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Australian Resources Minister Ian Macfarlane



Speech

to the

15th Pacific Basin Nuclear Conference

Sydney,

October 16 2006



Thank you.

It's a rare treat to escape Canberra in a Parliamentary sitting week - and I would never shy  from the opportunity to talk about Australia's place in the global uranium cycle. I've only just  returned from G8+ talks on clean energy and climate change in Mexico so this is a very  topical conference in many ways. Can I say in regard to G8+ that it was clear from the  beginning of the Conference that Australia is leading the world. We are leading the world in  many of the aspects of international collaboration on greenhouse gas reduction, clean  energy development and public private partnerships to commercialise projects using low  emission technology.

While the countries of the G8+ spoke passionately of the need for the development of  Carbon Capture and Storage Technologies. Australia was able to show we were past the  talking stage and well advanced on putting practical outcomes into place. We were one of  the very few countries at the conference that will reach our Kyoto target. And the work of the  Asia Pacific Partnership on Clean Development and Climate is a global flagship on  international co-operation and collaboration on the development, exchange and installation  of low emission technology particularly in high growth emission countries such as India and  China.

Added to this is the Australian Governments $1.8 billion funding of emission reduction  including the Public Private Partnership of the Low Emission Technology Demonstration  Fund. This will see half a billion dollars from the government leveraged into projects worth  more than $2 billion. At the G8+ Summit, Australia took the lead in promoting international  collaboration to develop low emission technologies. And we came away with a new  framework for collaborative efforts to develop critical technologies like carbon capture and  storage. The Mexico meetings were wide-ranging climate change talks. And, interestingly,  there was a pink elephant sitting in the front row for every discussion on emission reduction  - its name was nuclear power.

Nuclear power and climate change    While the North Korean events have put non-proliferation issues back in the news, there is  another debate occurring on the benefits of nuclear energy as a low emission energy  source. We must keep the two issues separate.

The Australian debate about nuclear power has been - to use that dreadful bureaucratic  clichÃÂ© - very robust. The usual suspects have been banging their drums of fear and  hyperbole but I think the wider public is taking a far more mature approach to exploring the  issue. People are today seeking a debate based on fact, not one skewed by 1970s-styled  hysteria. Nuclear issues have traditionally been a political no-go zone in this country. But  this government believes Australia is ready for a sensible debate, based on facts not fear.

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Today, it's time to consider the potential of nuclear energy.  Like any technology, nuclear  energy has its benefits as well as its risks. I believe that nuclear energy offers clear  environmental and economic benefits.  Nuclear energy could be - some would say must be  - a major part of the global strategy to curb greenhouse emissions.

Lowering emissions

The issue of uranium and nuclear power is as much about lowering greenhouse gas  emissions as it is about the supply of energy. In nuclear power the world has an option of a  base-load generation source which emits no CO2 in its operation. Yes, there are emissions  across the entire cycle of building, maintaining and decommissioning a nuclear power  station. But experts calculate these to be one-hundredth of the total emissions of a fossil-fuelled power station. That's not to say fossil fuels don't have a long-term future as base-load energy generators - they most certainly do. At the same time, the wind, solar, hydro,  geothermal and biomass sectors will grow in their ability to deliver reliable, renewable  supplementary energy - thanks largely to generous Australian government support.

Yet, based on currently available technology, only nuclear power has the potential to deliver  base-load quantities of cleaner energy in Australia. And nuclear has the potential to deliver  those greenhouse benefits now. Across the globe nuclear power accounts for just 16% of  energy but it is reducing CO2 emissions by some 2.4 billion tonnes every year.



The mood in Australia may alter quite dramatically as we appreciate the greenhouse gas  emission benefits in other countries using nuclear power as a base-load generator. Around  the world, uranium is coming in from the cold. This shift isn't driven primarily by the need for  energy - we have hundreds of years in coal and gas reserves. It's a demand propelled by  communities seeking to balance their economic development and the challenge of curbing  greenhouse emissions.

By 2020 fossil fuel-based electricity is expected to account for more than 40% of global  greenhouse gas emissions. Nuclear power presents a viable, mainstream energy option  and, with the greenhouse cost factored in, will soon emerge as a competitive, commercial  alternative to traditional energies. As third generation plants become a reality, there are  forecasts of full-cycle nuclear power, including waste disposal, costing as little as 5 cents a  kilowatt hour. That's in comparison now to 3.5 cents an hour for coal, 4.5 cents for gas, 8  cents for wind and 12 cents for solar power.

Uranium demand

It's good news for Australia that many countries are now reviewing their position on nuclear  power as an option for meeting future energy needs. In July 2006, there were 442 nuclear  power reactors in 30 countries with a combined capacity of 370 gigawatts a year. Right now,  almost 30 new nuclear power reactors are being constructed in 11 countries. The  International Atomic Energy Agency expects that nuclear power of 430 gigawatts will be in  place by 2020. This includes new reactors in countries including China, India, Russia,  Finland and France. Earlier this month, Japan, the country with the world's third largest  nuclear power generation capacity, brought its 55th nuclear power plant on line. At the same  time, both the United States and Britain are updating their nuclear policies in light of the  need to limit greenhouse gas emissions.

With all this activity, uranium prices continue to go up and up. In August 2003, U308 sold for  US$11.30 a pound. In September 2006, the spot price was sitting at US$52 - more than  four times what it was just 3 years ago. Demand for Australian uranium is tipped to continue  growing as third generation reactors are rolled out around the world. Back home, while the  population considers the nuclear questions, the Australian Government is investing serious  money into other low emissions technology. We will soon announce the first recipients of the

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$500 million Low Emissions Technology Demonstration fund. These aren't grants but  government-industry partnerships public private partnerships, on a $1 for at least $2 from  industry basis, in a wide range of energies.

The first round will include major coal-related projects as well as renewable projects and we  are expecting major results in the development of low emission technology. There are those  in the Bob Brown camp who advocate turning the lights out because we are a fossil-fuelled  country. I have a more optimistic view of human nature and know this country has the ability  to pioneer low-emission technology which will transform our energy sector - particularly  coal. I believe we have the human ingenuity to overcome the obstacles in our way and find  solutions to challenges as great as the greenhouse one before us now.

With the growing public focus on low emission energy, the fossil fuel sector now also has the  impetus to throw its full weight beyond these new technologies. The future commercial  success of their sector may just depend on the success on technologies like carbon capture  and storage, clean coal and de-gasification processes.

Conclusion  In conclusion, we are now seeing a global collision of economic and greenhouse challenges  which has brought nuclear power sharply into focus. We will not turn our backs on  Australia's traditional energy sources - like coal and gas. Unlike the Labor party, the Howard  government will not tax or shut down the energy sector as a means of addressing the  greenhouse challenge. Fossil fuels are here to stay as core contributors to our energy mix  but their production has to get smarter and cleaner. We will invest with the sector to make  sure that happens through international collaborations and local projects to develop new low  emission technology. But at the same time we can not ignore the greenhouse benefits of  drawing baseload power from nuclear stations.

Again unlike the Labor Party, the Howard Government is preparing the ground for a national  debate on the potential role of nuclear power as part of Australia’s low emission energy  future. While Labor keeps its head firmly in the sand on nuclear energy, the Prime Minister’s  Task Force reviewing the future of uranium mining, processing and nuclear energy in  Australia will hand down its report before the end of the year. That report will provide a  sound basis on where the public debate goes from here. It is breathtaking hypocrisy for the  Labor Party to continually call for Australia to lower its greenhouse emissions and at the  same time refuse to debate the potential nuclear option.

That hypocrisy is heightened even further when Labor agree that it is acceptable for other  developed countries to use Australian uranium to generate greenhouse gas free electricity.  When the Australian public considers the nuclear question it must also consider the  contribution this industry can - and already is - making to greenhouse gas reduction.

We have a wonderful, plentiful energy option here in this country. We would be foolish not to  consider that nuclear option. We would be even more foolish to simultaneously dismiss the  chance to slash our gas emission rates. Your discussions over these few days are an  important part of spurring an informed public debate.



I wish you well.

Thank you.

Ends

