Nuclear Confusion, anti-nuclear collusion

I’ll admit it. There are some confusing things happening in the energy business, especially concerning nuclear power. I promised to translate information about the business and the technology into something you could use. I have been struggling for several days to digest and synthesize a wide range of recent developments.

Last week, the Finnish company TVO filed a formal request with the government of Finland for permission to build a fifth nuclear power plant. The Green Party threatened to leave the five-party ruling coalition if the government approved the request.

The European Union produced a green paper including continued use of nuclear energy as one of the few viable options for reducing greenhouse gas emissions. The paper noted that European nuclear power plants were responsible for preventing the emission of 300 million tons of carbon each year.

In The Hague, Japan, China, India and Canada earned the wrath of a variety of delegates with their suggestion that building nuclear power plants might actually help reduce global carbon dioxide emissions. European and Russian NGOs were particularly adamant in their opposition to the inclusion of nuclear energy as a part of the Clean Development Mechanism.

The test program for the Temelin reactor earned positive comments from responsible ministers in the European Union and from the International Atomic Energy Agency. However, the program sparked blockades of border crossings from neighboring Austria and loud protests from opposition groups.

Taking all of the above into account, I have been trying to decide if my prediction of widespread use of nuclear energy is closer or farther away than it was last month. Of course, the exercise is rather silly; the world’s energy market is so enormous that it is cannot change direction very much in such a brief period of time. However, I’ve been accused of worse, so I will try anyway.

The protests and immediate negative responses to positive developments in the nuclear business are not at all surprising. Old habits are pretty hard to break and there are plenty of people that have built entire careers as anti-nuclear protesters.

However, unlike many observers, I am reluctant to automatically classify those protesters as motivated by safety fears or by environmental concerns despite their claims.

Though the word “Chernobyl” is still used to try to make people tremble, it has been almost 15 years since the accident occurred. If there were real safety problems associated with existing nuclear plants, a different word would be in use by now.

An energy source that operates without producing any polluting gases should earn positive comments from people truly concerned about the global environment. James Lovelock, one of the guiding lights of the environmental movement, has recently stated his conviction that nuclear energy is the only real solution to the problem of adequately providing for the world’s population while still reducing global pollution.

Instead of giving anti-nuclear protesters the cover of calling them environmentalists, it is worth trying to learn if there might be other reasons for their opposition.

The TVO plan to build a new 1,000 to 1,600 Mwe power plant definitely gives some people cause for concern. The plant will be used to provide additional capacity, but it will also allow the shuttering of some aging fossil fuel stations. A 1,600 Mwe plant would reduce the demand for coal by about 5 million tons per year.

Other groups have an interest; electricity prices in the Nordic region have been unprofitably low recently due to heavy rainfall. When that happens, dam operators will sell at almost any price rather than spill water over the dam without any revenue. Electricity suppliers in the region have been hanging on, waiting for demand to catch up to supply or for the rain to stop falling. A new nuclear plant might prevent them from recapturing their lost profits.

The European Union, though recognizing the value of its own nuclear plants in helping it to meet its obligations to reduce greenhouse gases, has an agenda that is not readily apparent. One item of concern is its competitive position with regard to the United States and Japan. It is adamantly opposed to any rule that would allow either of them to meet emissions commitments without economic pain.

The EU has an easier way of meeting its own emissions limits; it plans to take advantage of a provision in the Kyoto accords, which treats it as a single entity. As the EU admits new members from the former Soviet bloc, it obtains new credits to share from the shutdown of their obsolete smokestack industries.

Russia is also well within its targets because of its recent transition to a more market based economy. It, however, has an additional justification for opposition to nuclear energy. Most of the proposed power plants in Europe needed to meet population increases and economic growth are natural gas burners, ostensibly because they produce less pollution than coal plants would.

Russia now provides about 40% of Europe’s gas and earns a large portion of its hard currency in the process. Nuclear reactors that do not produce any greenhouse gases also do not burn any gas.

Last month, I noted that the Temelin reactor would probably reduce coal-mining jobs by more than 5,000 once it was fully operational. Every day that the progress can be delayed is another day that those people keep their jobs. There is little mystery why there are plenty of people to man the barricades.

I will conclude with a couple of final pieces of information.

The price of natural gas on the NYMEX exchange for delivery in January closed at a record US$6.59 per million BTU Nov. 30. A combined cycle natural gas fired power plant using that fuel would have an electrical production cost of about 8 cents per kWh.

The stock of Exelon (EXC), owner of more than 17 GW of nuclear power capacity in the United States, finished its first full month of trading at more than US$66 per share, up more than 15% since the beginning of the month. The average total production cost of the nuclear plants in its fleet is less than 2.3 cents per kWh.

The opposition can and will protest loudly. However, when you combine impressive financial numbers with positive comments from long-time environmental leaders like James Lovelock, there is little chance that the nuclear genie is going to be put back in the bottle. Even Wall Street investors are beginning to get the picture.