NUCLEAR POWER

Nov 23rd 2006 - The Economist

A shift in Australia's stance is a sign of the times: all over the world governments are rethinking the politics and economics of nuclear power

FOR much of its 26-year life the Ranger uranium mine in north Australia has seen protests from ecologists who oppose digging for nuclear fuel on the edge of a world heritage park. But by 2008, as the mine's riches run out, Australia may be marching towards a new nuclear era, prompted in part by fear of climate change, the biggest ecological issue of all.

On November 21st a government report said Australia should do more than sell uranium to other countries: it should use the material to fuel its own nuclear-power industry, and hence curb its greenhouse gas emissions. That is what John Howard, the prime minister, wanted to hear. Long a sceptic over global warming, he amazed everyone by saying during a trip to Canada in May that nuclear power was an "inevitable" choice for Australia.

In many parts of the world the mood is shifting in favour of nuclear energy--often because other responses to climate change seem harder (see article[1]). That in turn is creating new worries over the diversion of nuclear fuel to make bombs (see article[2]) and making the distant dream of nuclear fusion even more attractive (see article[3]).

Among rich countries Australia stands out as a place whose geography and geology pull its energy planners in different directions. It has 38% of the world's low-cost uranium reserves, but has never made its own nuclear power. Cheap coal fuels 80% of its electricity, gas the rest. But Mr Howard, having dropped his bombshell, ordered a policy review from Ziggy Switkowski, a scientifically inclined businessman.

His conclusions? Australia could quadruple its 2005 revenue from exporting uranium oxide (mainly to America, France and Japan) if it enriched and fabricated the fuel first. He also says Australia should consider installing its first nuclear reactor by 2020, building up to 25 reactors by 2050; such a grid could supply one-third of the country's electricity and cut greenhouse gases by almost one-fifth.

The report is already dividing the country. Not even Mr Howard liked it all: it acknowledges that nuclear power would be up to 50% dearer than electricity from coal. It would be competitive "only where the costs of greenhouse-gas emissions are explicitly recognised", in other words by imposing carbon taxes, something Mr Howard has rejected.

With nuclear power now set to dominate next year's general election, Mr Switkowski has certainly given those worried about global warming something to think about: he notes that Australia's uranium exports alone (a record 12,000 tonnes last year) are enough to supply more than twice its annual electricity needs.

Elsewhere in the world so many nations are either building new plants, or thinking about it, that energy analysts are speaking of a nuclear renaissance. New reactors are being built in 13 countries. Governments in others, like Britain and America, want to make it easier to start new plants. Several European states are slowing down plans to phase out nuclear power. Asian ones, whose nuclear appetite never faded, plan ever more reactors.

In most places the nuclear debate hinges on safety, cost, the environment and security of supply. Atomic energy lost favour after a near disaster at Three Mile Island in America in 1979 and a real one at Chernobyl in the Soviet Union in 1986. But engineering firms say their latest designs are safer. Several claim to build "passively safe" plants that need no human or mechanical intervention to close after a fault, but rely on the laws of physics to contain runaway reactions.

Regulators are tougher too: Finland has told Areva, a French firm making a new reactor, that it must be able to withstand a crashing plane. A consensus is emerging about where to put nuclear waste: most countries want to bury it underground, though only Finland and America have chosen sites.

As for economics, study after study rates nuclear fission one of the cheapest ways to make power. In practice, however, nuclear plants have often disappointed because of delays, cost overruns and breakdowns. But utilities seem to be getting better at maintenance; some keep their reactors going more than 90% of the time. In democracies, politics is the biggest cause of delay and financial upset. Nuclear policies can be as fickle as government coalitions. Public opinion and local planners are often more sceptical than national authorities--so getting permits is a nail-biting business. Utilities like to skirt such problems by putting new reactors near existing ones, where locals accept nuclear power. Many operators in America and Europe have quietly raised their nuclear output by upgrading existing plants.

Britain plans to encourage new reactors by amending its planning laws. Design will be approved by the national government, leaving local authorities to deal with narrower issues. America is offering utilities up to $2 billion in insurance against planning delays. Authoritarian countries like China, and even democratic ones with tough bureaucrats, like France or Japan, never gave much leeway to pesky locals.

Planning aside, nuclear plants can be hard to finance, since they cost more and take longer to build than coal- or gas-fired units. In countries with state power firms, like China, the government can stump up the money or use its clout to reduce borrowing costs. A handful of firms, such as Electricite de France, are big and profitable enough to pay for new reactors out of regular income. Other solutions show more imagination: a Finnish consortium that is buying a new reactor consists of utilities and power users committed to buying the plant's output at cost.

The Finnish and British governments say they will not subsidise nuclear power. America's has no such qualms; in addition to the insurance against delays, it is helping to bear the cost of the permitting process and offering tax breaks on power produced by new plants. Such enthusiasm reflects the hope that nuclear power can wean America off imported fossil fuels. Elsewhere, countries that fear foreign control of their energy supply tend to be pro-nuclear. Ukraine, site of the Chernobyl catastrophe, is busily making more nuclear plants to cut its reliance on Russian gas.