Within three weeks of the disaster, Fukushima operator TEPCO, one of the five largest electricity utilities in the world, lost more than three-quarters of its share value, while the Japan Wind Development Company nearly doubled its stock price.
The Fukushima crisis only exacerbates the major changes that the energy sector is facing due to a combination of environmental, resource, and demand factors. At the United Nations climate change conference in Cancún, Mexico, in December 2010, delegates agreed that “climate change is one of the greatest challenges of our time and that all Parties share a vision for long-term cooperative action.”
For the first time under the U.N. climate framework, participants acknowledged that “deep cuts in global greenhouse gas emissions are required according to science, and as documented in the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, with a view to reducing global greenhouse gas emissions so as to hold the increase in global average temperature below 2°C above pre-industrial levels.”
This statement not only confirms the scientific framework by which global emissions should be measured, but it enables calculations to be made about the volume of greenhouse gases that can be safely released to the atmosphere to avoid serious climatic disruption. Estimates indicate that global emissions must be cut roughly 80 percent by 2050, requiring the effective “decarbonization” of the energy sector.
Given that the expected lifetime of investments in energy infrastructure, grids, and power stations typically exceeds 50 years, all new projects built today should fulfill these sustainability criteria or face premature retirement. Although a large number of “low-carbon” technologies are both being deployed and under development, particularly in the renewable energy arena, the key factor is how (and if) these fit together into a zero-emissions energy sector.
Traditional energy forecasts anticipate rapid increases in energy demand, driven primarily by the need to fuel Asia’s growing economies, particularly in China and to a lesser extent in India. The International Energy Agency assumes that, if current policies continue, global energy demand will increase 47 percent by 2035. Based on this scenario, energy consumption in China will effectively triple, whereas in the European Union and the United States it will increase about 4 percent.
Over the medium term, a pressing concern is the availability of suitable energy resources—particularly liquid fuels—and the associated impact on both supply and consumer prices. The U.K. Energy Research Centre estimated in 2009 that the average annual rate of decline from oil fields that are past their peak of production is at least 6.5 percent, while the decline from currently producing fields is at least 4 percent.4 Just maintaining the current level of output would require 3 million barrels a day of new capacity each year, equivalent to the production of Saudi Arabia over three years.
And this does not take into account the growing demand from developing countries. The situation for oil is particularly acute, but concerns about the availability of other fossil fuels, such as natural gas, in some countries and regions is affecting their price significantly.
From the perspective of both climate security and traditional supply security, the current energy system and the policies that shape it are highly unsustainable. The new energy system must be based on two pillars. Firstly, energy efficiency must be at the heart of any new energy system, because meeting the anticipated increase in energy demand at current efficiency levels is not an option given the growth in population and changing consumption patterns.
As the European Commission points out, “energy savings is one of the most cost effective ways” to address concerns about climate change and the security of energy supplies.
The second pillar of the new energy system is no (or extremely low) carbon dioxide emissions. This decarbonization could come from three sources: nuclear power, fossil fuels (using emissions capture and storage), and renewable energy. Supporters of nuclear power believe that nuclear should play an increasingly important role in this new, highly efficient, zero-emissions energy sector, since in their view all low-carbon technologies will be needed.
But this claim must be addressed from multiple perspectives.
An Economic Comparison
When evaluating the role of nuclear power in the global energy mix, it is important to consider the types of support that nuclear receives compared with other technologies. Proponents of new energy technologies argue that direct government support is needed to enable these to compete with established technologies. Nuclear power has been in commercial operation for more than 50 years, yet it continues to receive large direct and indirect subsidies, in part because electricity prices fail to reflect the full environmental costs, and because of government guarantees for the final storage or disposal of radioactive waste.8 In the United States, even though nuclear and wind technologies produced a comparable amount of energy during their first 15 years (2.6 billion kWh for nuclear versus 1.9 billion kWh for wind), the subsidy to nuclear outweighed that to wind energy by a factor of over 40 ($39.4 billion versus $900 million).
Even with the demise of new orders for nuclear power and the rise of other energy technologies, nuclear continues to enjoy unparalleled access to government research and development (R&D) funding. Analysis from the IEA shows the dominance of nuclear power, both fission and fusion, within R&D budgets—commanding nearly two-thirds of total expenditures in recent decades.
Compared with renewables, nuclear power has received roughly five times as much government R&D finance since 1986 across the countries of the IEA.
Moreover, the building of new nuclear power plants, which is being proposed for the first time in decades in some developed countries, will require further government subsidies or support schemes, such as production tax credits, insurance for cost overruns, and more. With increasing constraints on public-sector spending, state support for one technology will mean less support available for others.
Despite the disproportionately lower support historically, some analysts consider solar photovoltaic (PV) energy to be competitive with nuclear new-build projects under current real-term prices. The late John O. Blackburn of Duke University calculated a “historic crossover” of solar power and nuclear costs in 2010 in the U.S. state of North Carolina. Whereas “commercial-scale solar developers are already offering utilities electricity at 14 cents or less per kWh,” Blackburn estimated that a new nuclear plant (none of which is even under construction) would deliver power for 14–18 cents per kWh.
Solar energy electricity is currently supported through tax benefits but is “fully expected to be cost-competitive without subsidies within a decade,” he noted.
Rapid and Widespread Deployment
Because the transition from fossil fuels to low-carbon energy sources needs to be rapid and global, technologies that are widely available today and that can be implemented in the short term have a clear advantage. Given the need for immediate reductions in greenhouse gas emissions, the time needed to introduce new technologies on a mass scale is a crucial parameter. The commissioning of new energy generating facilities involves two major phases, pre-development and construction, and both must be considered when comparing the benefits of technologies to emissions reduction.
The pre-development phase can include wide-ranging activities such as conducting extensive consultations, obtaining the necessary construction and operating licenses, getting consent both locally and nationally, and raising the financing package. In some cases, technology deployment may be sped up through the use of generic safety assessments. Alternatively, pre-development may take longer than expected because of local site conditions or new issues coming to light.
The IEA has estimated a pre-development phase of approximately eight years for nuclear power. This includes the time it takes to gain political approval but assumes an existing industrial infrastructure, workforce, and regulatory regime. In the case of the United Kingdom, then-Prime Minister Tony Blair announced that nuclear power was “back with vengeance” in May 2006, but it was some years before nuclear pre-development even began.
With regard to construction, nuclear power has a history of delays. According to the World Energy Council, the significant increase in construction times for nuclear reactors between the late 1980s and 2000 was due in part to changes in political and public views of nuclear energy following the Chernobyl accident, which contributed to alterations in the regulatory requirements.
It is important to note the differences in construction of a wind farm (and many other renewable energy schemes) compared to conventional power stations. The European Wind Energy Association (EWEA) likens building a wind farm to the purchase of a fleet of trucks: the wind turbines are bought at an agreed fixed cost and on an established delivery schedule, and the electrical infrastructure can be specified well in advance. Although some variable costs are associated with the civil works, these are very small compared to the overall project cost.
The construction time for onshore wind turbines is relatively quick, with smaller wind farms being completed in a few months, and most well within a year. The contrast with nuclear power, and even conventional fossil fuel power plants, is significant.
Looking at the net additions to the global electricity grid over the last two decades, nuclear power added some 2 GW annually on average during the beginning of this period, compared with a global installed capacity of some 370 GW today.
However, this trend has stagnated or decreased since 2005. Over the same period, global installed wind power capacity increased more than 10 GW annually on average, rising steadily to more than 37 GW in 2009 and 35 GW in 2010. Solar PV has accelerated rapidly in recent years as well.
In 2010, for the first time, the cumulative installed capacity of wind power (193 GW), small hydropower (80 GW), biomass and waste-to-energy (65 GW), and solar power (43 GW) reached 381 GW, outpacing the installed nuclear capacity of 375 GW prior to the Fukushima disaster.
Although renewable electricity generation (excluding large hydro) will remain lower than nuclear output for a while, it is catching up fast.
Total investment in clean energy technologies increased 30 percent in 2010 to $243 billion globally, a nearly fivefold increase over 2004.19 China is the world leader, investing $54.4 billion in renewables in 2010 (up 39 percent over the previous year), followed by Germany at $41.2 billion (up 100 percent) and the United States at $34 billion (up 66 percent).20 (See Table 4.) Italy more than doubled its renewable energy investments in 2010, to $13.9 billion, jumping in rank from 8th to 4th. Extension of a favorable feed-in tariff is expected to more than double Italy’s installed PV capacity in 2011 to around 8 GW—the government’s target for 2020.
Part of this rapid scale-up is due to the geographical diversity of renewable energy deployment. According to the Global Wind Energy Council, some 50 countries are home to more than 10 MW of installed wind power capacity, compared to 30 countries operating commercial nuclear reactors.
Although the majority of renewable energy countries are in Europe, there is widespread deployment of wind energy in Egypt (550 MW), New Zealand (500 MW), Morocco (286 MW), and the Caribbean (99 MW). Markets in emerging and developing countries now determine growth in wind power, and in 2010 for the first time, more than half of newly added wind power was installed outside of Europe and
China in particular has become the global leader for new capacity in both nuclear and wind power. Forty percent of all reactors under construction are in China. The extent to which both technologies are expected to grow is unparalleled, although the installed capacity for wind power, at roughly 45 GW, is currently more than four times that for nuclear (roughly 10 GW).
Even with a 3–4 times lower load factor, wind is likely to produce more electricity in China in 2011 than nuclear. China’s wind power growth is so dramatic that the country must continually raise its production targets, as they are repeatedly being met prematurely.
China is not only a major implementer of wind energy technologies, but a global player in related manufacturing. In India, meanwhile, wind generation outpaced nuclear power already in 2009, according to data from the U.S. Department of Energy.
In the United States, no new nuclear capacity has been added since the Watts Bar-2 reactor in Tennessee was commissioned in 1996, after 23 years of construction. Meanwhile, the share of renewables in newly added U.S. electricity capacity jumped from 2 percent in 2004 to 55 percent in 2009.
And although Germany provisionally shut down seven of its reactors after the Fukushima disaster, if the remaining 10 units generate a similar amount of electricity as they did in 2010, then in 2011 for the first time ever renewable energy will produce more of the country’s power than nuclear. Four German states generated more than 40 percent of their electricity from wind turbines alone already in 2010.
An analysis by the European Wind Energy Association (EWEA) shows that while more than 100 GW of wind and solar were added to the EU power grid between 2000 and 2010, nuclear generation declined by 7.6 GW, joining the rapidly declining trend of coal- and oil-fired power plants.
By Mycle Schneider, Antony Froggatt, Steve Thomas, World Nuclear Industry Status Report 2010-2011, www.worldwatch.org/system/files/WorldNuclearIndustryStatusReport2011_%20FINAL.pdf