Energy experts are focusing on next month’s climate change summit in Copenhagen. Given the complexity of the issue - notwithstanding the need to guard national interests - a far-reaching deal emulating that at Kyoto is an unlikely outcome. Much attention will surround the stances adopted by the US and Chinese Governments, which between them account for 40% of global greenhouse gases.
In the case of the US, any agreement to bring about major emission reductions would need Senate approval. The Chinese situation is also fraught with difficulty given that its economic growth rate remains robust. Whilst emission reduction figures will be widely debated, the issue of new nuclear-build cannot be ignored. As a general environmental principle, more nuclear investment will reduce the need for renewable generation capacity, whose development in most countries remains very challenging.
However, recent events have seriously dented the prospects for new nuclear-build projects, including the current weakness of world gas prices, and especially those in the US. The recession was a key factor in bringing down oil prices but, more recently, the deferred linkage between oil and gas prices has frayed: new gas recovery systems from shale sands in the US are partly responsible. In the nuclear sector itself, there has been a raft of bad news, including cost and time overruns along with technical concerns about the new designs.
Hence, if new nuclear-build fails to take off, there will be increased demand either on the renewables sector if the case for large emission reductions prevails or on gas-fired generation if security of supply becomes paramount.
In view of all the uncertainty on general economic issues, on new nuclear-build and on the future of gas supplies and prices, will Copenhagen deliver anything more than solemn and binding undertakings?