Monday, October 1, 2012

Can cheap gas replace nuclear power?

Oct 01, 2012
By Michael Richardson For the Straits Times

WHEN a severe earthquake triggered a giant tsunami along parts of Japan's Pacific coastline in March last year, causing extensive damage and a dangerous meltdown in one group of atomic reactors, some analysts predicted it would be the death knell of the nuclear power industry.

The industry, which generates just over 12 per cent of the world's electricity, has certainly taken a heavy hit. Public confidence in nuclear safety has fallen and several major economies have announced plans to phase out atomic power.

The Japanese government said recently that it was aiming to eliminate nuclear power generation by 2040, despite warnings from industry and exporters about the danger of electricity shortages and higher costs.

All but two of Japan's 50 working nuclear reactors are offline for safety checks. Before the meltdown at the Fukushima complex, they supplied about 30 per cent of the country's electricity.

In the wake of the Fukushima crisis, Germany closed seven of its oldest nuclear plants. The government later announced it would shut all plants by 2022. Nuclear power used to provide nearly a quarter of Germany's electricity.

Even France, which depends on nuclear reactors for nearly 78 per cent of its electricity, is to close its oldest plant in 2016, a year earlier than planned.

In a deal with the Greens, France's Socialist Party President Francois Hollande has pledged to cut reliance on nuclear energy for electricity to 50 per cent by 2025.

Yet despite these planned closures and other phase-outs announced by Switzerland and Belgium, a recent survey by the United Nations nuclear agency shows that the industry has substantial growth prospects in the developing world, particularly in Asia, the Middle East and Africa, where electricity supply lags behind demand in many countries.

Projected growth is strongest in East Asia, led by China and South Korea. Both are big energy importers that want to improve energy security while cutting pollution and global warming emissions from coal-fired electricity generating plants.

The panel of international scientists advising the UN on climate change reckons that nuclear power has the largest potential for reducing greenhouse gas emissions at the lowest cost in the electricity generation sector.

In addition to its very low global warming emissions, nuclear power does not emit the noxious gases associated with power plants that burn coal. These gases contribute to air pollution blighting many Asian cities and harming human health.

South Korea generates nearly 35 per cent of its electricity from nuclear plants. Heavily coal- dependent China so far uses nuclear reactors to produce less than 2 per cent of its power.

But this proportion is due to rise fast over the next couple of decades. China's ambitious reactor building programme is set to resume soon. It was suspended following the Fukushima disaster.

China plans to use reactors to generate 5 per cent of its electricity by 2020 and 10 per cent by 2030.

Coal-reliant India also aims to raise its share of nuclear power generation capacity from 3.2 per cent to 9 per cent in 25 years.

At present, 30 countries operate 435 reactors, with a further 62 units under construction.

The annual update by the International Atomic Energy Agency said that of the 29 additional countries considering or planning to introduce nuclear power, 10 are in Asia, 10 in Africa, seven in Europe (mostly the eastern sector), and two in South America.

The new nuclear entrants in Asia include Vietnam, Bangladesh and Indonesia.

Are they making the right decision, given their lack of operational experience and the huge cost of a Fukushima-type accident?

The global energy landscape has changed radically in the past few years. The cost of generating electricity from solar photovoltaic arrays on land and offshore wind farms has fallen sharply in suitable locations, to the point where it is competitive or close to competitive in some areas with nuclear, hydro and coal-fired power.

The United States has also pioneered new drilling methods to extract natural gas from shale rock in large quantities. This is turning North America into a cheap gas exporter and has sent US natural gas prices plummeting.

The benefits of low gas prices may spread to Asia if the US and Canada become major sellers. This would work to the advantage of countries like Singapore, which made the decision years ago to base its electricity generation on gas.

The International Energy Agency predicted in May that gas was "poised to enter a golden age", in which it could be cheaper than coal as a fuel for power generation.

Mr Jeff Immelt, chief executive of US-based multinational General Electric, a leading supplier of energy products, told the Financial Times in July that he thought "some combination of gas, and either wind or solar" power would appeal to most countries.

However, the shale gas revolution has not yet spread to Asia and gas prices in the region remain much higher than those in North America.

Meanwhile, many Asian governments, tired of volatile fossil fuel prices, are seeking constant supplies of base-load power from nuclear reactors to meet rising electricity demand from industry and increasingly affluent households.

They are prepared to finance or guarantee nuclear power's high upfront capital costs, while hedging their bets by using gas or renewable energy whenever it is affordable and feasible.

The writer is a visiting senior research fellow at the Institute of Southeast Asian Studies.

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