The Oil Drum

http://news.ft.com/cms/s/b8cda898-610f-11da-9b07-0000779e2340.html

Where does Britain get its energy from currently?

Britain generates around 20 per cent of its electricity from nuclear power, 33 per cent from coal, 40 per cent from natural gas and 4 per cent from renewable sources. The balance is mostly made up of oil and hydroelectric power.

What's the problem?

Britain's ageing nuclear power stations are reaching the end of their lives. The proportion of electricity generated by nuclear power stations, which produce no carbon emissions, has already slipped from 24 per cent in the past few years. By 2020, only 7 per cent will come from nuclear power stations. If they are not replaced, all but one of Britain's nuclear plants will be closed by 2023.

Because of strict new European Union rules, the amount of power generated from coal is also set to fall sharply. The government expects coal to generate just 16 per cent of the UK's power by 2020 -- half its current contribution. If nothing is done, this emerging gap would most likely be filled by generators using natural gas. Gas would then produce more than 60 per cent of Britain's electricity by 2020.

With this mix, however, Britain would not be able to meet its commitment to cut its carbon emissions by 60 per cent by 2050 - the central plank of its effort to combat global warming. Because the country's own supplies of North Sea gas are running out, it would be highly dependent on imports from politically-unstable parts of the world.

Didn't we already have an energy review?

In 2003, the government published a white paper setting out its energy policy. It gave strong backing to renewable energy sources as a way to reduce carbon emissions and cut reliance on imported energy sources.

The government is committed to generating 10 per cent of its electricity from renewable sources, such as wind and waves, by the end of the decade. The white paper set a goal to reach an even more ambitious goal of 20 per cent of electricity generation from those sources in the following decade.

However, the government seems unlikely to meet its first goal in 2010, let alone the second. Widespread local opposition to wind farms has stymied their construction in many parts of the country. And research from countries such as Germany has shown that wind farms have to be backed up by conventional generators because the wind is not always available.

The 2003 white paper sidestepped the issue of nuclear power, saying only that the option should be kept open. Critics called it a fudge, spurred by the fact that the government was having to bail out British Energy, the privatised owner of Britain's oldest and least economic nuclear plants.

So what will the new energy review look at?

The government has said it will be a wide-ranging, cross-departmental review, looking at both the supply and demand sides of the energy problem. The review will look at the role of existing electricity generating technologies - renewables, coal, gas and nuclear - as well as emerging technologies, such as carbon capture.

It will also look at ways to reduce demand, including energy efficiency in homes and even transport policy, although no details were given. The government is at pains to say that this will be a comprehensive energy review and not just focus on nuclear energy. It also said there are "no foregone conclusions about nuclear or anything else".

Behind the scenes, however, there are strong indications the government is laying the groundwork for the construction of new nuclear plants.

What is the timetable for all of this?

The government said that that its timetable was "urgent" but wanted to involve the public and business in the process. It will launch a public consultation in early January and embark on talks with the myriad interest groups with strong opinions on the issue.

The review team is due to report to the prime minister and trade and industry secretary in "early summer". If it concludes nuclear power stations should be commissioned, the government may wish to wait until a committee releases recommendations on how to dispose of Britain's existing nuclear waste. The panel is due to report in July 2006.

What's the rush?

Coal and nuclear power stations accounting for around 30 per cent of Britain's current generation capacity are due to shut down by 2020, the government says. However, companies do not want to start building replacements until the government gives some clarity on its future energy policy.

Given the long lead times on investment decisions, industry says it needs government to make choices now. New nuclear reactors could take 10 years to start producing electricity because of the lengthy approval and construction process.