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Nuclear Economics

Months ago I begged readers to track down or write and publish a clear, concise, cradle-to-grave overview of nuclear power, an issue that is incredibly important right now, and yet one that I must admit I find terrifically boring and thus difficult to research. Basically I was looking for a comprehensive cost-benefit analysis to determine whether nuclear ought to be a major part of the toolbox for reducing carbon emissions.

No one took the bait back then, but finally the Economist has come to the rescue:

...most studies reckon that even a moderate carbon tax would not make nuclear power generation competitive in a free energy market. Europe's emissions-trading system (ETS) is, in effect, that sort of a tax. And according to Oxera, a British consultancy, even with that implicit tax on carbon-based power generation, new nuclear plants would not be economic without government help.

But if the implicit tax rose, that might change. The point of a carbon tax is to reflect the cost to society of damage that using carbon does. Setting a price on those social costs is difficult. Europe's ETS implies that the social costs of carbon dioxide are €20 per tonne; but a British government study in 2002 estimated them at £70 (€112). Such estimates are necessarily vague; but if that higher figure is fed into Oxera's model, new nuclear plants begin to look economically viable.

We’re not given any sweeping conclusions about whether or not going nuclear is the right thing to do, but the article does close with the clear sentiment that, in America at least, nuclear expansion will occur.

This conclusion, however, seems to be largely based on the premise that the nuclear option is one that is supported by environmental interests, which I’m not sure is true. Certainly, most of the invested and educated environmentalists I know (by way mostly of the environmental blogosphere) seem to feel that the risks strongly outweigh the benefits. I wonder whether their views are shared by the greater environmental voting bloc, or whether most self-proclaimed environmentalists feel that the need for action on climate change exceeds any concerns over a return to nuclear power.

Ambivalence

By Hungry Hyaena at July 13, 2005 - 9:51pm |

I'm as confused about the cost-benefit analysis as you are - probably much more so. My search for an unbiased opinion has yet to turn up anything substantial. Every article either attacks the notion of nuclear power or champions it. As a result, I'm still ambivalent. Hopefully, this will change before long.

still?

By chris at July 15, 2005 - 11:03pm |

I'm curious if your confusion persists at the same level after reading the Economist article. I found it to be one of the more even-handed examinations of nuclear power I've read. Specifically, it eased some of my economic concerns about nuclear.

So many of the articles you refer to - those that either attack or champion nuclear power - make the mistake of treating nuclear power generation as a binary policy - either all of our energy will come from nuclear or none of it will. I think it's naïve to assume that nuclear won't be part of the solution to climate change (especially since some nuclear is currently in use), but it's also unnecessarily alarmist to claim that an increase in nuclear power generation marks a shift to a nuclear society carrying apocalypse on its shoulders. Like it or not, nuclear will be part of the toolbox that is used to mitigate carbon emissions and stave off global warming; and I'm increasingly unconvinced that's a bad thing.