At the end of the day energy comes down to economics.
Drilling oil out of the deserts of the Middle East is inherently more profitable than boiling them out of Canadian boreal forest.
Any deal at Copenhagen will hinge on how much the rich are prepared to pay the poor.
There will be no clean coal, unless the government passes the huge risk of unproven CCS onto the consumer.
And likewise nuclear. It will not be safety, the waste issue or the public unacceptability that will kill off nuclear it will be the finances.
The UK government may have said yes to ten new nuclear plants, but at the moment the economists are saying the economics do not stack up.
For years the UK government has said it could only grasp the nuclear nettle by saying there will be no public subsidy.
And for years the industry’s critics have argued that, without subsidy, there cannot be any nuclear. They argued that the government would somehow offer hidden subsidies by rigging the carbon market to favour nuclear at the expense of renewables.
What the nuclear industry needs is certainty – so if they can be guaranteed some kind of price over carbon for the decades then they might be able to go ahead.
Or will they? On the day that the government announced new nukes, the economists at Citigroup issued a devastating critique, called “new nuclear – the Economics say no”
And the reason for the resounding NO is that too much of the financial risk is still on the industry, rather than the government and hence the consumer. “The government has not announced any direct support for new nuclear. The government still seems to expect the private sector to take an unacceptable level of risk.”
Although by fast-tracking the UK planning process, the government has reduced the “Planning Risk” for the industry, the industry still faces four risks that need to be overcome. Three of these risks are so great that they are described as “corporate killers” by Citigroup.
The three corporate killers are Construction, Power Price and Operational. According to Citigroup, they are “so large and variable that individually they could each bring even the largest utility to its knees financially.”
As Citigroup’s briefing paper acknowledges “Nowhere in the world have nuclear power plants been built on this basis.”
It says: Indeed, “at no time, anywhere in the world, has a utility built a new nuclear power station and taken the full Construction, Power Price and Operational Risk.” Each one of these risks could bring a giant utility to its knees.
And this is before identifying another huge financial black-hole: decommissioning.
The only way the government can fix the conundrum of “funding the nuclear industry, whilst privately not funding it” is to fix the carbon price that makes nuclear be economic. However to get a price that pleases nuclear, the traditional fossil fuel operators will be up in arms.
Either way, you can be sure that if new nukes get the goahead, then it will be you paying for it.
One way or another.