Nuclear and gas - a low carbon future?
Having trashed wind on the grounds of being too expensive and needing too many subsidies, the "think tank options" to reduce emissions are Combined Cycle Gas with CCS (Carbon Capture and Storage), and Nuclear.
Civitas cost electricity from gas with CCS at £102.6 per MWh, only £6.10p/MWh more expensive than Combined Cycle Gas alone. These figures appear to come from the same Mott Macdonald report that has apparently underestimated the costs of intermittency in wind by £60 MW/h - dependable in one instance but not the other.
The first puzzle is why the difference between gas with CCS and unmitigated gas is so low.
The process of capturing carbon could represent as much as 40% of the energy cost of thermal power, so the 6% figure seems optimistic - especially as a substantial part of the cost of gas powered electricity come from fuel. Academic studies of costings don't lend themselves to a quick read by a layman so the feeling that a process that could add up 40% of additional energy costs will add only 5% to product price is a hunch not a hard fact - but it's probably safe to say that estimates for the costs of CCS have to be treated with caution. CCS is a technology known to involve major capital costs, both in the plant and for drilling to access geological gas stores, liquification of the captured CO2, transporting to the storage site and injecting it underground. It's also by no means sure that it will work - even a 1% leak would render the whole operation completely ineffective.
There's little point in losing too much sleep over a possible anomaly in CCS gas prices because the technology has a far bigger problem. Not a single commercial CCS project has been commissioned and the government has just withdrawn £1 billion of support for the technology. The chance of having gas with CCS on a time scale that keeps us on course to reduce emissions and to keep the lights on is very slim and gas without CCS is a very high risk policy.
Gas is better than coal in terms of carbon emissions but it is not a low carbon option. Commentators, including the IEA, are clear that gas will have serious impacts on carbon emissions, costs and investment in low carbon energy. There's also a dangerous assumption about fracked gas – that the UK will be able to exploit shale gas, keep gas prices low and reduce dependency on external suppliers like the Russia. Fracked gas in the USA has driven gas prices down and provides 30% of the domestic supply. It's not safe to assume that UK gas shale could fill the same role. The fracking process is not environmentally friendly. Depending on the rock type, it can produce millions of gallons of toxic waste water per well. The USA have relatively weak environmental controls for mineral exploitation and vast unpopulated areas to dispose of contaminated water. The process may pose far more problems in the densely populated UK, and, along with concerns about the stability of supply, suggests that assumptions about future gas supplies and prices could be badly flawed.
Rolling Stone magazine went a step further, with an article "the Big Fracking bubble, the Scam Behind the Gas Boom". The article, about the owner of Chesapeake Energy, offers quotes like this, from Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry,
"Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don't pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods. "This is an industry that is caught in the grip of magical thinking," Berman says. "In fact, when you look at the level of debt some of these companies are carrying, and the questionable value of their gas reserves, there is a lot in common with the subprime mortgage market just before it melted down."
Climate impacts aside. there are legitimate energy security concerns about putting all our eggs into an unproven and potentially economically catastrophic area. The Climate Progress article – “Natural Gas is a Bridge to Nowhere” offers a comprehensive critique of gas as a “bridge” to tackling climate change.
The other option of choice is nuclear power. Whatever the feeling about the safety or otherwise of nuclear power it is without doubt a genuine low-carbon power source. The problem is that it is not going to be a quick way of reducing carbon. Even if all the political and and funding issues miraculously disappeared overnight, the earliest plant wouldn't be operational until 2020. In a telling analysis of nuclear energy, Citibank has said:
“We don’t see new nuclear in the UK being commercially economic for public market investors unless the UK Government is willing to fully underpin construction, power price, and operational/safety risk – something the government so far is looking to avoid”.
The bank touches on several important factors financiers consider when looking at the energy market – government subsidies, construction cost, power price and operational safety/risk. To add to nuclear power's difficulties, a complaint about subsidies has been lodged with the European Commission – which, if upheld, would make it very unlikely any new nuclear would be built in Europe.
Bloomberg New Energy Finance in their recently published "White Paper - UK Power Forcasts" take a "conservative view" of the time scale for new build nuclear, and believe the first new plant is unlikely to be operational before 2022 - citing French experience with the new European Pressurised Reactor, currently 4 years behind schedule and three billion Euro over budget.
To add to nuclear woes, the BBC report that in an open letter to David Cameron 4 former FoE directors have said that nuclear power will be putting Britain's strategic energy future into French hands and that it represents a "massive rip-off" for the British taxpayer. I-Nuclear report on the details of the letter's content
So it's not so clear that gas and nuclear can be cost competitive or if they can can deliver carbon targets as quickly and effectively as wind. The real objection to gas is that unless CCS can be made a reality quickly it is not a low carbon option.
The problem with nuclear is that it may not be low cost. According to the BBC the agreement to build new plant includes agreement to cap liability in the case of accident to the first billion of clean up costs. They say that estimates prepared for Energy Fair suggest that if operators had to buy insurance at the market rate it would add at least 12 p a kilowatt to electricity prices - and potentially 20 times that figure.
The need for subsidies is one of the principle objections to renewables in the "think tank" reports. On this issue, once again "Think Tank Gate" consistently distorts the truth surrounding subsidies, which is a far more complex than tale the headlines suggest.
next- subsidies truth and lies
images: www.EON.com
