The cheapest way for the U.K. to meet its goal of cutting emissions by 80 percent from 1990 levels over the next four decades would triple nuclear power generation, according to the government’s carbon plan.
It would cost the least to have 33 gigawatts of nuclear power, 45 gigawatts of renewables and 28 gigawatts of fossil fuels with carbon capture and storage technology fitted, according to a government statement. The country has about 10 gigawatts of installed nuclear capacity.
Average energy costs, including for buildings and transport, would rise 24 percent from current levels to 4,598 pounds ($7,237) per person per year in the next four decades under the cheapest scenario, known as market allocation or Markal, the so-called 2050 calculator tool shows. Boosting nuclear generation sevenfold would increase the cost through 2050 by about 13 percent.
Without new environmental-protection measures, the energy system would rely on imported, climate-damaging fossil fuels and still cost 4,682 pounds per person on average each year through 2050, said Chris Huhne, energy and climate change secretary.“There is a clear risk of inaction” because fossil fuel prices may surge further, he told reporters today at a London briefing.
Meeting the 2050 target would cut fossil-fuel import costs to a maximum 24 billion pounds that year, compared with 86 billion pounds under the “do nothing” scenario, Huhne estimated. The nation’s policy will allow renewables, natural gas and nuclear to compete to supply energy, Huhne said.
Slow Economic Growth
Slow economic growth already is giving the U.K. the ability to avoid expensive nuclear power, said Laurent Segalen, the London-based managing director of the Euro Carbon Macro Fund. U.K. power consumption dropped to its lowest level in more than a decade in the quarter through September, government figures published last week show.
“New nuclear is simply too expensive,” Segalen said Nov. 25. “Offshore wind combined with gas is more flexible and is today 25 percent cheaper.” Nuclear costs about 4 billion euros ($5.4 billion) per gigawatt compared with 2.2 billion euros for offshore wind and 750 million euros for natural gas, he estimated.
The U.K. said two days ago it will provide compensation to help energy-intensive industries such as metals companies and cement factories deal with higher electricity prices and carbon-dioxide costs and minimize relocation to countries with no limits.
‘Not Shied Away’
“I have not shied away from supporting sensible steps to reduce this country’s dependency on volatile oil prices and reduce our carbon emissions,” Chancellor of the ExchequerGeorge Osborne said. “I am worried about the combined impact of the green policies adopted not just in Britain but also the European Union on our heavy energy-intensive industries.”
Huhne today rejected suggestions his government was divided on how to tackle climate change while limiting cost increases. Britain is set to beat its target to cut carbon-dioxide emissions by 34 percent from 1990 levels by 2022, he said.
Emissions are 25 percent less than 1990 levels, he said. A target to reduce CO2 by 50 percent by 2027 “will not have any additional cost implications during this Parliament, but beyond that will galvanize jobs and investment during a decade of mass deployment of key technologies,” he said. The current U.K. Parliament may run until 2015.
“No consideration has been given to the source of the project finance which will be needed to fund the deployment of technologies during this decade,” David Nickols, a London-based managing director at WSP Future Energy, said by e-mail. “The proposal to allow cost and market forces only to determine the mix between renewable technologies, gas with carbon capture and storage and nuclear leads to considerable doubt over whether the long-term targets will be met.”
It seems “absurd” for the government to impose climate policies on the one hand and then compensate business on the other, said Emmanuel Fages, a Paris-based analyst for Orbeo, an emissions trading venture. Solvay SA (SOLB) is buying the 50 percent of Orbeo it doesn’t already own from Societe Generale SA.
The compensation “really makes U.K. policy on climate change completely impossible to decipher,” Fages said yesterday by e-mail.