If nuclear power can compete with the benefit of the carbon adjustment while meeting its waste and decommissioning costs in full, then it should find a place in the energy mix. Conversely, if it is still uneconomical, it should not. And the same logic should apply to other technologies, including renewables. There is no reason why established renewable energy technologies such as wind power should receive both the preference of the CO2 adjustment and a guaranteed market share (as is currently the case in the U.K.).
Recent analysis conducted by the U.K. government shows that nuclear power would be viable over a wide range of scenarios. It would struggle to compete only if gas prices and the shadow price of carbon were both low. That combination is inherently implausible, however; it would almost certainly lead to a higher shadow price for carbon, bringing nuclear power back into contention.
During my tenure as Cabinet secretary, I saw the shortcomings of addressing the energy supply in piecemeal fashion. Although there were two attempts to write an energy policy paper, at the time no one wanted to challenge prevailing assumptions — for example, the assumption that greater energy efficiency, renewables (such as wind power), and natural gas would provide enough carbon reduction in and of themselves. Such assumptions were undermined when the price of energy shot up, and the Russians and others reminded us of the vulnerabilities of natural gas.
But as I write, a consensus is building in Europe and North America with respect to global climate change and energy security, and it is coupled with a growing sense of urgency. We now have a moment of opportunity to create a framework that enables the essential energy choices to be made — not by dictating them, but by providing open competition and building all the relevant factors into the marketplace where choices are made.
Reprint No. 06404
Lord Andrew Turnbull (email@example.com) is a senior advisor to Booz Allen Hamilton based in London. Between 2002 and 2005 he was secretary of the Cabinet and head of the Home Civil Service in the United Kingdom.