Is the government so determined to push through nuclear power stations that it is planning secret subsidies to the industry which will add 10 per cent to household electricity bills? That’s the conclusion of the Guardian, which ran a long news article and a highly critical editorial on the subject this Monday.
The truth is a little murkier. The story, while factually accurate, misrepresented the proposal rather badly. Nuclear power understandably triggers weary scepticism in many otherwise apathetic people – the history of the industry is closely bound with international realpolitik, intrigue at home and the warm afterglow of over two thousand nuclear bomb test detonations since 1945.
But, in fact, this new policy is a lot better than what we’ve got used to, and the Guardian called this one wrong. What at first seems like a subsidy for an unpopular type of power turns out, on closer inspection, to be something rather different: a cut in the implicit subsidy for fossil fuels. While there is legitimate debate about whether the risks of nuclear power outweigh its benefits, fossil fuels unquestionably cause massive environmental damage and human misery.
The government proposal, if implemented, is not to channel money to nuclear power, but to raise the cost of CO2 emissions licenses, which are currently unrealistically cheap. Recession notwithstanding, this is a very good idea.
Every type of energy source has its costs, whether they be for fuel, labour or construction. While explicit subsidies in the UK are currently directed towards renewables (particularly wind turbines) there are actually plenty of other ways in which the price we pay on our electricity bills does not reflect the true cost of generation.
In particular, for fossil fuels there is a glaring mismatch between the full economic cost of resource extraction (digging the coal out of the ground, or pumping the oil or gas), which we do pay up front, and the economic cost of the pollution produced, which we don’t.
This is not abstract, nor is it the wishy-washy moral argument of a hand-wringing liberal, nor is it even an argument about saving a pure and pristine environment from smoke and soot.
The cost of pollution is paid for one way or another whatever we do – it’s just that we don’t recognise this through our energy bills at present. But battered coastal defences, stretched NHS budgets for respiratory diseases, countless deaths of miners (much of our coal is now imported from dangerous mines abroad) and droughts which decimate third-world farming are all external costs of burning coal.
The only question is whether we take these costs fully into account when planning our energy policy. At present we don’t – which, as well as harming the environment, will probably end up costing more. The cheapness of fossil fuels is a mirage, a market failure brought about by a system which recognises some costs, but ignores or discounts others. Seen in this light, a rise in energy bills, with its attendant increase in costs for the poor, seems less unethical – particularly since the brunt of the invisible subsidy to coal generation is at present borne by the disadvantaged anyway. The rich can always pay their way out of a crisis – the poor can’t.
Besides, raising the cost of fossil fuels isn’t actually about increasing the total spent on power – since the money will have to be spent anyway mitigating coal’s environmental and health impacts, this would be little more than a change in accounting practices. That’s not to say it is merely a matter of bureaucracy – the way businesses and governments account for profits and costs has a huge impact on what decisions they make. Just ask Northern Rock, an organisation that realised far too late that its apparently profitable business was completely unsustainable.
So the Guardian isn’t really correct in saying that this is a bung to the nuclear industry – it’s more of a slap for coal. The trouble is, the nuclear industry gets plenty of other hidden subsidies – and this is where I concede that the newspaper does have a point of sorts. If the argument for recognising the full cost involved in coal power is unanswerable, then a similar case can and should be made for nuclear.
The cost of decommissioning old nuclear power plants, for example, still isn’t fully accounted for, though even the provisional figures are breathtaking. The Dounreay site on the northern coast of Scotland, for example, is currently being demolished and decontaminated, a process which is projected to take until 2336 – and that’s not a typo. (The interim price for the first 30 years of this is close to £2.9bn.)
The cost of potentially disastrous (if vanishingly unlikely) nuclear accidents is not factored in either. And we still don’t know what to do with the waste: as I never tire of saying, in six decades of nuclear power generation, humanity has not managed to permanently dispose of any of the high-level waste produced by nuclear power plants in that time. This isn’t just a source of concern on safety grounds – it also leaves us in the dark as to the future costs of dealing with the waste.
So the Guardian is both wrong and right. It is wrong that the proposals are a bad idea, and wrong that they are simply a subsidy to nuclear power. But they are right that nuclear power gets far too many hidden bungs. These need to be eliminated just as much as those to coal.
All this talk of economic costs, of raising prices and of level playing fields in a free market might all sound a little Thatcherite for an article in Tribune. But regardless of what political decisions we make about the organisation of the energy industry, whether we want it wholly privately run, wholly public, or somewhere in between, the argument remains the same.
Decisions about our future energy needs really ought to be based on a full assessment of the economic and environmental costs involved – and any subsidies we decide to pay, whether to wind turbines or nuclear reactors, need to be explicit, evidence-based and properly accounted for.
