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Economics must win over emotions

If we are to spurn the nuclear option, or indeed if we are to embrace it, we must do so only once we have taken all aspects into account. Rigour and honesty is required, too. We must accept the relevance of the subsidies that wind power receives, and the low carbon nature of nuclear energy.

BRITISH Energy claims that new nuclear power stations could be economic without direct government subsidies. “I don’t believe that nuclear power requires any subsidy to make it viable in the marketplace,” it said yesterday.

Greenpeace, on the other hand, is convinced that nuclear is economically unfeasible without financial help from the State. “We know that the only way to make nuclear power stations attractive to investors is for the Government to pay for some of its higher costs.”

Who is right? The only honest answer is that nobody can really be sure whether nuclear is independently financially viable or not. British Energy can say that it thinks the nuclear option is viable without fear of contradiction because it makes certain perfectly reasonable assumptions about the prevailing price of electricity and the cost of commissioning and decommissioning a new fleet of nuclear power plants. But it is a judgment, not a fact.

Some will say that Greenpeace’s financial arguments are alarmist. Greenpeace is vague about the sums, but this is far from unreasonable since there really is no knowing whether a nuclear power plant will prove to be economically viable. There are too many variables.... more [truncated due to possible copyright]  

BRITISH Energy claims that new nuclear power stations could be economic without direct government subsidies. “I don’t believe that nuclear power requires any subsidy to make it viable in the marketplace,” it said yesterday.

Greenpeace, on the other hand, is convinced that nuclear is economically unfeasible without financial help from the State. “We know that the only way to make nuclear power stations attractive to investors is for the Government to pay for some of its higher costs.”

Who is right? The only honest answer is that nobody can really be sure whether nuclear is independently financially viable or not. British Energy can say that it thinks the nuclear option is viable without fear of contradiction because it makes certain perfectly reasonable assumptions about the prevailing price of electricity and the cost of commissioning and decommissioning a new fleet of nuclear power plants. But it is a judgment, not a fact.

Some will say that Greenpeace’s financial arguments are alarmist. Greenpeace is vague about the sums, but this is far from unreasonable since there really is no knowing whether a nuclear power plant will prove to be economically viable. There are too many variables. There are also vast periods of time, across which all the variables will change, and change often. No one can say with absolute certainty what the energy markets will bring forward next week, let alone what the prevailing conditions will be in the decade after next.

One suspects that Greenpeace still hates nuclear simply because it is nuclear and labours with so many unfortunate associations with warheads, mushroom clouds, Chernobyl and cancer scares. There has long been a danger that Greenpeace plays too much on the understandable, but perhaps irrational, public fears about radioactive power. It is, therefore, heartening to see Greenpeace using the economic arguments. They represent an invaluable complement to the environmental objections more usually associated with their kind.

If we are to spurn the nuclear option, or indeed if we are to embrace it, we must do so only once we have taken all aspects into account. Rigour and honesty is required, too. We must accept the relevance of the subsidies that wind power receives, and the low carbon nature of nuclear energy. We might have to conclude that it is right for the government to offer financial help to nuclear operators if it means the country receives assurances on the security and diversity of supply. It might be better to plump for some good old-fashioned susbsidies over a complicated array of cod- market incentives, too. Psuedo-market incentives may cause more problems than they solve.

It is also important that we avoid falling into pro-nuclear and anti-nuclear camps. It would be better simply to decide whether we need it or whether we can do without it. 


Source: http://business.timesonline...

JUN 21 2006
https://www.windaction.org/posts/3156-economics-must-win-over-emotions
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