Nuclear power: ecologically sustainable or energy hot potato? A case study

Int. J. Liability and Scientific Enquiry, Vol. X, No. Y, xxxx

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Nuclear power: ecologically sustainable or energy hot potato? A case study Tilak Ginige* School of Applied Science, Bournemouth University, Poole, BH12 5BB, UK E-mail: [email protected] *Corresponding author

Frazer Ball The Business School, Bournemouth University, Poole, BH12 5BB, UK E-mail: [email protected]

Ann Thornton School of Applied Science, Bournemouth University, Poole, BH12 5BB, UK E-mail: [email protected]

Catherine Caine The Law Department, Bournemouth University, Poole, BH12 5BB, UK E-mail: [email protected] Abstract: We are facing the prospect of fossil fuels running out. The magnitude of the hydrocarbon resource gap and lack of alternative energy sources leaves us with few choices. The gap between supply and demand must be met through either increased efficiency or increased nuclear/renewable energy production. With the proposed development of ten nuclear power stations, government appears committed to using nuclear power to combat the problem. However, the sustainability of this solution is questionable. By taking Hinkley Point, Somerset as a case study, this paper will explore the sustainability of the project by having regard to the environmental impacts on marine biodiversity, as well as questioning the decommissioning and waste disposal costs that have been provided for the project. In doing so, this paper aims to understand whether nuclear energy is truly sustainable or simply a method of shifting the economic and environmental burden of responsibility onto future generations.

Copyright © 200x Inderscience Enterprises Ltd.

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T. Ginige et al. Keywords: nuclear power; sustainable development; thermal pollution; economics; intergenerational equity. Reference to this paper should be made as follows: Ginige, T., Ball, F., Thornton, A. and Caine, C. (xxxx) ‘Nuclear power: ecologically sustainable or energy hot potato? A case study’, Int. J. Liability and Scientific Enquiry, Vol. X, No. Y, pp.000–000. Biographical notes: Tilak Ginige is a Senior Lecturer in Environmental Law at Bournemouth University’s School of Applied Sciences. He is a member of the UK Environmental Law Association and the Nordic Environmental Law, Governance and Science Network. He has in the past contributed to the Catalan Government’s Environmental Policy. His other research-related achievements include involvement in EU funded research concerning the Water Framework Directive and the EU Mining Waste Water Directive. He has published in refereed journals including the European Environmental Law Review, Law Environment and Development Journal (LEAD) and the Journal of Water Law. He is currently participating in multidisciplinary renewable project energy with local community involvement, which is looking at Poole Harbour as a potential source of green energy. Frazer Ball is a Senior Lecturer of Accounting and Finance in the Business School at Bournemouth University, specialising in risk/disaster management and financial modelling. In addition to undertaking a PhD within the field of financial and alternative investments, his research currently focuses on the economic and multi-disciplinary aspects of renewable energy projects. As the UK strives to meet national obligations for the generation of energy from low carbon sources in order to create affordable energy security, the analysis of energy projects from economic, legal and environmental perspectives provides a balanced assessment of future proposals. Ann Thornton is currently working as an Ecological Consultant for Hampshirebased firm PV Ecology. Since graduating from Bournemouth with first class honours, she has continued collaborative research work with other members of the university. Her research interests include examining the impact of climate change mitigation and renewable energy initiatives on protected species and habitats; particularly the paradox whereby measures designed to protect the environment from the effects of climate change cause damage to the environment. This has led to a wider consideration of how low carbon energy will affect biodiversity and irrevocably alter ecosystem services. Catherine Caine graduated from Bournemouth University with a first class honours LLB degree. Her research interests are e-commerce law and climate change law. She is currently working with a multidisciplinary research team which is using Poole Harbour as a case study to look at the influence of the EU’s renewable energy policy. The research will address the issues that arise when proposals to exploit marine renewable energy come into conflict with stakeholder concerns and the need to protect areas of environmental importance. Whilst focusing on Poole Harbour, the approaches adopted will be of interest to all assessing marine renewable energy projects.

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Introduction

Given the move to low carbon technologies in order to mitigate the effects of climate change (with nuclear generation currently reducing carbon emissions by 7% to 14%) (DECC, 2011a), the UK plans to invest heavily in nuclear power, with the impact on the Severn region now to be significant, following the rejection of the Severn Tidal Barrage renewable energy scheme. Unfortunately, nuclear development is shrouded with great deal of uncertainty and debate over the likely costs of expanding the UK’s nuclear electricity generating capacity. Aside from the ecological and legal issues surrounding the building and operation of new nuclear facilities, economic considerations are very much to the fore, for energy companies, government and the region. Horizon nuclear power (as a joint venture between E.ON UK and RWE) had planned to invest £15 bn in new facilities at Oldbury, South Gloucestershire, to generate 6.0 GW of electricity and positively impact on the regional economy. However the recent decision by these energy companies to abandon this investment and put Horizon up for sale, citing “high running costs and long lead times required for nuclear plants” (Reuters, 2012) illustrates the great uncertainty within the industry. The remaining energy companies still involved in new nuclear development in the Severn area have been unsurprisingly keen to promote the regional economic benefits. Job creation and impact on the regional economy are seen as being key benefits. Hinkley Point C (HPC) is projected to provide “£100m of economic benefit for the regional economy during every year of construction” and “£40m per year in economic benefit for every year of the site’s 60 year operation” (EDF Energy, 2011a). EDF Energy reveals that 700 permanent and 200 contract staff will be required during the operation of HPC. Furthermore, the company’s forecasts suggest a peak construction workforce of 5,600, with 20,000 to 25,000 individual jobs being created over the 10 year construction period. The aim is to enable a significant percentage of these roles to be filled by local people. With this in mind, the company is to invest over £6 m in local colleges to help train potential employees and create apprenticeships for the many technicians required by the new power station. The company also has plans to establish a £20 m community fund to be spent on local projects (EDF Energy, 2010). These much highlighted benefits must also be seen in the context of the importance that these new power stations will have to the energy companies themselves. Despite the dramatic decision by E.ON. UK and RWE to pull out of the Horizon venture, it must be assumed that EDF Energy are very keen to continue their investment into the UK after achieving 4.7% growth in earnings for 2011, with 13% of this €14.824 bn coming from UK operations (EDF, 2012). In addition to economic concerns, those charged with the planning of nuclear projects are under an obligation to ensure that the projects comply with obligations imposed by the concept of sustainable development. With its roots in the 18th and 19th centuries (Schutt, 1992), the concept of sustainability has gradually entwined itself into environmental legislation. With the current definition of sustainable development (Brundtland, 1987) concerning the balance of economic growth with societal needs and environmental protection, potential nuclear projects should be analysed for their ability to fulfil the requirements of sustainable development. By examining nuclear technology’s compatibility with the principles of sustainable development, it is undisputed that nuclear technology can, amongst other things contribute significantly to the creation of a steady and abundant supply of electrical energy. It is suggested that electricity generated from the use of nuclear power satisfies

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the economic and environmental protection goals of the Rio Principles (Joskow, 2009). Furthermore the energy aspect of nuclear power has links with the three dimensions of sustainable development – economic, environmental, and social. Energy services are fundamental for economic and social development. However, as energy use continues to grow, its health and environmental impacts will have to be controlled, alleviated or mitigated in order to achieve sustainable development goals. In a bid to establish nuclear energy as the solution to UK’s the energy problem, the government in 2010 (Cabinet Office, 2009) rebranded nuclear energy as a means of delivering a sustainable energy supply which mapped on to the internationally agreed Millennium Development Goals (UN Millennium Development Goals, http://www.un.org./millenniumgoals).

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The obligation of sustainable development

The modern concept of sustainability has its roots in the technique of forest management practised by central European foresters in the 18th and 19th centuries (Schutt, 1992). It was fundamentally an economic management technique and was not inspired by ecological or biological considerations (Schutt, 1992). The current definition of sustainable development is as much concerned with economic and social development as it is with environmental protection (Brundtland, 1987). According to Brundtland, sustainable development is a process of transformation which, by combining economic growth with broader social and cultural changes, enables individuals to realise their full potential. This dimension of sustainability brings with it the recognition that development must adhere to the physical constraints imposed by ecosystems, so that environmental considerations have to be embedded in all sectors and policy areas. Sustainable development was one of many issues discussed by the International Court of Justice in the Danube Dam case (The Gabcikovo-Nagymaros, 1998). In this case, Judge Weeramantry in his dissenting opinion argued that the principle of sustainable development had already become part of modern international law and practice, however the court in its infinite wisdom stated that the ‘concept of sustainable development’ was one which expressed the need to reconcile economic development with the protection of the environment. The EU incorporated the principle of sustainable development into Article 2 of the Treaty on European Union provided that the Community “shall have as [one of its tasks]…to promote throughout the Community harmonious, balanced and sustainable development of economic activities (Treaty of Amsterdam, 1997), and Article 6 provides “Environmental protection requirements must be integrated into the definition and implementation of the Community policies and activities referred to in Article 3, with a view to promoting sustainable development” (Treaty of Amsterdam, 1997). The Lisbon Treaty made this commitment stronger and the new Article 3 provides that “Union shall…work for the sustainable development of Europe…” indicating that strengthened sustainable governance is in place (Treaty of Lisbon, 2007). In the UK the definition changed, from a trade-off between the economy and the environment (DEFRA, 1994) in 1994, to 2005 where the definition expanded to incorporate five guiding principles (which include living within environmental limits, just society, sustainable economy, good governance and sound science). The effectiveness of sustainable development within UK legislation however remains questionable with none going as far as to impose

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a duty to achieve sustainable development. For example, it is questionable to what extent the legal duty in the Planning and Compulsory Purchase Act 2004 Section 39(2), which requires all plan making bodies to exercise their function ‘with the objective of contributing to the achievement of sustainable development,’ has any real content or value, despite the great deal of discretion that is brought with this non-binding wording. One key issue that is central to the Brundtland definition is the needs of the current generation and those of future generations (Rauschmayer et al., 2011). Needs can be distinguished from preferences as they are considered the very minimum necessary for the survival of a species, i.e., food, clean air and water and shelter in a tolerable climate. There is however considerable debate about what we really ‘need’ (Redclift, 1993). The problem is further compounded when we engage in judging the needs of the future generations owing to the fact that what is valued by one generation will not necessarily be held in the same esteem in the preceding generation (Bell and McGillivray, 2008).

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Environmental implications

In order to determine the sustainability of planned nuclear developments in the UK, it is important to explore the environmental concerns associated with the development. The environmental concerns over nuclear power, such as the difficulties with the disposal of intermediate and high level waste, are well documented and it is beyond the scope of this work to address all these issues. However, a significant and somewhat under considered area of concern that could call into question the ‘sustainability’ of nuclear power is the ‘death by a thousand cuts’ ecological impact from the new power stations. This concerns the cumulative impact of a small number of ‘minor adverse’ or ‘moderate adverse’ impacts (EDF, 2011) combined over the operational lifetime of the power station could, ultimately, result in major adverse impact. The consultation process for the HPC power station finished on 28 March 2011 (EDF, 2011). As one of the statutory consultees, the Environment Agency (EA) provided a detailed response to the proposal and, in particular, addressed a number of ecological concerns (EA, 2011). These focussed upon three key areas of the main HPC development. The locations considered for the intake and outflow pipes are shown in Figure 1. EDF (2011) advised their preferred configuration to be intake at point A and outflow at point B. It is anticipated that the intake rate will be ‘low velocity’ at 120cumecs. Temperature of the discharged water will be raised by 12.5°C. The locations for the intake and outflow pipes represent the least damaging option. However, the EA (2011) expressed concern about a lack of appropriate assessment of the impact from the thermal plume particularly modelling in different conditions for example during a ‘hot summer’. They require further studies to be undertaken and reviewed by the EA prior to a planning application being submitted.

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T. Ginige et al. Proposed locations for intake/outflow pipes (see online version for colours)

Source: Forster et al. (2011)

The thermal plume will have an impact upon the species assemblage within the Severn Estuary with warmer water loving fish, such as bass, thriving and colder water species, for example cod, moving away from the area (Forster et al., 2011). There is no mention within either the EDF assessment (EDF, 2011) or the EA (2011) response as to the potential for invasive/non-native species to colonise the area. There are no definitive criteria for determining whether a non-native species will become invasive. It is possible that the niche created by a cold-water species moving away could provide an ideal opportunity for a non-native species already present within the ecosystem to exploit (DEFRA, 2011). Currently, the cooling water discharge from Hinkley Point B (HPB) does not contain anti-fouling chemicals (biocides) such as chlorine. The BEEMS (Forster et al., 2011) study highlighted the likely impacts from cooling water discharge without biocide and discharge with biocide (likely hydrazine). There are no studies, as yet, into the impact of this chemical on the marine environment within the Severn Estuary. The Environment Agency has recommended further study (EA, 2011).

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3.1 Fish impingement/entrainment It is this aspect of the nuclear power plant development that could, potentially, result in significant impact on the marine ecology of the Severn Estuary. Again, the Environment Agency expressed concern over the lack robust survey methodology used by EDF to establish likely impact. They note that only using a beam trawl would not have sufficiently sampled the marine environment and would have missed those species present in the water column. Although it is acknowledged that the turbidity of the water within the Severn Estuary results in limited commercial fishing activity, the population of eel within the area is significant. It is reported that 95% of elver catch in the UK comes from the Severn Estuary (EA, 2011).

3.2 Relevant international, EU and UK legal instruments Whilst it is important for nuclear projects to adhere to sustainable development criteria, this is not the only legal problem that the plan faces. There are several international, European and national pieces of legislation that need to be taken into consideration in relation to the proposed developments. These can be broken down into preventive and sanctioning legislation (Ginige, 2002) and have been considered in depth in the April 2011 report produced by EDF Energy (EDF Energy, 2011b). It is suggested that the majority of legislation can be adhered to with appropriate monitoring (EDF Energy, 2011b) by regulatory agencies. However, there may be issues with regard to the Eel Regulations of 2010 (SI 2009 No. 3344) and EU Habitats Directive (Dir. 92/43/EEC (1992). The European Eel Regulations 2010 [Council Regulation (EC) No. 1100/2007] state that it is a requirement that mitigation is in place at the intake point for power stations to prevent impingement by eel. The European Eel has also been placed on the CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), 1973) register thereby adding a further level of protection for this species (EA, 2011). In addition, the impact on the marine food web of impingement/entrainment of smaller species, for example the brown shrimp (Crangon crangon) have not been assessed. Significant destruction of populations of these species could have impacts upon the ecosystem within the region and the possible further decline of protected species, for example Allis shad (Forster et al., 2011). The EA (2011) subsequently supported the inclusion of a fish return device within the intake/outflow system for HPC. However, they require further details of the location of the fish return to ensure it is not within the vicinity of the thermal outflow (Payne, 2011).

3.3 Cumulative impacts A cumulative impact is a consequence of more than one direct or indirect impact acting together and such impacts can be very difficult to predict, with indirect ones manifesting in unexpected places and after considerable delay (Barrow, 2006). The concept of cumulative impact made its first appearance in legislation in the United States National Environmental Policy Act of 1969 (NEPA) and was subsequently incorporated into the Environmental Impact Assessment (EIA) Directive (85/337/EEC) as amended by Directive 97/11/EC of the European Community. Cumulative impact assessments provide

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information to inform the management of developments so resultant impacts do not exceed specified threshold levels. Any project or action will have an effect on the environment. However, what needs to be appreciated is that the combined or cumulative effect of multiple actions can be greater than the sum of the individual parts (Canter and Kamath, 1995). To determine the effect a project might have, appropriate assessments are required under Directive 85/337/EEC as amended by Directive 97/11/EC or Directive 2001/42/EC, but the assessments in these two directives only refer to certain projects and require an assessment of the general impact they may have on the environment. The Habitats Directive 92/43/EEC Article 6(3) also includes a requirement to conduct an appropriate assessment if the plan or project, either individually or in combination with other plans or projects, has the potential to significantly affect the integrity of a Natura 2000 site [Natura 2000 is a network of European protected sites. These sites are made up of special protection areas (SPAs) which are high level protected sites classified under the Conservation of Wild Birds Directive (79/409/EEC) whose species are listed in Annex I of the Birds Directive and which include regularly occurring migratory species, and of special areas of conservation (SACs) which are protected sites designated under the Habitats Directive 92/43/EEC. The habitat types and species concerned are listed in Annexes I and II of the directive. The list consists of habitat types and species that are considered to be most in need of conservation at the European level]. It must be noted that Directive 92/43/EEC Article 6(3) assessment is site specific and there is a requirement to take into consideration the site’s conservation objectives (European Commission, 2001, 2007). It is suggested that provisions in Directive 85/337/EEC (as amended by Directive 97/11/EC), Directive 2001/42/EC and Directive 92/43/EEC provide comprehensive instructions regarding what aspects need be considered, referring specifically for the need to identify all potential impacts (including cumulative impacts), the requirement to use best available techniques, and that the most effective mitigation measures be discussed (Kramer, 2009). The assessment of cumulative impacts is increasingly being included within EIAs in the UK, given its requirement under the Directive 85/337/EEC (as amended by Directive 97/11/EC), and which was incorporated into UK law by the Town and Country Planning (EIA) Regulations 1999 (Piper, 2001). Regrettably, despite the provision of detailed indicators referred to above, on which considerations are required to be included in assessments (Kramer, 2009), it is apparent that there is confusion on the part of EIA practitioners regarding the definition of cumulative impacts and their specific requirements (Masden et al., 2010). Particular uncertainty arises within the Town and Country Planning (Environmental Impact Assessment) Regulations 1999 where cumulative impacts are given different definitions: Schedule 3, Section 1a refers to them as those impacts which occur having regard amongst other things to the size of the development and 1b to cumulation with other development. This leads one to infer that they are to be considered as impacts which occur across developments. However, Schedule 4 Part 1, which deals with information required in the environmental statements, defines them as “a description of the likely significant effects of the development on the environment, which should cover the cumulative effects of the development”, implying that they are impacts which accumulate within the life of the project.

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Furthermore, this legislation, and others, fails to provide adequate guidance as to methods of assessment, thus, creating a situation where cumulative impacts are insufficiently included in EIA reports. This is reflected in a review of 50 UK EIAs (Cooper and Sheate, 2002), which found that only eight provided a definition of cumulative impacts and those that were included varied greatly. Such variety in definitions significantly influences the ways in which cumulative impacts are identified, dealt with and ultimately managed (Gunn and Noble, 2009). For example, the Marine Report (EDF, 2011) made references to ecological impact from the HPC development with the majority deemed to be of ‘minor adverse significance’. However, there are no studies assessing the cumulative effects of the ‘minor adverse’ and ‘moderate adverse’ impacts. An area of concern expressed by the EA (2011) was the, as yet unknown, impact from both HPB and HPC operating at the same time. This is a theoretical possibility with HPB due for decommissioning in 2016 with any delay in that decommissioning potentially resulting in a combined impact from both power stations. Concerns regarding this oversight were flagged by the EA in their report stating that “under regulation 61 of the Conservation of Habitats and Species Regulations 2010, if the combined impacts cannot be concluded to have no adverse effect on the integrity of the Severn Estuary Special Area of Conservation (SAC) (Annex II fish species), then compensation may be required under regulation 66 of the Conservation of Habitats and Species Regulations 2010” (EA, 2011).

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Nuclear economics

The World Nuclear Association (WNA) (2011a) believes that nuclear power is competitive against other methods of electricity production in terms of costs and Government consultants Mott Macdonald project “nuclear to be the least cost option in longer term, assuming DECC’s central fuel and carbon assumptions” [Macdonald, (2010), p.5].

4.1 Uncertainty of capital construction costs In a 2008, White Paper on Nuclear Power, the UK Government originally forecast the construction costs of a new ‘first of kind’ reactor with capacity of 1.6 GW to be £1250/KW (BERR, 2008). EDF Energy, who have consulted on plans to build four new European Pressurised Water Reactors (EPR’s) by 2025 have forecast the costs to be much higher. EDF Energy forecasts that the two reactors at Hinkley Point will cost in excess of £9 bn, to produce a capacity of 3.26 GW, equating to a cost of £2,760/KW (more than double government’s 2008 forecast) (EDF Energy, 2010). The capital construction cost of reactors is the greatest proportion of cost for nuclear power (at 70%) (Thomas, 2009), with the fuel cost being relatively low. As “nuclear fuel costs make up only a small proportion (around 10%) of the overall plant running costs, compared to gas plant where fuel costs represent around 70% of running costs” (Horizon, 2011), it is the assumptions over construction costs made in the appraisal of nuclear energy projects which can have a huge effect on financial viability and performance. When comparing the economic costs and benefits of different technologies, it is important to have a common measure in which to express this comparison. The levelised cost expressed in £/MWh represents “the lifetime discounted cost of ownership of using a

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generation asset...expressed in cost per unit of energy produced” [Macdonald, (2010), p.1]. The 2008 Nuclear Power White Paper forecast an overall positive net present value (NPV) of £15 bn, on plans to generate an extra 10 GW of electricity using nuclear power. The central scenario used in this forecast (using a 10% discount rate) resulted in levelised costs of £38/MWh for nuclear power, although this varied between £31/MWh – £42/MWh when different discount rates were applied over a 40 year period (BERR, 2008). Given the uncertainty surrounding the capital costs of construction, the levelised costs/MWh could be far higher than detailed in the 2008 White Paper. The UK Government’s own 2010 study into the Severn Tidal Barrage scheme showed that nuclear power compared favourably against other low carbon technologies. However, the levelised costs/MWh projected by consultants Mott Macdonald for that study, were significantly higher than originally thought. Using government’s central scenario of a 10% cost of capital (to reflect the return required by a private investor), Nuclear Power was forecast to cost £69/MWh, as against Coal with Carbon Capture and Storage at £110/MWh and Offshore Wind at £129/MWh (DECC, 2010). However this modelling undertaken by Mott Macdonald produced a wide range of estimates dependent on: the discount rate used, the start date of the project and whether the technology represented First of a Kind (FOAK) or Nth of a Kind (NOAK). The relatively low levelised cost above for nuclear power reflects NOAK. Under their ‘medium’ scenario for a FOAK PWR, the projected cost increased to £3744/KW (approximately £90/MWh) before potentially falling to £2913/KW as the learning curve might take effect. Mott Macdonald caution however, that although the NOAK costs are much less, they are “not applicable this decade” [Macdonald, (2010), p.37]. DECC now estimates that plans to provide 16GW of new capacity for the UK in the form of ten new reactors, will require some £50 bn of investment (DECC, 2011a). However, given the uncertainty of forecasting, this may still be many billions higher.

4.2 Decommissioning cost concerns Costs of decommissioning are also of key concern when assessing the relative competitiveness of nuclear power against other forms of low carbon energy. Decommissioning and waste disposal costs are forecasted as being approximately 9-15% of the capital construction cost of a nuclear plant (Fraser, 2011). In its Annual Report and Accounts for 2010/11, the Nuclear Decommissioning Authority (NDA) (2011) shows existing discounted decommissioning and clean-up liabilities of over £49 bn. Public concern exists that the costs of decommissioning are being stored up for future generations to deal with and that the burden will fall on the taxpayer. Although the latest guidance for new nuclear operators makes it clear that in addition to energy companies funding the development and building of new nuclear power stations, the full burden of decommissioning and waste management will lie with those energy companies (DECC, 2011b), the general public remain sceptical. One has to question whether an energy source that creates an ever increasing legacy of liabilities is truly sustainable. The prescribed discount rate used to assess existing liabilities is stated by the NDA as 2.2% (NDA, 2011). However, variation in the discount rate of +/– 0.5% has the effect of changing the value of the liabilities by approximately £5.5 bn in either direction, with the NDA showing a range between £46.1 bn and £57.5 bn, with other factors included. In his recent report commissioned by DECC, Professor MacKerron (2012, p.115), believes that these figures show “a higher risk of the eventual bill being higher than the ‘most likely’

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estimate than lower”. The uncertainty surrounding this existing legacy, where cost estimates can fluctuate so wildly depending on the assumptions made, does not bode well for the Government in trying to persuade the public that new nuclear will not lead to liabilities for the taxpayer. MacKerron (2012, p.115) believes that “greater transparency around a most likely undiscounted value might help broaden public understanding of the scale of the legacy”. The argument is made that decommissioning costs for new nuclear build are factored into the initial investment appraisal process. Decommissioning and waste costs (of £1.27 bn for an example individual reactor) were included as part of Government’s 2008 forecasts. When discounted over a 40 year period, these costs added only £0.31/MWh to the overall cost (BERR, 2008). However, Mott Macdonald’s 2010 projections used a standard discounted increase of £2.1/MWh to account for decommissioning and waste costs in all scenarios, providing a levelised cost incorporating a “cradle to grave aspect” [Macdonald, (2010), p.1]. In assessing the competitiveness of nuclear power against other renewable energy sources such costs are highly relevant and must be included to provide a ‘level playing field’. Overall, these wide ranging forecasts highlight the uncertainty surrounding the provision of adequate resources to fund these future decommissioning costs, whether met by the energy companies themselves or ultimately through the taxpayer.

4.3 Proposals to meet decommissioning costs The WNA highlight several methods used internationally to finance decommissioning costs, including upfront prepayment; the use of a levy where proceeds over the period of operation are secured in an external trust fund; or some form of guarantee/insurance to cover overall costs (WNA, 2011b). The UK Government has been consulting on proposals to introduce a Funded Decommissioning Programme (FDP) which will establish a framework for financing the eventual decommissioning and waste management of new nuclear facilities. Final guidance was published at the end of 2011. The purpose of the FDP is to ensure that energy companies “are able to meet the full cost of decommissioning and their full share of waste management and waste disposal costs” [DECC, (2011c), p.8] and the guidance makes clear that ‘prudent provision’ must be made to meet this obligation [DECC, (2011b), p.3]. Each energy company will be required to set up an approved fund prior to ‘first criticality’ of any related reactor core [DECC, (2011b), p.49], making regular payments to contribute sufficient resources over the lifetime operation of the nuclear plant. An appropriate investment strategy will be required to generate sufficient returns to cover the estimated costs of decommissioning, waste management and disposal. Expectation is for “mechanisms to be put in place to mitigate the risk of Fund Assets being insufficient” [DECC, (2011b), p.61], with arrangements to be made the event of shortfall in the fund value. Examples provided in the guidance of such arrangements, include amongst others the provision of an upfront endowment. However the fairly recent problems associated with endowment mortgages within the financial services industry, illustrate perfectly the problems of ensuring adequate financial performance of investments when projecting decades into the future. Volatile market performance, over ambitious growth estimates and highly uncertain future costs, create a difficult environment for the operation of the fund. Highly prudent financial planning will be the key to successful accumulation of sufficient funds to meet the eventual liabilities. This of course is not an insurmountable problem given the multitude of long-dated, low-risk financial instruments available for financial planning.

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Potentially, ultra-long-dated, low-risk Gilts running for say a 40 to 50 year period might be available, although yields are not necessarily attractive over such a long time frame (Telegraph, 2011). Fund assets will be periodically compared to the target value of the fund and appropriate action required should a shortfall be evident. Further protection against a material shortfall may take the form of insurance, financial instruments or charges over assets (DECC, 2011b).

4.4 Uncertainty surrounding cost assumptions and potential final liabilities Government will assume liability for the eventual spent fuel disposal, with the money from the fund being used as compensation for this service. Government proposes to set an index-linked ‘waste transfer price’ (WTP) for the provision of this waste disposal service. The WTP will be set at the end of a deferral period (30 years into the operation of the plant) when it is believed that there will be less uncertainty over ultimate waste disposal costs (DECC, 2011c) and will take the form of a variable cost per unit expressed as £/tU (pounds per tonne of uranium). Government however, also plan to introduce a maximum cap to the WTP for the disposal costs of spent fuel, to create a degree of certainty for the energy companies. Using an example 1.35 GW PWR operating for 40 years, this cap (at an assumed disposal date of 2130) would be set at £1,104 m (DECC, 2011c) based on a cap price of £978k/tU. As the transfer date (of liabilities) predates the eventual disposal date by 50 years (2080), the liability to the energy companies is subject to discounting (at an example 2.2%) and falls to £372 m. Even though Government suggests that the cap is based on conservative estimates and is “three times the current best estimate of waste disposal costs” [DECC, (2011c), p.64], concern exists that still the cap price may prove to be insufficient to meet the eventual waste disposal costs and that the taxpayer will end up heavily subsidising the industry. Analysis of NDA liabilities shows that spent fuel disposal costs are rising at 4.5% above inflation (Jackson, 2011b). Using this information, it can be forecasted that the spent fuel disposal base cost (being used by the government) of £193k/tU will rise above the cap price by the year 2047. For reactors operating over 40 to 60 years from 2020, this will potentially lead to shortfalls in the amount necessary to cover the full cost of decommissioning and waste disposal of between £131m–£1,127m (Jackson, 2011a). A second concern highlighted by analysts, is that government’s base cost of £193k/tU for the disposal costs of new nuclear waste is based on optimistic assumptions when compared to the disposal costs of existing nuclear waste. Jackson (2011b) believes that “it is likely that disposal costs of advanced gas cooled reactor (AGR) and PWR spent fuels will be very similar” and that “disposal costs of PWR spent fuels may have been significantly underestimated and may need a public subsidy”. In his independent report for Greenpeace, Jackson (2011a) estimates that further subsidies of between £296 m–£445 m (based on 40 to 60 year PWR operation) may be required. The uncertainties involved in both government and independent forecasts, cast doubt on whether by setting a maximum cap, the full costs of decommissioning and waste disposal will actually be met by the nuclear operators, despite strong assurances from government. Any indirect subsidy for the nuclear industry actually penalises other forms of renewable energy as they suffer cost comparison on a potentially unfair basis. The risk is, that in the desire to create energy security using the (so called) least cost option, more truly sustainable forms of energy may be overlooked with economic and environmental legacies left for the next generation to tackle.

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Future generations

We have up to now looked at the environmental implications and the economic aspects of nuclear energy related to this case study. The focus has been on the effects that new nuclear development will have for the current generation. However, in order to fully appreciate the issue of sustainability and legacies we need to turn our attention to the effects on future generations. As mentioned earlier one of the groundbreaking aspects of the Brundtland report was putting the very long-term onto the environmental policy agenda as reflected in the Rio Declaration “The right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations” (Rio Declaration 1992). This aspect was further reinforced by the Johannesburg Declaration which contained references to ‘the generations that will inherit this earth’ (Johannesburg Declaration, 2002) and ‘a long-term perspective’ (Johannesburg Declaration 2002 at para 26). Much of the theoretical debate on future generations revolves around the feasibility of formulating duties and rights in respect of people who do not yet exist (Carter, 2001). Furthermore, it is still unclear how normative concepts like ‘obligations’, ‘rights’ or ‘harms’ may be interpreted when applied to the intergenerational context. It is suggested that in the absence of a coherent ethical theory most people tend to attribute moral importance to the lives of future generations and the discussion on the matter is typically a rights based one. If you declare universal human rights for every individual, why should individuals born tomorrow not impose obligations on present individuals? It seems appropriate to consider future people as right bearers-even in the absence of a clear definition of what this implies for the present generation practically and legally (Gopel and Arhelger, 2010). Furthermore reference to future generations from a European Union perspective is moving gradually from the implicit and non-binding level to an explicit and more binding one. Comparing references with regard to future generations in the Commission’s 1974 recommendation concerning the protection of birds and their habitats (Commission Recommendation 75/66) and that seen in the Aarhus Convention (1998). The former is a good example of an indirect reference to future generations reflected in the statement that “[p]ublic opinion is coming to consider migratory birds more and more as common heritage” (Commission Recommendation 75/66) and the latter 1998 Convention contains specific description of how rights of future generations transformed into present duties “every person has the right to live in an environment adequate to her or his health and well-being, and the duty, both individually and in association with others, to protect and improve the environment for the benefit of present and future generations” [Aarhus Convention, (1998), Art. 1]. It should be noted that European environmental legislation to date has only referred to future generations randomly and inconsistently [Gopel and Arhelger, (2010), p.4]. From an economic perspective on future generations, Mackerron (2012, p.98) raises the valid argument that even where provision is made for decommissioning costs through an established fund, “the fact that the work still needs to be done at later dates means that it is future real resources, not present-day resources, that will be deployed to carry out the task”. The ethics of passing off responsibility for dealing with the current generation’s energy ‘solutions’ to generations 100 years in the future, is highly questionable and may actually cost more overall.

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Conclusions

Having analysed the environmental and economic impacts of nuclear power development in the UK, it is evident that not all questions have been answered. On an environmental front, serious consideration should be paid to the consequences that development will have on specific species in the Severn Estuary. Whereas on an economic level, it would appear that the cost forecasts for construction and decommissioning are surrounded by great uncertainty, with wide ranging estimates depending on the assumptions made and the forecasting techniques applied. Whilst a truly ‘sustainable’ concept will consider environmental, economic and social needs of the present, the needs of the future also need to be assessed. The concept of future needs has been analysed by many with the overriding outcome often being that this criteria of future needs if extremely difficult to evaluate. However thanks to the spread of sustainable development policies there is emerging a fundamental norm concerning the relationships across generations which requires each generation to pass the planet on in no worse condition than it received and provide equitable access to its resources and benefits (Weeramantry, 2011). In order for the nuclear energy sector to declare itself ‘sustainable’, the cumulative effects of the environmental and economic legacies of ALL the new nuclear power stations must be assessed from the perspective of “respecting the limits of the planet’s environment, resources and biodiversity”( DEFRA, 2005).

Acknowledgements The authors like to thank the anonymous reviewers for their valuable contributions in helping to shape this paper.

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