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Reason
Foundation...
The Truth About
Nuclear Power
Separating
economic myth from economic fact
By Veronique de Rugy
March 25, 2011
Myth 1: Nuclear power is a cheap alternative to fossil fuels.
Fact 1: It isn’t.
As Jerry Taylor of the Cato Institute wrote in Reason magazine in 2009,
“Nuclear energy is to the Right what solar energy is to the Left:
Religious devotion in practice, a wonderful technology in theory, but
an economic white elephant in fact (some crossovers on both sides
notwithstanding). When the day comes that the electricity from solar or
nuclear power plants is worth more than the costs associated with
generating it, I will be as happy as the next Greenpeace member (in the
case of the former) or MIT graduate (in the case of the latter) to
support either technology.”
Until that time comes, producing nuclear energy remains a very costly
business.
The chart above uses data from a 2009 interdisciplinary study at the
Massachusetts Institute of Technology to compare the costs of
generating a kilowatt hour of electricity using nuclear, coal, and gas
power. Looking at this data, the cost differential is
clear—nuclear-powered energy costs 14 percent more than gas to produce
a unit of electricity, and it costs 30 percent more than coal.
Furthermore, according to Gilbert Metcaf’s recent National Bureau of
Economic Research paper on energy, this increased cost of nuclear
energy includes a baked-in taxpayer subsidy of nearly 50 percent of
nuclear power’s operating costs.
While the nuclear industry in the United States has seen continued
improvements in operating performance over time, it remains
uncompetitive with coal and natural gas on the basis of price. This
cost differential is primarily the result of high capital costs and
long construction times. Indeed, building a nuclear power plant in the
United States has cost, on average, three times as was originally
estimated.
The United States Energy Information Administration estimates that
these cost trends will continue for the near future.
This chart compares the projected costs of generating electricity in
the year 2016 using various sources. As you can see, nuclear power
remains more expensive than other conventional forms of power.
As Taylor notes, this is why nuclear power has only flourished in
countries where the government has intervened on its behalf.
Myth 2: Risk is the main problem with nuclear power.
Fact 2: Cost is the main problem, not risk.
Radiation is terrifying to most people. And like most things, the less
you actually know about it, the more frightening it can be.
Safety is certainly a critical issue, as the tragedy in Japan makes
clear. However, so far the death toll from the current nuclear crisis
in Japan is zero.
The chart above uses data compiled from various sources to compare the
deaths per terawatt of energy produced. Deaths resulting from the
production of nuclear power are over 4000 times less than the rate of
death resulting from the production of energy from coal.
Writing in the Journal of American Physicians and Surgeons, Bernard
Cohen, a physics professor at the University of Pittsburgh, puts the
risk from nuclear power into context, comparing the relative risk of
nuclear power to other activities. He used a one-in-a-million chance of
increased risk of premature death as a standard. His calculations
indicate that if one lived at the boundary of a nuclear power plant for
five years, there would be an increased risk of premature death from
nuclear radiation of one in a million. That risk would decline
significantly as one moved further away from the plant.
Put differently, Cohen found that the risk of living next to a nuclear
power plant is comparable to the risk incurred from riding 10 miles on
a bicycle, riding 300 miles in an automobile, or riding 1,000 miles in
an airplane.
In fact, Steven Chu, President Barack Obama’s energy secretary, has
made it clear he doesn’t think nuclear power is dangerous per se. When
asked to compare coal and nuclear energy in 2009, Chu responded: “I’d
rather be living near a nuclear power plant.”
That being said, what happened in Japan reminds us that while nuclear
doesn’t kill people on a yearly basis, it has the potential to be very
lethal under certain circumstances. However, the idea of risk-free
world is unrealistic because unanticipated vulnerabilities are
inevitable in any complex system. Future technologies may reduce the
chance of some terrible disaster but it won’t ever eliminate it
completely. Like all other sources of energy, nuclear power entails
some risk.
Myth 3: The spread of nuclear power has stalled in the U.S. due to a
hostile regulatory environment.
Fact 3: Nuclear power has stalled because it is simply not profitable.
Many Americans argue that government regulations are the real reason
why nuclear power is so expensive. As evidence, they point out that in
France, where there is more opportunity to build nuclear power plants,
nuclear power is safe and affordable.
It is true that France gets about 75 percent of its electricity from
nuclear power. It is also true that the country has avoided a
large-scale disaster due to the many safety regulations it has imposed,
most of which are similar to regulations enacted in the U.S.
However, producing nuclear energy in France is not any cheaper than it
is here. The chart above shows, in U.S. dollars, the parity between the
costs of generating nuclear power in the United States (which has a
relatively strict regulatory regime) and France (which has a relatively
loose one).
The chart presents a range of estimates of the costs of nuclear
reactors in the two countries gathered by Mark Cooper, a senior
research fellow for economic analysis at the Institute for Energy and
the Environment at the Vermont Law School. As Cooper found, the ranges
overlap: France’s estimated cost of a kilowatt of power is between
$4,500 and $5,000; the United States’ estimated cost for this unit of
power is between $4,000 and $6,000.
From the start of commercial nuclear reactor construction in the
mid-1960s through the 1980s, capital costs (dollars per kilowatt of
capacity) for building nuclear reactors rose dramatically. Although
unit costs for technology usually decrease with volume of production
because of scale factors and technological learning, nuclear power has
gone in the opposite direction. This exception to the rule is usually
attributed to the idiosyncrasies of the nuclear regulatory environment
as public opposition grew, laws were tightened, and construction times
increased.
As a result, no new nuclear power plants have been built in the United
States in 29 years. Nuclear has proven to be a poor investment,
producing far more expensive electricity than originally promised.
Myth 4: Nuclear power is the key to energy independence.
Fact 4: More nuclear doesn’t mean less oil.
On last Sunday’s Meet the Press, Sen. Charles Schumer (D-NY) cited
America’s need to get off of foreign oil as a strong reason for
pursuing nuclear power.
Setting aside the misguided goal of so-called energy independence,
Schumer is still wrong. Oil is primarily used in vehicles and in
industrial production. Nuclear power is primarily used for electricity.
As the chart below illustrates, data from the United States Energy
Information Administration shows that the vast majority of our
electricity comes from non-oil sources.
Interestingly, according Michael Levi, a senior fellow and director of
the program on energy security and climate change at the Council on
Foreign Relations, it wasn’t always the case. “During the heyday of
nuclear power, the early 1970s (45 plants broke ground between 1970 and
1975),” Levi writes, “oil was a big electricity source, and boosting
nuclear power was a real way to squeeze petroleum out of the economy.
Alas, we’ve already replaced pretty much all the petroleum in the power
sector; the opportunity to substitute oil with nuclear power is gone.”
Perhaps more importantly, less than 1 percent of the oil used in the
United States today goes to generate electricity while 70 percent is
consumed by the transportation sector, with roughly 30 percent of oil
being used by the residential and industrial sectors.
The bottom line is that more nuclear power would mean less coal, less
natural gas, less hydroelectric power, and less wind energy. But more
nuclear won’t mean less oil.
Am I against nuclear power? It certainly looks like nuclear can never
be a sustainable source of energy because it is just too expensive. And
while it is a safe source of energy overall, there are tremendous risks
in those instances where something goes disastrously wrong. The
probability of such a dire scenario may be low, but the need to
build-in protections against it will always raise the cost of producing
nuclear power.
But more importantly, what I am against is the government deciding that
nuclear power must be encouraged and then subsidizing the industry. On
that point, I leave the last word to Reason Science Correspondent
Ronald Bailey.
“The main problem with energy supply systems is that for the last 100
years, governments have insisted on meddling with them, using
subsidies, setting rates, and picking technologies,” Bailey observes.
“Consequently, entrepreneurs, consumers, and especially policymakers
have no idea which power supply technologies actually provide the best
balance between cost-effectiveness and safety. In any case, let’s hope
that the current nuclear disaster will not substantially add to the
terrible woes the Japanese must bear as a result of nature’s fickle
cruelty.”
Read this with links at graphs at Reason
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