Green Economy

Chris Huhne, the Energy Secretary, has been pressing his fellow environment ministers to increase the already challenging carbon emissions reduction target of the European Union. However, across Europe countries under severe budget constraints are already cutting back on their expensive carbon reduction programmes or modifying them. The Spanish and German governments for example are reducing their subsidies to solar power by some 30%. In Britain, the governing Coalition has scrapped plans for a third runway at Heathrow airport, supposedly on environmental grounds, but has abolished the Sustainable Development Commission, the official watchdog originally created to oversee the drive to a so-called Green Economy. It seems that the government is also abandoning the previous Labour plan to invest £1 billion raised by the sale of state assets, such as the Channel tunnel link, into a so-called Green Investment Bank and instead use the money to reduce the budget deficit.
To meet the carbon emissions reduction target, major subsidies will be needed to enable the electricity supply industry to switch from fossil fuels (which currently are used to generate some 70% of UK demand) to renewable sources of energy such as solar or wind power. Mr Huhne favours renewable energy but seems to dislike the thought of nuclear generated energy (and its associated toxic waste disposal problem) which at source can be recycled and has stated that there is no money in the budget for nuclear power stations. Currently nuclear power stations provide some 22% of UK demand with renewable energy sources only producing around 5%. The remainder is imported (via a sub-Channel power cable) from France which, for energy security reasons following the oil crisis in the 1970s, produces around 80% of its electricity output from 50 nuclear power stations and around 50% of its total energy needs.
The current generation of nuclear power stations in the UK will be completely phased out by 2020 and 10 sites have been identified for construction of the next generation, which with planning and procurement delays together with a typical 4-5 year construction phase would still not come fully into service until late in the decade. Although a nuclear power station could cost an additional 50% or more of a conventional gas-powered equivalent, the more stable prices and supply sources for the uranium fuel with station operating costs at 10% of total capital, offer major savings compared with the 80% operating costs of the fossil fuel alternative, which in the case of gas is much less predictable in price and sources of supply. The latest, more fuel efficient, nuclear reactors over their design lives are also said to generate only 10% of the waste produced by the entire UK nuclear sector to date.
Given then the non-constant nature of renewable energy supplies e.g. from less predictable wind power (as of 1st August, 2010 there were 264 wind farms in the UK producing nearly 4.5 gigawatt of electricity) and that the McKinsey consulting firm has calculated renewable investments could cost £430 to save one tonne of carbon dioxide compared with the £8 per tonne offered by nuclear the latter, granted an appropriate in-feed tariff to the national grid, should play a major role in meeting the future energy demand of the UK and the carbon emissions reduction target of its green economy.

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