Nuclear trail paved with carbon tax.

Weekend Australian
Saturday 25/11/2006, Page: 21

Nigel Wilson, Energy Writer

EXPANDING Australia's contribution to the world nuclear cycle beyond mining and supplying uranium yellowcake will not be easy. The draft report of the Prime Minister's review of uranium mining, processing and nuclear energy, released this week, is as much about the hurdles developing a vertically integrated nuclear industry faces as about identifying the pathway to a nuclear future.

And to achieve nuclear power will require Australia to make some fundamental choices about lifestyle, not only in the way energy is generated but also in the way that it is priced and delivered.

The very first page of the review sums up the position clearly. Nuclear power, it says, would be between 20 and 50 per cent more costly to produce than coal or gas-fired power. "This gap may close in the decades ahead, but nuclear power and renewable energy sources will only become competitive in Australia in a system where the costs of greenhouse gas emissions are explicitly recognised," it states.

In other words, Australia needs a carbon tax, or at the very least a sophisticated carbon trading system. That means electricity consumers, but commercial and household, will pay more, not less. This is a point that appears to have been accepted by Prime Minister John Howard in the past few months, after initially rejecting the push by some Labor states for a carbon trading scheme while hitching the federal Government's wagon to clean coal technology through carbon capture and storage.

The lack of a recognition that electricity consumers in Australia which are, in contrast to Europe, the major contributors to greenhouse gas emissions should be held accountable for their impact on global warming was a key failing of the federal Government's 2004 energy White Paper.

The nuclear review headed by Ziggy Switkowski, addresses this, saying the challenge to contain and reduce greenhouse gas emissions would be considerably eased (not solved) by nuclear plants. "Australia's greenhouse challenge requires a full spectrum of initiatives and its goals cannot be met by nuclear power alone," the draft report says.

It maintains greenhouse gas emission reductions from nuclear power could reach 8 to 18 per cent of national emissions by 2050, painting a scenario that 25 nuclear reactors could be built in Australia between 2020 and 2050, producing more than one third of the nation's electricity.

That means there will have to be significant contributions by other energy sources, not only renewables, but also gas and possibly even coal in the carbon capture and storage configuration to meet Australia's future energy demand.

The Switkowski review is conservative in its energy projections, taking an annual growth rate to 2050 of around 2.1 per cent, which is the same as that promoted by the Energy Supply Association of Australia and which corresponds with ABARE forecasts out 30 years.

But the cost equation is the one that may determine the public policy outcome. Switkowski says that assuming Australia built a series of nuclear plants, not just high cost first-of-a-kind operations, the price of electricity generated from nuclear power could fall within the cost range of $40 to $65 a megawatt hour.

While this is double existing coal-fired generation costs, it is comparable with the low-end cost expectations for clean coal technology plants into the future while being cheaper than expectations of wind power, solar and thermal power and considerably cheaper than photo voltaics.

"Nuclear power could become economic even with conventional coal-based electricity at low to moderate prices for carbon emissions at approximately $15 to $40 a tonne of carbon dioxide," the review says.

While initial coverage of the Switkowski review has concentrated on it view that 25 nuclear plants might be needed by 2050 and that an uranium enrichment and processing industry might add $1.8 billion a year to the national economy, ultimately it will be how nuclear power can be introduced without curbing lifestyle options that will engage the federal Government during the next few years.