Memorandum by BNFL
Nuclear energy must continue to play a
significant role in the UK's baseload electricity generation.
Without nuclear's contribution, this country cannot have a continued,
secure, diverse and environmentally-friendly energy supply that
helps sustainable development
1. Given the imminent
dependence of the UK on energy imports, how can the UK maintain
a secure energy supply? What mix of fuels would maximise security?
Energy mix must be balanced, diverse,
reliable and stable. It must help sustainable development
Nuclear energy provides a secure
and reliable supply of energy that can contribute to sustainable
It is a key component of our existing
baseload electricity generation
It must continue to be part of the
But decisions need to be taken soon
on replacement nuclear power stations to avoid serious long-term
consequences for security of supply
With energy demand projected to rise steadily
over the next few decades and an increasingly large proportion
of supply expected to come from imported oil and gas, maintaining
the security of supplies has to be an essential component of UK
energy policy. Security can be achieved, provided there is:
sufficient diversity of supply
reliability throughout the supply
low vulnerability to fluctuations
low susceptibility to disruptions
in supply (networks and infrastructure)
ready availability of quality base-load
The objective, therefore, must be to maintain
an energy mix that can address these criteria in a balanced way
over the long-term, whilst keeping a firm focus on safety, cost
effectiveness and environmental impact. Supply security is a key
factor in a sustainable energy strategy.
To achieve this, BNFL recommends that the Government
actively encourage substantial development and deployment of both
nuclear and renewable energy supplies. Nuclear energy can make
an effective contribution to the sustainability of energy supplies
and, in doing so, can help to ensure supply security.
Operational stocks of nuclear material at various
production stages in EU facilities, from raw uranium feedstock
through to finished fuel, are sufficient to provide for several
years' electricity production, which makes nuclear generation
much more robust than other generation forms in the event of disruptions
Although uranium is imported it is purchased
from diverse sources in regions that are economically and politically
stable. Currently, over half of global uranium mining is done
in Australia and Canada.
The nuclear fuel component of total generating
costs is relatively low, at around 20 per cent or less, making
nuclear generation significantly less exposed to volatility in
fuel costs compared with other generation technologies. Nuclear
stations are also able to deliver very high energy density, when
both generating capacity and land requirements are taken into
account, and are able to provide the grid with reliable baseload
As far as fuel mix is concerned, an even distribution
between major sources of energy supply is the best way to maximise
security, taking account of both domestic and imported supplies.
Three or more major independent sources, each with around 20-30
per cent of supply, should be the goal. In addition there must
be adequate capacity margins available to help reduce impact in
the event of disruption to any of those supply sources.
If decisions are not taken soon on replacement
nuclear power stations the security of supply benefits of nuclear
power will no longer be available, as existing stations reach
the end of their operating lives. Nuclear's share of electricity
generation is set to decline sharply in the next 20 years (from
23 per cent share of electricity generation to 5 per cent), based
on current plans for power station decommissioning and if there
is no replacement build. In view of the considerable reduction
in capacity this represents and since nuclear power provides significant
baseload generation of electricity, a failure to take decisions
on replacement build would have serious long-term consequences.
It is essential for the current nuclear capacity to be actively
replaced so that nuclear power can continue its significant contribution
to UK energy policy objectives, as part of a balanced energy mix.
If nuclear energy is to maintain its secure contribution to the
UK's electricity supplies then continued availability of existing
licensed sites and the associated transmission infrastructure
is an important consideration.
2. Is there a conflict between achieving
security of supply and environmental policy? What is the role
for renewable and Combined Heat and Power schemes?
Nuclear energy meets security of
supply objectives and helps to reduce the impact of climate change
Other energy sources cannot reconcile
these objectives in the same way
A well-balanced energy mix is the
answer, that includes nuclear energy
Nuclear waste is being safely stored
There is no inherent conflict between the objectives
of security of supply and environmental policy since nuclear energy
already demonstrates that it is possible to fulfil both at the
same time. Although it is clear that not every component of energy
supply will be able to reconcile these objectives in the same
way as nuclear energy, nevertheless the aim should be for a sensible
overall balance within the energy mix, as already outlined in
the answer to the Question 1. Renewables, for instance, must be
included in the mix since they will help to meet emission reduction
objectives but it should be recognised that they will be more
expensive, less flexible and insufficient in meeting demand capacity.
In the short to medium term they are unlikely to be able to make
a major contribution in terms of security of supply and will not
in any case be able to replace the substantial emissions avoidance
capability of nuclear generation.
Nuclear waste is being safely stored. Interim
safe stores already exist and are demonstrable evidence that wastes
associated with nuclear power can be cost-effectively and safely
managed whilst the disposal issues are resolved.
3. What scope is there for further energy
More can be done to encourage conservation
But conservation is only one of a
number of measures required to tackle energy policy objectives
All industrial and domestic users of energy
have a responsibility to use available energy resources wisely
and effectively. It is true that more can be done to encourage
and achieve energy savings but conservation on its own will not
be sufficient to address the issues presented by security of supply
or climate change mitigation. Conservation policies and measures
will need to be pursued but they should be considered as part
of a wider package, including those energy options that are able
to address security of supply concerns in a meaningful way.
4. What impact would any changes have on
industrial competitiveness and on efforts to tackle fuel poverty?
The Government must be committed
to tackling security of supply
Over-reliance on gas imports would
have a negative impact on competitiveness and so could ultimately
affect fuel poverty
It is not possible to comment on the extent
of any impact without knowing the scope of any proposed measures.
However, if security of supply in the context of UK energy policy
is to be taken seriously, as it should be, then the Government
must not shy away from implementing necessary means to help achieve
it. This should centre on the principle of positive incentivisation
that rewards achievement of goals rather than penalising failure
or shortcomings. This will encourage positive attitudes and participation.
Actions to deal with industrial competitiveness and fuel poverty
must be taken within the policy framework, not outside it.
Industrial competitiveness could be adversely
affected if the UK became overly dependent on gas imports from
unstable countries, as a consequence of price swings and rising
costs. Failure to address this would have considerable negative
impact on UK industry, particularly on those sectors that are
energy-intensive, and on domestic consumers, exacerbating the
situation on fuel poverty.
5. Is any change of Government policy necessary?
How could/should Government influence commercial decisions in
order to achieve a secure and diverse supply of energy?
Doing nothing will mean the end of
nuclear power generation in the UK
Yet the UK needs nuclear energy to
help ensure security and diversity of supply and to contribute
to a sustainable energy strategy
Suggested policy improvements to
give nuclear a level playing field:
Modify existing climate change
mechanisms, such as the Climate Change Levy, to take account of
the fact that nuclear generation makes virtually no contribution
to greenhouse gas emissions
Improve planning and regulatory
Look at long-term electricity
supply contracts. This is required for all fuel types
Decide policy for radioactive
Encourage provision for nuclear
education, training and R&D
New modular passive designs for nuclear
reactors will be competitive and can be brought to market commercially
if these policy changes are made
Government policy measures are needed to deal
effectively with security of supply concerns and to ensure sound
management of any associated risks. Primary amongst these is a
need to keep energy options open, with corrective steps taken
where necessary if inequitable conditions prevail amongst energy
providers. BNFL wants to see the nuclear energy option retained
and recommends a number of key measures for the Government to
take on board in order to ensure that nuclear power can make a
continuing contribution to secure and diverse energy supplies
as well to sustainable development.
Investors and industry alike need certainty
in respect of planning, construction, operational and regulatory
approvals. A climate of assurance must be in place if major important
infrastructure projects, such as replacement nuclear power stations,
are to be delivered and if investor confidence is to be promoted.
This is particularly true in respect of the nuclear industry,
which has long lead times and long pay-back periods. Government
must therefore take the initiative, actively create the right
framework for replacement reactor build and be prepared to take
prompt decisions in order to make progress.
Government also needs to take a longer-term
view of the energy supply situation. For instance it should review
how long-term electricity supply contracts can be put in place,
in order to ensure future provision of reliable baseload electricity
generation. It should also recognise that delivery of long-term
solutions requires market conditions that do not undergo radical
change and therefore it should ensure that policy is shaped to
The issue of internalisation of external costs
associated with energy production needs to be taken into consideration
in order to achieve harmonised conditions for all producers. Currently
nuclear generators include the costs of waste management, disposal
and decommissioning in their cost base and hence in the prices
charged to customers. This is not the case for other producers,
for example fossil fuel generators, where costs are not reflected.
In addition to levelling the playing field such harmonisation
will ultimately guide consumer choice towards those sources which
are cost effective and climate-friendly.
At the same time unfair discrimination should
be corrected. One example is the Climate Change Levy, which currently
does not allow nuclear generation any benefit, despite the fact
that it produces virtually no greenhouse gas emissions.
Government also needs to determine a comprehensive
radioactive waste management policy which recognises that today
safe waste management is an operational reality, that long-term
storage is a viable option and that waste from historic operations
has to be dealt with on a commercial basis. This will give confidence
to the public and to customers that nuclear energy is an acceptable
and realistic option for the UK's energy supplies.
Instituting these improvements in the policy
framework will inject more balance and help to maintain diversity
of choice in available energy sources, whilst still leaving purchase
decisions to generators in line with market considerations.
These points are explained in more detail in
BNFL's submission to the Performance and Innovation Unit's review
of UK energy policy. A copy of the submission is attached for
29 October 2001