Hugh Saddler: Thank you, Richard, and thank you very much to the Nautilus Institute for organizing this forum that I’ve greatly enjoyed, and myself being here today and hearing all the speakers that have gone before. Dave Sweeney has spoken mainly about the very first part, or the front-end of the nuclear fuel cycle, the mining of uranium, and then he had some very firm words to say about the very back-end, the disposal of the waste from the use of uranium to make energy.

I’m going to talk mainly about the middle part, and just as a reminder, I’ll just explain the stages of the nuclear fuel cycle from the mining of uranium produced and then, in the form of yellow cake that’s purified, converted to uranium hexafluoride.

Uranium hexafluoride has to be enriched in the fissile isotope of uranium, uranium-235, to the point where it can be used in the most common form of nuclear reactors which require  enrichment several times above the natural occurrence of uranium-235. It’s then used in the reactors to make electricity, and then the spent fuel…something has to be done with the spent fuel.

I won’t be talking about the so-called back-end of the nuclear fuel cycle, the waste disposal and the reprocessing–several other speakers have touched on that. But, the only thing I will say, is that the reprocessing stage and the enrichment stage are the crucial stages, so far as the production of fissile material that can be used to make nuclear weapons is concerned.

And at the enrichment stage you can make enriched uranium, making uranium weapons at the reprocessing stage. You separate out plutonium, and you can make plutonium weapons. They are the most sensitive stages, and they are the stages around the world, which only occur in a few large installations in a small number of countries for the most part, so far as the commercial starts of the nuclear fuel cycle is concerned, and of course, in various countries they occur on a smaller scale.

And most recently, this is what the concerns about Iran and North Korea are about. They’re doing these on a smaller scale, and obviously this gives them a capacity to make nuclear weapons.

I’m going to just concentrate on talking about enrichment and then nuclear power. These are both being discussed in policy discussions in Australia over the last five or so years, but it’s important to recognize they’re really completely separate propositions.

So, first of all, I wanted to say just a little about enrichment of uranium, or the concept that Australia might become involved in enrichment. This was seen by advocates as part of sort of value-adding for Australia’s exports for uranium, reflecting Australia’s position as a large producer of uranium for the world nuclear industry.

Two or three years ago, as I’m sure all of you recall, when Mr. Howard was Prime Minister, he commissioned an inquiry, chaired by Ziggy Switkowski, who’d been deposed as the chief executive of Telstra, and the title of the report was, “Uranium Mining, Processing and Nuclear Energy Review, ” sometimes called the “UMPNER Report.”

This report, in my opinion, did a great service to the discussion of this aspect of nuclear fuel cycle in Australia, because, effectively, it took the prospect of enrichment off the table for sensible and serious policy debate.

What they said about the prospect of establishing enrichment industry in Australia, more or less quoting the words of the submission from BHP Billiton, which, as Dave explained, along with Rio Tinto, would be one of the two companies who’d be most interested in doing this commercially as the two companies producing the large quantities of uranium in Australia.

And they said, and the report of the committee endorsed, that the development of a conversion or enrichment capability will need to clear significant regulatory, diplomatic, and public perception hurdles. Those hurdles are the ones we’ve been hearing about most of today–how it contributes to the capability to make weapons, and so on, and it’s unavoidable relationship to the proliferation of nuclear weapons.

It will need to clear these hurdles, as well as provide a commercial return–and it’s the commercial return part that was not there, and it’s why BHP Billiton and why Rio Tinto said that they weren’t interested in doing it.

And the report, it’s well worth reading that chapter of the report about that, because it just sets out just exactly why it’s not a commercially sensible activity for Australia to become involved. And that, of course, is the decisive factor that means, as far as I can see, it’s off the table for a very long time to come, and that’s one good thing we don’t have to worry about.

Now, turning to the question of whether Australia might produce some of it’s electricity by the use of nuclear power, of course, the enormous other crisis we are facing in the world today as a global community–the crisis of global climate change produced by anthropogenic greenhouse gas emissions, has invigorated, enlivened the lobby advocating that we build nuclear power stations in Australia; and the Switkowski Report, the UMPNER Report, was a very strong proponent of doing so.

I think that makes absolutely no sense whatsoever. I’ll just spend the next few minutes saying why I think that’s so, and there are a large numbers of reasons.

First of all, and this was described in rather anodyne terms, I would say, in the Switkowski report, there will be a need to establish an entirely new regulatory structure, a regulatory regime, train or recruit from oversees, both really, a new cadre of nuclear physicists, chemists, engineers, and so on, and establish the supporting laboratory infrastructure and research capacity.

And that would take a very considerable time and quite a lot of commitment of resources, which of course, would have to be done by the public sector, or at least the public sector taking a lead.

Secondly, there is the issue of the capital cost of a nuclear power station, and the issue about nuclear power stations is that, of all the ways of making electricity, it is the most capital intensive, and the form of making electricity which requires the largest single lump of investment in one go to make what might be an economically-sized project to produce electricity.

This is simply not a consistent approach to financing new investment in energies, not consistent with the structure, the model, of the electricity supply industry we have in Australia today, and also in most countries, in fact, around the world.

But Australia is in the vanguard of this so called liberalized, or competitive markets for electricity, where we rely on private investment, not directly supported by the government–private investors, private companies, to make the investment in new electricity generation capacity.

For an investor, this is a really terrifying talk of investment, and as Dave Sweeney alluded to, the penny finally dropped with those three leading Australian business people not so long ago who didn’t realize that.

The only conceivable way that this might happen financially in Australia, is if investors were provided a guaranteed return, of the sort that a number of these so called private-public partnerships to build toll roads and the like–have gone to in Australia in recent years, which we know, a number of these are now in litigation. It’s cost most of the State governments who got into them large amounts of money.

The size of investment of a nuclear power station is far greater than the investment needed for a toll road, and the risks, all the other risks, of course, are far greater. So, it is not financially sensible–it doesn’t fit with the model of the electricity industry that we now have today.

But finally, the reason why it makes absolutely no sense in Australia is that, of all the developed industrialized countries around the world, Australia is by far the best endowed with renewable energy resources, relative to it’s consumption of energy.

We just have the most fabulous resource endowment of solar radiation, of wind energy, of hot rock energy and of wave energy–which are the main four types. To think that we cannot use those sources of energy to produce… Really, the size of the resource just completely dwarfs the size of the demand for energy.

It is really simply a question of the technology that’s used to harness it, and of course I think it’s nearly all known. Many of the technologies are now, really in a commercially material stage. That’s most obviously the case with wind energy, but the main solar technologies, concentrating on solar power and photovoltaics, are now widely used around the world.

Photovoltaics have been used increasingly in Australia. These costs of all these technologies are coming down every year, not only with further research. which is particularly important in the case of photovoltaics. but with experience “learning by doing” in the case of wind energy.

If Australia says, “Well, we can’t move to a low and ultimately zero emission energy society with the resources we have here”, what hope is there for any other country around the world? Conversely, Australia is a better place than almost any other country to set the example and demonstrate how we can in fact do it.

The other factor, which is relevant in terms of the transition to a low emission, and ultimately zero emission future in the longer term, is our enormously abundant resources from natural gas which are much lower emission–obviously not zero–but much lower emission fossil fuel source, compared with coal.

Now, of course, I won’t talk about the coal industry, and the coal lobby, and so on, because that’s not quite so relevant here, but I’ll just make a few remarks about the arguments that are advanced against renewable energy and the arguments that say why we have to have nuclear power mainly revolve around the issue of so called “base-load power”.

That’s power that can go around 24 hours, through the night and through the day continuously. First of all, it’s important to separate this argument from the argument about the cost of the electricity.

They are very much confused, mainly because the importance of aluminium smelting as an industry in Australia. What the aluminium industry mainly needs is extremely cheap electricity. Now, there’s absolutely no advocate of renewable energy would say that renewable electricity can be as cheap as coal-fired electricity, from the enormous resources of very, very, cheap coal in the Latrobe Valley, in the coal fields of New South Wales or Queensland.

I think it can be certain that there won’t be any new aluminium smelters put in Australia. Whether the existing one’s stay or go (they’re getting quite long on the tooth most of them now) is a separate matter.

They use about 18% of all the electricity consumed in Australia. So that’s a large part of what needs to go around 24 hours a day. If you take the amount out of the picture because they won’t work with more expensive electricity anyway, the issue becomes a bit less complex.

The next thing to say about so-called “base-load electricity” is that in fact it’s really an economic creation. It was actually dreamt-up, particularly by economists working for the French electricity utility in the 1950’s. It’s an economic response to a technological imperative because of the characteristics of large coal-fired power stations and, a fortiori, of nuclear power stations. They do not work well if they have to follow the load, the fluctuating load. They like to go flat–evenly. So, you actually have to invent ways to find demand for electricity in the middle of the night, so that they can do that.

There have been times in our electricity market in Australia that some of the generators in Latrobe Valley have actually been in negative prices, because it costs them more to shut down than to be allowed to keep generating electricity.

So, if we just try and completely change the way our electricity system is structured, the issue of the base-load power diminishes greatly. It will need a different type of electricity system, a distributed system. It will need much more different and more sophisticated forms of the control of the transmission and distribution.

That’s the difficulty the electricity industry has today. Most of the leading people are locked in this model, of a centralized system with a small number of very large power stations sending the electricity out, rather than the network system with lots, and lots, and lots of small generators spread around where the load is.

Of course, nuclear power stations are the centralized form of electricity, above all. Not only are they very large, they have to be centralized. But they also have to be subject to the most stringent type of regulatory control, and pose all sorts of security issues and so on, which all those have spoken about.

So, building nuclear power stations in Australia not only doesn’t make economic sense, it would be locking Australia into the form of electricity supply which is a product of the 20th Century, not the 21st Century. It would be taking us backwards, rather than forwards, in the way we need to go to meet our electricity needs of the future.

It will be making a dreadful example to the rest of the world as to how to go about maintaining adequate supplies of electricity for our needs without polluting the planet further, when we have such abundant and wonderful resources of clean, renewable energy which can last us forever to meet our electricity needs.

About Hugh Saddler

Hugh Saddler is the Managing Director of Energy Strategies.

He presented this speech at a public forum on nuclear disarmament, Who Will Stop Nuclear Next Use? The forum was organized by the Nautilus Institute at RMIT. It was held on Sunday 20 September 2009 at RMIT Storey Hall.