Entec Bulletin
Interview with Adrian Ham -
Chief Executive, British Nuclear Industry Forum

Did BNIF welcome the Performance and Innovation Unit (PIU) Energy Review report?

Yes, we welcomed the PIU report for two reasons. Firstly, it showed that the government realised that some urgent strategic issues concerning the energy sector need addressing, in particular, that more CO2-free generation has to be found within the next decade. Secondly, it concluded that the nuclear option should be kept open for the future. However, we were concerned about aspects of the PIU's analysis - for example their confidence in the capability of renewables and energy efficiency to deliver a low carbon energy economy, and their relaxed attitude to the risks to security of supply posed by Britain's impending reliance on gas imports.
Of course, a good deal has happened since the PIU reported. The government has conducted a further round of consultation in preparation for its Energy White Paper early next year. And now the whole debate is coloured by the turbulence in the electricity market that has severely affected British Energy's and other generators' financial positions, and could have serious implications for the security of Britain's electricity supply in the long run unless sensible measures are taken to restore some stability to the market.

Do you think that market liberalisation conflicts with a secure and sustainable energy supply?

There are conflicts and I think that was highlighted at the beginning of the whole review process when Tony Blair announced it in June last year.

On their own, markets tend to support the development of capacity towards the lowest cost option at any particular time. So it follows that if the market is left to follow its own course, as nuclear is phased out, it would be replaced by the cheapest option which, in the short term, would be gas. Without fiscal measures, such as a carbon tax or tradeable permits that recognise and reward carbon free fuels, there is nothing to discourage electricity generation that produces CO2. However, at the moment with wholesale electricity prices at an unsustainably low level, there is no incentive or economic justification for anyone to build anything. Of course, there is overcapacity at present, but unless the market sends the appropriate price signals to incentivise new build we could conceivably face a California-style crisis at some stage in the future.

In the longer term we know that UK gas resources are limited and that by about 2020 Britain could become dependent on overseas gas supplies from the major marginal suppliers such as the former Soviet Union, which of course is a very important strategic factor to be aware of in terms of security of supply. I don't think it's good enough to rely on the liberalisation of European markets to ensure the UK energy supply.

Increasingly we now have to think about reducing CO2 very substantially, to the order of a 60% cut by 2050. Massive changes in the patterns of energy use are therefore required. Clearly this conflicts with the way the market is currently operating and even the new measures that the government introduced to the market, for example the Climate Change Levy and some of their innovations which are targeted to assist renewables, are not doing enough to meet those targets. We need to see proper rewards for all forms of carbon-free electricity.

Do you think there is a perceived trade-off between nuclear new build and investment in other sources of energy, for example renewables?

Oddly enough I think this is a criticism of the PIU report as it did seem to imply that renewables are a like-for-like alternative to the out-going nuclear. Our view is that they are not at all substitutes one for the other. We do believe renewables are enormously important, particularly for replacing fossil fuel generation, but we don't think you can do everything you have to do, during the timescales, with renewables alone.

Most renewable sources that we can see growing are intermittent. So you also need a base load source of CO2-free power which is going to run 24 hours a day and nuclear provides that, renewables don't.

Are the suggested timescales for changes to supply sources achievable?

The aim is to increase renewables to 10% of supply by 2010 and that is a very tall order. If we increased to 10% of electricity generation from wind, which is the most available short-term source of renewables, it would mean we would have to more than double the entire wind capacity of the whole of Europe by 2010.

Half the existing UK nuclear capacity is to close in the next 10 years, and almost all in 20 years, so time is critical for nuclear new build. Even if you had a package of funding from the private sector you would still have to go through the processes of getting new designs and licensing procedures. Nuclear build times have historically been something like 22 months plus a period of refining and preparation in the order of 2-3 years minimum. This means that it's going to be very difficult to facilitate new nuclear build and get the adequate capacity coming in when it's going to be needed.

Do you think the waste management issue needs to be addressed before any decisions on nuclear new build can take place?

Yes, waste is a big issue for the industry and although we feel that technically the solutions are known, there is no doubt that there is a big public perception issue to be dealt with. There is a lot of existing nuclear waste in Britain, the government estimates there is something like £85 billion worth of waste and decommissioning work that currently needs to be done. The vast majority is legacy waste, and we welcome the government's intention to establish the Liabilities Management Authority to manage that legacy. It's true that the amount of nuclear waste that exists on the civil side would only be increased by 10% with an entire replacement of the current nuclear fleet with modern PWRs. However, whilst this puts the waste from new build into perspective, it doesn't mean that the public would be comfortable with it.

There is a role here for government to show clearly the way in which approval for dealing with waste is going to be achieved and what the process will be for finding the right sites. If it's seen as a muddle, the public won't buy into new nuclear build. Again, the government is taking steps to establish an acceptable policy through the Defra consultation, and we welcome that, though we have reservations about the length of time - seven years - that Defra has indicated it might take to complete the consultation.

Is there enough being done to tackle the demand side of the energy debate? What should and could be done?

Currently there's a lot of work and thinking being done on energy demand. In the transport sector, for example, car companies are looking ahead and electric cars do exist. There's a huge need to switch away from fossil fuel to more electricity based sources of power and that's a potentially giant market for generation but it would have to be CO2-free generation.

When energy prices are low, people tend not to bother about energy conservation as much, that's human nature. For every year in the last decade that energy conservation organisations have existed, domestic CO2 emissions have gone up. So either we're tackling this the wrong way or, as prices keep falling there is less you can do. Alternatively, more radical action has to be taken to encourage people to use less. The more technologically developed lifestyles become, the implication is that energy demands increase. So you're still stuck with the problem of how to achieve the energy requirements without the CO2 and that's not so easy given the way modern societies are developing.

In the past, the nuclear industry has been seen as secretive and non-transparent, how do respond to those claims?

Well I think that's absolutely right, the nuclear industry has historically been its own worst enemy by talking to itself, rather than to other people - during the cold war there were reasons for this but it's a tradition that has lingered and that's not good enough now, the public are concerned about the nuclear legacy. In a modern society you cannot afford to ignore the fact that people want you to be transparent.

Of course you have setbacks. After the terrorist attacks in the US in September last year, clearly there was a response to that tragedy that openness might expose the industry to further dangers. It is now much more difficult for people to visit nuclear stations and that's regrettable because there are some excellent visitor centres. I do hope that we can continue that greater openness in getting the public in to see what we do; I think that's critical to the nuclear industry's future.

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