True meaning of nuclear power is to do with finance

It's really all about power

It's really all about power. Although electricity generated by Britain's nuclear power stations is likely to be twice as expensive by 2020 as electricity generated by onshore wind farms, the nuclear industry still manages to wield enormous power where it counts: in Whitehall.

Even last week's announcement that British Nuclear Fuels Ltd (BNFL) is to be broken up, with £35 billion sterling of its liabilities - including all nuclear fuel reprocessing operations at Sellafield - transferred to a new liabilities management authority, cannot be read as a serious setback.

Although welcomed by Greenpeace and Friends of the Earth as marking the beginning of the end for reprocessing, the real agenda is to eliminate BNFL's liabilities and prepare the company for partial privatisation by 2005, when a 49 per cent stake in the company is due to be sold off.

Whatever fears the public may have, the nuclear lobby in Britain is used to winning. Only once in its 50-year history has it been rebuffed, and that was in 1996 when the inestimable John Gummer rejected plans by UK Nirex to store radioactive waste in an underground dump near Sellafield.

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This was also a victory for the Irish government. After years of turning a blind eye to the expansion of reprocessing facilities in Cumbria, just across the Irish Sea, it put together a formidable case against UK Nirex's plans, not least because the chosen site lay in a geologically unstable area.

Now the Government is trying to block Sellafield's controversial MOX reprocessing plant from going into production on December 20th, as authorised by the British Environment Secretary, Ms Margaret Beckett. One of the real fears, in the wake of September 11th, is that it could become a terrorist target.

As a recent editorial in the Guardian noted, "Sellafield is nearer to Belfast than it is to Glasgow or Sheffield, and the new mixed oxide fuel plant there would be very much closer to the centre of Dublin than it would be to the centre of London". Its neighbours in Ireland, therefore, had legitimate cause for concern.

However, in response to the Government's case before the Law of the Sea tribunal in Hamburg, the British side seemed more concerned about the financial implications of closing Sellafield than about safety considerations or what the Guardian called "the truly terrifying post-September 11th possibilities".

The fact is that Sellafield has never made any money. BNFL lost £210 million sterling last year, of which £66 million was accounted for by the necessary decommissioning of old nuclear installations from the Windscale era, used to produce radioactive plutonium for nuclear weapons in the 1940s and 1950s.

The MOX plant, built at a cost of £472 million sterling, will mix spent uranium with plutonium to produce new fuel pellets for nuclear power stations. It is tacked on to the end of BNFL's £1.6 billion Thorp (thermal oxide reprocessing) plant, which was sanctioned in 1978 with no objection from the government here.

The economic justification for bringing the MOX plant into production five years after it was finished is quite spurious. Characterised by its opponents as "voodoo economics", the alleged "benefit" only adds up if the capital cost of the plant is written off and BNFL's £150 million order book is treated as "future profits".

British Energy plc, which runs most of the country's nuclear power plants, is trying to extricate itself from contracts with BNFL to reprocess spent fuel from its reactors. According to BE, this costs six times more than simply storing the spent fuel underground. At £300 million a year, it says, reprocessing is "uneconomic".

If BE succeeds in abrogating its contracts, BNFL will have to fall back on foreign clients, notably in Germany and Japan, to make the MOX plant viable.

But no firm orders have come in from the Japanese, who are still smarting over the revelation two years ago that specifications for the new fuel had been falsified.

What happened, according to the Observer, was that a group of workers "forged quality-control records for MOX fuel at a photo-type facility at Sellafield in order to cut corners". This was followed by three damning reports by the Nuclear Installations Inspectorate, criticising BNFL's management and safety culture.

Over 61 tonnes of plutonium the most toxic of radioactive substances, are stored at Sellafield, although there are serious doubts that it can all be recycled through the MOX plant. What worries the Government is that ships ferrying yet more plutonium to Cumbria run the risk of terrorist attack on the high seas.

Incredibly, the terrorism argument was not even taken into account in the decision to license the MOX plant, even though it might mean having to provide naval escorts for ships carrying plutonium. Also discounted was a consultancy report which concluded that going ahead with the plant did not make economic sense.

Yet it seemed unlikely that Ireland can succeed in stopping MOX. Even under New Labour, Britain remains committed to its nuclear industry. Why else would it be prepared to pledge £35 billion sterling in public money to fund a programme of decommissioning redundant reactors and cleaning up radioactive waste?

In the meantime, the nuclear lobby is pressing the British government to sanction at least six and possibly as many as 24 new nuclear power stations, arguing that these are necessary to plug an emerging "energy gap", to ensure more "diversity" of fuel supply and help reduce carbon dioxide emissions.

BNFL's own plans include replacing outdated Magnox reactors, such as those at Wylfa and Trawsfynnd in Wales, which need to be decommissioned anyway. An advantage is that new power stations, estimated at £1 billion sterling each, could be connected cheaply to the electricity grid,