By Polly Toynbee (THE GUARDIAN, 19/05/06):
To launch a political hot potato like a new nuclear energy policy at a CBI dinner was no way for Tony Blair to start this debate. Gifting business this apparent sweetener looked like the final scenes of Animal Farm: the other Labour animals were obliged to press their noses against the CBI window hoping to overhear this vital conversation as their leader caroused with the farmers. It was yet another example of his defiant take-it-or-leave-it, jumping-the-gun policy making. It is not a way to persuade doubters.
Nuclear power may or may not be necessary, but it has always been clear that Tony Blair intended to put himself on the nuclear side. Nuclear suits his style. It is big, bold, manly - an apparent quick fix for everything tricky in energy policy. It takes nerve and risk, it tickles the concrete-pouring industries, and it upsets the woolly types. If he pushed it hard, it could become his domestic Iraq: throw in Trident replacement and you have nuclear war on the home front. No sooner had he fired the opening salvo than Ken Livingstone planted his flag on the opposite side. Blair is at his happiest when pitched against lefties and greens while outfoxing Tories. What does the energy minister Malcolm Wicks think about his review being bounced? Bumping into him yesterday, he gave a wry shrug, rolled his eyes and says: "Well, he's the prime minister ..." But his review is, he says, less about nuclear power than other things.
With no report until July, a forest of energy factoids float about with contradictory costings no one agrees with. But one thing is emerging starkly: investors are unlikely to plunge into the expensive and unknowable nuclear future without assurances and cash from the taxpayer or consumer first. If there was a natural commercial appetite to build nuclear, there has been nothing to stop them anywhere in Europe or the United States for decades. Coming out as pro-nuclear in theory may be clever political positioning, or else it just stirs anger needlessly for something that may never happen. Why not? Because investors will not back it without state cash.
So I asked Malcolm Wicks the vital question. Will nuclear power get any special inducement not offered to other forms of energy generation? Will there be a genuinely level playing field giving every prospective form of clean energy the same chance to prove its viability? That means nuclear power stations would have to pay not only for their waste storage, but the high cost of full insurance: currently they only cover themselves up to a paltry £140m of risk - so a Chernobyl would leave the state picking up a huge bill for compensation and clean-up. Will future nuclear generators be forced to pay into a fund each year enough money to cover all their own decommissioning? The state is now paying a £70bn bill to close existing stations - with the price still rising.
"Yes," was his answer. "Yes, yes and yes. They will pay all their own costs and the Treasury wants to be sure of that." The state paying current nuclear decommissioning costs was, he said, "a disgrace". Not one penny in soft loans or guarantees? "No." What about the price of energy? If the government were to guarantee a fixed minimum price for say, 30 years, it would give the kind of financial security for investors to explore the relative capital and pay-back costs of all kinds of generation. Will the government fix the price? "No, absolutely not".
So it will be left entirely to the market to decide whether to go nuclear? "We will be working on planning regulations generally, so things can move more quickly." Difficulty in getting permissions has indeed been one obstacle to nuclear investment, but if that really is the only extra help nuclear gets, is that enough to make investors go where they have feared to tread until now? "I think it could be, if - and the report's not out yet - the government signalled that it wants nuclear as part of the mix."
Here is the great value of private markets. At present, quite rightly, no one wise trusts the nuclear industry's estimates for the cost of 10 or 20 new stations that will take from 2016 to 2030 to build. None has ever come in anywhere near time or price: the only new one, in Finland, is already nine months overdue only a year into a five-year building programme (and it is a subsidised loss-leader by a French company hoping to win contracts from all over Europe).
In estimating the true price, private markets will do far better than any government department. As, alas, proved over and over in PFI and PPP contracts, private investors propelled by Adam Smith's hidden hand of profit will always trump state planners in striking the best deal for themselves. So leave it to them to decide if nuclear, with the full cost of all its risks, really is a cheaper option than offshore wind, tidal and wave power or coal-fired stations with carbon sequestration. Let the state set out safety and planning laws, set renewables obligations and carbon-trading schemes and then let investors decide on an absolutely level playing field.
So before anti-nuclear fury erupts, left to the market the chances are that nuclear power will lose out to almost anything else. Writing yesterday in the Financial Times, Alexander Johnston, from a leading consultancy to Fortune 100 companies, lays out the terms he thinks investors would require. He points out that most of nuclear power's advantages are not financial at all but public-policy benefits: home-grown generation, carbon-free, a hedge against any astronomic fossil-fuel price rise - none of which interests investors. It would need, he says, fixed quotas for nuclear generation to guarantee nuclear energy is bought, whatever its price. Mercifully, Malcolm Wicks specifically rules that out. It would need consumers to pay a premium to cover nuclear costs, as they did until 2000. Wicks will have none of that either. All in all, Johnston is distinctly cool about nuclear as any investor's dream.
So Tony Blair going nuclear may turn out to be an eccentric political flourish (though a PM declaring for nuclear may risk chilling investment in wind, wave or carbon capture). Not surprisingly, Wicks sounds frustrated that his review has been hijacked in advance by the nuclear red herring. Even doubling present nuclear capacity (unlikely) only reduces carbon emissions by 8% by 2030. Other issues matter so much more.
For a start, government reports show that 30% of energy could be saved. It's not politically sexy, but need not be hair-shirt either. Banning incandescent light bulbs and stand-by buttons on TVs, printers etc would save vast amounts. Look how simply labelling white goods with energy-saving ratings made virtually all of them AAA in a short time. Wicks is determinedly optimistic. "It can be done," he says. There is still time. "This is humankind in a race against global warming. People see the ice caps melting and they are ready to take action. There will be step changes in the cars we drive, the homes we live in, what we build. No more messing around. Just watch this space!" And we will, impatiently.