very important I think in both contributions is that we have to compare the nuclear options with other solutions. Well, good carbon price could help a lot in making these comparisons, that’s why it is a very serious story that we do not have real carbon pricing in the world.

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