Climate Action 2010-2011

Energy and Mitigation
more competitive than either gas-fired or coal-fired power
generation. At a 10 per cent discount rate, which is less
favourable for high fixed-cost, low-carbon technologies,
a carbon price of roughly US$50 would be required to
make nuclear the absolutely least expensive technology
for baseload power generation (excluding so-far unproven
coal with carbon capture and storage). Meanwhile, wind
power would become competitive with coal only at prices
of US$100 and above. However, even at 10 per cent,
nuclear remains most competitive in Asia and America.
While these numbers are only indicative and real
capital costs in the energy market are around 8 per cent,
there can be no doubt the carbon prices required for
establishing competitiveness of low-carbon technologies
lie somewhere in between the values mentioned above.
Carbon prices play indeed an important role in ensuring
the competitiveness of low-carbon electricity generating
technologies.
Three steps towards realising the full
potential of low-carbon technologies
In order to allow all capital-intensive, low-carbon
technologies to realise their full potential in terms of
helping provide stable electricity supplies at attractive
costs and reducing GHG emissions from power
generation, the simple but powerful three-point plan
below needs to be followed:
1. Reduce price volatility in electricity markets:
uncertainty about future electricity prices is the major
hurdle for capital-intensive low-carbon technologies
in their competition with coal- and gas-fired power
generation. While the movement towards power market
liberalisation in OECD countries is largely irreversible,
we must create the conditions for long-term contracts
and producer-consumer consortia. This will reduce price
risks and minimise the cost of financing, which in return
will allow garnering the private and social benefits from
the stable variable costs and reduced GHG emissions
stemming from technologies such as nuclear and
renewable energies.
2. Ensure a reliable long-term signal on carbon prices:
carbon prices are clearly an important driver for the
competitiveness and economic viability of low-carbon
technologies including nuclear energy, renewables,
CCS and even demand-side measures. Most of these
investments need to be planned for decades ahead.
A clear commitment to a stable price for carbon
emissions is the most efficient incentive measure our
governments can make to initiate the transition towards
a low-carbon economy.
3. Include nuclear energy in any post-Kyoto mechanism
for emissions reduction crediting: Whenever a nuclear
power plant is being built it substitutes primarily for
coal- and gas-fired plants in the production of baseload
power. It thus reduces existing emissions or ensures that
future emissions do not rise. For all other low-carbon
technologies, such substitution in developing countries
generates certified emission reductions (CERs) under the
Clean Development Mechanism of the Kyoto Protocol
but currently nuclear is not included in this mechanism.
In order to realise the full GHG abatement potential of
nuclear energy, it should be included in any successor
mechanism under conditions equivalent to those for
other technologies.
Carbon prices play an
important role in ensuring
the competitivness of
low-carbon electricity
generating technologies.
One of the most influential publications to emphasise
that stabilising concentrations of GHGs to a level
that would limit temperatures increases to 2-3°C was
the Stern Review on The Economics of Climate Change.
Unsurprisingly, the Stern Review also foresaw a neardoubling
of global nuclear capacity by 2050 to 700 GWe
as one of the measures to stabilise GHG concentrations.
It is one of many forecasts of this nature.
However the modellers and forecasters are not the
only ones who are saying it; a simple consideration of
the contributors to GHG emissions suggests that any
solution to the climate challenge will require a substantial
contribution by nuclear energy.
Luis Echávarri is Director-General of the OECD/
NEA, a post he has held since 1997. A former Project
Manager for three nuclear power plants for Spanish
energy company, Westinghouse Electric, he was later made
Technical Director of the Spanish Nuclear Safety Council
(CSN) and named commissioner in 1987. He is a Fellow
of the College of Industrial Engineers in Madrid. He
represents the OECD/NEA on the governing board of the
International Energy Agency (IEA) and is a member of
the International Atomic Energy Agency’s International
Nuclear Safety Advisory Group.
The NEA is a specialised agency within the OECD, an
intergovernmental organisation of industrialised countries,
based in France. The NEA works to assist its 28 Member
countries in maintaining and developing the scientific,
technological and legal bases required for the safe and
economical use of nuclear energy for peaceful purposes. It is a
forum for sharing information and experience and promoting
international co-operation, a centre of excellence where
Member countries can pool and maintain their technical
expertise, and a vehicle for facilitating policy analyses and
developing consensus based on its technical work.
12 Boulevard de Iles, 92130 Issy-les-Moulineaux
France
Fax: +33 145241115
Website: www.nea.fr
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