17-06-04
Europe needs to consider nuclear generation when investing in new power plants as its rising dependence on Russia for natural gas is a growing concern for the International Energy Agency. The IEA's chief economist Fatih Birol said the West's energy watchdog would release a report in October warning that the Russian economy's high dependency on oil and gas could subject Europe to the same high prices that the Middle East and OPEC commands for its oil.
"What scares me is that we in Europe are getting increasingly dependent on
Russian gas," Birol said on the sidelines of a conference in Lyon.
As gas production in the North Sea declines, Europe will become more
dependent on imports from neighbouring Russia, which along with Iran, holds 52 %
of the world's gas reserves.
"What we found out is that the Russian economic growth is very linked to
the oil and gas industry -- the amount of oil and gas dependency is almost as
high as Saudi Arabia's -- so Russia may exert pressure on prices to solve the
budget problems at home. We are too dependent on Russian gas, and we will be
vulnerable to these gas price increases," he added.
He drew the analogy with the oil sector, where the Middle East produces about
30 % of world output, but where most countries are single product economies,
completely linked to oil revenues.
"Sometimes [Middle East producers] try to put pressure on the prices, and
as a result of OPEC policies, the whole world experiences high oil prices. This
may be the case in gas for Russia in the future," Birol said. He said that
to avoid depending on fossil fuel producers, nuclear generation, which is being
phased out in Europe, was a solution to the region's quest to lower greenhouse
gas emissions in line with the Kyoto Protocol, and to ensure reliable energy
supplies.
The IEA projects that Europe needs to invest some $ 1.4 tn by 2030 to build 660 GW of generation capacity, half of which is needed just to replace aging power plants.
"The IEA has the same distance to all fuels. But nuclear is an option which
we should take into consideration when making long-term strategic plans,"
Birol said. "There are three reasons: Nuclear diminishes dependence on
sources like gas, nuclear is a source of energy that does not emit CO2, unlike
gas, coal or oil, and its cost of capital will not increase in the future,"
he added.
Source: The Moscow Times