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Is Britain heading back to a nuclear future?
By
Euan Stuart
Nov 07, 2005
At MoneyWeek, we’ve been fans of nuclear power and uranium as an investment for some time, despite the fact that it has remained firmly in the political wilderness in the UK. Now, though, the political climate appears to be changing. Nuclear power is firmly back on the agenda, says The Economist. The Government is believed to be warming to the environmental attractions of this carbon-free source of electricity. Tony Blair initially promised a decision on it by the end of this parliament and more recently the energy minister has proposed making a decision by the end of next year.
To think that, just a few years ago, nuclear power seemed finished, says Geoffrey Lean in the Daily Mail. Only 8% of the worldwide nuclear capacity that nuclear fans predicted would be online by 2000 was ever built: new reactor construction peaked 30 years ago and had practically come to a halt by the turn of the century. Of Europe’s existing 200 nuclear plants, only six have been built in the past two decades and no new reactor has been ordered in the US since 1978. And in the UK, we have just a dozen nuclear power stations in operation (there were once 19), all but one of which were slated for closure by 2023, says the FT.
The UK government is not the only one busy U-turning on nuclear. Planned Swedish and German shutdowns are on hold, France and Finland are planning new atomic stations and George Bush is keen to restart construction in the US. The emerging economies are even keener: 55 new reactors are being planned in China, Russia, India, Japan and South Korea.
The reasons for nuclear’s new-found popularity are clear. In the UK, for example, natural resources are becoming scarcer, and the Government’s plan to see 20% of the nation’s power come from renewable energy by 2020 is looking as unlikely as the economy hitting Gordon Brown’s GDP targets (currently the level is only 4%). So something is needed to fill the gap. And most countries are already struggling to meet their Kyoto agreement commitments to cut greenhouse gas emissions, so if the UK wants to have any chance of complying, nuclear power is one of the few viable options. The other point currently in nuclear power’s favour is its cost. Historically, it has been something of a “money pit” (British Energy, which operates Britain’s newest reactors, had to be bailed out by the Government only two years ago), but today producing atomic energy has become cheaper, thanks to simpler reactor designs such as those being used in South Korea and China’s large-scale nuclear programmes.
None of this is to say that the march toward nuclear power will be pothole free in the UK. There is considerable opposition to the idea from activists and from inside Government itself. Environment secretary Margaret Beckett has been strongly against it in the past and Gordon Brown and the Treasury are sceptical regarding the subsidies needed for new reactors to be built. Stephen Twigg, former education minister and now head of the Foreign Policy Centre think-tank, talks of nuclear energy being a “puffball skirt” Ð a costly fashion mistake, says The Scotsman. Still, if the UK wants to avoid an energy crisis in the coming decades, it is unclear what the critics think an alternative solution might be. It seems to us that it is not a matter of if, but of when, new power plants will be approved here.
Published in Investment-Advice
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