Nuclear power for energy security

When Prime Minister Manmohan Singh visits the USA later this month, he will ask the US lift curbs on the transfer of technology and equipment for nuclear and other purposes. He needs to emphasise that this is not about building bombs. Nuclear power looks like becoming critical to India’s economy and long-term energy security. Most of my writing life, I have opposed nuclear power in India for its non-transparency, disguised subsidies, dubious efficiency and dubious cost and safety. However, I have been obliged to rethink my position for five reasons. First, India’s rise as an economic power means that its energy needs will rise massively. The BRIC report of Goldman Sachs projects India’s GDP to rise by 40 times between 20000 and 2050. If energy consumption rises at just half this rate, it means India will need 20 times more energy in 2050. It will be difficult or impossible to meet these needs through conventional fuels. Second, the price of fossil fuels has shot up, with oil more than doubling to $ 60/barrel and gas more than tripling to $ 7/million BTU in the US.

Oil prices are notoriously volatile and could fall sharply in a few years. But they will surely rise again later. The emergence of China, India and other Asian countries as major consumers means that global supplies of fossil fuels will increasingly come under pressure. By contrast, nuclear energy is unconstrained by fuelworries: a small amount of uranium generates many megawatts, and plutonium can be extracted from the spent fuel to yield fresh fuel in mixed-oxide reactors. Third, global interest rates have fallen to a new low. Ten-year US treasury bonds fetch barely 4% interest even though short-term rates have been raised to 3.25%. Capital costs (mainly interest costs) are the main component of nuclear power costs. India’s market interest rates (as opposed to controlled rates) were 15% for big corporations in the 1970s and 1980s, but are now down to 7%. This means that the commercial cost of a capital-intensive project like a nuclear power plant has almost halved in unsubsidized terms. Fourth, a new generation of much safer and cost-effective nuclear plants has been developed in France and the USA.

Accidents at Three Mile Island in the USA and Chernobyl made consumers suspicious, rightly, of exaggerated claims of governments the world over about nuclear safety. Yet there has been no accident since Three Mile Island in the USA for decades. New technologies have at last made the US government confident about pushing for a new building spree of nuclear power plants. Fifth, the threat of global warming means that nuclear power, once opposed tooth and nail by environmentalists, has suddenly emerged as the most promising way of reducing carbon emissions and thus slowing global warming. So a founder of Greenpeace, Patrick Moore, has parted company with his organization and now supports nuclear power as an environmental saviour. I am personally agnostic on global warming, and have no faith in the models being used to predict high temperatures. But I acknowledge that global warming is a catastrophic possibility. None of this should obscure the fact that the Indian establishment has long tried to pull the wool over the eyes of the public on nuclear issues.

In the name of patriotism and national security, Indian scientists and bomb-makers have hidden their lies, errors and lack of competence for decades. Nuclear know-how can be used for both electric power and military power, and India has deliberately mixed the two up. It obtained a nuclear research reactor in the 1950s from Canada on the promise of peaceful uses, and but then used plutonium from this reactor for a nuclear explosion in 1974. Indira Gandhi had the gall to tell the outraged Canadians that it was a peaceful nuclear explosion, and that the technology would be used for purposes like blasting canals. We now know that this was a pack of lies. Yet Indian journalists and intellectuals shamelessly parroted those lies for a long time. Nuclear power plants are extremely capital intensive, costing twice as much as thermal plants of comparable output.

They need an additional 10-15% for decommissioning when they become too old to operate. But they have the big advantage of very low running costs. By contrast, running costs can be half of total costs in a thermal plant, and keep rising with fuel prices. The secret of success in nuclear power is to build plants quickly, reducing interest costs during construction. This requires a large-scale programme based on a standardized design, an approach France has successfully adopted to generate 77% of its electricity. Time overruns must be avoided like the plague: they push up capital costs rapidly. Standardised design also reduces operational problems. India started with light water American reactors using imported enriched uranium at the Tarapur power plant. When the 1974 nuclear explosion led to a technological cut-off, Indian scientists, through trial and error, built heavy power plants using indigenous materials and know-how.

This was a major technical feat, but it was plainly non-commercial. It meant enormous time overruns and serious operational problems. These should have been commercially disastrous, but were not because finance was provided without limit, on highly concessional terms, and with additional subsidies for plants producing inputs like heavy water. The nuclear establishment will tell you that it produces electricity very cheaply. But the fact is that, stripped of concessional finance, our nuclear programme has been a strategic rather than commercial success. This approach will not meet India’s huge energy needs of the future. Instead, India needs foreign inflows of the latest know-how, equipment and enriched uranium. This now looks vital for long-run energy security. Yet rules of the London Club of nuclear suppliers require international inspection of all nuclear facilities (including defence-related ones), and India will never agree to this. It wants the rules waived. It will not be easy for Manmohan Singh to persuade the USA to giver a waiver. He needs to emphasize that, without such a waiver, Condoleeza Rice’s talk of helping India become a superpower will be meaningless prattle.

What do you think?