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Uranium exports: bonanza or bust?

February 23rd, 2013

Note: The usual sitewide ban on discussions of nuclear power is lifted, for this post only

Queensland’s ban on uranium mining was lifted last year, and a committee is due to report soon on the conditions under which mining might be restarted. As recently as a year ago, the prospects for uranium exports looked bright, despite the Fukushima disaster. In March last year, the Bureau of Resource and Energy Economics predicted “prices close to $100 a pound between now and 2015, rising to $124 in 2016 and $141.6 in 2017, in constant 2011-12 Australian dollars.”

In reality, however, the price has fallen to $US43/pound in early 2013 and looks set to decline further. Looking ahead, the future of nuclear power looks bleaker than at any time since the industry began. That’s bad news for the global climate – cheap and safe nuclear power would be the ideal replacement for coal if it could be delivered – but there is no benefit in denying reality

It’s now clear that the “nuclear renaissance” is dead in the US. There are four plants currently under construction, behind time and over budget as usual. No more are planned, and with two plants already closing, it seems clear that nuclear power capacity is going to decline. It’s fashionable to blame cheap gas for this, but that hasn’t stopped huge growth in wind and solar, neither of which is as heavily subsidized as nuclear. It’s even more silly to blame the opponents of nuclear power, who have been both quiet and politically marginal in the US, as is evidence by the bipartisan support for nuclear loan guarantees.[1]

The situation in Europe, and of course in Japan, is even worse. Again, and despite the absence of cheap gas, the economics simply don’t stack up. George Monbiot, who famously became an advocate of nuclear power *after* Fukushima, has reluctantly concluded that “for now, the facts are against me”.

The great hope for the future of nuclear power is, of course, China[2]. Given its rapid growth, China is in a position to place a bet on every horse in the energy race, including nuclear. But, while its plans for renewables have been steadily upgraded, China’s nuclear plans were scaled back substantially after Fukushima.

It seems likely that, with higher safety standards, the Chinese nuclear program (until now characterized by on-time and on-budget delivery, but probably with compromised safety) will start to experience construction costs and delays comparable to those that have been the uniform experience of the developed world. If not, there is still a chance for nuclear power in the future. But the establishment of a track record of safe construction and operation in China will take at least a decade, which means that any global renaissance won’t start delivering benefits until after 2030.

Most of these negative outcomes could have been, and were, predicted on the basis of 20th century experience with nuclear power. In this context, it’s striking that rightwingers who want to excuse anti-science attitudes on their side so often point to the anti-nuclear stance of many (not all) on the left as an example of leftwing anti-science.

The opponents of nuclear power have been proved right on the big question of whether cheap, safe and clean nuclear power can be delivered in developed countries. Perhaps some were right for the wrong reasons. But on this issue, as on so many others, the clearest examples of magical (and therefore anti-scientific) thinking are found among those rightwingers who continue to insist, against all the evidence, that nuclear power represents an obvious solution to our problems, and that the only obstacle to its success is the unreasonable opposition of environmentalist.

Coming back to the original quesiont, the price of uranium boomed in the early 2000s, after supplies derived from nuclear stockpiles were exhausted. But the current decline looks set to continue for a long time. Unless new mines are profitable at prices of $40/tonne or less, they will probably be uneconomic.

fn1. Of course, news like this doesn’t help (H/T David Adamson).

fn2. BREE also mentions India and Russia. But given the long history of lax construction standards in both countries (a problem China is at least addressing), it seems unlikely that either of these countries will serve as a model, or that they can manage a rapid expansion without another disaster, perhaps not on the scale of Chernobyl or Fukushima, but enough to derail the whole process.

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  1. Hermit
    March 3rd, 2013 at 22:42 | #1

    @Ronald Brak
    I suggest the fact SA has guaranteed east coast customers for its 1.2 GW peak windpower is largely due to the RET. Hence the need for beefed up transmission like the Heywood interconnector. The east coast is to SA windpower what Norway is to Danish windpower. During heatwaves SA imports power from eastern seabord states sometimes at a very high price.

    As for lower wholesale electricity prices that makes it hard to explain AGL’s base summer retail rate of 34c per kwh which I think is one of the highest in the world. That would have seemed unthinkable a few years ago. I expect high gas and electricity prices for business will keep new unsubsidised industry away from SA.

  2. John Quiggin
    March 4th, 2013 at 04:44 | #2

    We’ve done intermittency to death on this blog many times. To restate, the answer is variable pricing for consumers.

    The new point raised by quokka was the idea that (implicitly w/o nuclear) a carbon-free economy is infeasible because of land area constraints. That point appears to have been conceded as wrong, at least as regards electricity, and not to have been pursued further.

  3. John Quiggin
    March 4th, 2013 at 04:52 | #3

    @Hermit

    First, most of the increase in electricity prices, in SA and elsewhere in Aust is due to distribution charges, which in turn reflect the mess we’ve amde of pricing

    More important, though, let’s suppose that a renewables-based system would result in retail electricity prices of 30-40 c/kWh, even if we could fix the distribution mess. What’s your alternative? Clearly nuclear isn’t going to be any cheaper. If you think we should keep subsidising coal to promote industry, come out and say so.

    It seems to me that you and quokka are going the same way as Brave New Climate. That is, you started out bagging renewables in order to push the case for nuclear. Now that nuclear is obviously not a goer, you’re still bagging renewables, running the same kind of arguments we used to see from Peter Lang here and at BNC, and effectively supporting the coal lobby. Of course, we have to get the facts straight, but most of what I read from you two is factoid rather than fact.

  4. Hermit
    March 4th, 2013 at 07:13 | #4

    @John Quiggin
    I agree nuclear power is not going to supply electricity at prices aluminium smelters have come to expect. However it has negligible CO2. Both the ALP and LNP think a 5% emissions reduction 2000-2020 is worthy but I suggest we should be aiming for at least 25%.

    Now there is a new spanner in the works, the likely doubling of the east Australian gas price by 2015. That probably means that monstrosities like Hazelwood will be with us for another 20 years. To be replaced by what? If the Germans are showing us how they are going about it a funny way with increased emissions and negative economic growth.

  5. quokka
    March 4th, 2013 at 08:57 | #5

    @Sam

    The problem, Quokka, is with your interpretation of average power. Perhaps it’s true that the average over a whole country is from 1-2 W/m^2, but in practice there is significant variation from region to region. In all the places you put wind turbines, the power per area is much much higher than the average (by probably a couple of orders of magnitude). In this way, you can extract a very large percentage of a country’s total wind energy with a very small percentage of land covered.

    Just plain wrong. The 2 W/m^2, as I said is from David MacKay “Without the Hot Air”. It is the area average power density of a high performance UK wind farm. It is around the upper bound of on shore wind performance. The “average” bit is average over time. Everybody should read “Without the Hot Air” – it is free and available on-line.

  6. Chris Warren
    March 4th, 2013 at 09:48 | #6

    Forget nuclear. It is only attractive to blinkered thinkers. George Monbiot is just blowing back and forth with the wind.

    We need renewables that do not take up massive real estate, but more importantly funding for research into such things as “Blue Energy”.

    http://www.statkraft.com/presscentre/news/statkraft-considering-osmotic-power-pilot-facility-at%20sunndalsora.aspx

    Capitalists are unlikely to jump on board because Blue Energy cannot be monopolised. It needs public funding and public ownership.

    If all the funds going into nuclear technology went into “Blue Energy” I suspect that suitable membranes could be developed.

  7. quokka
    March 4th, 2013 at 10:19 | #7

    @Chris Warren

    Blue Energy? Mention nuclear power and it always happens. Out come the dinky toys with the unstated assumption that if you integrate over the space of all dinky toys, you will get something orders of magnitude larger than dinky. Not going to happen.

    Our energy options are all on the table right now. Some new game changing fundamentally different energy technology is very unlikely over the next few decades. That’s physics for you.

    The only possible exception is fusion, but it’s only an outside chance and well short of any stage of development that would warrant any consideration in planning decisions.

  8. Chris Warren
    March 4th, 2013 at 10:31 | #8

    @quokka

    Try delving into the links and literature.

  9. TerjeP
    March 4th, 2013 at 11:32 | #9

    Capitalists are unlikely to jump on board because Blue Energy cannot be monopolised. It needs public funding and public ownership.

    I suspect that if it could be monopolised you would then argue that it should be in public ownership for that reason.

  10. Sam
    March 4th, 2013 at 11:41 | #10

    @quokka
    Oh OK then. In that case I dispute the figures. I just googled UK windfarms, and the first thing I found was Whitelee (there’s a wiki page). It’s a 322 MW farm, over 55 km^2, giving power density ~5.8 W/m^2

  11. Chris Warren
    March 4th, 2013 at 11:44 | #11

    @TerjeP

    Well done, your learning rate is picking up.

    However a regulated private monopoly may have advantages.

  12. Sam
    March 4th, 2013 at 11:44 | #12

    Biglow farm, 450MW, 10 000 Hectares=>4.5 W/m^2

  13. Sam
    March 4th, 2013 at 11:45 | #13

    Just the first two I found.

  14. Ikonoclast
    March 4th, 2013 at 12:38 | #14

    Availability of land area is not an issue for Australia. We have massive swathes of flat, arid and semi-arid land. There is even plenty of spare, flat, marginal land (marginal for agriculture and grazing) near our big cities. In addition, the entire roof space of our entire infrastructure can be given over to solar power if required. Current developments indicate that roofing material and even windows can double as solar panels with appropriate manufacture.

    Bagging renewables just gives propaganda free kicks to fossil fuels and nuclear power along with the huge subsidies they currently get. Our main problem in this area (aside from not understanding the reality limits to growth) is our legacy committment to subsidising old technology namely fossil fuels and nuclear. Many of our current capitalists are heavily invested in these arenas, lobby for subsidies and lobby against being left with stranded assets. The capitalist system and the captured and suborned political system in this arena are enormous obstacles to needed change.

    It’s another example of the maladaptive nature of late stage capitalism in that it responds to its own internal imperatives but not to the environmental signals and the ultimate imperatives of natural world laws (at least not until too late).

  15. quokka
    March 4th, 2013 at 13:22 | #15

    @John Quiggin

    We’ve done intermittency to death on this blog many times.

    Perhaps, but this blog is not the real world.

    Under a recent headline “Germany to Add Most Coal-Fired Plants in Two Decades” Bloomberg reports that Germany is starting up 5.3 GW of new coal plants this year, with 1 GW of old coal capacity coming off line.

    Why is Germany not dealing with intermittency with variable pricing? One answer may be that it might be a bridge too far on top of 5.3 eurocent/kWh already levied on retail bills to subsidize renewables.

    But a more fundamental reason is that security of electricity supply will simply fall apart without the stability and quality of supply offered by thermal generators (or hydro where available). There are few who actually contest this reality at this time, as distinct from some imaginary future.

    Claims that variable retail pricing will deal with the problem are proven nowhere and unlikely to be proven anywhere anytime soon.

    In the real world we see that coal and nuclear are functionally interchangeable. And that wind/solar and coal are not.

    In the coal – nuclear choice Germany has made it’s decision, which of course it is entitled to. But there is no obligation on anybody to believe it is a sensible choice.

    Moving on to Denmark.

    Denmark is nothing like a test case. As already observed it is a small market with interconnects to much larger markets, with relatively speaking very large flows with the majority of the flows to/from the Nordic market. In other words Danish wind is backed by hydro/nuclear, and a national boundary makes not the slightest difference to that.

    Denmark really is a small market. Total installed wind power is about 3.95 GW up from about 2.39 GW in 2000. Of that approximately 1.56 GW growth in capacity, O.87 GW is offshore (55%). See the Danish Energy Agency 2011 “Energy Statistics 2011″. Also see on page 9 the trend chart showing the era of rapid expansion of on shore wind in Denmark may be over. Land use issues? And that with onshore wind supplying no more than 5% of final energy use. No amount of energy efficiency stories can trump that.

    Denmark’s final energy use per unit land area is lower than that of the UK, France and Germany.

    And my last words here for now. Denmark’s wind supplies about 6% of it’s final energy use. Germany’s wind about 2%. Germany’s PV about 1%.

    This is supposed to be evidence of an energy transition that will be climate saving? Really? PV/wind is still much less than nuclear world wide. Even in Germany with crippled nuclear it still beats solar+wind. The precautionary principle has become a bit fashionable lately. How about we apply it to energy too?

  16. March 4th, 2013 at 13:29 | #16

    With the size of turbines increasing, wind farms now use about 1% of the land or less for pylons and roads. The rest is of the land is still available for its original purpose. The Hazelwood brown coal power plant and its associated mine covers over 35 square kilometers and I presume that land is only used for power production and mining. This means that wind turbines produce several times as much electricity per square metre of land used for electricity production than the Hazelwood power plant.

  17. Nick
    March 4th, 2013 at 13:54 | #17

    quokka: “We can now make a minimum estimate of the external costs savings by using nuclear rather than fossil fuels in Japan

    6,000,000,000,000 x 0.05 = 300,000,000,000 = 300 billion Euro = USD 308 billion”

    Japan has generated just as many, if not more, kWh from imported natural gas compared to imported coal since the mid to late 70s. Why then make the assumption its nuclear capability wouldn’t have been substituted with increased natural gas use – nuclear and natural gas, not coal, being the two energy sources it chose to diversify to significantly in wake of the oil shock?

    The EEA estimated external costs of natural gas in the EU (including those associated with its mining and export) of between 1c to 3c/kWh.

    6,000,000,000,000 x 0.01 = 60 billion euros

    That’s your minimum cost estimate – 60 billion euros. Not 300 billion euros.

    You’re trying to imply that a minimum external cost estimate still leaves nuclear some $50 billion in the black, and that the reality would have to be even more favourable for nuclear.

    In reality, a minimum external cost estimate leaves nuclear $190 billion in the red…

  18. quokka
    March 4th, 2013 at 20:42 | #18

    Japan has generated just as many, if not more, kWh from imported natural gas compared to imported coal since the mid to late 70s.

    You forgot to mention oil. Oil and Coal have easily generated more electricity than gas – somewhere between two and tree times. Next objection?

  19. Mark Duffett
    March 4th, 2013 at 21:25 | #19

    @Sam

    Are you taking the capacity factor into account? If not, multiply your numbers by ~0.3.

  20. Mark Duffett
    March 4th, 2013 at 21:53 | #20

    @John Quiggin

    Brave New Climate…started out bagging renewables in order to push the case for nuclear.

    That’s actually not true. In its very earliest days, BNC espoused the renewables+feel-good-measures-will-do orthodoxy of the time. Prof Brook was also pushing solar thermal ahead of most. Unlike many others, he has at least consistently demonstrated the ability to change his opinion in response to rigorous quantitative evaluation and new information.

  21. Nick
    March 4th, 2013 at 22:29 | #21

    “You forgot to mention oil.”

    quokka, that sentence you quoted…read the last sentence of the paragraph it came from. Why on earth would Japan have wanted to wean themselves onto more oil as an electricity source in the 70s? As you well know, the idea was to steadily wean themselves off it. Oil as hypothetical substitute for the Japanese nuclear industry…you seriously want to argue that?

    “Next objection?” Nah, I reckon that $240 billion error in ‘minimum cost savings’ you made is enough for now…

  22. March 5th, 2013 at 15:55 | #22

    While a wind farm using 2 megawatt turbines may only remove about 0.67% of the total area it covers from agricultural use, using a figure of 1% for the Bald Hills Wind Farm under construction on grazing land in South Gippsland in Victoria gives me an average output of about 218 watts per square metre, for an energy density that is about 6.8 times greater than the lignite fuled Hazelwood Power Plant.

  23. Sam
    March 5th, 2013 at 17:32 | #23

    @Mark Duffett
    Ah no, I didn’t. That does change things quite a bit. Apologies for that.

    Still, Ronald Brak’s point about wind farms still allowing for grazing on most of their land applies.

    Also, the potential for offshore wind is larger, why not include it?

    It’s true that not every country has a level of grid interconnectedness comparable to Denmark. However, every place with a high population density (ie where land space matters), will have such grid connections, meaning wind can be integrated into the grid.

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