The tragedy at Fukushima has sunk a territory named the “island of fortune” into a dark futuristic nightmare, compounding three other catastrophes that successively hit the region (a monster earthquake and a tsunami, followed by an unseasonal blizzard)
The plight of its people is beyond description and, perhaps, the fact that the fourth plague was man-made makes it even harder to bear.
And yet there’s the nuclear lobby, hardly able to wait for the worst to be over to go go back at pushing its agenda for an aggressive expansion of nuclear production.
What are their arguments? Simple indeed. As any marketing expert knows, a message has to be simple, appealing and constantly hammered to gain its way into the public’s mind. In this case:
- Nuclear energy is cheap. Very cheap. “Too cheap to meter” as Lewis Strauss, first president of the Atomic Energy Commission envisioned it in his infamous speech of 1954.
- Nuclear energy is safe. Very safe. Safer than sunbathing, safer than watching TV, safer than just lying around doing nothing.
- Nuclear energy is the technology of the future. a CO2 free source of energy, the only one to provide for a peaceful and abundant future.
In a three posts series, we will go over these promises and think about the costs of nuclear energy, what risks and uncertainties it creates and, finally, what would the prospects of the technology be in an undistorted market.
The most authoritative report on the cost of nuclear energy among those which are available to the public is Nuclear Power: Still Not Viable without Subsidies (2011), released on February 23rd by the Union of Concerned Scientists. It really touches on practically all the issues I bring up here, so I will summarize below the findings of the report and let the inquisitive minded follow the link to better explanations than mine.
Nuclear energy is a production system based on huge investments in return of a lower operating cost (not spectacularly lower, certainly not zero). Since the impact of the initial investment on the Kw average cost is crucial, assumptions that tend to lower this cost or that disregard substantial parts of it, will completely skew the results. Nuclear plant operators have benefited from many subsidies (direct or indirect) that tend to be obviated in any analysis concluding that nuclear generation is more efficient. Most egregiously:
- Construction costs: Most nuclear plants were built on public money and then transferred at much lower cost to private operators. The relatively few that were privately built have enjoyed loan guarantees, outright subsidies and the ability to transfer any costs to consumers held hostage, since electric utilities enjoy de facto monopolies in their demarcations.
- Construction costs have systematically overshot the initial calculation (and ended up financed by the taxpayer) However, all the studies arriving at favourable average Kw costs relative to other sources are based on foreseen, instead of actual construction costs.
- The industry is allowed to apply accelerated capital amortization rates, that work like a tax break.
- Waste management: There are no definitive waste deposit facilities for nuclear electric plants in the world. Despite legislation to the contrary, plant operators are permitted to keep practically all of the spent fuel in cooling pools at the reactors sites, waiting for “something” to be done by “somebody” sometime (i.e. waiting for the problem to get so big it has to be handled by the government, at taxpayers’ cost)
- Decommissioning: A huge but difficult to estimate part of decommissioning is passed on to the taxpayer through a mixture of tax breaks, costs directly borne by the government and residues management.
But also many of the operating costs of nuclear plants are transferred to the taxpayer and thus excluded from calculations of the cost of nuclear energy.
- Risk: In the next post I will go over risks in greater detail. Suffice to remember here that regulations in every country cap liabilities for their nuclear operators at levels ridiculously lower than what can reasonably be expected in the case of an actual occurrence. The US has by far the most strict regulation, and it just requires a pooled amount of 12,66 bn USD, the rest being on the taxpayer.
- Uranium mining enjoys tax subsidies and a lenient land restoration regime. When it’s done by the government in public land, it is provided at subsidized prices to plant operators. It enjoys a generous scheme of export credits.
- In some countries, nuclear is considered a renewable source, thus benefiting from price incentives.
- Security of the plants against terrorist attacks is provided by the police and the army, on taxes. The need of such security is obviously on a different order of magnitude than, say, for a coal plant.
- The price of water is set at lower levels for utilities than other consumers. On top of this, a great part of the vast amounts of water used by the nuclear industry is returned to the environment, only hotter. This destroys habitats that are not paid for.
- As nuclear generation lacks any amount of flexibility (a plant has to be kept producing at near maximum capacity and can’t be shut at will) they get preference when selling their output to distributors. In fact, it transfers the risk of demand peaks and troughs to other sources, since it’s unable to manage them at all.
Just taking into account all capital costs makes nuclear energy more expensive than any alternative. If you add to these the above numbers 1 to 3 operating costs (which are easier to estimate), the figures are outright outrageous. In a reversal of the “too cheap to meter” slogan, it turns out that nuclear energy is in fact too expensive to bother: it would have been cheaper for the public to produce the total output of the nuclear industry by conventional means and give it away to the consumer.