The financial crisis of the last year caused the most significant ever drop in energy demand and investment, leaving turbulence in energy programs worldwide, the International Energy Agency (IEA) said today.
In the first major global analysis since the financial crisis hit, the IEA's World Energy Outlook predicted a drop of 1.6% from 2008 consumption figures. This, only the second drop since the end of the World War II, has led to a fall in investment which could later trigger a supply squeeze, particularly in oil. Investment in wind turbines collapsed by 47%, but since recovered half of the fall.
Although it could give no examples, the IEA warned of delays or cancellations in nuclear power programs, adding that "the financing of new nuclear power plants, especially in liberalised markets, has always been difficult and the financial crisis seems almost certain to have made it even more so."
In the short term another problem could come for nuclear power: a glut of gas. The IEA noted the huge recent increase in shale gas recovery in the USA. This should limit the growth of US gas imports with "far-reaching implications for gas pricing."
However, nuclear power remains a key generation method in the opinion of the IEA's chief economist, Fatih Birol, who launched the report in London today. He rejected the idea that nuclear power was a bridge technology, saying it would have a "crucial" role in the preferred 'zero carbon' group of technologies alongside renewables and carbon capture and storage.
Indeed, the report notes: "Nuclear technology is the only large-scale, baseload electricity generation technology with a near-zero carbon footprint, apart from hydropower (potential for which is often limited)."
If the world follows the IEA's advice in limiting carbon dioxide concentrations in the atmosphere to 450 parts per million - the '450 scenario' - then total investment in low-carbon power generation could reach $7155 billion by 2030. Renewables are favoured with investment of $4770 billion while nuclear could see $1272 billion. Details of policy proposals to stimulate this kind of investment were released early by the IEA in time for October climate talks in Bangkok.
The above figures combined with others in the report indicate nuclear could provide 14% of global emissions cuts from a 16% share of power station spending. Renewables provide 27% of cuts from a 60% spending share and carbon capture could give 11% of cuts for 7% of power generation investment. The IEA sounded less confident about the impact of carbon capture, listing it third in the low carbon group and saying it hoped for would be able to contribute.
The surge in nuclear build is expected to begin in earnest after 2020 and result in 375 GWe of new capacity by 2030, some of this replacing retired plants. Annual construction rates will have to grow by a factor of eight, and the IEA said "improved and shorter planning procedures will be crucial for accelerating the development of nuclear power."
In addition, the IEA said that governments may need to mitigate the financial risks of nuclear construction, which carries heavy up-front costs. In the long term, however, a "well designed system that puts a price on carbon should lead to adequate investment in nuclear power."