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Is it time for nuclear energy for Australia?
26 July 2013
By Professor Stefaan Simons, Director, UCL International Energy Policy Institute
BHP Billiton Chair of Energy
Many in Australia would say that the answer is a resounding “No!”.
Australia is richly endowed with non-nuclear energy resources. However, it really depends on what the objectives are in relation to Australia’s energy sector. Governments around the world are trying to balance the “trilemma” of providing their nations with security in energy supply, whilst maintaining economic growth and, at the same time, mitigating their impacts on climate change by reducing carbon emissions. Australia, despite its ample resources, is no different.
So, if we look at the three energy policy priorities, including nuclear energy in the low-emission energy mix could provide opportunities for all three. Certainly, nuclear energy is proven to be consistent and reliable, with a levelised cost of electricity similar to that of the lowest cost renewable forms of energy, because of its reliability (it has a capacity factor of 85-90% compared to, say, wind, at 25-30%). Hence, if the focus is on energy security in a carbon constrained economy, a market determined mix of nuclear and renewables could provide this, along with up to 55,000 new jobs for Australia.
In relation to economic growth, for Australia to have the capability to build, operate and maintain a nuclear energy industry would require significant investment in education and training to develop a highly skilled workforce with an ingrained safety culture. The spin-offs, however, could be significant, in relation to new investment in mining operations, service industries and advanced manufacturing.
To maintain energy security, investment in uranium conversion and enrichment facilities would allow Australia to fuel its domestic nuclear energy market. This would result in hundreds of further jobs and add value to a resource that currently is supplied to the international market as yellowcake at only around half of the potential fuel value. Whilst the complexities of the international market may make it hard to justify domestic conversion and enrichment facilities on export grounds alone, indirect economic benefits and energy security are another matter.
This brings us to climate change. Australia has set itself an unconditional target of reducing carbon emission to 5% below 2000 levels by 2020, and a longer-term, more ambitious target of 80% below 2000 levels by 2050. It was expected to achieve the former with a combination of domestic emission reductions primarily through a carbon price, and the purchase of overseas abatement credits. Whether it will achieve even the modest near-term target remains to be seen. Scenarios to achieve the longer-term target are heavily reliant on the large scale deployment of carbon capture and storage (CCS) on coal-fired power stations. However, to date, no such facilities exist anywhere in the world and the general indication is that economically-viable CCS is still a long way off, if achievable at all, and that it may well be only viable for a limited number of sites. So, if that is the case, what options are we left with?
It should be noted that the above targets were set based on a 2 degrees Celsius global average temperature rise and it is now widely accepted that we have already missed that boat. What should be our next target? 4 deg. C.? 6? Whatever we choose will result in greater economic hardships for all in the future. Adaptation plans are now being formulated – but adaptation will cost more in the long run than mitigation. Certainly we need to transition away from fossil fuels. However, it is difficult to see how a 100% renewable energy system could be achieved, given our current demands for energy and the migration of the human population to urban environments with very large energy footprints. We will need renewables and nuclear in order to meet the 80% target. Nuclear energy would displace coal burning power plants with significant carbon emission savings. In Australia, having 10 to 25 GWe nuclear energy capacity would remove one to three-quarters of Australia’s total electricity-related carbon emissions. The remainder could be avoided with renewable energy and energy demand reduction measures.
Such a transition will require policy certainty to encourage the necessary long-term investment. University College London's International Energy Policy Institute (IEPI), based at its Australia campus in Adelaide, undertakes economic, regulatory and policy research on how Australia could develop a nuclear energy industry and manage its externalities including decommissioning and waste.
The IEPI presented on the issue at the 2013 Australian Academy of Technological Sciences and Engineering (ATSE) conference, titled "Liberalised Electricity Markets and Long-term Capacity Adequacy". The presentation considers whether markets are impeding the effectiveness of energy-sector policies designed to mitigate climate change through long-term investment in low-carbon technologies. While it is intended that price “signals” should encourage investment in new capacity, long-term investment decisions appear to conflict with the short-term (i.e. instantaneous) nature of the market and may impede the effectiveness of climate policies. Measured policy interventions could be required for nuclear power to develop in Australia, such as long-term feed-in contracts and Government-backed loan guarantees that share the risks between the investors and consumers, resulting in a net welfare gain for the community.
Prof. Simons' article was published in The Conversation. See the full article 'Is it time for nuclear energy for Australia?'