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Nuclear energy: time to move ahead

A Note by the Director (Ditchley 2005/08)

24-25 June 2005

Ditchley experimented with a change from its normal format for this conference, which we called a “Workshop”.  The duration was restricted to 24 hours, from Friday to Saturday lunch time.  We designed the discussion to respond in particular to the potential need of the UK Government to start looking during the course of the new Parliament at the case for nuclear new-build.  The terms of reference asked participants to focus on, first, the economic arguments and, second, the political context and the considerations affecting public presentation.  The two working groups looked at these areas and reported back orally to the plenary. 

The expertise represented at the table was impressive, with the weight of opinion lying in favour of a nuclear role in the UK’s future energy mix and with the opposing arguments under-represented:  this was to some extent inevitable given the event’s design and should not be taken to indicate that the balance of opinion might not be very different if a broader spread opinion was tested.

The Workshop started from the assumption that the British Government would soon be setting in hand a comprehensive analysis of the country’s energy needs over the next generation and of the part which nuclear energy might play in this.  Almost all participants saw some urgency in having the question settled, given that the scheduled decommissioning of nuclear power stations now in operation would bring the proportion of electricity generated by nuclear in the UK down from over 20% to 7% by 2020.  The Workshop did not establish in any clear sense that maintaining a minimum of 20% nuclear in the UK’s energy mix was going to be necessary.  There were too many uncertainties at the moment both in the relevant data and in world prospects for that to be incontestable.  There was, however, widespread agreement that three factors in particular would act as leading criteria:  first, the need to take deliberate action to reduce carbon emissions;  second, the advantages for the UK in securing supplies without over-dependence on world markets and world events;  and third, the unpredictable future for world energy prices, now that it looked likely that the era of cheap hydrocarbon energy had passed.  As one participant put it, we should be careful not to underestimate the potential for nuclear energy to be cost-competitive in the future if we are leaving the low-cost energy world.  Many others agreed that nuclear was likely to maintain or improve its relative cost-competitiveness, while other forms of energy – particularly oil, gas and coal – would gradually lose theirs.  It was pointed out that in Sweden this had affected the public’s approach to nuclear energy.

None of these three factors were thought to be clinching arguments on their own.  Import dependency did not have to be a huge disadvantage if world oil and gas markets were working effectively and were not rigidly controlled by the producing countries.  Security of supply in pipelines and tankers was gradually improving, as was the diversity of supply.  Hydrocarbon prices were to some extent cyclical.  The scientific analysis on CO2 was not yet accepted universally as compelling.  Nevertheless, there was a majority feeling in this discussion that the uncertainties contained in these and other factors affecting the future were great enough for it to be sensible for countries with the capacity to do so to keep their sources of energy flexible and interchangeable.  When the advantages of nuclear energy as a carbon-free source were added, the case for maintaining at least the current spread seemed to be quite strong.  Many thought – with some strongly dissenting voices – that a reasonable target area for nuclear lay between 20% and 50%.

In considering the economic arguments, the Workshop looked briefly at the costs of nuclear waste disposal and combatting proliferation risks.  These certainly had to be added in and were factors affecting public opinion.  But most people believed that the downsides could be contained and that technologies and defensive methods would continue to improve effectively enough for the risks inherent in these areas not to be overwhelming.

Since the discussion was aiming to see the issue through governmental eyes, there were interesting exchanges on what approach Ministers should adopt.  There was a strong feeling that the provision of energy for electricity was a public responsibility and that it was one of the Government’s primary duties to supply energy to the country at an affordable cost.  Should Government wait for facts to become clearer or should it take a definite lead?  There was no doubt that widespread consultation was going to be necessary involving parliament, industry, scientific experts and the media.  The Workshop considered the question of whether an independent commission might be formed to lead on the analysis and to present what ought to be perceived as an objective case for or against nuclear new-build.  The working group did not go so far as to recommend such a commission, preferring instead to suggest a task force of acknowledged experts to go over the necessary ground.  Of the three possible reasons why Government might establish such a task force – to manage public opinion;  to look for actual energy solutions;  or to park the subject on the side of the road – a mix of the first two was thought to be sensible.  The discussion came back, however, to the question of urgency:  given the lead time for establishing public support for, designing, licensing and finally constructing a new nuclear power station (usually thought to be no less than ten years), if decisions were not taken reasonably soon the default result would be a diminished proportion of nuclear in the UK energy mix.  The Government therefore could not afford to wait for public opinion to crystallise in one direction or the other:  it would need to show some leadership in settling the issue within a definable period such as the lifetime of the current parliament.

In this context, we looked quite closely at the American experience.  It was pointed out that the George W Bush Administration had come to office with a prejudice in favour of more nuclear energy in the US mix.  The Administration had been prepared to take on an element of the political and economic risk, for instance in assuming the task of waste disposal.  It had then begun to formulate possible conditions for the participation of the private sector, with certain parameters and guarantees which were still being discussed.  UK participants thought that the United States was at least two years ahead of the UK in these respects.  It was clear that the UK Government had not yet taken up a position so markedly favourable to nuclear.  Nevertheless the American experience could offer some useful guidelines to the UK, should the Government decided to test methods of moving ahead.

The relative responsibilities of the public and private sectors were discussed in some detail, both in the relevant working group and in plenary.  Industry and the business voice was only partially represented at the table, but important points were made.  Utility companies had so far been satisfied that there was no drive for nuclear new-build.  They were now beginning to realise that a consistent policy on carbon pricing would be needed from the Government and that it would make sense to try to establish greater price certainty in the energy sector more generally.  These considerations might bring nuclear into the picture.  The capital cost of building a nuclear power station was obviously a major factor.  Very few energy companies would be able to manage it without help and the fact that some of these would be European rather than UK had to be fed into the equation.  If the UK was to be the site for new nuclear power stations, the circumstances would need to fit with the European experience so far.  Participants also thought that, if investors were to be attracted into the sector, the rationale would need to go broader than just carbon control.  Even with security of supply and price stability to bring into the argument, the attractions of investing in nuclear were still finely balanced.  If the Government wanted to promote nuclear more strongly, there would need to be incentives.  Others argued that the market might just have to be left to make up its mind:  that could be the criterion for whether nuclear was worthwhile or not.  For most, however, the nature of the nuclear sector and the example set by the recent US experience suggested that Government would have to take deliberate action to offer incentives.

The issues of justification and licensing also needed to be considered.  It was pointed out that justification and site selection were two different processes, with separate sets of EU regulations.  Every power station would need to go through a process of overall justification.  Then site selection would follow, perhaps with a greater degree of pragmatism.  Whatever the actual requirements, Government would need to be clear about what its interventions would actually amount to.  It would also have to accept that the political risk of energy supply was not transferable to the market in its entirety.  Whether there was room to leave the precise mix to some extent to the private sector would need to be decided.  Most participants felt that the market certainly had a role to play in that respect.

As for public opinion, while the subject was undoubtedly complex and emotive, most people believed that good arguments, fitting the best science and transparently presented, could have an effect.  Something was moving, after all, in American opinion, to judge by recent decisions of the US Senate, by the growing number of city mayors paying more attention to environmental issues, by California beginning to go its own way in certain respects and by other evidence of changing sentiment.  If carbon emissions in the UK were to be reduced as intended, something solid had to start happening somewhere.  There were enough elements for the argument to be moved from an emotional to a rational base.

Against that background, it was suggested that two questions in particular ought to be put before the public as a framework for the whole nuclear debate.  Neither question needed to mention the word “nuclear”.  The first was:  “How does the United Kingdom achieve 60% carbon reduction in 50 years?” and the second was:  “Is it or is it not acceptable to enter a new era of energy dependence?”.  This might help to stimulate a rational debate.

It was neither the purpose or the expectation of the Workshop to reach any firm conclusions.  Representatives of Government Departments felt that the brainstorming had been useful and a number of things clarified by the discussion, even if there was still a long way to go.  Everyone felt that they had learned from listening, even if opponents of nuclear new-build were disappointed by being left in a minority.  The spirit of the discussion was excellent, for which credit is due to the whole company, but particularly to our Chair for her sympathetic and wise guidance of the debate.  As a Ditchley experiment, the strong conclusion appeared to be that it was a success.

This Note reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression.

 

PARTICIPANTS

Chairman     :      The Honorable Barbara Thomas  (UK/USA)
Chairman, United Kingdom Atomic Energy Authority (2004-); Deputy Chairman, Friends' Provident PLC; Deputy Chairman, Financial Reporting Council.  A Governor, The Ditchley Foundation.

UNITED KINGDOM
Sir Eric Ash CBE
       
Chairman, Ocean Power Technology Limited.
Mr Godfrey Boyle       
Director, Energy and Environment Research Unit, Design and Innovation Department, The Open University.
Mr Gerald Clark CMG       
General-Secretary of Energy Strategists Consultancy Limited; Energy Adviser to 33 St James's.
Mr Jeremy Clayton       
Director, Transdepartmental Science and Technology, Department of Trade and Industry.
Sir Anthony Cleaver FBCS        
Chairman, Nuclear Decommissioning Authority (2004-); Medical Research Council (1998-); IX Europe PLC (1999-); SThree (2000-); Working Links, Employment  Limited (2003-); Royal College of Music (1999-). 
Ms Fiona Clouder Richards        
Head, Science and Innovation, Foreign and Commonwealth Office.
Professor David Cope       
Director, Parliamentary Office for Science and Technology (1998-). Formerly: Professor, Energy and Resource Economics, Doshisha Daigaku.
Mr Jim Currie       
International Advisor, Eversheds.
Professor Ian Fells CBE, FREng, FRSE      
Chairman, New and Renewable Energy Centre, Northumberland (2002-). Formerly: Special Adviser, House of Lords Select Committee on Environment (1993-94).
Mr Malcolm Grimston        
Associate Fellow, Sustainable Development Programme, Chatham House; Honorary Senior Research Fellow, Imperial College, London.
Lord Lea of Crondall        
Patron, Trade Unions for Safe Nuclear Energy (1999-); Vice Chairman, All Party Group on Africa (2003-); House of Lords Sub-Committee on EU/UN Relations (2005).
Professor Sir Christopher Llewellyn-Smith FRS       
Director, Culham Laboratory (2002-); Chair of the Advisory Committee on Mathematics Education (ACME).
Dr David Lowry        
Energy and Environment  Research Unit.
Ms Joan MacNaughton CB      
Director-General, Energy, Department of Trade and Industry.
Mr Adrian Montague       
Chairman, British Energy Group PLC; Friends Provident PLC; Michael Page International PLC; Cross London Rail Links Limited.
Ms Jan Murray        
Deputy Secretary-General, World Energy Council.
Dr Rachel Quinn        
Acting Head, Science Policy, The Royal Society.
Mr James Sassoon      
Managing Director, Finance Regulation and Industry Directorate, HM Treasury (2002-).  Formerly: Vice Chairman, Investment Banking, UBS Warburg (1985-2002).
Professor Jim Skea        
Research Director, UK Energy Research Centre.
Sir Crispin Tickell GCMG KCVO        
Chancellor, University of Kent; Director, Green College Centre for Environmental Policy and Understanding; Visiting Fellow, Harvard University Centre for the Environment. 
Mr Stephen Vaughan        
Managing Director, European Utilities Team, NM Rothschild & Sons Limited (1988- ).
Mr Peter Waller        
Head of Energy, Industries and Technologies Unit, Department of Trade and Industry.
Mr John Weston CBE 
Chairman, Spirent Plc (2002-). Formerly: Chief Executive, BAE Systems (1999-2002).  A Governor and Member of  Council, the Ditchley Foundation.

UNITED KINGDOM/UNITED STATES OF AMERICA
Ambassador John Ritch III
       
Director-General, World Nuclear Association.

UNITED STATES OF AMERICA
Dr George Atkinson
        
Scientific and Technical Adviser to the Secretary of State.
Mr Robert Card        
President and Group Chief Executive, CH2M Hill International; Senior Fellow, Brookings Institute. Formerly: Under Secretary, Energy, US Department of Energy (2001-2004).
Admiral James Ellis   
President and Chief Executive Officer, Institute of Nuclear Power Operations.