The world is choking on carbon. We're entering an energy-constrained economy as consumers and businesses alike begin to wonder where their next electron is coming from.
No wonder, then, that French company EDF recently agreed to take over the British nuclear industry by purchasing British Energy for £12.5bn. The purchase gives it access to all but two of the country's nuclear power plants, which will in any case shut down in 2010.
The government has touted the purchase as part of a global "renaissance" for the nuclear industry, that will see the UK's aging fleet of nuclear power stations replaced, at least four more reactors constructed and the UK begin to export its nuclear expertise to other countries. But how viable is the nuclear renaissance, at home and further afield, and what constraints do energy companies face as they try to bring reactors onstream?
There are several significant benefits to nuclear power that have prompted talk of a renaissance in the technology, and William Kovacs, vice president of environment, technology, and regulatory affairs at the US Chamber of Commerce, is happy to point them out. "A lot of people don't want to look at nuclear energy," says Kovacs, who recently authored a report warning of the costs associated with regulating CO2. "You can generate large baseloads of electricity, which is what we need, and not generate any CO2."
In contrast, renewable sources like wind and solar are notoriously unreliable in terms of baseloads. The energy is there when the sun or the wind is up, but of course such resources are sporadic. Conversely, nuclear plants produce constant energy, and lots of it. Unlike coal plants, they produce no carbon emissions, and can therefore be useful at a time when legislation is mandating energy producers to reduce their greenhouse gas output.
Secondly, once up and running their fuel efficiency is extremely high; uranium is up to 16,000 times as efficient as oil. On the face of it, in an economy where energy costs seem set only to rise, nuclear energy looks like a no-brainer.
Nevertheless, the concept faces significant challenges in the future, not the least of which are financial, warns Jurgen Weiss, managing director of advisory services at carbon trading analyst firm Point Carbon. "In the climate change community there is still a widespread belief that in the US nuclear will play a substantial role in solving the climate change problem," he says. "I am less certain. Even if you could argue that it makes sense, I think there are some serious practical hurdles for the next generation of nuclear plants to get off the ground, and access to debt is one."
The financial crisis could not have come at a worse time for companies hoping to capitalise on the nuclear business. Clean tech firms face enough challenges in terms of getting project funding in a cash-constrained market, but the capital required to build a nuclear plant dwarfs that needed for, say, a decent-sized wind farm.
Moreover, wind farms and solar plants can begin producing energy relatively soon after construction begins, and can expand their energy in line with additional construction. Nuclear plants don't move any juice until they're completed, and they can take a long time to build.
In Asia, which is the region most likely to kick-start the nuclear business, the OECD Nuclear Energy Agency says that reactors are taking an average of 62 months - just over five years - to come online. Many of these reactors are scheduled for grid connection in the next couple of years. However, The wider picture looks more dismal. The International Atomic Energy Agency (IAEA) says that 35 reactors are currently in construction around the world, but many have no official grid connection dates, or in some cases even start dates.
The UK isn't the only western country hoping for a nuclear renaissance. The outgoing US administration has been pushing for a revival since the DoE unveiled Bush's Nuclear 2010 strategy six years ago. The programme originally pursued the goal of deploying new nuclear reactors in the US by 2010, a goal that is now no longer realistic. Only one reactor is currently being built in the US, and that one started in 1972. After a long cessation, construction has restarted and it is now slated for completion in 2013.
However, despite the challenges governments remain commited to making the nuclear renaissance a relaity.
While the renewable energy sector has had to lobby extensively for production and renewable tax credits, the decades-old nuclear industry has a history of government subsidy and taxpayer support looks set to continue. In the UK, British Energy was bailed out by the British Government in 2002, leaving the UK taxpayer on the hook for at least $5.4bn, according to a Houses of Parliament Select Committee report.
In the US, the 2005 Energy Policy Act provides a production tax credit of up to $18 per kw/hr for the first eight years of a plant's operation for advanced third generation nuclear reactors. It also legislated low-debt financing on up to 80 per cent of construction costs for advanced nuclear plants subject to certain conditions, guaranteeing that if the utility defaulted on the loan, the Treasury would pick up the tab.
Advocates of nuclear power argue that such support is necssary when the cost of construction for nuclear power plants is estimated at around 30 per cent more than that for conventional non-clean coal or natural gas plants.
But while using the public purse to underwrite loans for expensive construction projects is welcomed by the nuclear industry, it is perhaps less appealing to consumers recently saddled with a trillion dollar quasi-nationalisation of the financial sector.
The future of the nuclear sector will depend in large part on the regulatory landscape over the next few years. An analysis by the Congressional Budget Office suggests conditions for the successful construction and operation of nuclear plants rests on whether carbon emissions are regulated and factored into energy plants' costs.
The Warner-Lieberman bill that failed to make it through Congress this year would have imposed a mandatory cap-and-trade mechanism in the US, as has happened in Europe. Both presidential candidates have expressed support for such a scheme going forward. The CBO analysis said that under such a carbon regime, nuclear power would become the cheapest form of electricity if carbon were traded at $45 per metric tonne. However, that is subject to current assumptions about volatile parameters such as construction costs.
But with doubts about the future make up of carbon cap-and-trade schemes and the subsequent price of carbon continuing, reviving the nuclear industry won't be the slam-dunk certainty that advocates might have us believe.
When Reagan laid out plans to expand nuclear capacity in 1981, some of the economic conditions were similar to those we face today. There was tension in the middle east following the Iranian revolution and the commencement of the Iran/Iraq war. Oil prices had spiked just as the world went into a recession. And while he didn't face the prospect of carbon regulation, neither did he have to contend with such deep concerns over nuclear waste disposal - the federal Yucca mountain project, designed to store nuclear waste in a hollowed-out mountain in Nevada, is woefully behind schedule and nuclear waste is languishing in reactor-based cooling ponds that experts suggest represent perfect terrorist targets.
Even against this backdrop, Reagan failed to kickstart the nuclear industry. Bush didn't do much better. How will the next president do, or will it remain up to the Asian tigers to pull it along?