Japan crisis puts nuclear energy under the spotlight
In March 2011, an earthquake and tsunami hit Japan, leading to an explosion and radiation crisis at the Fukushima nuclear power plant. Japan has the third highest number of nuclear reactors in operation in the world. 26.8% of Japan’s electricity came from nuclear power in 2010 but this proportion is higher in some other countries. The crisis has prompted a global review of nuclear power, with alternative and renewable sources back on the agenda.
- Energy supply and security are essential for quality of life as well as a functioning and competitive business environment. Global energy demand is rising as a result of population growth and urbanisation, as well as rapid economic growth and industrial production in emerging markets;
- Nuclear power accounts for around 14% of the world’s electricity production, according to the World Nuclear Association, with 443 operable reactors globally as of 1st March 2011;
- One of the biggest advantages of nuclear power is the fact that it is a clean form of energy with virtually no carbon emissions. As the world battles the effects of climate change from the burning of fossil fuels, nuclear power has risen in importance as a feasible alternative. In the decade to 2010, global carbon dioxide emissions from fossil fuels increased by 30.8%;
- The Fukushima nuclear crisis is the first major crisis since the Chernobyl disaster of 1986 in Ukraine. In Japan, radiation has been detected in tap water, food and seawater, which has raised global concerns about the risks associated with nuclear energy;
- The nuclear debate has occurred at the same time as spikes in oil prices following social unrest across the Middle East and North Africa in early 2011, triggered by the revolutions in Tunisia and Egypt. The Europe Brent spot price for oil was US$104 per barrel in February 2011 compared to US$74.3 per barrel a year earlier. Rising commodity prices highlight the importance of energy security and diversification. Higher oil prices will raise inflationary pressures, reducing business profits and weighing on consumer discretionary spending potential.
As of 1st March 2011, there were 62 nuclear reactors under construction around the world but the Fukushima crisis has sparked a worldwide review of nuclear power:
- China and India are reviewing their nuclear energy plans following safety concerns. However, China announced in March 2011 that it would build a nuclear power plant in April 2011 using fourth generation technology, with helium gas instead of water for the cooling process. Both economies are under pressure to expand energy production to meet rapid economic and population growth. China and India will account for 35.8% of the global population in 2020;
- Germany (Europe’s largest economy) has switched off several reactors to conduct safety checks. However, France has backed nuclear power, particularly as it accounts for three-quarters of the country’s electricity production. France is the world’s largest net exporter of electricity;
- Russia and Belarus have been in talks about Russia providing investment for a nuclear power plant in Ostrovets, Belarus ready for 2016. Russia will also be performing stress tests on its existing nuclear plants.
It may be too soon to assess the full impact of the Fukushima nuclear crisis but there will no doubt be a reduced public appetite for nuclear power. Consumers have already been seeking greener products and environmentally-friendly business initiatives – the latest nuclear crisis is likely to push up the importance of renewable resources, providing significant business opportunities.
The United Nations has set a target for world temperatures to rise by no more than 2°C by 2020 (from pre-industrialised levels) and so alternative energy sources to fossil fuels will remain high on political agendas. However, the advantages that nuclear power has in terms of large-scale, clean energy production will mean that it remains a viable alternative source of energy for many major economies as the depletion of natural resources accelerates.