Nuclear Subsidies in the UK

Earth Track Blog Post

Kayla Ente at Ente Consulting has recently released a summary of current subsidies to nuclear power in the UK (summary discussion - full report).  The analysis joints a number of other recent studies (US, France, and Japan) that tabulate government subsidies to the civilian nuclear industry around the world.  A general overview of common subsidy features to the nuclear fuel cycle globally is included as Section III.6 of World Nuclear Industry Status Report 2009.  Section III.6.4 in particular (page 81), written by economist Steve Thomas at the University of Greenwich, provides a historical review of nuclear subsidies within the UK.

Highly capital intensive industries are often global, with similar attributes throughout the world.   Primary metals refining, for example, tends to be co-located to inexpensive sources of energy even if that location is not rich in the ore being processed.  Often, as in the case of primarily aluminum production, the inexpensive power source is a publicly-owned, taxpayer subsidized, large scale hydroelectric dam.

For civilian nuclear power, other factors matter more.  These include large scale government-provided subsidies to financing, plant decommissioning, and uranium mining and enrichment, as well as shifting of key risks of the fuel cycle relating to accidents and long-term management of highly radioactive wastes. 

Ente's review of the UK government's role in the nuclear sector highlights problems similar to those I've found in the US.  Government-owned assets are not run well, resulting in substantial operating losses over time and large legacy costs.  Government-intervention in markets to regulate civilian enterprises, decommission facilities, or manage radioactive wastes have resulted in large losses to taxpayers even in cases where industry is charged some user fees.  For example, the Office for Nuclear Regulation claims that fees on industry cover 98% of its costs.  However, Ente notes that review of new reactor designs is being entirely financed by taxpayers, at a cost of 62 million British pounds/year.

Losses related to the Sellafield MOX reprocessing plant were estimated at 90 million pounds/year in June report.  This is largely the result of a very capital intensive process built to handle 560 mt of waste per year actually processing only 15 mt -- a capacity utilization rate of less than 3 percent.  Any capital-intensive private facility, be it in timber, paper, metals,  or energy, with such an abysmal utilization rate would have been shuttered long ago.  However, Sellafield announced it was closing only last month, a result of the Fukushima accident in Japan.  As Fiona Harvey notes, the Japanese were the only customers of the Sellafield plant, and that demand has been significantly reduced and may never recover now that the Japanese are rethinking their reliance on nuclear power.  

Harvey notes that the potential closure of the UK's Thorp reprocessing facility (receiving much larger subsidies according to Ente at 500 million pounds/year) due to similar market pressures is being denied.  Stay tuned.

(Thanks to Simon Carroll for the link to Ente's analysis)