December Newsletter No195

Posted by SONE on 30 December 2014 in Newsletters

Old king coal remains centre stage

Ten years from now Britain will no longer be generating electricity from coal – not even coal from other countries – if the Liberal Democrats have their way.

An industry which dominated the UK energy scene for centuries and with a post- war workforce large enough and powerful enough to challenge the authority of Prime Ministers will be no more. Old King Coal will have lost his crown.
And six years after that we will have a totally carbon-free electricity supply in Britain – not only no coal but no oil and no gas to generate electricity and support the intermittent renewables when they fail to deliver. That’s if the Labour Party has its way. Ed Miliband said so this month.

As a nuclear energy supporter I might be expected to applaud the Lib Dem and Labour Party policy objectives (even more need for nuclear) but I can’t. If implemented it will be confusion which reigns in place of Old King Coal not an energy resource. Just look what happened to previous forecasts.

Ten years ago oil demand was expected to increase dramatically and prices continue to rise. The global warming debate had hardly started and Old King Coal looked set to remain centre stage. Instead oil demand and prices have fallen sharply as the Chinese economy sinks to its lowest point for 40 years and the American oil fracking revolution takes hold, leading the US to import less oil and to off-load surplus coal cheaply. As a result the price of oil had slumped to 70 dollars a barrel by the end of last month – a fall of 30 dollars in 12 weeks – and coal prices are falling, too.

Devoting much of this article to coal, with a nod towards oil, gas, bio and renewables, may seem illogical for a nuclear energy supporter but I believe that what happens to the fossil fuels will have an important bearing on what happens to nuclear, particularly the time scale for its introduction, and on the competitive strength of the UK economy.

Britain’s green energy dilemma

While all this turmoil is going on in the oil markets and Britain anxious to add to it by fracking we are also stuck with the consequences of the greening policies brought in by politicians who put their faith in crystal balls, windmills, sun traps and central Government planning rather than the market.

It all started some seven years ago when Tony Blair negotiated a highly expensive European target for the generation of electricity by renewables at his last Eoropean Council meeting in 2007. Ed Miliband’s influence on energy policy during his time in government continued a process which has led to virtually all forms of electricity generation receiving subsidies even when, as in the case of nuclear, the industry didn’t even ask for them.

As a result Britain no longer has a real energy market and we have seen the biggest expansion of State power since the nationalisation programme of the 1940s and 1950s, with the cost of the front end of the electricity generation process now largely determined by politicians.

The forecast that Old King Coal’s reign will come to an end by 2024 came from the Climate and Energy Secretary, Ed Davey, at the Liberal Democrat party conference. He told delegates that if his Party is in Government after next year’s General Election – a big if – “we will legislate to ban the generation of electricity from coal.”

No ifs and buts, no hedging of bets, no room for the “cleaner coal” technologies now being developed. Coal is to be banned, he said, a proposition which deserves further study, politically, practically and environmentally.

Politically, the Energy Secretary can’t be so deluded as to think that the Lib Dems will be first past the post in next May’s General Election. So we must assume that he believes he can persuade the Conservative Party or Labour Party to do his bidding (and the Labour Party just might) if we end up with another coalition government which includes the Lib Dems – another big if.

I have long felt that we should do without coal, having lived through the post- war smogs caused by it, smelt the stink from coal-fired gas works and realised it was killing thousands of people inside and outside the coal industry. I’ve been down a coal mine as a journalist and been horrified at the conditions men worked in, even in the show piece coal mine I was meant to admire.

Earlier this year the Guardian maintained that emissions from our coal-fired power stations of nitrogen dioxide, sulphur dioxide, particulates and mercury are still causing some 1,600 deaths a year in the UK. Half that and it would still be far too many. But it is one thing to want King Coal deposed and another to kick him off his throne before we are ready to replace him.

How sure are we that replacement fuels will be found in time? What will it be? Gas, oil, nuclear, renewables? Mr. Davey is thinking gas and stated at the Lib Dem conference that he would “rather use our own gas than Putin’s gas or even Middle East gas.” He didn’t say where this indigenous gas would come from. North Sea gas is a diminishing asset so he can only be thinking of the carbon producing products of fracking, augnmented by imports, despite Putin’s bellicosity.

“We will need gas as a bridge to a zero fossil fuel future” he acknowledged “at least for the next two or three decades. That’s reality.” But reality went out of the conference hall windows later when he turned on his Conservative colleagues in the Coalition government.

Fracking all over the land

“ I have had to hold back the Tories desire to frack every square mile of Britain,” he said. “Ensuring that gas exploration is safe. Protecting national parks, areas of outstanding beauty and world heritage sites. Stopping a Tory free for all on fracking”

Somehow the Conservative Party’s plan to frack every square mile of Britain has escaped the attention of the energy, environmental and scientific communities and writers. No matter. Oil and gas from fracking is going to be very important if imports are to be kept to a minimum.

There is already something of a clamour for the Energy Secretary to acknowledge that coal, cleaned up, will continue to be needed and that some of the newer and better coal-fired power stations will need to be moth-balled, just in case they have to be brought back into service in a hurry.

Mr. Davey has indicated that he sees a role for some of these stations as incinerators of bio fuel (for which read wood chips), mainly imported from the United States. A start has been made with bio fuel at the Drax coal-fired power station at Selby in North Yorkshire, which has been converted to run half of its output from trees cut down in America.

The environmental credentials of this material are to say the least dubious. The wood chips have to be of a certain quality (which will be difficult to guarantee), they have to be brought to the UK in diesel-powered ships, adding to emissions en route, and produce more CO2 when burnt.

Not everyone likes the idea of the UK importing wood from the States either. Sixty American scientists have written an open letter to Mr. Davey begging him to change the policy and stop denuding their forests.

The big burners

Since the year 2,000 global coal consumption has grown faster than any other fuel with the five largest coal users being China, the USA, Russia, Japan and India.

Around 7 billion tons of coal were used world-wide last year, of which less than one per cent was burnt in UK coal-fired power stations. In all, what the Lib Dems say they intend to do would have a peripheral impact on the amount of coal burned world-wide. The fact is that some countries intend to reduce coal based CO2 emissions, or so they say, and others to increase them.

An agreement was reached recently between China and America to address climate change, with the objective of trying to encourage others to promise to reduce emissions in time for a grand statement of intent at a climate change summit in Paris at the end of 2015. The US – China deal has been described by the International Energy Agency as “a giant leap for mankind.”

“Mankind” presumably covers every country on this planet and far from every country making a giant leap forward some important, less developed countries are planning to step back from all the talk about emission reduction targets, which they find it impossible even to contemplate.

Under the US-China deal by 2025 America aims to cut its carbon dioxide emissions by more than a quarter compared with the levels they were at in2005. The US may well, of course, simply export its surplus coal and its pollution to countries which plan to increase coal-fired generation.

The Chinese have simply promised that by 2030 emissions from China will start to fall and hope that by that date a fifth of its energy will come from zero- carbon sources. We will see. As things stand it is still building new coal- fired power stations at an extremely rapid pace.
Russia holds the world’s second largest coast reserves, estimated at some 170 billion tons, yet it currently produces less than 15 per cent of its power from coal. It plans to increase this proportion though and to more than double coal exports to Asia to an annual 85 million tons by 2030.

With Japan’s nuclear reactors awaiting final safety clearances in the wake of the Fukushima accident Japan has been forced to burn more coal as well. It sees coal as a long-term electricity source alongside nuclear energy while showing little interest in “green energy”options India will remain heavily reliant on coal for the foreseeable future and plans to increase its use. It has made it perfectly clear that it won’t sign any climate deal that threatens its economic growth and the country’s environment minister has branded poverty as the worst kind of environmental disaster.

The obvious replacement for coal is, of course, nuclear energy. It always has been, since the day the 30-year old Queen opened the world’s first nuclear power station Calder Hall, on October 17, 1956. At the opening ceremony R.A. (Rab) Butler , the Lord Privy Seal, speculated that by 1965 every new power station which was built would be nuclear. Sadly that didn’t come about.
Instead we had decades of dithering by successive governments which accepted the dubious arguments against nuclear made by a well-organised Green lobby which chose to turn a blind eye to the environmental ravages caused by burning coal and settled for what they saw as a softer target, nuclear energy, an industry employing fewer voters than coal did then.

Friends of the Earth even invited Arthur Scargill, the firebrand leader of the Miners Union, to speak at an anti-nuclear rally held in Trafalgar Square in the late 1970s, effectively giving coal an environmental seal of approval. Bizarrely, Tony Benn, meant to represent all of the energy industries in the Cabinet, popped round to listen and support his friend Arthur, hiding away round a corner so not to be seen.

If all goes well Hinkley Point C will come into operation in 2020, supplying some seven per cent of the UK’s electricity needs and there may be other new nuclear stations coming on line about the same time, although others will have been retired. But nuclear is a base load fuel, not to be switched on and off continually. It’s the fossil fuels which are needed as to act in a support role for the renewables, and even then at some cost in terms of expense and mechanical damage.

In any case the Hinkley Point C development is only four years short of the deadline set by Mr. Davey for halting coal-fired generation, which currently provides nearly 40 per cent of our energy needs. With the best will in the world I cannot see nuclear bridging a gap of that size on that sort of time scale.

Wind out of their sails

Although the Conservatives are not covering every acre of land in Britain with fracking equipment it has most definitely signalled that it’s had enough of spreading wind turbines far and wide across the countryside.

Eric Pickles, the Tory Secretary of State for Communities and Local Government, has really upset the Lib Dems. He has intervened in 53 wind farm projects, calling in the applications so he can make the final decision. He has published 25 decisions so far, with 22 rejected and only three approved. The fact that some are being approved is still a worry – we should be thinking of culling the contraptions, Dale Vince, who owns 60 turbines spread over 17 wind farms, is very annoyed with Mr. Pickles and has said that he won’t apply to build any more in England. I can’t say that worries me over much.

He and his wind turbine manufacturing colleagues have had a good run already. As it is, green levies on household energy bills will triple over the next five years according to the Insitute of Fiscal Studies to nearly £10 billion as the number of wind turbines increases. Illogically, the Treasury will benefit. Revenue from levies such as the Renewables Obligation, feed-in tariffs, the Warm Homes Discount and the Carbon Reduction Commitment is expected to grow from £3.6 billion last year to £9.9 billion in 2019-20.

Nevertheless, Britain has made a start in getting to grips with wind farm proliferation.The rest of Europe would clearly love to leap off the renewables treadmill, too, if it could, even Germany, which helped Britain to get it going. This summer Germany passed a new renewables act which slashed taxpayer support by a quarter for solar and wind energy and Britain has been doing much the same, although less drastically.

Caught out by the world-wide upheaval caused by the effects of American’s shale gas boom, Germany has turned to coal, the fossil fuel it once condemned. Often touted as a renewables role model, Germany now has eight coal plants under construction or in development and electricity from lignite is at its highest level since German reunification.

Maxatomstrom, with a mission to promote nuclear energy solely for environmental reasons, launched what it called Germany’s first nuclear power plan at the start of the UN Climate Change Conference in Lima, Peru, this month. The plan calls for a nuclear renaissance in Germany and no more coal fired power station expansion, citing support for such a policy from a raft of distinguished scientists and environmentalists. As yet the German nuclear renaissance is just an ambition, of course. Other countries have firmer plans.
The World Energy Outlook 2014 produced by the International Energy Agency suggests that policies concerning nuclear power will remain an essential feature of national energy strategies “even in countries which are committed to phasing out the technology and that must provide for alternatives.” So maybe there is hope for the Germans yet.

The WEO’s central scenario indicates that global nuclear power capacity will increase by almost 60 per cent from 392 gigowatts in 2013 to 620 GW in 2040. But don’t get too excited.

Nuclear’s share of global electricity generation, which peaked almost two decades ago, is expected to rise by just one percentage point to 12 per cent because of the “unprecedented rate” of decommissioning planned for older power stations.

Such growth as there is will be concentrated in just four countries it is thought – China, India, South Korea and Russia. Of the anticipated growth in nuclear generation to 2040 China accounts for 45 per cent while India, South Korea and Russia collectively make up a further 30 per cent. Generation increases by 16 per cent in the US, recovers to some extent in Japan and falls by 10 per cent n the European Union.

I find it encouraging that the WEO does not make global warming part of its case for more nuclear energy. “Nuclear plants can contribute to the reliability of the power system where they increase the diversity of power generation technologies in the system,” the WEO says. “For countries that import energy it can reduce their dependence on foreign supplies and limit their exposure to fuel price movements in international markets.” Just so.

The size of the decommissioning challenge is made abundantly clear in the WEO report. Nearly 200 of the 434 reactors that were operating commercially at the end of 2013 will be retired by 2040, it suggests, although matching supply with demand is not going to be easy and I wouldn’t be surprised to see the life-times of some of them extended. The vast majority of the reactors to be shut down will be in the European Union, the United States, Russia and Japan – not surprising as they were the first to develop a civil nuclear power infrastructure.

The challenge for the industry will be to manage this unprecedented rate of decommissioning, while also building substantial new capacity to match that lost as a result of the closures. The pressure on skills and resources is going to be immense.

The WEO report estimates the cost of decommissioning plants that are retired to be more than $100 billion and warns that “considerable uncertainties” surround this figure, reflecting the relatively limited experience to date in dismantling and decontaminating reactors “and restoring sites for other uses.”

I’m not sure what is meant by making sites available for other uses, which needs to be defined in terms of the level of clearance required for a particular use. Experience has shown, certainly in Britain, that it is existing nuclear sites which are likely to be where new build projects take place not virgin parcels of land. There, with on-going nuclear industry use, it is surely not necessary to wipe the slate completely clean.

A major consultation exercise

These are issues which may well be raised during the public consultation exercise which the UK’s Nuclear Decommissioning Authority (NDA) has just begun on its draft business plan, covering its ideas on how the country’s decommissioning challenges might be met over the next three years.

The 53-page draft business plan covers the period from April next year to 31 March 2018. It sets out key objectives and expected progress for 17 of the NDA’s sites, which include the first generation Maxnox reactor sites, research and fuel facilities and the Sellafield nuclear complex. The plan also provides a 20-year review of future activities right across the business, which is very big business indeed.

The NDA says it plans to spend £3.31 billion ($5.17 billion) in 2015-2016 alone, of which £2.09 billion ($3.27 billion) will be financed by the UK Government and £1.22 billion ($1.91 by income derived from commercial enterprises.

The consultation will close on 30 January, after which the NDA will revise the plan as appropriate and subject to final approval by government the NDA expects to publish the final version in early April. That seems an extremely challenging target to me. With 53 pages of material to go at there is ample chance for obfuscation if people are so minded. Nevertheless, the NDA is to be applauded for its initiative.

So is the Government, for its initiative in signing a co-operation agreement with NuGen “to promote external financing” for the Moorside nuclear power plant in Cumbria. In my view the possibility of a full blown renaissance of nuclear energy in Britain went up a notch with this move by the Treasury. The agreement is designed to help NuGen gain access to the UK Guarantee Scheme, introduced four years ago to support infrastructure projects seeking finance and investment.

NuGen plans to build three Westinghouse AP1000 pressurised water reactors at Moorside by the end of 2026, with a total capacity of 3.4 GWe. The first unit is expected to begin operating by the end of 2024. Moorside would be the first site in Europe to host the AP1000, eight of which are already under construction in the US and China.

The Hinkley Point C project was accepted into the Guarantee Scheme recently and a co-operation agreement similar to that just signed with NuGen was signed between the Treasury and both Hitachi and Horizon Nuclear Power in relation to their Wylfa Newydd nuclear power plant last year. The importance of the Guarantee Scheme was underlined by the Chancellor, George Osborne, when the Moorside move was announced.

“Investment in a new generation of civil nuclear power is part of our long- term economic plan to provide Britain with the energy it needs for decades to come,” the Chancellor said. “We’ve already done a lot to support new investment through our changes to the planning regime, the generic design approval process and reforms to the electricity market. The Guarantee Scheme, designed to accelerate private sector investment is a crucial component of this project, and further reinforces nuclear as the lead technology in the UK’s low carbon energy revolution.”

And that is a positive note on which to end 2014. HAPPY NEW YEAR.