In Age of Austerity, France Stays with Nuclear Power

First, an additional tidbit on our coverage of IEA’s World Energy Outlook 2011, where we learned that the rumors of nuclear energy’s demise are greatly exaggerated. Just consider this chart from page two of the “Key Graphs” part of the report. 

As you can see, the IEA sees nuclear’s future more in line with the measured growth of renewables rather than coal or oil’s steady decline.

In its report, the IEA imagines a world without (or actually, with very little) nuclear power. It’s called the “Low Nuclear Case” scenario. And surprise! It’s not the utopia some would have you believe.

The net result would be to put additional upward pressure on energy prices, raise additional concerns about energy security and make it harder and more expensive to combat climate change.

Of course, it’s a projection, so it has to be taken with a grain of salt. But the data coming in from countries that have scaled back their nuclear energy plans show that the IEA is onto something.

First, there’s Germany. As we’ve covered before, their nuclear moratorium has led to higher cost electricity, lost jobs and more emissions.

There’s some evidence that Japan’s shutdown of most of its reactors may be having a negative effect on Japan’s export-based economy. [Financial Times, subscript req’d. “Japan restarts first nuclear reactor since disaster,” Nov. 1, 2011.]

Concerns about stable supply of electricity are prompting some [Japanese] companies to shift production overseas. A rise in fuel costs for utilities to make up for a lack of nuclear power, leading to bigger electricity bills for consumers, is another factor undermining the economy.

A full nuclear shutdown would have a huge annual bill as Japan turns to more expensive fossil fuels.  

Using gas and oil to make up for the loss of all nuclear power reactors will cost more than 3,000 bn yen ($38bn) a year, based on imported fuel prices and utilisation rates in 2009, the government has estimated.

Another country has considered the pros and cons of nuclear power, but when asked about shutting down its reactors replied with an emphatic “Non, merci!”

The French government's fiscal belt-tightening effort won't touch the country's ambitious nuclear energy program, France's energy minister said Wednesday, as he also dismissed any need for France to reduce its nuclear dependency...French energy and industry minister Eric Besson said Flamanville, the follow-up Penly reactor and other French nuclear investments won't be affected "at all" by the country's austerity package.

"The plan is designed to reduce deficits, yet growth engines aren't touched, budgets for the future haven't been dented," Mr. Besson said two days after the government unveiled a €7 billion austerity package.

In fact, it turns out nuclear energy can be especially helpful in times of austerity. First nuclear energy creates jobs—not only in the industry itself—but in wholly unrelated fields.

Mr. [Henri] Proglio [chief executive of Electricité de France] said that 400,000 jobs, direct and indirect, in the nuclear industry would be threatened [if France shut down its reactors] as well as another 100,000 future jobs dependent on nuclear exports. Another 500,000 jobs in energy-intensive sectors like aluminum production could be outsourced to other countries as a result of higher energy costs, he predicted.

Lower cost electricity (generated thanks to nuclear energy) also leaves ratepayers/consumers with more money in their pockets, too. Money they can spend on other goods and services, spreading the wealth.

The French pay, on average, about 30 percent less for their electricity than their neighbors do, he said, ‘‘thanks to our nuclear establishment and hydropower.’’

Of course there is a way out. Something akin to the IEA’s Low Nuclear Case: build more fossil fuel plants.

Mr. Proglio told the paper that it was his ‘‘conviction’’ that France…would need to invest somewhere in the vicinity of $544 billion to build new fossil fuel power plants to replace lost generating capacity if it shut down its reactors.

That, he said, would have to be financed by a doubling of the price of electricity and would bring a 50 percent increase in France’s greenhouse gas emissions.

A doubling of electricity prices, hundreds of thousands of jobs lost and (lest we forget!) higher emissions. Sounds like the IEA is onto something in its projections of a world without nuclear power. And sounds like France has the right idea to not scale back nuclear energy during tough times. Something to keep in mind as more nations, including our own, face budget cuts.

Germany Nuclear Phase Out Same as Putting 4.4 Million Cars on the Road

We return, once more, to Germany where details are starting to emerge on the real costs of their nuclear phase out.

Let’s start with emissions. According to an estimate by Laszlo Varro, the head of the gas, coal, and power markets division at the International Energy Agency emissions will rise significantly.

Varro estimates that the nuclear phase out in Germany has caused a 25-million-ton annual increase in carbon dioxide emissions. The culprit, in large part, is the new coal power that has come online to meet the shortfall.

25 million tons is sort of abstract, but EPA has a pretty cool tool: the Greenhouse Gas Equivalencies Calculator. It finds more concrete alternatives to “tons of carbon dioxide” like “emissions from passenger vehicles.” Turns out 25 million tons of CO₂ emissions per year is equal to (pick your favorite one of the following):

• Annual greenhouse gas emissions from 4,446,984 passenger vehicles or
• CO₂ emissions from 52,743,297 barrels of oil.
• CO₂ emissions from the electricity use of 2,827,882 homes.
• CO₂ emissions from burning 123,494 railcars’ worth of coal.
• Annual CO₂ emissions of 5.4 coal-fired power plants.

Imagine adding emissions from 4.4 million cars in a country of 80 million. Or the emissions from almost 3 million homes. That’s essentially what Germany’s done with its phase out of nuclear power.

Don’t forget jobs. Obviously, the European economy isn’t doing too well. While Germany seems to be weathering the storm fairly well, losing 11,000 jobs can’t help.

E.ON, the world's largest utility by sales, joined peers in posting weak half-year results as Germany's decision to abandon nuclear power forced it to slash its profit outlook, its dividend and up to 11,000 jobs.

There are also concerns over the nuclear phase out’s long-term drag on Germany’s export-oriented economy. One estimate has energy bills up 20%.

Christian Schulz, senior European economist at Berenberg Bank, said estimates suggested the nuclear shutdown would increase Germany's energy bill by a fifth, which will hit the country especially hard since its economy relies heavily on its energy-intensive manufacturing industry to propel growth.

This sort of things makes you understand German manufacturers’ concerns about competitiveness. But the phase out isn’t sparing consumers either.

German households pay twice as much for power than in France, where 80% of energy is generated by nuclear plants. Klaus Abberger, senior economist at the Ifo institute for economic research at the University of Munich, said energy prices had already gone up since plans to end nuclear power generation and would stay at high for at least the next five years [emphasis added].

So much for “expensive nuclear power.” Perhaps this is behind Belgium’s qualified rethink on nuclear power.

The plan for a shutdown of the three oldest reactors by 2015 and a complete exit by 2025 is conditional on finding enough energy from alternative sources to prevent any shortages.

"If it turns out we won't face shortages and prices would not skyrocket, we intend to stick to the nuclear exit law of 2003," a spokeswoman for Belgium's energy and climate ministry said.

That’s a fair share of caveats. At least this gives  Belgium a face-saving out if they can’t find cost effective “alternative sources” scalable enough to prevent blackouts. Renewables and natural gas may just fit the bill. Or not. Renewables are hard to scale up. Natural gas prices are hard to predict. But Belgium, unlike Germany, at least has given itself time to consider the alternatives.

Will Europe Struggle to Keep the Lights On?

A new study from consulting company Capgemini said that Europe may have trouble “keeping the lights on” this winter thanks to the nuclear phase-out in Germany.

Following its reactor shutdowns, Germany began to import electricity from its neighbors, including more than 2,000 MW per day from France. During the winter electricity peak, France mainly imports electricity from Germany and this will no longer be possible in coming years. This represents a real threat to some countries “keeping the lights on” for winter 2011/2012 and future winters.

The report sums it up well: without German nuclear generation, energy security is down, emissions are up. First, security. The Europeans better cozy up to the Russians because they will be more dependent on them than ever.

In 2010, the EU imported 113 bcm of gas by pipeline from Russia, representing 33% of total gas imports. In 2030, gas flowing through Gazprom pipelines is expected to represent 50% of all European gas supplies.

That’s right, 50 percent, half of all European gas. But Gazprom’s dependable, right? Sure, most of the time. Just ask Ukraine, Belarus and Lithuania. But Nord Stream should end all that, right? Sure, no problem.

Then, there’s emissions: the nuclear phase-out is taking Germany further away from its climate goals. The Breakthrough Institute had this to say in its analysis of the German government plan to phase out nuclear.  

The plan indicates that--in the absence of nuclear power--Germany will continue to be heavily reliant on fossil-fuel generation for the bulk of its electricity supply. The report calls for the construction of 5 GW of new natural gas power plants, in addition to 11 GW of new coal-fired power plants currently under construction in the country. This will leave the country with a net increase of 5 GW in coal-fired electricity capacity...this planned uptick in fossil fuel generation would cause the country's overall carbon emissions to rise by as much as 14% of the country's 2008 total carbon emissions.

But there’s hope. Some of Germany’s neighbors see an opening here. Why not sell the Germans low-cost, low-carbon electricity generated by nuclear power plants? [WSJ, subscription req’d] The Czech Republic seems particularly well placed.

On Monday, the country's government-controlled CEZ AS  [electrical utility] will issue technical specifications for a $25 billion project to build up to five new nuclear reactors, with the first two scheduled to go online by 2025.

What’s more, the Czechs are old hands at exporting energy. 

Vaclav Bartuska, the Czech government's special energy envoy, said the Czech Republic wants to increase the proportion of its electric power generated by nuclear reactors to 50% from the current 30%…CEZ, which is operating six reactors now, has long been one of Europe's largest power exporters, sending electricity to neighboring Germany and elsewhere.

Poland may be getting into the act and Hungary is toying with the idea. What’s not to like? It’s probably more secure than Russian gas and will help Germany meet those emissions goals. We’ll give the Czechs the last word, as it’s Czech National Day today.

"There is antinuclear sentiment in some countries," Mr. Bartuska added. But until alternate energy sources make economic sense, "we see nuclear as the solution."

For more on American and Czech cooperation in  nuclear energy, see this fact sheet from the White House.