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Nuclear Power: Ecologically Sustainable or Energy Hot Potato? A case study Tilak Ginige 1 , Ann Thornton 1 , Frazer Ball 2 1 School of Applied Science, Bournemouth University, Poole,BH12 5BB, United Kingdom. 2 The Business School, Bournemouth University, Poole,BH12 5BB, United Kingdom. Email: [email protected] ; [email protected] Abstract: ―Man is here only for a limited time, and he borrows the natural resources of water, land and air from his children who carry on his cultural heritage to the end of time. One must hand over the stewardship of his natural resources to the future generations in the same condition, if not as close to the one that existed when his generation was entrusted to be the caretaker.(Delano Saluskin, 1991) We are now facing the prospect of fossil fuels running out. The magnitude of the hydrocarbon resource gap, lack of significant alternative energy sources and disastrous impact on society of energy shortfalls leave few choices. Any gap between supply and demand must be met through increased efficiency or increased nuclear/renewable energy production. With the proposed development of 10 nuclear power stations providing 16GW of new capacity, the government appears committed to obtaining a significant percentage of the country‘s energy from this source. The sustainability of this power source in comparison to other forms of low carbon energy is of paramount importance. The World Nuclear Association stated: ‗[nuclear power] is robust from a sustainable development perspective …‘ Using the basic pillars of sustainable development (economic, environmental and social) this paper examines this statement using the proposed reactors at Hinkley Point, Somerset and Oldbury, (South Gloucestershire), as a case study. EDF Energy plans to develop two new reactors at Hinkley Point with forecasted construction costs in excess of £9bn to produce a capacity of 3.2GW. The Company believes this will boost the regional economy by over £500m, particularly through job creation, during the construction period and beyond. Horizon Nuclear Power is to invest £15bn to produce a capacity of 6 GW and again positively impact on the regional economy. These nuclear power stations will be located on the Severn Estuary, and thus enabling the abstraction of seawater for the cooling process. However, water is then returned to the sea at a ‗slightly raised temperature‘. Even small increases in temperature can create fluctuations in environmental conditions enabling the establishment of invasive/non-native or eurybiontic species that can rapidly colonise and threaten marine and coastal biodiversity. Studies have also shown a decline in phytoplankton and zooplankton abundance close to the discharged water with possible impacts upon the wider food chain and overall ecosystem services. Highly uncertain decommissioning and waste disposal costs are of key public and governmental concern when assessing the relative competitiveness and sustainability of nuclear power against other forms of low carbon energy. The Nuclear Decommissioning Authority shows current 394

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Page 1: Nuclear Power: Ecologically Sustainable or Energy Hot ... · Nuclear Power: Ecologically Sustainable or Energy Hot Potato? A case study Tilak Ginige1, Ann Thornton1, Frazer Ball2

Nuclear Power: Ecologically Sustainable or Energy Hot Potato? A case

study

Tilak Ginige1, Ann Thornton

1, Frazer Ball

2

1School of Applied Science, Bournemouth University, Poole,BH12 5BB,

United Kingdom. 2 The Business School,

Bournemouth University, Poole,BH12 5BB, United Kingdom.

Email: [email protected]; [email protected]

Abstract:

―Man is here only for a limited time, and he borrows the natural resources of water, land and air from his children who carry on his cultural heritage to the end of time. One must hand over the stewardship of his natural resources to the future generations in the same condition, if not as close to the one that existed when his generation was entrusted to be the caretaker.‖

(Delano Saluskin, 1991)

We are now facing the prospect of fossil fuels running out. The magnitude of the hydrocarbon resource gap, lack of significant alternative energy sources and disastrous impact on society of energy shortfalls leave few choices. Any gap between supply and demand must be met through increased efficiency or increased nuclear/renewable energy production. With the proposed development of 10 nuclear power stations providing 16GW of new capacity, the government appears committed to obtaining a significant percentage of the country‘s energy from this source. The sustainability of this power source in comparison to other forms of low carbon energy is of paramount importance. The World Nuclear Association stated: ‗[nuclear power] is robust from a sustainable development perspective …‘ Using the basic pillars of sustainable development (economic, environmental and social) this paper examines this statement using the proposed reactors at Hinkley Point, Somerset and Oldbury, (South Gloucestershire), as a case study. EDF Energy plans to develop two new reactors at Hinkley Point with forecasted construction costs in excess of £9bn to produce a capacity of 3.2GW. The Company believes this will boost the regional economy by over £500m, particularly through job creation, during the construction period and beyond. Horizon Nuclear Power is to invest £15bn to produce a capacity of 6 GW and again positively impact on the regional economy. These nuclear power stations will be located on the Severn Estuary, and thus enabling the abstraction of seawater for the cooling process. However, water is then returned to the sea at a ‗slightly raised temperature‘. Even small increases in temperature can create fluctuations in environmental conditions enabling the establishment of invasive/non-native or eurybiontic species that can rapidly colonise and threaten marine and coastal biodiversity. Studies have also shown a decline in phytoplankton and zooplankton abundance close to the discharged water with possible impacts upon the wider food chain and overall ecosystem services. Highly uncertain decommissioning and waste disposal costs are of key public and governmental concern when assessing the relative competitiveness and sustainability of nuclear power against other forms of low carbon energy. The Nuclear Decommissioning Authority shows current

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discounted decommissioning and clean-up liabilities for existing nuclear facilities of over £45bn. If sufficient provision for costs of decommissioning waste from the new proposed nuclear facilities are not properly provided for, the burden will fall on the taxpayer (either directly or indirectly). The key issue here is to ensure that nuclear energy is truly sustainable and not simply shifting the economic and environmental burden of responsibility onto future generations to satisfy short-term political energy objectives. Keywords:

nuclear power, sustainable development, thermal pollution, economics, intergenerational equity.

1 Introduction

Given the move to low carbon technologies in order to mitigate the effects of climate change (with nuclear generation currently reducing carbon emissions by 7-14%) (DECC,2011), the UK plans to invest heavily in nuclear power, with the impact on the Severn region now to be significant, following the rejection of the Severn Tidal Barrage scheme. However, there is currently a great deal of uncertainty and debate over the likely costs of expanding the UK‘s nuclear electricity generating capacity. Aside from the ecological and legal issues surrounding the building and operation of new nuclear facilities, economic considerations are very much to the fore, for the energy companies themselves, the government and the region. The energy companies involved in new nuclear development in the Severn area are keen to promote the regional economic benefits from the schemes. Job creation and impact on the regional economy are seen as being key benefits. Horizon Nuclear Power state that 800 permanent jobs will be created at Oldbury (South Gloucestershire) during operation and a peak of 5000 jobs during construction(Horizon,2011). Hinkley C. (Somerset) is projected to provide ―£100m of economic benefit for the regional economy during every year of construction‖ and ―£40m per year in economic benefit for every year of the site‘s 60 year operation‖ (EDF Energy,2011a). EDF Energy reveals that 700 permanent and 200 contract staff will be required during the operation of Hinkley C. Furthermore, forecasts suggest a peak construction workforce of 5600, with 20,000-25,000 individual jobs being created over the 10 year construction period, with up to ¼ of these going to local people. To further support the local workforce, the company is to invest £6.1m in local colleges to help train potential employees and create more new apprenticeships to provide 200 of the technicians required by the new power station. The company also has plans to establish a £20m community fund to be spent on local projects (EDF Energy, 2010). The modern concept of sustainability has its roots in the technique of forest management practised by central European foresters in the eighteenth and nineteenth centuries (Schutt,1992). It was fundamentally an economic management technique and was not inspired by ecological or biological considerations (Schutt, 1992). The current definition of sustainable development is as much concerned with economic and social development as it is with environmental protection (Brundtland, 1987). According to Brundtland sustainable development (SD) is a process of transformation which, by combining economic growth with broader social and cultural changes, enables individuals to realise their full potential. This dimension of sustainability brings with it the recognition that development must adhere to the physical constraints imposed by ecosystems, so that environmental considerations have to be embedded in all sectors and policy areas. Sustainable development was one of many issues discussed by the International Court of Justice in the Danube Dam case (The Gabcikovo-Nagymaros(1998). In this case Judge Weeramantry in his dissenting opinion argued that the principle of sustainable development had already become part of modern international law and practice, however the court in its infinite wisdom stated that the ‗concept of sustainable development‘ was one which expressed the need to reconcile economic development with the protection of the environment. The EU incorporated the principle of sustainable development into Article 2 of the Treaty on European Union provided that the Community ―shall have as [one of its tasks]…to promote throughout the Community harmonious, balanced and sustainable development of economic

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activities(Treaty of Amsterdam,1997), and Article 6 provides ―Environmental protection requirements must be integrated into the definition and implementation of the Community policies and activities referred to in Article 3, with a view to promoting sustainable development‖(Treaty of Amsterdam,1997). The Lisbon Treaty made this commitment stronger and the new Article 3 provides that ―Union shall…work for the sustainable development of Europe…‖ indicating that strengthened sustainable governance is in place (Treaty of Lisbon,2007). In the UK the definition changed, from a trade off between the economy and the environment (DEFRA,1994) in 1994, to 2005 where the definition expanded to incorporate five guiding principles (Five principles include living within environmental limits, just society, sustainable economy, good governance and sound science). The effectiveness of UK sustainable development legislation however remains questionable, and none go as far as to impose a duty to achieve sustainable development. For example it is questionable to what extent the legal duty in the Planning and Compulsory Purchase Act 2004 Section 39(2) which requires all plan making bodies to exercise their function ‗with the

objective of contributing to the achievement of sustainable development‘ has any real content or value. However, the non-binding wording allows a great deal of discretion. Sustainable development has been incorporated into national law in India, through the Vellore Citizens‘ Welfare case(Vellore Citizens‘ Welfare Forum v Union of India AIR [1996]) and in Sri Lanka through the Eppawela case(Bulankulama and Others v Secretary, Ministry of Industrial Development and Others SLR [2000]) and could under certain circumstances be said impose duties and obligations on public and private bodies (Razzaque,2002). This development, further suggests that the issue of the needs of the current generation and those of future generations are central to the Brundtland definition of sustainable development (Rauschmayer, et al., 2011). Needs can be distinguishable from preferences as they are considered the very minimum necessary for the survival of a species i.e. food, clean air and water and shelter a tolerable climate. There is however considerable debate about what we really ‗need‘ (Redclift,1993). The problem is further compounded when we engage in judging the needs of the future generations owing to the fact that what is valued by one generation will not necessarily be held in the same esteem in the preceding generation (Bell, & McGillivray, 2008) . In this context nuclear technology can amongst other things contribute significantly to the creation of a steady and abundant supply of electrical energy. It is suggested that electricity generated from the use of nuclear power satisfies the economic and environmental protection goals of the Rio Principles (Joskow,2009). Furthermore the energy aspect of nuclear power has links with the three dimensions of sustainable development – economic, environmental, and social. Energy services are fundamental for economic and social development. As energy use will continue to grow, its health and environmental impacts will have to be controlled, alleviated or mitigated in order to achieve sustainable development goals. In a bid to establish nuclear energy as the solution to UK‘s the energy problem, the government in 2010(Cabinet Office,July-2009) rebranded nuclear energy as a means of delivering a sustainable energy supply which mapped on to the internationally agreed Millennium Development Goals(UN Millennium Development Goals). To truly appreciate this aspect of nuclear energy we will analyse its environmental and economic implications.

2 Environmental Implications

The environmental concerns over nuclear power, such as the difficulties with the disposal of intermediate and high level waste, are well documented and it is beyond the scope of this work to address all these issues. However, a significant and little considered area of concern that could call into question the ‗sustainability‘ of nuclear power is the ‗death by a thousand cuts‘ ecological impact from the new power stations. The cumulative impacts of a small number of ‗minor adverse‘ or ‗moderate adverse‘ impacts (EDF, 2011b) combined over the operational lifetime of the power station could, ultimately, result in major adverse impact.

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The consultation process for the Hinkley Point C (HPC) power station finished on 28 March 2011 (EDF, 2011b). As one of the statutory consultees, the Environment Agency (EA) provided a detailed response to the proposal and, in particular, addressed a number of ecological concerns (EA, 2011). These focussed upon three key areas of the main HPC development. The locations considered for the intake and outflow pipes are shown in fig. 1. EDF (2011)b advised their preferred configuration to be intake at point A and outflow at point B. It is anticipated that the intake rate will be ‗low velocity‘ at 120cumecs. Temperature of the discharged water will be raised by 12.5oC. The locations for the intake and outflow pipes represent the least damaging option. However, the Environment Agency (EA, 2011) expressed concern about a lack of appropriate assessment of the impact from the thermal plume particularly modelling in different conditions for example a ‗hot summer‘. They require further studies to be undertaken and reviewed by the EA prior to a planning application being submitted.

Fig. 1 Proposed locations for intake / outflow pipes (Source: Forster, et al., 2011).

The thermal plume will have an impact upon the species assemblage within the Severn Estuary with warmer water loving fish, such as bass, thriving and colder water species, for example cod, moving away from the area (Forster et al. 2011). There is no mention within either the EDF (EDF,2011b) assessment or the Environment Agency (EA, 2011) response as to the potential for invasive / non-native species to colonise the area. There are no definitive criteria for determining whether a non-native species will become invasive. It is possible that the niche created by a cold-water species moving away could provide an ideal opportunity for a non-native species already present within the ecosystem to exploit (DEFRA 2011). The BEEMS (Forster et al. 2011) study highlighted the likely impacts from cooling water discharge without biocide and discharge with biocide (likely hydrazine). There are no studies, as yet, into the impact of this chemical on the marine environment within the Severn Estuary. The Environment Agency has recommended further study (EA,2011).

2.1 Fish impingement / entrainment

It is this aspect of the nuclear power plant development that could, potentially, result in significant impact on the marine ecology of the Severn Estuary. Again, the Environment Agency expressed concerned over a lack robust survey methodology used by EDF to establish likely impact. They note that only using a beam trawl would not have sufficiently sampled the marine environment and would have missed those species present in the water column. Although it is acknowledged that the turbidity of the water within the Severn Estuary results in limited commercial fishing activity, the population of eel within the area is significant. It is reported that 95% of elver catch in the UK comes from the Severn Estuary (EA, 2011).

3 Relevant International, EU and UK Legal Instruments

There are several International, European and National legislation that need to be taken into considered in relation to the proposed developments. These can be broken down into preventive and sanctioning legislation (Ginige,2002) and have been considered in depth in the April 2011 report

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produced by EDF Energy( EDF, April 2011). It is suggested that the majority of legislation can be adhered to with appropriate monitoring(EDF,2011b) by regulatory agencies. However it is suggested that there may be issues with regard to the Eel Regulations of 2010(SI 2009 No. 3344) and EU Habitats Directive( Dir.92/43/EEC (1992). The European Eel Regulations 2010(COUNCIL REGULATION (EC) No 1100/2007) state that it is a requirement that mitigation is in place at the intake point for power stations to prevent impingement by eel. The European Eel has also been placed on the CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES),1973) register thereby adding a further level of protection for this species (E A, 2011). In addition, the impact on the marine food web of impingement / entrainment of smaller species, for example the brown shrimp (Crangon crangon) have not been assessed. Significant destruction of populations of these species could have impacts upon the ecosystem within the region and the possible further decline of protected species, for example Allis shad (Forster et al. 2011). The Environment Agency (2011) subsequently supported the inclusion of a fish return device within the intake / outflow system for HPC. However, they require further details of the location of the fish return to ensure it is not within the vicinity of the thermal outflow (Payne, 2011).

3.1 Cumulative Impacts

The European Commission published a booklet titled Managing Natura 2000 Sites: The Provisions

of Article 6 of the Habitats Directive92/43/EEC in 2000(European Commission, 2000), giving detailed guidance on Articles 6(3) and (4) (European Commission, 2001) in 2001 and in 2007 a guidance document on Article 6(4)( (European Commission, 2007) which was intended to 'further develop and replace' the section on Article 6(4) of the booklet of 2000((European Commission, 2007). The main aim of these documents was to ensure a coherent application of the Directive's provisions at national, regional and local level. Thus contributing to the establishment of sound management of the Natura 2000 network. Habitats Directive attempts to ensure that those habitats that come under its jurisdiction per Article 6 are not significantly affected by plans or projects. Therefore, such plans or projects should not normally be authorised (Article 6(3)). The provisions of Article 6(4), which provide for compensatory measures, constitute an exception to those of Article 6(3) and must therefore be interpreted restrictively(European Commission, 2000), (European Commission, 2007). Thus in the context of Article 6(4), the question that needs to be asked is whether a plan or a project is likely to have a significant effect on the site concerned within Article 6(3) of Directive 92/43. Whenever the responsible authorities consider it probable that there might be a significant effect, they have to make an assessment. The requirement for an appropriate assessment of the implications of a plan or project is that there is a probability or a risk(Case C-127/02 Waddenvereniging [2004]at 43) that the latter will have significant effects on the site concerned(Case C-127/02 Waddenvereniging [2004]at 44). Furthermore any reasonable scientific doubt as to the absence of adverse effects on the integrity of the site must be removed for authorisation to be given(Case C-127/02 Waddenvereniging

[2004]at 59) and Case C-239/04 Commission v Portugal [2006] at 31). In order to determine whether there is likely to be a significant effect, an appropriate assessment has to be made, according to Article 6(3) of Directive 92/43. The assessment under Article 6(3) of Directive 85/337(Dir. 85/337 (1985) OJ NO. L 175/40 )only requires an assessment of a project on the environment in general, while the assessment under Article 6(3) is site-specific and must examine whether a plan or project adversely affects the integrity of the natural site in question: ‗assessments carried out pursuant to Directive 85/337 or Directive 2001/42 cannot replace the procedure provided for in Article 6(3) and (4) of the Habitats Directive‘(Case C-418/04, Commission v Ireland [2007] at 231). The Commission documents suggest the type of considerations that should be take into account for the assessment; in particular, the necessity to identify all potential impacts, including cumulative impacts, and to use the best available techniques and methods, to examine the most effective mitigatory measures in order to avoid, reduce or cancel the negative impacts and to use the best possible indicators for ensuring the biological integrity of the Natura 2000 network

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(Kramer,2009). In the UK this aspect is reflected in regulation 61 of the Conservation of Species and Habitats Regulations 2010 (SI 2010 No.490) which states that the competent authority, before deciding to undertake, or give any consent, permission or other authorisation for, a plan or project which—is likely to have a significant effect on a European site or a European offshore marine site (either alone or in combination with other plans or projects), and is not directly connected with or necessary to the management of that site, must make an appropriate assessment of the implications for that site in view of that site‘s conservation objectives. The Marine report (EDF, 2011b) made references to ecological impact from the HPC development with the majority deemed to be ‗minor adverse‘. However, there are no studies assessing the cumulative effects of the ‗minor adverse‘ and ‗moderate adverse‘ impacts. An area of concern expressed by the Environment Agency (EA, 2011) was the, as yet unknown, potential impact from both Hinkley Point B (HPB) and HPC operating at the same time. This is a theoretical possibility with HPB due for decommissioning in 2016. Any delay in that decommissioning could result in a combined impact from both power stations. Concerns regarding this oversight were flagged by EA in their report stating that ―under regulation 61 of the Conservation of Habitats and Species Regulations 2010, if the combined impacts cannot be concluded to have no adverse effect on the integrity of the Severn Estuary SAC (Annex II fish species), then compensation may be required under regulation 66 of the Conservation of Habitats and Species Regulations 2010‖ (EA, 2011).

4 Nuclear Economics

The World Nuclear Association (WNA) believes that nuclear power is competitive against other methods of electricity production in terms of costs (World Nuclear Association (WNA), 2011) and Government consultants Mott Macdonald project ―nuclear to be the least cost option in longer term, assuming DECC‘s central fuel and carbon assumptions‖ (Mott Macdonald, 2010).

4.1 Uncertainty of Capital Construction Costs

In a 2008 White Paper on Nuclear Power, the UK Government originally forecast the construction costs of a new ‗first of kind‘ reactor with capacity of 1.6GW to be £1250/KW(BERR,2008). EDF Energy, who are consulting on plans to build 4 new European Pressurised Water Reactors (EPR‘s) by 2025 have forecast the costs to be much higher. EDF Energy‘s forecasts on their plans to construct two reactors at Hinkley Point, show costs of £9bn to produce a capacity of 3260MW, equating to a cost of £2760/KW (more than double the Government‘s 2008 forecast)( EDF Energy 2010 ). Horizon Nuclear Power (a joint venture between E.ON UK and RWE) plan to invest £15bn in new facilities to generate 6000MW of electricity, with up to 3 new Pressurised Water Reactors (PWR‘s) at Oldbury producing 3300MW(Horizon, 2011). The capital construction cost of reactors is the greatest proportion of cost for nuclear power (70%) (Thomas,2009), with the fuel cost being relatively low. ―Nuclear fuel costs make up only a small proportion (around 10%) of the overall plant running costs, compared to gas plant where fuel costs represent around 70% of running costs‖ (Horizon, 2011). As such, the assumptions made in the appraisal of such long term energy projects can have a huge effect on the financial viability and performance. When comparing the economic costs and benefits of different technologies, it is important to have a common measure in which to express this comparison. The levelised cost expressed in £/MWh represents ―the lifetime discounted cost of ownership of using a generation asset...expressed in cost per unit of energy produced‖ (Mott Macdonald, 2010). The 2008 White Paper forecast an overall positive Net Present Value (NPV) of £15bn, on plans to generate an extra 10GW of electricity using nuclear power. The central scenario used in this forecast (using a 10% discount rate) resulted in levelised costs of £38/MWh for nuclear power, although this varied between £31/MWh - £42/MWh when different discount rates were applied over a 40 year period(BERR,2008). Given the

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uncertainty surrounding the capital costs of construction, the levelised costs/MWh could be far higher than detailed in the 2008 White Paper. The UK Government‘s own 2010 study into the Severn Tidal Barrage scheme showed that nuclear power compared favourably against other low carbon technologies. However, the levelised costs/MWh projected by consultants Mott Macdonald for that study, were significantly higher than originally thought. Using the Government‘s central scenario of a 10% cost of capital (to reflect the return required by a private investor), Nuclear Power was forecast to cost £69/MWh, as against Coal with Carbon Capture and Storage at £110/MWh and Offshore Wind at £129MWh(DECC 2010a). However the modelling undertaken by Mott Macdonald produced a wide range of estimates dependent on the discount rate used, the start date of the project and whether the technology represented First of a Kind (FOAK) or Nth of a Kind (NOAK). Under their ‗medium‘ scenario for a FOAK PWR, the projected cost increased to £3744/KW and then fell to £2913/KW as the learning curve took effect. Mott Macdonald caution however, that although the NOAK costs are much less, they are ―not applicable this decade‖ (Mott Macdonald, 2010). The DECC now estimates that plans to provide 16GW of new capacity in the form of 10 new reactors, will require some £40bn of investment (DECC, 2011). However, given the uncertainty of forecasting, this may be many billions higher.

4.2 Decommissioning Cost Concerns

The costs of decommissioning are also of key concern when assessing the relative competitiveness of nuclear power against other forms of low carbon energy. Decommissioning and waste disposal costs are forecasted as being approximately 9-15% of the capital construction cost of a nuclear plant (Semple Fraser 2011). In its Annual Report and Accounts for 2009/10, the Nuclear Decommissioning Authority (NDA) shows existing discounted decommissioning and clean-up liabilities of over £45bn(Nuclear Decommissioning Authority (NDA) 2010). Public concern exists that the costs of decommissioning are being stored up for future generations to deal with and that the burden will fall on the taxpayer. The 2008 White Paper makes clear that in addition to energy companies funding the development and building of new nuclear power stations, the full burden of decommissioning and waste management will lie with those energy companies((BERR,2008). The argument is made that decommissioning costs are factored into the initial investment appraisal process. Decommissioning and waste costs (of £1.27bn for an example individual reactor) were included as part of the Government‘s 2008 forecasts. When discounted over a 40 year period, these costs added only £0.31/MWh to the overall cost (BERR,2008). However, Mott Macdonald‘s 2010 projections used a standard discounted increase of £2.1/MWh to account for decommissioning and waste costs in all scenarios, providing a levelised cost incorporating a ―cradle to grave aspect‖ (Mott Macdonald, 2010). These wide ranging forecasts highlight the uncertainty surrounding the provision of adequate resources to fund these future decommissioning costs, whether from the energy companies themselves or ultimately through the taxpayer.

4.3 Proposals to Meet Decommissioning Costs

The UK Government is currently consulting on proposals to introduce a Funded Decommissioning Programme (FDP) which will establish a framework for financing the eventual decommissioning and waste management of the new nuclear facilities. Final guidance on this is expected to be published in the latter part of 2011. The purpose of the FDP is to ensure that energy companies ―are able to meet the full cost of decommissioning and their full share of waste management and waste disposal costs‖ ( DECC, 2010b). Each energy company will be required to set up an approved fund, making regular payments to contribute sufficient resources over the lifetime operation of the nuclear plant. An appropriate investment strategy will be required to generate sufficient returns to cover the estimated costs of decommissioning, waste management and disposal, with arrangements to be made in the event of shortfall in the fund value. However the fairly recent problems associated with endowment mortgages within the financial services industry, illustrate perfectly the problems of

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ensuring adequate financial performance of investments when projecting decades into the future. Volatile market performance, wide ranging growth estimates and highly uncertain future costs, create a difficult environment for the operation of the fund. The flaw within the endowment mortgage industry was overambitious growth projections and therefore highly prudent financial planning will be the key to successful accumulation of sufficient funds to meet the eventual liabilities. This of course is not an insurmountable problem given the financial instruments available for financial planning. Low risk, undated government stock with a current redemption yield of 4.91% could be employed to calculate the required annual contribution to the fund. Changes in the contribution would be required when yields change to keep the fund on track. Long dated government stock (15 years+ to redemption) could be used towards the end of the operation of the plants, with maturity coinciding with plant closure. Potentially, ultra-long dated stock running for say a 40-50 year period might even be available, although yields are not necessarily attractive over such a long time frame(Telegraph 2011). Fund assets will be periodically compared to the target value of the fund and appropriate action required should a shortfall be evident. Protection against a material shortfall may take the form of insurance, financial instruments or an upfront endowment (DECC 2010 b).

4.4 Uncertainty Surrounding Cost Assumptions and Potential Final Liabilities

The government will assume liability for the eventual spent fuel disposal, with the money from the fund being used as compensation for this service. The government proposes to set an index-linked ‗Final Price‘ for the provision of this waste disposal service. This final price will be set at the end of a deferral period (30 years into the operation of the plant) when it is believed that there will be less uncertainty over waste disposal costs (DECC 2010 c). This final price will take the form of a variable cost per unit expressed as £/tU (pounds per tonne of uranium). The government plans to introduce a maximum cap to this final price for the disposal costs of spent fuel, to create a degree of certainty for the energy companies. Using an example 1.35GW PWR operating for 40 years, this cap would be set at £1,104m(DECC 2010 c) based on a cap price of £978k/tU. However concern exists that the cap price may prove to be insufficient to meet the eventual waste disposal costs and that the taxpayer will end up heavily subsidising the industry. Analysis of NDA liabilities shows that spent fuel disposal costs are rising at 4.5% above inflation(Jackson,2011). Using this information, it can be forecasted that the spent fuel disposal base cost (being used by the government) of £193k/tU will rise above the cap price by the year 2047. For a reactor operating over a 40 year period between the years 2020-2060, this will lead to a £131m shortfall in the amount necessary to cover the full cost of decommissioning and waste disposal. Jackson (2011) forecasts even greater subsidy requirements of £1,127m for a 60 year PWR. A second concern highlighted by analysts, is that the government‘s base cost of £193k/tU for the disposal costs of new nuclear waste is based on optimistic assumptions when compared to the disposal costs of existing nuclear waste. Jackson(Jackson,2011) believes that ―it is likely that disposal costs of Advanced Gas Cooled Reactor (AGR) and PWR spent fuels will be very similar‖ and that ―disposal costs of PWR spent fuels may have been significantly underestimated and may need a public subsidy‖. This is evident when comparing the spent fuel disposal cost of AGR at £659k/tU against the government‘s base cost for PWR of only £193k/tU. This variation comes about from the government‘s questionable assumption that PWR spent fuel will cost 50% less to dispose of than AGR spent fuel, with a further 42% reduction applied for economies of scale arising from a 10 reactor new nuclear build programme(Jackson,2011). In an independent report for Greenpeace, Jackson(Jackson,2011) quantifies the underestimation of the actual disposal cost of spent fuel for PWR at £280k/tU, leading to a further required subsidy of £296m (for a 40 year PWR) or £445m (for a 60 year PWR). The uncertainties involved in both government and independent forecasts, cast doubt on whether by setting a maximum cap, the full costs of decommissioning and waste disposal will actually be met by the nuclear operators despite strong assurances from the government. Any indirect subsidy for the nuclear industry actually penalises other forms of renewable energy as they suffer cost comparison on a potentially unfair basis. The risk is, that in the desire to create energy security

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using the (so called) least cost option, more truly sustainable forms of energy may be overlooked with economic and environmental legacies left for the next generation to tackle.

5 Future Generations

We have up to now looked at the environmental implications and the economic aspects of nuclear energy related to this case study. The focus has been on the effects that new nuclear development will have for the current generation. However, in order to fully appreciate the issue of sustainability and legacies we need to turn our attention to the effects on future generations. As mentioned earlier one of the groundbreaking aspects of the Brundtland report was putting the very long-term onto the environmental policy agenda as reflected in the Rio Declaration ‗The right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations‘(Rio Declaration, 1992) .This aspect was further reinforced by the Johannesburg Declaration which contained references to ‗the generations that will inherit this earth‘(Johannesburg Declaration 2002) and ‗a long-term perspective‘(Johannesburg Declaration 2002 at para 26). Much of the theoretical debate on future generations revolves around the feasibility of formulating duties and rights in respect of people who do not yet exist (Carter,2001). Furthermore, it is still unclear how normative concepts like ‗obligations‘, ‗rights‘ or ‗harms‘ may be interpreted when applied to the intergenerational context. It is suggested that in the absence of a coherent ethical theory most people tend to attribute moral importance to the lives of future generations and the discussion on the matter is typically a rights based one. If you declare universal human rights for every individual, why should individuals born tomorrow not impose obligations on present individuals? It seems appropriate to consider future people as right bearers-even in the absence of a clear definition of what this implies for the present generation practically and legally (Gopel, and Arhelger, 2010). Furthermore reference to future generations from a European Union perspective is moving gradually from the implicit and non-binding level to an explicit and more binding one. Comparing references with regard to future generations in the Commission's 1974 recommendation concerning the protection of birds and their habitats (Commission Recommendation 75/66) and that seen in the Aarhus Convention (Aarhus Convention, 1998). The former is a good example of an indirect reference to future generations reflected in the statement that ―[p]ublic opinion is coming to consider migratory birds more and more as common heritage‖(Commission Recommendation 75/66) and the latter 1998 Convention contains specific description of how rights of future generations transformed into present duties ―every person has the right to live in an environment adequate to her or his health and well-being, and the duty, both individually and in association with others, to protect and improve the environment for the benefit of present and future generations‖(Aarhus Convention, 1998 Art. 1). It should be noted that European environmental legislation to date has only referred to future generations randomly and inconsistently (Gopel, and Arhelger, 2010 pg 4).

6 Conclusion

As stated earlier future needs and preferences are themselves dependent on several factors and therefore may make it difficult to evaluate. However thanks to the spread of sustainable development policies there is emerging a fundamental norm concerning the relationships across generations which requires each generation to pass the planet on in no worse condition than it received and provide equitable access to its resources and benefits (Weeramantry, 2011). In order for the nuclear energy sector to declare itself ‗sustainable‘ its environmental and economic legacies must be assessed from the perspective of ―respecting the limits of the planet‘s environment,

resources and biodiversity‖( DEFRA, 2005) together with the cumulative effects of ALL the new nuclear power stations. Indeed as Ambassador Frans Van Haren noted with regard to the responsibilities faced in relation to the environment:

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‗We are its custodians. If we destroy the Earth wilfully through greed or through ignorance we will destroy life. There is therefore also a normative, or if you prefer, an ethical aspect to environmental

policy formulation and planning‘ (Van Haren, 2003).

7 Acknowledgement

The authors like to thank April Clemo, Emily Downs, Kerrie Baggs, Leanne Adimi and Helena Batlle for their valuable contributions in helping to shape this paper.

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