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Strategic Analysis:
A Monthly Journal of the IDSA
India’s Energy Security Policy: A Case for Nuclear Power
By Shebonti Ray Dadwal
*
Introduction
The 220 megawatt electric (MWe) nuclear power plant in Kaiga, Karnataka, is expected to attain criticality in September 1999, thereby bringing the debate on the feasibility and acceptability of developng nuclear power to deal with the country’s dismal power scenario, once again to the fore.
Despite an increasing dependence on oil and natural gas imports for its burgeoning energy requirements, energy security is yet to become a key national objective for India. Though the present government has realised the need for a long–term energy plan, a realistic policy framework for energy security has yet to be chalked out, keeping in mind the country’s needs and deficiencies.
The total installed capacity for power generation in India as on March 31, 1998, was 89,690 MW. The government had planned a capacity addition of 40,000 MW during the Ninth Five–Year Plan period (1997–2001), but only 25,000–30,000 MW is likely to be added, which means a shortfall of about 35 per cent. 1
In fact, as against a target to install an additional capacity of 1,300.9 MW during April–November 1998, only 1,050. 2 MW was added.2 The government has plans to install an additional 90,000 MW over the next 10 years. However, if immediate steps are not taken to implement a viable power plan and to trigger a continuous cycle of improvements through new investments, product quality and fair pricing, India’s economic liberalisation programme runs the risk of being jeopardised. 3
After independence, due to economic reasons as well as lack of technological know–how, the Government of India, which preferred to follow a policy of self–reliance, opted for a power policy based on coal–based thermal plants, though subsequently, gas and fuel oil–based plants were also set up. Today, the share of coal, gas and fuel–oil based thermal plants is around 79.9 per cent; hydroelectricity; 17.7 per cent; and nuclear power around 2.6 per cent. Though the majority of the thermal plants are coal–based, since the 1970s, India has had to import increasingly large amounts of crude oil to feed its growing refineries, while from 2000 onwards, huge quantities of liquified natural gas (LNG) imports are scheduled to arrive in the country as well. In addition, superior grade coal is also being imported as despite the country possessing large reserves of coal–some billions tonnes–it is of inferior quality. In fact, by 1996–97, coal imports touched 10 million tonnes. 4 India’s energy imports, therefore, are projected to soar, with the oil import bill alone touching roughly $10 billion at current international prices. 5
Ideally, a country with vast natural resources like India should choose an optimal mix of energy resources for its power generation, i.e., thermal, hydro, nuclear, renewable and non–conventional. This, however, depends on individual specifications as well as various factors like political, social, environmental, technical and economic considerations, which play a part in opting for a particular energy resource. This article attempts to highlight the advantages of developing nuclear power in India so as to increase its energy security.
The International Scenario
The 1950s saw the start of the use of nuclear power as a source of electricity generation, and by 1960, around 17 nuclear power reactors were in operation, generating some 12,000 MWe of electricity in four countries–France, the USSR, the UK and USA. Though nuclear power achieved the status of commercial viability in the 1960s, it was the oil price shock of the 1970s that gave the nuclear power industry its biggest boost, as the industrialised countries began to accord a greater role to nuclear power in their search for suitable alternatives to oil as a source of power generation. But the sudden proliferation of nuclear plants with inadequate safety measures soon drew the attention of environmentalists against the perils associated with nuclear energy. At the same time, with the increase in energy conservation measures, there was a decline in the growth in electricity demand; also, public awareness of the dangers associated with nuclear radiation grew. Finally, the 1979 accident at the Three Mile Island plant in the US followed by the 1986 Chernobyl disaster drew international approbation and a hardcore lobby against nuclear power as an alternative energy source was established. However, these two accidents also helped the cause of the nuclear industry in that more attention was paid to plant operation and efforts were made to improve plant designs and streamline their construction to reduce time and cost overruns. 6
Today, a total of 2,276 billion killowatthours (KWh) of electricity is being generated from around 440 nuclear power plants worldwide, providing 17 per cent of the world’s total electricity generation and 6 per cent of total energy production. 7 With current concern about environmental dangers associated with greenhouse gas (GHG) emissions increasing, the case for nuclear power as an alternative source of energy to fossil fuels should be strong.
A recent study conducted by the Nuclear Energy Agency (NEA) has estimated that world carbon emissions would grow by 5 to 25 per cent if all nuclear units were shut down and replaced with fossil–fuel generation. According to the study, there are three potential paths of nuclear power development over the next 50 years, and the impacts of these different paths on carbon emissions have been determined. They are:
According to the study, current worldwide nuclear capacity shows that around 1.8 billion metric tonnes of carbon equivalent per year have been avoided. In the second case, i.e. the steady growth case, GHG emissions would be reduced by 6.3 billion metric tonnes by 2050, with the largest reduction in carbon emissions taking place in the Eastern Europe/former Soviet Union (FSU) region, which also would have the largest increase in nuclear capacity in the high–growth case relative to the reference case forecast. This would be possible because nuclear power would directly replace coal use in the electricity sector. In all the three cases, however, the study avers that though the investment required would be enormous, it would, however, represent only a small fraction of the total capital flows available up to 2050. The real challenge in raising funds for investment in nuclear facilities would be the perceived financial risks to investors and the need for adequate rates of return on investments. 8 Fig. 1 gives the present upper and lower values of full–chain emission factors. The lower values of hydro, nuclear, wind, solar, photo–voltaic (PV) and biomass power are consensus values derived by the International Atomic Energy Agency (IAEA) topical expert meetings.
However, despite the improvement in plant performance and safety factor, the prospects for growth or even maintenance of nuclear power’s share of worldwide electricity generation are uncertain, especially in the Western industrialised countries (except Japan). In fact, in the 1990s, the nuclear industry has gone from being the fastest growing energy source to one of the slowest, showing only a five per cent increase in generating capacity worldwide. The two main problems besetting the nuclear energy industry are the high cost of construction and problems concerning disposal of nuclear waste. Even France, once the strongest proponent of nuclear power, has declared a moratorium on new plants and is investing in renewable energy systems, including micro–turbines and wind power stations.
Proponents of nuclear power hoped that when parties from the 1992 Framework Convention on Climate Change, meeting in Kyoto, Japan, in December 1997, agreed to a new set of commitments for reducing greenhouse gas emissions, their case would be strengthened. In November 1998 again, a two–year Plan of Action was adopted to establish deadlines for finalising details of the Kyoto Protocol agreement. If the protocol is ratified, it will require significant shifts in energy use among the participants, because energy use is a major source of greenhouse gas emissions. Overall, the final targets are still quite aggressive, and significant shifts in fuel usage are likely to be required in most countries. However, many of the countries, including the US, have yet to ratify the protocol. Neither was the use of nuclear power as a means to meet emissions goals specifically mentioned in Annex I of the Kyoto Protocol. Nevertheless, it could be argued that continued or increased use of nuclear technology will make it easier to meet the targets. Most renewable technologies are still relatively expensive and cannot consistently provide large amounts of energy. In contrast, nuclear technology is well developed, and many countries already have significant experience in building and operating plants. Thus, nuclear power may be a more attractive option for meeting short–term goals. Though constructing new nuclear capacity is more expensive than building new coal or gas–fired plants, if restrictions to CO2 emissions are implemented, the environmental costs of fossil–fuelled generation will have to be considered, and nuclear expansion may be economically justifiable. 9
Despite the opposition to growth in nuclear capacity in the industrialised world, countries in developing Asia, such as China, Taiwan, India, South Korea and Pakistan, are all expected to increase their existing nuclear energy capacities, though the current challenges of high construction costs and public concern about safety and nuclear waste storage influence the growth of the nuclear industry. By 2020, nuclear capacity in the region is projected to be between 30 and 77 GW, with China expected to have at least 8.7 GW of nuclear capacity operating–which is four times the current capacity–and a possible increase of 11 times its current capacity in a high growth scenario. Even amongst the industrialised countries, Japan has declared ambitious plans to increase its nuclear capacity. 10
The Indian Scenario
Since the late 1960s–70s, India decided to opt for nuclear energy as a supplement to more conventional sources of energy to meet its growing demand for power generation. In fact, the Indian nuclear power programme commenced in 1969 with the building of the twin units of the Tarapur Atomic Power Station (TAPS), with US assistance. At this stage, Boiling Water Reactors were used, because of the favourable performance guarantees for these reactors. The first two Indian Pressurised Heavy Water Reactors (PHWRs), RAPS–1 and RAPS–2, for which indigenous uranium is used, were built with Canadian assistance, and commenced in December 1973. However, in 1974, after the first peaceful nuclear experiment was conducted at Pokhran, Canada withdrew its support. So did France, which stopped supplying fuel for the Fast Breeder Test Reactor (FBTR) which was under construction with French assistance. The US too expressed its inability to fulfill its contract to supply fuel for TAPS. Despite this sudden withdrawal of foreign assistance, the government decided to go ahead with its nuclear programme with the help of its own R&D infrastructure and with the help of Indian industry. Though this caused some delay in ongoing projects, the embargo spurred the indigenous growth capability of developing substitutes for the denied products, technologies and know–how. RAPS–2 commenced operation in 1981, the FBTR went critical in 1985, using indigenously made plutonium–uranium mixed carbide fuel. For TAPS, India devised a plutonium–uranium mixed oxide fuel and facilities for its industrial production as an alternative to the enriched uranium–based fuel. Since then, India has not looked back and has continued on its chosen path, without depending on external help, and is, in fact, the only developing country that has demonstrated the capability to design, build, operate and maintain nuclear power plants, as well as manufacture equipment and the necessary components, special materials and nuclear fuel. 11
In 1987, the Nuclear Power Corporation of India Ltd, (NPCIL) was set up to operate and maintain existing power stations and for setting up future projects. The government launched a programme to establish 10,000 MWe of nuclear power by 2000 AD, but lack of budgetary support, as well as lack of access to foreign sources of finance due to US sanctions resulted in the non–achievement of its target, despite a fairly good performance by the plants, which have completed about 140 reactor years of operation. The safety performance of the operating power reactors was also good, with release of radioactivity to the environment much below the limits prescribed by the Atomic Energy Regulatory Board (AERB). By the end of the Eighth Plan, India had a total of 10 nuclear power plants providing 1,840 MWe of nuclear power. 12
Two days after India conducted nuclear tests in May 1998, the US government once gain imposed sanctions, which are mandatory under Section 102 of the Arms Export Control Act (also known as the Glenn Amendment). Additional sanctions were imposed by the secretary of state under Section 2 of the Export–Import Bank Act. The sanctions put a further halt on the already limited foreign aid, except for humanitarian purposes, banned the sale of military goods and certain types of technology to India, prohibited US banks from lending to the Indian government, and prohibited new loans and loan guarantees from agencies such as the Export–Import Bank and the Overseas Private Investment Corporation (OPIC). The sanctions also required Washington to oppose multilateral assistance by organisations such as the World Bank and the International Monetary Fund. As expected, on May 27, 1998, US opposition forced the delay of $865 million in World Bank loans for an electric power grid, small hydro–electric generators, and road construction. 13 The sanctions were also expected to slow down economic growth and infrastructure development in India.
Despite the negative reaction abroad, and the hardship resulting from the imposition of sanctions following the nuclear tests, the government declared its intention to proceed with its ambitious plans for infrastructure development (including energy, especially electric power projects).
The Case for Nuclear Power
Despite the technological, commercial, organisational, political and financial challenges facing India in the nuclear field, there are also several conditions which favour the growth of the nuclear power industry in India:
The teething problems faced earlier in manufacturing nuclear power equipment in the mid–1980s were over by the early 1990s and today India is one of the few countries which is entirely self–reliant in this field.
In recent years, India’s nuclear–power plants have been running at good capacity utilisation levels. Plant load factors (PLFs) are now close to design levels and this means that costs are close to normative levels.
India has around 60,000 metric tonnes of uranium reserves, which is equivalent to 1.2 billion tonnes (bt) of coal reserves. This can be raised to 100 bt of coal equivalent, if the fast breeder reactor route is employed successfully. In addition, India also has 360,000 metric tonnes of thorium reserves, which, if the technology of thorium utilisation and the thorium–uranium–233 cycles is developed, would equal 600–1000 bt of coal equivalent.
In terms of Long Range Marginal Cost (LRMC) advantages, nuclear power is a genuine economic option for power supply at locations far removed from coal reserves, especially if hydel sources are not available in those areas. Therefore, though the capital cost of a nuclear power plant is 20 per cent more than that of a coal–based plant, the running cost of a coal–based plant is more if the plant is situated 1,000 km from the pit head. Therefore, over a period of time, since the fuel cost of a uranium–based plant is lower, the unit energy cost tends to remain stable with time.
Table 1 gives the cost of supply of different kinds of energy:
[ Table 1 not available ]
Today, coal–based power plants are the biggest competitors to nuclear power plants in India, mainly because of the cost factor as well as the availability of vast reserves of coal in India. However, existing coal reserves at current levels of consumption would be enough to last another 30 years. Also, coal is associated with environmental degradation due to coal–fired power plants in the total cost–benefit analysis, thereby making nuclear energy a preferred option. 14
Though most of India’s power and energy demands are met by coal, production in 1998–99 has not been sustained and in fact showed a marginal drop of one per cent in the April–January period. Also, the quality of Indian coal, which has a high ash content (36 per cent), has played havoc with functioning of thermal power plants and steel plants. Hence, though production has been rising, stocks too have been rising as consumers have been refusing to lift sub–standard coal, and the government has had to allow imports of coking coal. Imports in 1997–98 had amounted to 16.07 million tonnes, showing a 31 per cent rise from the preceding year. Also the coal industry is plagued by problems like low productivity, distribution problems and loss of markets to higher quality, less expensive imports. 15 Therefore, in time, there will be a reduction in the share of coal in power generation because of higher generation costs away from the pit–heads.
According to Dr. Morris Rosen, advisor and coordinator of environmental matters at the IAEA, a single 1,000 MW coal plant emits about 6,00,000 tonnes of CO2 and there is no economically viable method to reduce or segregate this enormous quantity of emission. Fuel energy chain studies have shown that of the GHG emissions that can be attributed to fuel extraction, transport, manufacturing and construction activities, nuclear and wind power are on the low–emission side. Photo–voltaic (PV) cells account for higher emission levels due to GHG released during silicon chip (used in solar cells) manufacturing. In his comparative analysis, Rosen highlighted the extraordinarily high energy density of nuclear fuel compared to fossil fuels, as an advantageous physical characteristic. He maintained that because of high fuel requirements, the quantity of toxic pollutants and waste spewed by fossil fuel plants is much higher than the amount generated by other energy options. He underscored the advantages of managing nuclear waste as the quantities, considering the energy produced, are remarkably small. 16
A study was recently conducted on India’s energy requirements by three scientists under a programme entitled “Energy and Power Evaluation Programme”, using two models. Both models project that, thanks to an increase in imports of commercial energy resources, including coal, there would be a change in the fuel mix for electric power generation in India. Existing coal reserves at current levels of consumption would be enough to last another 30 years. As a result, there would be a reduction in the share of coal in power generation because of higher generation costs away from the pit–heads, while in the case of hydro power, the recent controversies in the setting up of major projects would constrain generation. Both models also project a 16–time increase in the share of nuclear power from 12 MBOE (million barrels in oil equivalent) in 1994 (the base year of the study) to 195 MBOE in 2018 (the terminal year of the study. 17
Nuclear Power vs Other Non–Conventional Forms of Energy
The Government of India has always been open to the idea of augmenting power generation by non–conventional and renewable sources of energy as a supplement to fossil fuels. At present, 78 per cent of the total electricity in India is fuelled by coal, while 13 per cent is fuelled by hydro and other renewable forms of energy. Natural gas, oil and nuclear power generation provide the balance.
Hydro–electric power
Worldwide, hydro–electric and other renewable energy use is projected to increase by 62 per cent from 1995 till 2020, more than half of it in the developing world, where large–scale hydro–power projects boost the level of renewable energy consumption. Out of this, many of the large–scale projects are planned in China and India.
India, like China, is focussing on large–scale hydro–electric projects to ease the power shortage in the country. The government began the policy of promoting the development of hydro power and plans to introduce tariff subsidies to supplement its development to improve the country’s energy mix.
The hydro–electric potential in the country is estimated at 600 billion KWh per year. Out of this, only a fifth has either been developed or is being developed. 18 Therefore it is not surprising that the government has approved plans to set up 12 large–scale projects by 2002, which will add 3.7 GW of installed hydro–electric capacity to that already existing. Another 5.81 GW of hydro–power is expected to be added by new state–sector projects and 350 MW by the private sector. 19 However, though India has plenty of rivers which can be a source of huge amounts of electricity, the political and ecological problems surrounding large–scale hydro–electric projects is a deterrent, as the current controversy surrounding the Sardar Sarovar project has pointed out. Therefore, a possible alternative is small scale hydro–electric schemes of up to 3 MW capacity, and which could also promote development in remote rural areas, especially in the hilly regions of the north–east. For instance, the region around the Brahmaputra river has an estimated potential of 30,000–40,000 MW of which only 306 MW has been tapped so far.
The Ministry of Non–Conventional Energy Resources is promoting small scale or mini and micro hydel projects of up to 3 MW capacity, mainly to develop remote rural areas. The potential generating capacity from such projects is around 2,040 MW in 25 states and island territories.
Wind Energy
It can be argued that it would be safer and more environmentally safe if other forms of unconventional energy resources other than nuclear could be employed to augment India’s energy requirements.
Wind energy has been the fastest growing renewable energy source for four years running, and according to the International Energy Agency (IEA), it would appear to make sense if more funds were allocated for developing this industry. In 1998, 2,100 MW of new capacity of wind power generating capacity was installed worldwide, with growth being driven by improved technology and supportive governments policies, and several countries have guaranteed a fixed price for wind–generated electricity in an effort to respond to environmental concerns. However, the cost of the technology varies considerably, though in some cases it is getting close to that of conventional energy sources. In fact, wind turbine prices have fallen by a factor of at least three from 1981–1991, while the cost of energy generated by turbines has halved over the past decade as a result of fall in turbine prices, higher efficiencies and lower operation and maintenance costs. Overall, five countries account for more than 80 per cent of the world’s installed capacity viz. Germany, the US, Denmark, India and Spain.
However, though India is the second largest producer of wind energy, meteorologically it is not endowed with great wind resources, though wind energy can be competitively produced in the coastal areas and in some regions, So far, though 3,000 wind operated pumps have been installed and recent wind farms have succeeded in generating 71 MW of power, in general, wind power projects have performed badly in India thanks mainly to over–estimation of wind resources in some areas, poor project design and operation, and problems with the utility grid. 20 Hence, though wind energy could be a safe and effective alternative to hydrocarbons, it would take years for it to become a commercially viable alternative source of energy in India.
Solar Energy
Yet another energy source, of which India has a vast potential, is solar power. However, the penetration of solar and other renewable energy into the Indian economy has a long way to go mainly because of the current exorbitant cost of PV cells which are used to convert solar energy into electricity. Though successive governments have installed 700 PV pumps, 26,000 PV domestic lighting units, 800 PV based TV and community units and 30,000 PV powered street lights, which together generate some 530 KW, a great deal needs to be done to deliver PVs on a large scale. Since many bulk applications of energy (like cooking and heating) need only a low grade energy source, it makes sense to make solar thermal devices available to households on a large scale. But the installation of solar water heating devices appears to have slowed down, and though major savings can be achieved through the use of solar passive systems for heating and cooling buildings, apart from the few isolated architectural experiments, not much has been achieved in this area. 21
Conclusion
If India is to maintain its current and projected rate of economic growth, and given its huge population, the need for rapid increase in its power generation capacity is enormous. Currently, India derives most of its electricity from cost–based plants, but thanks to the increasing awareness of the need to adopt more environment–friendly methods of power generation, the government has been trying to shift its fuel base from coal to other more acceptable fuels, including natural gas. It is, however, a fact that in a few decades, the price of hydrocarbons will be exorbitant as world reserves become increasingly scarce, and since India is not self–sufficient in hydrocarbon production, it will have to deal with a situation where large amounts of its foreign exchange will be depleted in meeting its oil import bill.
Therefore, real energy savings can only come from a rational energy policy that not only promotes energy efficient and renewable energy based technologies, but also introduces energy pricing based on real resource cost.
Given the projected demand for electricity in the medium and long terms, it is imperative to utilise all possible sources of energy. Although large parameters in new electricity generation are expected to come from thermal and hydro–power plants, nuclear power is a viable option to supplement the energy requirements of the country. Also, according to the Nuclear Energy Agency (NEA), in a long–term perspective, non–electrical applications of nuclear energy, such as heat, potable water and hydrogen production could be developed and these applications could enlarge nuclear power’s contribution to carbon emission reduction in a significant way. R&D would be necessary in order to assess fully the technical feasibility of those applications at the industrial level and the economic competitiveness of nuclear vs. fossil fuels and renewable sources. Governments could play an important role by supporting such R&D and international organisations could assist in this process by promoting and facilitating exchange of information. 22
Though critics of nuclear energy cite political, diplomatic and financial costs as a deterrent to adopting a nuclear programme, it is necessary to develop nuclear power, independent of short–term economic considerations, for the following reasons:
The need to diversify energy resources for energy security and energy independent.
Limit greenhouse gases.
Take care of long–term energy needs which cannot be met by fossil fuels, which are required for consumption in other sectors. Also dependence on the import of any commodity in as important an area as infrastructure, development is unacceptable.
Given the high cost of transporting coal as plant feedstock in areas far removed from the pit–heads, the advantages of nuclear feedstock in the west and the south are clear.
The Indian nuclear power industry is totally indigenous.
Therefore, a vast country like India, which despite possessing substantial amounts of energy reserves, needs a prudent mix of energy resources to fuel its burgeoning electricity requirements. In such a situation, and given the fact that developing its nuclear energy potential has several advantages, there is a critical need to ensure that the share of nuclear power be raised to 30,000 MWe or 10 per cent of total installed power generation by 2020. Already five more reactors are near completion or being set up. The Kota plant was expected to go critical this year, while two more 500 MWe reactors are coming up at Tarapur. Another two units of 1,000 MWe each are being set up at Koodamkulam in Tamil Nadu with Russian cooperation.
Despite the many hurdles that have had to be overcome due to withdrawal of technological and financial aid and the less than satisfactory performance of its 10 plants in terms of PLF output and plant availability, many of the problems have been overcome. However, there is still a need for greater budgetary support and soft loans from financial institutions to speed up ongoing projects and to prevent cost overruns. With the national power deficit projected at about 29 per cent, the loss in terms of production to the economy as a whole due to power shortage is huge. Therefore, keeping in mind all the benefits of nuclear energy vis–a–vis the environment, and the technological advantages that we have, the case for according priority to nuclear power is worth consideration.
Endnotes
*: Research Fellow, IDSA. Back.
Note 1: Business Standard, August 18, 1999. Back.
Note 2: Economic Survey, 1998–99, Back.
Note 3: Observer of Business and Politics, July 8, 1999. Back.
Note 4: Ninth Five–Year Plan on Energy (1997–2002), vol. II. Back.
Note 5: Observer of Business and Politics, September 15, 1999. Back.
Note 6: Hans Blix, “Nuclear Power in the 21st Century”, Nu–Power, vol. 11, no. 1–3, 1997. Back.
Note 8: “Climate Change and Nuclear Power”, excerpted from “Nuclear Power and Climate Change”, OECD Nuclear Energy Agency, Nu–Power, vol. 12, no. 2, 1998. Back.
Note 9: “Nuclear Power”, International Energy Outlook, 1999, Report No. DOE/IEA–0484(99). Back.
Note 11: Dr. R. Chidambaram, “Towards and Energy Independent India”, Nu–Power, vol. 11, no. 1–3, 1997. Back.
Note 12: First Report of the Standing Committee on Energy 1998–99, 12th Lok Sabha, Department of Atomic Energy, July 1998. Back.
Note 13: “Country Information on India”, US Energy Intelligence Agency/Deptartment of Energy Website. Back.
Note 14: Y.K. Alagh, “Economics of Nuclear Power in India”, Nu–Power, vol. 11, no. 1–3, 1997. Back.
Note 15: “Country Information on India”, US Energy Intelligence Agency/Department of Energy Website. Back.
Note 16: The Hindu Business Line, January 5, 1998. Back.
Note 17: N.S.M. Rao, K.K. Kuldeep and K. Muralidhar, “Integrated Energy Planning in India, Using the Energy and Power Evaluation Programme (ENPEP), Nu–Power, vol. 12, no. 2, 1998. Back.
Note 18: Ninth Five–Year Plan on Energy, vol. II, 1995–2002. Back.
Note 19: “Hydroelectricity and Other Renewables”, International Energy Outlook, 1999. Back.
Note 21: Ashok Khosla, “The Real Issues of Solar Energy in India”, Development Alternatives, vol. 8, no. 8, August 1998. Back.