Urgent need for nuclear in global energy transition

The IEA’s Energy Technology Perspectives 2020 analyses more than 800 different technology options to assess what would need to happen to reach net-zero emissions by 2070 while ensuring a resilient and secure energy system.

"Despite the difficulties caused by the COVID-19 crisis, several recent developments give us grounds for increasing optimism about the world’s ability to accelerate clean energy transitions and reach its energy and climate goals. Still, major issues remain. This new IEA report not only shows the scale of the challenge but also offers vital guidance for overcoming it," Fatih Birol, the IEA’s executive director, said on announcing the release of the report today.

With global carbon emissions at unacceptably high levels, structural changes to the energy system are required to achieve the rapid and lasting decline in emissions called for by the world’s shared climate targets, according to the report. It finds that transitioning just the power sector to clean energy would get the world only one-third of the way to net-zero emissions. Completing the journey will require devoting far more attention to the transport, industry and buildings sectors, which today account for about 55% of CO2 emissions from the energy system, it says.

Historically, the carbon footprint of the global energy system has been reduced "in waves", it says, driven by government policies. For instance, construction of nuclear reactors surged in the 1960s and 1970s, but slowed down thereafter.

Today, greater use of clean electricity is central for decarbonisation, it says. The share of electricity in final energy demand grows from one-fifth today to nearly 50% in 2070 in the IEA's Sustainable Development Scenario, contributing almost a fifth of cumulative CO2 savings. Electricity demand expands by 30,000 TWh, which means that each year to 2070 sees electricity demand equivalent to the current annual demand of Mexico and the UK combined be added to the world power system, pushing far more use of solar, wind and other renewables, as well as nuclear power, it says.

The value of nuclear

Addressing the high-level panel Building a stronger and cleaner tomorrow with nuclear energy during World Nuclear Association's Strategic eForum 2020 yesterday, Varro said the coronavirus pandemic had triggered "an unprecedented economic and social shock" which, due to the restrictions on mobility and the restrictions on economic activity, has had an impact on energy use. And as a result of the deep recession and social restrictions, there has been an unprecedented reduction of energy use and an unprecedented reduction of carbon dioxide emissions by around 2.6 billion tonnes.

"But this is not something to be celebrated," he said. "Emission reductions were achieved with an unacceptable social and economic cost and our analysis also shows that unless governments rise to the challenge and put clean energy at the heart of the economic recovery efforts, if the world economy recovers without significant structural change, then it is almost certain that carbon dioxide emissions would rebound, quite possibly to above the 2019 historical peak."

Climate change is "still completely untouched", he said, and the IEA’s Sustainable Development Scenario - a mathematical representation of the Paris Agreement - indicates that by 2025 global CO2 emissions will have to be lower than they are today and continue to be reduced without shutting down the global economy.

The electricity sector is "at the heart" of this transition, Varro said, as the largest emitter of CO2 "by far", but it is also a sector with large, scalable low-carbon alternatives. The electrification of the economy by electric cars or heat pump heating can become "a very powerful tool", he said, in decarbonising other sectors.

"So it's fair to say that electricity is the decisive battlefield in the fight against climate change," he said.

In a sustainable development trajectory, the annual average increase of low-carbon generation is around the same amount as Japan’s electricity consumption, he noted, and every year the world needs to be "at the equivalent of" the Japanese electricity system exclusively from clean-energy sources.

"It is absolutely clear that wind and solar power will play a major role and it is very important that our discussions about the role and future of nuclear power should largely acknowledge the technological revolution that is unfolding in wind and solar technology and the unique role that they are likely to play," he said. "At the IEA we argue that there is a clear value in maintaining a diversified low-carbon technology portfolio including nuclear power that's by no means against wind and solar power. In fact, we very much see nuclear power as a very useful complement to a power system which has large shares of renewable energy. But we also need to recognise that, while we need to ramp up low-carbon generation, in the case of nuclear even a significant loss of existing low-carbon generation cannot be ruled out."

As a result of the coronavirus crisis, wholesale electricity and gas markets have reached record lows, he noted, which has "created major challenges" for any facility, including nuclear power plants, which earn revenue from wholesale markets.

"Very often the design of those wholesale markets fails to fairly remunerate the electricity security contribution of facilities like nuclear power plants, and very often countries fail to put in place carbon prices which could reflect the low-carbon value of nuclear," he said.

This year, the IEA estimates that the nuclear power production that will be lost from the premature retirement of nuclear power plants "before the end of their optimal technical lifetime" is around half of the newly installed wind and solar power globally, he said.

"For every second wind turbine and every second solar panel there's just simply replacing one type of low-carbon generation with another type of low-carbon generation, without contributing to decarbonisation at all. We can do much better than that," he said. "So, we have been advising governments that their first priority should be that for any nuclear power plant that satisfies the safety and operational regulations should be extended and should operate until the optimal lifetime."

Investment in nuclear

There is also a clear need, he said, for investment in new nuclear capacity.

"In fact, from a macroeconomic point of view perhaps the most important impact of the coronavirus crisis is that, instead of the gradual normalisation of monetary conditions and the gradual alliance of interest rates, major central banks around the world reacted by a massive monetary stimulus leading to zero or even negative interest rates. Now that is very important from the point of view of nuclear power because perhaps the most significant obstacle is the very large initial capital investment and this obstacle is much easier to tackle in a zero or negative interest rate environment.

"That is an opportunity that governments can take advantage of. It’s fair to say that there is limited private sector investment appetite for the third generation USD10 billion, 10-year construction time projects. Those have essentially become the preserve of state-owned energy companies, but we do see private sector investor appetite in venture capital and research & development investment into advanced nuclear technologies, but there again governments have a very important role to play, both in promoting basic science and also in facilitating and helping early deployment."

IEA analysis "clearly shows", he said, that nuclear power has an important role and makes the energy transition "more cost effective and more energy secure". He added: "We shouldn't be blind however and we should recognise that there are major challenges to be overcome both by the industry and also by governments."