European Affairs

Fundamentally, Europeans and Americans view the energy crisis from different perspectives. For Europeans, “energy” is essentially a question of natural gas and their dependence on Russia as an unreliable, increasingly pricey source of supply of electricity (Russia is expected to provide as much as two thirds of Europe’s natural gas by 2050.) For the United States, “energy” essentially means oil for cars and trucks, which has to come mainly from the Middle East. Put another way, Europe uses much less oil to run its vehicles – it manages the “demand” for oil and other energy with taxes. In contrast, the United States tends to think more in terms of “supply:” It produces most of the energy it consumes, except for oil, where imports are rising. Translated into figures, the EU is more than 50 percent dependent on energy imports (a level set to rise to 70 percent by 2020) – most of it from Russia. In comparison, the net energy imports of the United States amount to less than 25 percent of its consumption.

Both sides of the Atlantic recognize the need to do better on both supply and demand – and, Ritch insists, both sides will find that their approaches are necessary but not sufficient unless they include a lot more nuclear energy in their own countries, in Asia and in fact around the world. Nuclear reactors can compete directly with natural gas and coal in generating electricity in Europe and the U.S. Of course, nuclear energy does not directly power vehicles, but, as Ritch notes, it can produce the huge amounts of hydrogen and battery power that many people expect will be needed as a fuel to drive cars completely cleanly.

Many people in the policy community have been slow to recognize the scale and challenges of a new nuclear revolution that is already under way, Ritch contends, because the nuclear industry does not possess the pubic-relations machinery and clout of its longstanding rivals such as coal and oil. Since those fossil fuels involve enormous ongoing operations of mining, refining and distribution, they generate large permanent payrolls and huge financial flows. In contrast, nuclear power – unleashing huge amounts of energy from small amounts of uranium – is financially much smaller and lacks the means to pay for and support a ubiquitous “nuclear lobby” – which exists, he says, only in environmentalist fantasy. The important point, Ritch says, is that the strength of a pro-nuclear message today derives not from any well-financed effort to market the message but rather from the intrinsic merits of the case for nuclear power, which governments are examining and finding persuasive.

The data and predictions highlighted in Ritch’s overview of the energy-environment debate challenge much conventional wisdom – including the realistic potential for Transatlantic cooperation on energy – and the likely limitations on it. Despite calls for strategic energy cooperation from both sides of the Atlantic, the Bush administration is sticking to its position that new technologies, including nuclear, offer the way forward – and rejecting carbon taxes or any regulatory measures such as caps on greenhouse emissions.

In contrast, the European Union puts its prime emphasis on energy conservation imposed by regulatory measures to control emissions, as seen in its adherence to the Kyoto protocol. One of the reasons some European countries have been able to accommodate the Kyoto targets is that economic recession at the beginning of the 1980s (and the collapse of economies in ex-Soviet-run states) structurally altered economies away from heavy industry towards services. But, as economist Dieter Helm noted this fall in the Financial Times, these industries did not go away - they relocated in the rapidly developing countries of the Far East, China and India. “In importing from these countries, the developed countries are implicitly responsible for the pollution caused in their manufacture.” So the U.S. and Europe are actually polluting much more than the crude emissions data indicates.

Ritch predicts a gradual, partial Transatlantic convergence as European countries make a new commitment to nuclear power and, hopefully, as post-Bush diplomacy starts moving toward an emissions regime to succeed the Kyoto protocol when its expires in 2012. Ritch predicts that a new regime will need to be a global system of emissions-trading, which yields worldwide incentives to move toward cleaner energy. This goal may be out of reach, practically speaking, but, he says, even a start in global negotiations aiming at this target would be a powerful signal and incentive to markets – including, of course, the reviving nuclear industry.

Some readers will find Ritch’s approach provocative because of its emphasis on the under-recognized role of nuclear energy in recent decades and its confident predictions of massive expansion in the world’s fleet of nuclear reactors and renewed competition in the increasingly privatized nuclear industries. But Ritch combines unusual credentials as a policy intellectual, who has genuine expertise and feels free to be remarkably outspoken. He did not come to his current position from a background as a scientist or a nuclear-industry professional. For most of his career, Ritch worked in foreign affairs as an adviser in the United States Senate, where he focused on arms control, notably on efforts to combat nuclear proliferation. In the Clinton administration, he became U.S. ambassador to the International Atomic Energy Agency, the Vienna-based UN agency responsible for policing the treaty against nuclear weapons proliferation and for promoting the spread of civilian nuclear technology. During his eight years in the job, he became convinced that, while not abandoning the effort to prevent weapons proliferation, the international community needed an intensive focus on using nuclear energy as an urgently needed tool for global environmental preservation.

Ritch says that his convictions about the need for nuclear and his realization about the extent of confusion about the role of commercial nuclear power prompted him to help create the World Nuclear Association, the London-based organization that serves as a coordinator and advocate for the enterprises that comprise the global nuclear industry. With worldwide membership, the WNA has members in almost every country in Europe and North America and has links with non-governmental and intergovernmental bodies involved with nuclear electricity-generation and other peaceful nuclear applications in medicine and agriculture. The WNA took the lead in founding the World Nuclear University, a partnership that draws on the major intergovernmental institutions like the IAEA and leading national academic and professional resources to provide “big picture” training to nuclear physics students and young professionals accepted from countries all over the world. It is a part of WNA’s effort to prepare a “successor generation” of nuclear leaders as the global fleet of reactors expands dramatically in the coming years.

The WNA’s essential message is that nuclear power not only offers energy security but is also environmentally friendly because it does not produce greenhouse gases responsible for global warming. As Sir Nicholas Stern argues in his recent report for Chancellor Gordon Brown in Britain, science has accumulated overwhelming evidence that our world faces a threat of accelerating and irreversible climate changes that could prove as disastrous as the world wars of the last century. So, Stern concluded, governments and companies should act now against the risk that accelerating global warming will bring on a “tipping point” that precipitates the planet into climate catastrophe. Stern’s report seemed in many respects to be aimed at overcoming U.S. reluctance to act strongly against global warming by demonstrating how costly a failure to act now could be – for developed nations as well as the less developed.

Ritch takes a similar view of the threat. In this interview in November with European Affairs, he argued that energy security – and the indispensable role that nuclear power can play in providing it – should be at the top of the geopolitical agenda in Europe and the United States. Excerpts of the discussion follow.

European Affairs: Some people are talking about a “nuclear renaissance” being already under way? What is the evidence for that? Where do the United States and Europe stand?

John Ritch: The International Energy Agency (IEA), the intergovernmental think-tank and policy-coordinator on energy, has just overturned its longstanding skepticism about the future of nuclear energy. Its new estimate, released in November in the latest World Energy Outlook, more than doubles its previous forecast for the growth of nuclear generation. Now it foresees expansion by 2030 of as much as 40 percent. That translates into orders for about 50 new reactors in the coming 15 years, a very short time for energy development, and an additional 100 by 2030. I still consider them too cautious about the prospects for nuclear power. But even in their view – and the IEA has no pro-nuclear bias – the revolution seems to be here.

This nuclear wave has been unleashed in a global context, on every continent, with Asian countries such as India and China, Japan and Korea setting the fastest pace for the moment. In Europe and the United States, governments are soberly looking at what their energy options are, both in terms of supply security and in terms of constraining greenhouse emissions. As a result, with rare exceptions, governments are now embracing nuclear-based strategies. This does not mean they are abandoning their dependence on fossil fuel (coal, oil and natural gas), which is too extensive to be divested quickly. But with rare exception they are choosing nuclear power as a key component in their long-term energy plans. Europe, the main base of nuclear energy, and the United States, which has the largest number of nuclear plants, still have technological leadership, but they are part of a larger phenomenon.

EA: Can you be more specific about where the U.S. and Europe stand?

Worldwide, there are 443 nuclear-power reactors in operation. Europe currently has 142 of them (plus 25 more if you include Switzerland, Bulgaria, Romania and Ukraine), and many EU countries have programs under way to expand their nuclear energy capacity. Sometimes this involves upgrading existing reactors, but some countries also have new reactors under construction. Finland is building the world’s largest reactor and is talking about starting another one. Poland is planning its first reactor. Bulgaria has just ordered new reactors. Britain’s government has announced that nuclear energy will continue playing an essential role, implying that reactors’ lives will be prolonged and new ones ordered. France has plans to renew its entire fleet of 59 reactors and has started work on the first of this new generation of reactors.

In the United States, which has 103 reactors in operation, half a dozen utilities have filed preliminary applications for new reactors, most on the same sites as existing plants – to simplify regulatory and public acceptance. The recent U.S. energy bill sought to rev up the process of “nuclear new build” by reducing what investors call “the regulatory risk.” This involved creating an approval process that is largely completed in advance so that construction of new plants is less liable to be upset by protests or political interventions. (In the past, such delays were terribly costly for investors, and sometimes fatal to projects, because in nuclear power, 75 percent of a plant’s lifetime costs are in the construction.) In addition to this fast-tracking, the new U.S. legislation also provides some financial incentives for “first-movers” in building this new generation of nuclear power plants. These are not subsidies but simply onetime help for companies ready to pave the way.

EA: Who will be building these nuclear power plants?

Countries on every continent will be expanding their nuclear portfolio. If you mean “which companies?” the competition for contracts to build these new reactors is already intense. Big new players are emerging from a phase of consolidation in the nuclear-manufacturing sector. The French company Areva is the world’s largest manufacturer of nuclear technologies including fuel enrichment, reactor design and manufacture and also reprocessing: it has benefited from integrating German and U.S. nuclear companies that suffered from the eclipse of nuclear building in those countries. Areva has recently concluded a tie-up with Mitsubishi Heavy Industries, so it is clearly a major contender. General Electric and Hitachi have announced that they will join forces in the nuclear field and we will see how strongly GE revives in this sector. Toshiba has taken over the nuclear parts of Westinghouse, a company that started in the U.S. and had been bought by Britain’s state-owned British Nuclear Fuels Ltd. India has developed its own sophisticated nuclear technology during the decades it was barred from getting foreign help in this sector. The recent U.S.-India deal is set to normalize India’s ability to import and export commercial nuclear power technology, so now it is poised to become a player. There are also Canadian, Russian and Korean manufacturers, so it’s going to be a very competitive market. South Africa has a design of its own, called a modular reactor that it hopes to sell in markets looking for smaller reactors that can be expanded gradually as local electricity demand grows.

EA: Until recently, at least, nuclear power has been widely written off in the EU and the U.S. as a technology that had failed to live up to its promise and was being phased out. Are you saying that this is now changing?

It’s true that the U.S. and some EU countries could be said to have moved away from nuclear energy in the sense that they built no new nuclear reactors for a quarter century, roughly speaking since the 1980s. Some countries such as Germany and Britain embraced plans to phase out their existing reactors. (There are exceptions: France never envisaged a phase-out and its economy gains a competitive edge by getting 78 percent of its electricity from low-cost nuclear energy.) But even during this “moratorium,” nuclear power remained a crucial part of the energy mix on both sides of the Atlantic, accounting for over 20 percent of our electricity constantly even when our economies were growing and our use of electricity was expanding. The expanded output was attained by productivity increases in existing reactors and the arrival on line of new reactors that had been in the pipeline. What is happening now is that governments in most countries have a fresh commitment to the nuclear option. The United States and Britain are prime examples. The Bush administration’s new energy legislation has provided start-up incentives for a new generation of reactors. The Blair government spent several years trying to find a viable formula for massive reliance on wind power and other so-called renewables. Predictably, this proved futile as an overall solution. Britain continues to subsidize renewables, but this year the government made a firm and clear commitment to nuclear energy as part of the future British portfolio of fuels.

EA: Where does the rest of Europe stand on the promise of nuclear power?

Public opinion has moved away from the anti-nuclear taboos that prevailed in the final two decades of the 20th century. Similar trends are evident right across Europe. Swiss voters have twice rejected new curbs on their country’s nuclear-power program in recent referenda. Belgium and the Netherlands have reversed plans to close nuclear facilities. In Sweden, as a result of the educational effects of a prolonged national debate, the public has now become one of the strongest supporters in Europe of the expanded use of nuclear energy. In Germany, where nuclear policy became hostage to the Green party’s pivotal position in the Green-Social Democrat alliance, the government adopted plans to phase out nuclear power by 2020. But the new conservative chancellor, Angela Merkel, would like to reverse course and expand nuclear energy. Since she has to reckon with the Social Democrats, her junior coalition partners, she will have to wait for the right political opportunity. In Ukraine, scene of the world’s worst-ever accident with civil nuclear power at Chernobyl, the people and the government are solid supporters of additional nuclear power, which they view as a safe, affordable technology that can reduce their dependence on Russian gas. Bulgaria has just announced an order for a new reactor from Russia. Romania is building a nuclear plant. The three Baltic states have created a consortium to build and share new nuclear power. Nuclear energy is well-entrenched in the Czech Republic, Hungary and Slovenia. In Europe only a handful of countries – Austria, Denmark and, for the time being, Italy (which has to import nuclear-generated electricity from France), plus a diehard fraction of the German electorate – are resisting what is increasingly a collective recognition of the need for nuclear to be a big part of the solution to climate change. These countries are an anomaly.

EA: How do you explain this turnaround in attitudes and policy? Are you saying that it is due to hopes that nuclear energy is the answer to the problem of global warming?

A major shift has certainly occurred, and it comes partly from the spreading realization that we face an ominous and potentially overwhelming environmental challenge. That has stimulated new thinking about nuclear power, including among many environmentalists, because nuclear reactors can meet rising energy needs – on the scale the planet is going to need – without emitting greenhouse gases. Given the scale of the challenge – and people like me see climate change as the biggest collective challenge in our history as humankind – I believe that any rational response to global warming must include recognition that we must embrace, stimulate and manage an exponential expansion in our use of nuclear energy. We need more energy, much more, and we need to get it cleanly. Nuclear meets this dual challenge.

Notice that I say “include” nuclear because my advocacy of this technology does not mean excluding everything else and trying to get the world to rely on nothing but nuclear. It doesn’t blind me to the arguments in favor of alternatives such as wind power or, for that matter, energy conservation. These approaches have their uses, but only as far as they go. People should understand, rationally, that “energy saving” or “renewables” cannot do the job in trying to take the planet forward safely. Even in combination and even under the most optimistic assumptions, the renewables simply cannot meet the problem on the scale that we have come to understand.

Non-nuclear alternatives, while good up to a point, all have major drawbacks when it comes to deployment on a large scale. Clean-coal technology has not been developed and proven: if and when it is, it can be expected to be expensive. Wind and sun power probably are appropriate in some limited applications, but they are not constantly reliable. There are times when they don’t work, so they have to be backed up by other power sources. Then the question becomes how clean, how reliable, how expensive is the back-up power? If it’s non-nuclear, then it will be dirty, i.e., carbon emitting. And that brings us back to the argument favoring nuclear. There are places where wind can work: Denmark, for example, can invest heavily in wind because when it needs more electricity, neighboring Norway can simply release more water from its dams and pass along electricity generated by hydropower. In sum, the renewables are limited answers to huge problems of getting lots more of what we call “base load” power for our electricity grids. As we search for ways to wean our economies off carbon-emitting fuels, renewables help. But in any foreseeable future, they will inevitably be a junior partner to nuclear in producing clean energy.

EA: Many voices in the U.S. and in the EU are enthusiastically evoking bio fuels as a possible panacea for the current energy crisis because they are clean and can be home-grown as “energy crops.” Sweden, for example, has announced a bid to use bio fuels to entirely replace oil and gasoline in its fuel economy. Is there scope for U.S.-EU cooperation here?

It remains to be seen whether these bio fuels actually constitute a long-term contribution to a sustainable strategy for clean energy. If we look at the underlying causes of the climate crisis, we see two principal elements: one is the explosive growth of carbon emissions, but a secondary and not insignificant one is the shrinkage of “carbon sinks” as the world’s forests get converted to farm land. This switch greatly reduces the carbon-absorption ability of the planet. Already, half the world’s forests that existed at the start of the last century have been converted. It’s another example of the limits on “renewables.” Bio fuels to power tomorrow’s vehicles can sound attractive, but their wide use would run up against two realities. The first is the limited amount of additional farmland. The second constraint, more conceptual, is that clearing woods to plant these crops actually heightens our vulnerability to amassing more greenhouse gases in the atmosphere. In contrast, energy from uranium (of which we have a limitless supply, including untapped sources in the seas) can power batteries or cleanly make hydrogen for emission-free fuel cells for transport on an unlimited scale.

EA: And what about the other basic question we mentioned before: Why is public opinion now starting to see this?

Several factors explain the shift in perceptions. There is the environmental imperative, which is spreading awareness that we need to drastically cut greenhouse gases, that we are yet not doing it, and that nuclear power can help do it because nuclear generation does not release any greenhouse gases or other harmful emissions. (ge smoke emerging from reactors’ tall cooling towers is water vapor that contains no emissions or any radioactivity.)

Another part of the answer is energy security. When a country has a nuclear power plant, it avoids pollution and it also avoids part of its need to import energy. This realization is dawning now because the overall energy picture – environment, costs, supply security – was tilted during most of the last decade. Many countries made a “dash to gas” at a time when natural gas seemed cheap and reliable, adaptable and relatively clean as a fuel for generating electricity. True, gas is cleaner than coal (but it still emits greenhouse gases that nuclear does not), but the other assumptions about gas have shattered as prices have spiked dramatically in the last two years. (In contrast, uranium, the nuclear fuel, is comparatively cheap, stable in price and mined in reliable supplier countries.) The gas-price surge has doubled electricity bills for homeowners and businesses in many countries. In addition, the recently demonstrated readiness of Moscow to turn off the tap on its gas-export pipelines has given Europe a foretaste of what its energy dependence can mean in terms of vulnerability. Russia supplies more than a quarter of the gas consumed in EU states (where gas is the second most important fuel) and more than half the gas consumed in Central and Eastern Europe. (Illustrating Europe’s overall dependence even more dramatically, the European Commission has reported that Europe imports more than the total amount of energy it consumes, and its rate of net dependence is set to rise to 70 percent. In contrast, the U.S. rate is less than 25 percent.)

So pocket-book pressures about energy’s cost and reliability, as well as environmental pressures, are contributing to this groundswell of renewed public and political acceptance of nuclear energy.

EA: Does this trend have a Transatlantic dimension in the sense of having particular impact and potential for the EU and the United States either separately or as partners?

In some senses, the U.S. and Europe are lagging in this worldwide trend toward much more reliance on nuclear. The Atlantic community retains technological leadership, but other nations, particularly in Asia, are moving ahead more aggressively to meet their faster-growing energy needs. India has an enormous construction program under way and has announced plans for hundreds of new reactors. These plans will probably be accelerated as the long overdue deal goes through to lift the restrictions on international nuclear commerce with India. China has similar big ambitions to expand its nuclear sector from the current handful of reactors to hundreds by mid-century and probably well over a thousand by the end of this century.

In the EU, the European Commission resembles many other international institutions in often having de facto dragged its feet in recognizing the need for nuclear power. All these international bureaucracies were prone to be intimidated by Green lobbying. At the Commission, nuclear energy too often became a hostage to commissioners for the environment, with their Green-influenced views, while the commissioners for energy or finance were often neutralized. Now, this anti-nuclear tilt in the Commission is visibly changing. To some extent, it is being softened by the widespread support for nuclear energy in the new member states in Eastern Europe. More importantly, the new pressures I’ve mentioned about energy security have pushed the issue to the top of the EU agenda. Of course, the EU has no “common energy policy” and decisions remain national. But the Commission has influence, and I read with interest a speech on an EU energy agenda given by President Manuel Barroso in Lisbon in October. He said:

“For those that want it, there is nuclear energy. It is for the Member States, not the Commission, to decide on whether they use nuclear energy. But the Community can make a contribution to those that want, for example on research and on safety. We cannot hide from the issue. A debate on nuclear energy in Europe should not be taboo.”

Such forthrightness represents a new realism among EU Commissioners.

EA: Mr. Barroso has also called for a “strategic dialogue” with the U.S. on energy. Do you see much that can be achieved there on civilian nuclear energy?

I’m not convinced that a great deal can come of this in concrete terms beyond some cooperation on R&D and perhaps some useful emulation. We already have good cooperation on safety through the World Association of Nuclear Operators, in which plant operators visit each others’ installations for peer review on safety practices. (WNA strongly supports WANO, and works jointly with WANO to sponsor activities of the World Nuclear University.) But on changing the nuclear landscape, the major developments are going to be commercial and, to the extent they’re international, bilateral. For instance, Finland bought its new reactor from a French company. More broadly, take the fact that some European countries, mainly France, have maintained the practice of reprocessing spent nuclear fuel to re-use some of the emissionable material and reduce the amount of highly radioactive waste. This European support for reprocessing played a role in influencing Washington recently to drop longstanding U.S objections to this practice. The American view was that the technology had an undesirable by-product, plutonium, which can be diverted to weapons, and the technology was abandoned in the U.S. But various factors – including a desire to provide a fully-supervised international system for handling the full nuclear fuel cycle – have induced the Bush administration to drop U.S. opposition and turn to France to import some pilot technology as the U.S. starts developing its own plans for safe reprocessing. So, industrially, there is a lot of Transatlantic cooperation. (Areva, for example, is the largest single supplier to U.S. nuclear power facilities.)

But, in practice, there is a gulf between the U.S. and the EU in their basic approaches to the current crisis of energy and the environment. Put simply, European governments put their primary emphasis on regulatory measures as a solution to the problem; in contrast, the U.S. sets store in the ability of technology and innovation to meet the challenge. As a result, Europeans look to energy-saving, including a possible carbon tax – an idea that is being vigorously resisted in Washington for the moment. The Bush administration, after rejecting the Kyoto protocol on cutting emissions, still has not come forward with its own ideas of what should come in Kyoto’s place (or, more practically, what it suggests for a “post-Kyoto” regime starting in 2012). Instead, Washington has launched what it calls “the Global Nuclear Energy Partnership” that calls for cooperation with nations such as France that have advanced civilian nuclear energy programs. GNEP envisages new technologies (such as new forms of reprocessing) and an effort to get nuclear power to developing countries. Very controversially, it calls for guaranteed fuel supplies to countries that agree to forego national uranium enrichment and reprocessing activities and to rely instead on a system of regional repositories under international supervision that guarantees fuel supply and takes back spent fuel.

EA: So what is actually occurring on these issues among the U.S., the EU and other nations interested in nuclear energy?

There are two main initiatives. One is a dialogue aimed at ensuring that world security is not diminished by the global nuclear renaissance, which is clearly underway. Essentially, these are efforts aimed at preventing the proliferation of nuclear weapons, and their key focus is the technologies of enrichment of nuclear fuel, the reprocessing of nuclear fuel and the security of spent-fuel disposal. The core idea here – put forward by the IAEA and by the Bush administration and supported by key European nations – is to create regional centers to handle these technologies so that they can guarantee all other countries’ needs for reactor fuel (and for its disposal) while cutting down any risk of opening access to missile material for weapons to countries that do not already have them. This approach is included in the Bush administration’s Global Nuclear Energy Partnership initiative.

In reality, these discussions are going to run up against a hard wall. That is resistance to the idea on the part of key developing countries that want to be full players in the nuclear cycle and feel that they have a perfect right to do so. Countries in the category include Brazil, Argentina, South Africa as well as Australia, which are considering their broader participation in nuclear commerce. These countries have legitimacy under the Nuclear Non-Proliferation Treaty to do this and, where they are concerned, their doing so would not jeopardize world security. So the idea of getting a vast global solution to cure a limited number of problems, as represented by North Korea or Iran, may prove easier said than done.

EA: So you are not very optimistic about the international community’s chances of creating a new regime redefining what had come to be accepted as the rights of NPT-signatory countries to have a full nuclear fuel cycle of their own. What is the other big international dialogue under way?

It concerns ways to actively promote nuclear energy and here I think there is a very limited role for government. Whatever your general views about the potential value or risk of government intervention in our nations’ lives, the main thing that governments need to do now about the current nuclear surge is to get out of the way. Right now, the great international development institutions are in the way of the surge because they are de facto opponents of nuclear power. They avert their eyes when the word “nuclear” comes up and so they are busily promoting all sorts of alternative energy strategies and ignoring nuclear, the one technology that actually stands a chance of meeting the world’s clean energy needs in this century.

We need – and I’m hoping we’ll get this from the new UN Secretary General – is a shift so that the entire UN system recognizes and acts to embrace the indispensable importance of nuclear energy as part of a viable strategy for sustainable development. The World Bank needs to get its head out of the sand on nuclear energy’s value as a good investment in clean-energy development in the nations of the South. I’m not talking about some form of major inter-governmental collaboration to support nuclear power. But there does need to be a moral and political embrace of this nuclear necessity and the elimination of all the de facto obstacles that remain in the way – psychological, political, institutional obstacles to recognition that nuclear power must and will be a growing part of our future energy portfolio.

There is a role for governments in tackling the energy crisis if they can start moving toward a global system of emissions-trading. The EU has started one, which is having teething problems. It is modeled on a very successful U.S. model formed to deal with acid rain by creating market incentives for companies to find ways of reducing their polluting emissions and getting “credits” for it – credits that can then be sold to continuing polluters. The Bush administration has shied away from copying this system for greenhouse gases because it involves imposing a “cap” on emissions to make a market for trading credits. That amounts in practice to a carbon tax. Significantly, some groups of states in the U.S. are trying to set up a regional system of this sort. All these efforts point to the likelihood of some sort of carbon tax in future and that makes nuclear energy even more attractive economically.

EA: So you see technology combined with regulation – emissions trading, for example – as the formula for achieving the environmental goals that are part of the new definition of energy security. What would your program be?

On global warming, the first necessity is to create a truly comprehensive global regime on climate control that would incentivize all countries to invest in clean energy: this would need to be a regime that covered all countries and used the marketplace mechanisms to reward innovators and entrepreneurs and managers who found ways to cut back on carbon emissions. This is an incredibly ambitious diplomatic goal, and we probably lack the international political will and collective wisdom to put it in place. Look at the problems of the Kyoto accord, which was much more limited in its aspirations in every dimension. But if we could just put the quest for a new, truly global accord and trading system on the international agenda, it would be a major step forward. Just the fact of an on-going negotiation aimed at these goals would send strong political signals and create economic incentives favoring efforts to bring about a worldwide transformation to clean-energy technology.

EA: You confidently predict that nuclear energy will be a major element in such a transformation. But a great many people insist that the nuclear industry must first solve the problem of permanently disposing of its highly radioactive waste. Isn’t that a major hurdle?

There is a great distinction and difference between where science and politics are on waste disposal. Scientists are satisfied that a well located and well constructed geological repository for underground storage of waste is a sound, long-term solution for nuclear waste. (By the way, nuclear waste is physically very small and very manageable compared to carbon-linked gases that are now being released freely into the atmosphere.) We have the science, and now we need to convert that concept into reality by doing it. Some countries have already gone through the process of getting democratic consensus to do it. Finland, Sweden and the United States have sites in advanced stages of development. So does Russia. France has said it will start soon, and Britain has just announced it will, too. Once a few repositories are operating, it will essentially end the issue as a political debate by demonstrating that it is not a question of whether or not this can be done but simply a question of doing it correctly.

EA: What about the cost of nuclear energy? Economics was a factor that induced many utilities to move away from nuclear power in the 1980s. How does nuclear compare to rival fuels now?

It is now accepted on all sides – except for doctrinaire anti-nuclear militants – that nuclear power has become economically viable. The new report from the IEA concluded that nuclear power is cheaper than gas and just as cheap as coal. And those figures are calculated in the absence of carbon taxes that penalize fossil fuels, including natural gas. Most planners, including those in industry, are convinced that carbon taxes are inevitable. Even the United States may move in that direction once Europe imposes such taxes that will affect U.S. holdings in Europe and put a premium on reducing carbon emissions. Developments in this direction make nuclear power even more competitive economically.

An earlier report by the IEA, in conjunction with another OECD body, the Nuclear Energy Agency, found that the lifetime costs of a nuclear plant made it cheaper over two decades than coal or natural gas. Since then, the price of fossil fuels has risen sharply while uranium prices have remained stable. (Specialists can consult the report to see the basis for these calculations, which prices nuclear at just under four U.S. cents a kilowatt hour and rates it consistently as less than its rivals.)

A WNA study completed last year identified some causes for the improved economics of nuclear. Cost reductions have occurred in all aspects of nuclear economics: construction, financing, operations, and waste management and decommissioning. The industry is embracing new financing techniques and standardized reactor designs offering shorter construction times and better operating efficiencies. It is achieving more generating efficiencies and longer plant lifetimes – improvements that go hand in hand with enhanced safety.

The U.S. and some EU governments are taking steps to jump-start nuclear revivals in their countries with incentives for the new programs. But these are one-time help for the few “first-movers”: they are not subsidies and do not alter the fact that nuclear is economically competitive with other big sources of energy and likely to become more so.


This article was published in European Affairs: Volume number 7, Issue number 3-4 in the Fall/Winter of 2006.