About the same time that man began to depend on fossil fuels, especially petroleum, for his energy needs, man started to become aware that, sooner or later, it was going to be necessary to find alternative sources of energy, once those sources were exhausted. Despite awareness of that problem, progress toward finding alternatives sources of energy has not been entirely satisfactory.
Nowadays, in addition to the exhaustion of fossil fuels, there is another major global challenge in the energy sector – the sharp increase in global demand for energy caused by the emergence of such major industrial economies as China and India. Other factors generating concern are the high concentration of hydrocarbon reserves in areas of geopolitical instability and competition for access to those resources. In addition, the Kyoto Protocol obliges countries to reduce their greenhouse gas emissions in order to avoid disastrous climatic change.
The Latest Political Tensions
From January 2000 until mid-July 2006, petroleum prices increased by 235%. The acceleration has been sharpest over the last three years, during which the price of a barrel of crude has increased by more than 55%, according to Bloomberg News.
Recently, price pressures have sharply accelerated, following Israel’s decision to attack Lebanon in reprisal for the capture of its soldiers by Hezbollah, the pro-Iranian, Lebanese-based militia. Both West Texas crude, the benchmark in the United States, and Brent, the benchmark in Europe, have reached historical highs of more than $80 per barrel.
Analysts say that the price of ‘black gold’ will remain above $80 a barrel this summer, although that price could get even higher if the conflict gets more complicated.
Although neither Israel nor Lebanon produces any oil, and Syria produces only small amounts, the greatest fear in the market is that Iran will get involved. The second-largest member of the Organization of Petroleum Exporting Countries (OPEC), Iran is also the political, ideological and financial ally of Hezbollah (Party of God), the terrorist group. “The Iranians are involved in everything that Hezbollah is doing in Iran,” declared Shaul Mofaz, Israel’s minister of transportation and ex-head of its defense forces. “They give them arms and money, and they feed them ideologically.”
Iran could respond to an attack by blocking the flow of petroleum through the Strait of Hormuz in the Persian Gulf. Of the 84 million barrels of petroleum consumed each day, an estimated 16 million barrels pass through those straits. Hypothetically, the price of oil could increase to $100 or even to $130, according to some analysts.
The Key Economic Factor
“Short term, the price of petroleum has become one of the key factors in the cyclical growth of the global economy,” notes Paul Isbell, chief international economics researcher at the Real Instituto Elcano. “Each of the three last global recessions (1980-82; 1991-93; and 2001-2) was generated, at least in part, by a strong increase in the price of petroleum.”
According to Isbell, “Although the global economy has done a good job of dealing with rising prices during the last three years, it continues to be vulnerable to a new price rise, which would lead to a resurgence of inflation, push up interest rates, and wind up ending the current robust growth.”
Given this context, the debate about nuclear energy has once again been reopened in countries such as Spain, where nuclear energy had been paralyzed or even not utilized. Many people argue that a nuclear revival could put a brake on climate change and put an end to rising petroleum prices.
Joaquín Almunia, European commissioner of economics, has said that although he has always opposed nuclear energy, strategic considerations about the European Union’s energy dependence have made him rethink his position.
In Western Europe, Finland has played a leading role in the nuclear revival with its plant of 1,600 megawatts. Approved by the Finnish parliament in 2002, it would begin operations before the end of this decade.
An Alternative to Petroleum
Finland’s decision is stimulating other European countries to relaunch their nuclear projects. In the United Kingdom, British Energy, which manages Britain’s nuclear facilities, is considering new installations after making its own recent economic restructuring. In Sweden, a model for managing nuclear waste is making in-roads, promising to include nuclear energy in the broader energy mix. In countries that have nuclear power plants, such as Italy and Portugal, there is a growing debate about whether or not to invest in this sort of energy.
Juan Carlos Martínez, a professor at the Instituto de Empresa, says that “the alternatives to petroleum are nuclear energy, coal and renewable sources. Coal is very abundant, and it is not located merely in places where there are conflicts. However, coal is highly polluting, giving off a large amount of carbon dioxide into the atmosphere. That conflicts with the Kyoto Protocol. Renewal energy sources are phenomenal from the viewpoint of pollution, but they are still largely undeveloped. The only thing left for us today is nuclear energy. Among other reasons, that’s because people have forgotten the Chernobyl disaster. During the 1990s, we ignored it because of the low price of crude oil.” Martinez believes that nuclear power has an advantage over petroleum in that “there is a stable, guaranteed supply that countries that own the power stations can control by themselves, without having to depend on third parties. In addition, the costs barely vary, and nuclear energy doesn’t emit carbon dioxide into the atmosphere.”
Isbell adds that nuclear energy is a way that countries can “manage to improve the security of their supply, have more stable costs, and add flexibility to their national energy systems.”
Last May, President George Bush defended the nuclear option. He argued that, for “the good of national and economic security, the U.S. must move ahead with drastic measures for the construction of more power stations.”
However, Francesco Sandulli, of the Complutense University’s department of business management, does not view Bush’s commitment to nuclear energy as very credible. “It is only partially clear that the U.S. president favors nuclear energy. The government of the United States and, more specifically, its director of energy policy are committed to a model for generating electrical energy in which nuclear energy plays only a secondary role. According to the ‘Annual Energy Outlook 2006 with Projections to 2030,’ published by the Energy Information Administration, coal will be the principal source of energy generation in 2030, and nuclear energy will grow comparatively little.”
Asia Bets on Uranium
Currently, 442 functioning [nuclear] power stations provide 24% of the total electricity production in the member-states of the Organization of Economic Cooperation and Development (OECD). In 10 countries in Europe, nuclear energy provides more than 30% of electricity consumption. In Spain, the nine power stations that are operating produce one quarter of the country’s entire electrical consumption. In France, where there are 59 nuclear power plants, that percentage rises to 80%.
While Europe and the United States reconsider the possibility of the nuclear option, Asia appears to have taken a more decisive position on this type of energy. Of the 32 nuclear plants currently under construction, 19 are in Asian countries. The region is experiencing strong economic growth, and its high level of dependence on foreign energy sources serves as an impetus for diversification [of energy sources].
China is the country where demand for energy is growing fastest, and it is strongly committed to nuclear power. Over the next 15 years, China plans to construct 40 nuclear power plants, with an anticipated generation capacity of 40 million kilowatts. Experts endorse this approach because they want Beijing to restrain growing consumption of petroleum, and opt instead for coal and nuclear power.
In India, six nuclear power plants are now in operation. In the short term, two other plants will go on stream, as well as two other plants in 2007 and 2008. India’s nuclear program is ambitious, aiming to achieve 20,000 megawatts of installations by the year 2020.
However, nuclear energy is not problem-free. “The first problem is the money,” says Sandulli. “You need to invest a lot in order to construct and maintain nuclear power plants at high levels of efficiency. The second problem is managing waste, and it has yet to be solved.”
Experts believe it is highly unlikely that nuclear energy will become a substitute for petroleum in the future. Martínez believes that it can be “a transitional energy” between fossil fuels, mainly crude oil, and renewable energy sources that will play the leading role “not before 2050, even possibly later than that.”
“Can nuclear substitute for petroleum?” asks Sandulli. “Clearly, the answer is no. The uses for atomic energy are very different from those for crude oil. Will we see cars with nuclear engines? Probably not.”
Isbell agrees and argues that the key is that nuclear power is used only for generating electricity, not as a substitute for the way petroleum is used most effectively. In other words, nuclear energy will never be used to create fuels used in means of transportation. However, he adds that in the future, when hydrogen cells become established as an alternative energy source for cars, most electricity needed for creating those cells will be generated by nuclear energy. “If it becomes feasible in the future, any generator of electricity would work well,” he maintains.
Isbell adds that “practically no petroleum is used for generating electricity,” which is the only point where nuclear energy could substitute directly for petroleum.
Nevertheless, in his article, “The Nuclear Mirage in the Light of the Global Energy Situation,” Marcel Coderch Cellell, secretary of the Association for the Study of Energy Resources (AEREN), mentions the hypothetical possibility of progressively increasing the total number of reactors so that in 2030, or thereabouts, a substantial share of the electricity that is currently forecast to be generated worldwide with fossil fuels comes, instead, from nuclear power.
According to Coderch, that would save enormous quantities of natural gas and coal, as well as a lot of petroleum. Emissions of pollutants would consequently drop. That, in turn, would force a drop in the price of fossil fuels, or extend their period of availability. At the very least, this process would not put upward pressure on fossil fuel prices.
However, it may not be possible to take advantage of this opportunity because of the logistical and financial problems associated with a nuclear construction program of this scale. (Plans call for construction before 2030 of more than 4,500 one gigawatt-type reactors in order to substitute for 1,511 gigawatts of coal and 3,011 gigawatts of gas and petroleum, as well as 146 reactors for renewing the current supply of electricity, and another 72 for dealing with forecasts of increased demand for electricity). Another challenge is the amount of fuel (uranium) that would be needed to feed so many reactors of such magnitude.
Sandulli believes, however, that the best solution to dependence on crude oil is greater efficiency in using energy. He says that “millions of euros should be devoted to improving energy efficiency for residential and industrial use.”
“The use of renewable energy should be promoted,” Sandulli adds, “but it is very important to work on the development of efficient, renewable energy that also makes sense from an economic point of view. So long as we don’t have efficient sources of renewable energy, it won’t make any sense to base our economic development on renewable energy. In such a case, using that energy would mean a significant loss in our competitiveness vis-à-vis China and India, whose economic models are based on traditional energy sources that may be harmful to the environment, but are much cheaper.”