Expansion of Nuclear Power in Europe

The combination of aggressive carbon emission reduction targets and concerns about the security of gas supplies from Russia is driving a pretty rapid expansion of nuclear power in Europe.

The Swedes have just repealed a law requiring them to phase out nuclear power and seem likely to join the list of countries building new plants.

Several European countries are opting for nuclear energy and there is concern about the reliability of Russian-supplied fuel after Moscow's gas dispute with Ukraine last month.

Poland wants its first nuclear plant by 2020 and Britain decided last year to replace its ageing nuclear reactors and create new sites. France has ordered its 61st nuclear generator and Finland is building the largest reactor in the world, which is expected to open in 2011.

Sweden has some of the most ambitious greenhouse-gas targets in the world and plans to become carbon neutral by 2050. It wants to abolish fossil fuels as a heating source by 2020 and use half of its energy from renewable sources by 2030.

"The nuclear phase-out law will be abolished," a government spokesman said yesterday. "The ban in the nuclear technology law on new construction will also be abolished."

As Larvatus Prodeo notes, even the enormous cost blowouts we associate with nuclear power are not dampening enthusiasm in Finland.

European ETS Reconsidered

A recent MIT study suggests my generally negative image of the European scheme may be out of date.

Read the whole article but they cite several lessons from the European experience.

First, the European experience shows that the economic effects—in a macro economic sense—have not been large. ... A second lesson is that permitting "banking and borrowing" will make a cap-and-trade system work more efficiently. ... A third lesson is the importance of having accurate data and good communications both to ensure a smooth-running market and to achieve the desired reduction in emissions. ... A fourth lesson is that the process of allocating emissions allowances is going to be contentious—and yet cap-and-trade is still the most politically feasible approach to controlling carbon emissions. ...

Perhaps the main message for policy makers is that everything does not have to be perfectly in place to start up. When the EU ETS began, the overall EU cap had not been finally determined, registries for trading emissions were not established everywhere, and many available allowances—especially from Eastern Europe—could not come onto the market. The volatility of prices during the first period reflects those imperfections. "Obviously you're better off having things all settled and worked out before it gets started," said Ellerman. "But that certainly wasn't the case in Europe, and yet a transparent and widely accepted price for CO2 emission allowances emerged rapidly, as did a functioning market and the infrastructure to support it."