UK to review energy policy with focus on nuclear power

London (Platts)--29Nov2005

UK Prime Minister Tony Blair Tuesday said his government was embarking on
a wide-ranging review of its energy policy, which would "specifically" look at
whether to build more nuclear power plants.
     Energy minister Malcolm Wicks will lead the review and make a government
policy statement in the early summer of 2006 which "will include specifically
the issue of whether we facilitate the development of a new generation of
nuclear power stations," Blair told business leaders in London Tuesday.
     The UK currently has some 23 nuclear reactors generating one fifth of its
electricity.
     "By around 2020 the UK is likely to have seen the decommissioning of coal
and nuclear plants that together generate over 30% of Britain's current
electricity supply," Blair said. "Some of this will be replaced by renewables,
but not all of it can."
     Although he said the "future is clean energy," Blair is believed to favor
new nuclear plants as an option that will help guarantee security of supply
and also enable the UK to meet its pledged cut in greenhouse gas emissions.
     A formal consultation period for the energy review is expected to start
in early 2006, said the Department of Trade and Industry, which is responsible
for energy policy. The review will be looking to ensure the UK is on track to
cut its carbon dioxide emissions by about 60% by 2050, with "real progress by
2020," the DTI said.
     "The review will consider all options including the role of current
generating technologies (e.g. renewables, coal, gas and nuclear power) and new
and emerging technologies (e.g. Carbon Capture and Storage)," the DTI said.
     Most new power plants built in the UK in recent years have been
gas-fired, but the UK became a net importer of gas last year and could be 80%
dependent on imported gas by 2015, according to national gas pipeline operator
National Grid.

     GREENPEACE PROTEST
     Blair's speech was delayed by an hour as a result of a protest by
environmental lobby group Greenpeace. Two Greenpeace protestors climbed into
the roof of the conference hall in London, one displaying a banner which read
"Nuclear: wrong option."
     In a statement issued after Blair's speech, Greenpeace UK director
Stephen Tindale said the Prime Minister was "trying to launch a new nuclear
age." "Nuclear power is not the answer to climate change--it's costly,
dangerous and a terrorist target," he said.
     "The real solution to climate change and energy security is a mix of
efficient, safe and clean energy technologies like wind, wave, and solar...
Nuclear power is simply a dangerous red herring in this debate," he said.
     In response to the Greenpeace protest, Blair said what was needed was "a
serious, open and democratic debate, not one conducted by protests or
demonstrations to stop people having their freedom to express their views."
     The UK needs to build new plants to replace ageing coal and nuclear
generation, but is becoming increasingly wary of becoming over-reliant on
gas-fired generation.
     UK gas prices have soared in recent weeks, both for immediate supplies
and deliveries through the rest of the winter, prompting fears of a possible
shortage of supplies as domestic output continues to decline and the country
becomes increasingly dependent on gas imports.

     GAS SUPPLY FEARS
     Blair said that if forecasts of a cold winter proved correct, large gas
users could face supply problems. "If it is as cold as the Met office suggests
it may be, our gas market will be tight. For our domestic gas customers and
most businesses the National Grid is clear there would not be a problem.  But
for big gas users, (energy regulator) Ofgem, the National Grid, energy
suppliers and the DTI have all been and will be working to make sure business
is aware and ready," Blair said.
     Blair first announced that the government would carry out a new review of
energy during a speech to the Labour party conference at Brighton in October.
The review will be the first comprehensive look at energy policy since a white
paper in early 2003.
     Blair also predicted that there would be an international agreement on a
successor to the Kyoto Protocol on climate change, with all major economies to
be involved.
     "Climate change is producing a sense of urgency...I believe there will be
a binding international agreement to succeed Kyoto when the Protocol expires
in 2012 that will include all major economies," he said.

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