"The government's review, which is due to report to Tony Blair by the 
summer, will examine the economic case for greater reliance on imported 
gas, coal and renewable energy, Mr Johnson said."

What answer the economic analysis comes up with is crucially dependent 
on the discount rate assumed in the study.  In conventional economic 
analysis, positive discount rates of a few per cent are typical.  A 
relatively high discount rate will favour coal, low discount rates 
favour renewables and energy conservation, and intermediate levels 
favour nuclear.

But it could be argued that the discount rate for energy should really 
be negative, since the efficiency of conversion of energy resources is 
continually increasing, and a negative discount rate massively favours 
renewables and conservation. 

What's the betting the government chooses an intermediate discount rate?

Is there any way we can get these ideas across to the public?

Chris

Rules overhaul could speed up nuclear plants
 >By Christopher Adams and Fiona Harvey
 >Published: January 24 2006 02:00 | Last updated: January 24 2006 02:00
 >>

Ministers are preparing to simplify the planning and licensing regime 
for nuclear power plants in a move that could cut years off their 
construction time and reduce upfront costs for industry by billions of 
pounds.

Launching a three-month public consultation on future energy needs, Alan 
Johnson, trade and industry secretary, yesterday promised a clear 
regulatory framework for operators investing in new power generating 
capacity.

The government's review, which is due to report to Tony Blair by the 
summer, will examine the economic case for greater reliance on imported 
gas, coal and renewable energy, Mr Johnson said.

But he also strengthened the view that Mr Blair is preparing to give the 
green light to fresh investment in nuclear power, declaring it was time 
to take a decision on whether to replace the UK's ageing capacity, 
almost all of which is due to be decommissioned within the next two decades.

Coal and nuclear power stations producing 30 per cent of the UK's 
electricity would close by 2020, Mr Johnson said.

"Companies will need to decide how this capacity should be replaced. 
These are big investment decisions, so the government needs to provide a 
clear framework," he said.

In a long section, the consultation paper pointed to several advantages 
of nuclear energy, including its contribution to reducing carbon emissions.

It noted that after a slowdown in construction over the past 15 years 
many countries were considering new nuclear build, with more than 20 
plants under construction.

Supplies of uranium would remain reliable for up to 80 years.

But the paper also underlined the uncertain cost of development, 
pointing to academic studies that suggested it could vastly exceed that 
of coal and gas.

The government would expect future plants to be built and run by the 
private sector. The view in Whitehall is there is substantial interest 
from operators.

Ministers have ruled out any direct public subsidy including, it is 
understood, suggestions for tax credit-style incentives to aid 
construction of a first wave of plants. Later plants would be cheaper to 
build.

But there are growing expectations the government will recommend 
streamlining the planning and licensing regimes for new nuclear plants, 
as well as other forms of generation, measures that would improve 
investors' rates of return by cutting upfront costs and shortening 
considerably the construction timetable.

One senior Whitehall insider said: "If anything can be done to make that 
easier, while retaining the scope for appeals, it should be looked at."

Environmental groups warned that favouring nuclear power would result in 
less investment in renewable forms of energy such as wind, wave and solar.

They pointed to remarks by Patricia Hewitt, who as trade and industry 
secretary in 2003 suggested that investing in nuclear power would have 
been "foolish".

Stephen Tindale of Greenpeace said: "Ministers are asking the wrong 
questions. Instead of asking how Britain can make its energy system more 
efficient, this review is only looking at what kind of fuel we use to 
generate electricity."

Sir Digby Jones, director-general of the CBI employers' body, welcomed 
the review, saying recent weeks had highlighted gas supply concerns.

The government, he said, was "absolutely right" to assess the nuclear 
option. But there were "legitimate questions about its cost, and about 
the disposal of waste, that need clear answers so that a decision can be 
made."

However, nuclear power should not crowd out other considerations, he 
said, urging support for low carbon technology and the more efficient 
use of energy.
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