Nuclear Power and Energy Independence

A Reason Foundation roundtable

Shikha Dalmia, William Tucker & Jerry Taylor | October 22, 2008

Both presidential candidates regard nuclear energy as an important cure for all the major challenges we currently confront. Sen. John McCain has even declared that if he is elected he will build 45 new reactors in America by 2030 in order to make America energy independent—a goal that Shikha Dalmia, a senior analyst at Reason Foundation, notes is neither achievable nor desirable, in this edition of the Reason Roundtable.

There is a great degree of disagreement as to whether nuclear energy can sustain itself in the market without government involvement. America has added little nuclear capacity over the last few decades. Is this because regulatory obstacles and political opposition has made private investors wary of investing in nuclear energy? Or is it because the high upfront capital costs make nuclear energy much too risky an investment for private investors? "Can the industry offer energy consumers sufficient value to stand on its own without shaking down taxpayers or receiving immunity from liability for future hazards?" asks Dalmia.

William Tucker, author of Terrestrial Energy: How Nuclear Power Will Lead the Green Revolution and End America's Long Energy Odyssey, believes it can. "The current problem with nuclear is not its underlying economics but the current political climate in the U.S. that is hostile to nuclear and doesn't offer a level playing field," he notes. But Jerry Taylor, senior fellow at the Cato Institute disagrees. He believes that government policies have offered nuclear energy unwarranted help in the form of subsidies, tax breaks and other government guarantees. Those who believe in nuclear energy, he counsels, should adopt a policy of tough love. "Welfare, after all, breeds sloth in both individual and corporate recipients."

Shikha Dalmia: Going Nuclear—But Not for Energy Independence

Nuclear energy is receiving renewed attention this election season, thanks to the battle-cry of energy independence that both presidential candidates have raised. Our contributors to this edition of the Reason Roundtable consider whether nuclear energy is the right answer—but let me begin by pointing out why energy independence is the wrong cause.

Every president since Richard Nixon has muttered direly about the need to make America "energy independent." But this old and tired saw has assumed new importance now because both Barack Obama and John McCain are offering it as the weapon of choice to vanquish all the alleged threats we currently confront —terrorism, recession and, not to forget, global warming.

In the last debate, both candidates pledged to end America's reliance on Middle Eastern and Venezuelan oil within 10 years (Canadian oil supposedly is OK)—a nonsensical goal since oil is a fungible commodity with a single global market. Both candidates also claim that replacing oil with alternative fuels will create "millions of jobs" and, once again, put America on the road to riches. "We can't keep on borrowing from the Chinese and sending money to Saudi Arabia (to pay for oil)," Sen. Obama thunders on the stump (a formulation more admirable for its pithy syntax than grasp of economics.)

But the fact of the matter is that energy independence is neither feasible nor desirable. Indeed, when Nixon originally took up this crusade in the wake of the oil embargo, America imported a third of its oil. Now it imports 60 percent. Why? Because imported oil is cheaper than indigenous oil. Trying to fight this reality won't create jobs or restore America's economy, it'll do the opposite.

Third World countries in Latin America and Asia learned this lesson the hard way when, in their zeal for economic self-sufficiency, they embraced a something called the import-substitution approach half a century ago. The idea was to discourage imports of key industrial products such as factory equipment and machinery through trade barriers and encourage their domestic production through massive subsidies. The upshot, however, was neither self-sufficiency nor prosperity. Rather, import-substitution raised production costs, making Third World goods uncompetitive in the global markets and prohibitively expensive at home, consigning these countries to decades and decades of economic stagnation that has not yet been fully reversed. Delinking America from global energy markets will wreak similar economic havoc.

But will energy independence make America more secure by depriving terrorist nations of petro dollars? Not really. Indeed, insofar as America, the single biggest oil consumer, spurns Middle Eastern oil, it will only make it that much cheaper—and therefore more attractive than the alternatives—for everyone else, including India, China and other energy-hungry emerging markets. The result might well be a new geo-political alignment with countries dependent on Middle Eastern oil in one camp—and "energy-independent" America in the other. This is not a recipe for defunding terrorism. Rather, it is a way of giving Middle Eastern countries even less of a stake in our well being and making them less interested in helping our struggle against terrorism.

Energy independence therefore offers no rationale for building 45 new reactors in America by 2030 as John McCain wants. That, however, doesn't mean that there is no case for nuclear power—or, for that matter, other alternatives to oil. Oil prices are inherently volatile, making it hard for businesses and manufacturers to reliably plan ahead. What's more, a diversified fuel supply that is not too dependent on any one source would increase economic security. And to the extent that such fuels supplement existing oil supplies, they would bring down overall energy costs and boost economic growth.

In an economy unencumbered by barriers to entry or distorted by other government policies, the market of course would be constantly searching for the most viable alternatives. But that is far from the case in America where a complicated web of government subsidies, taxes and trade barriers has severely crimped some fuels while artificially boosting others. So the question before the current Reason Roundtable is whether nuclear energy would be economically viable if it were neither helped nor hindered by government policies. Can the industry offer energy consumers sufficient value to stand on its own without shaking down taxpayers or receiving immunity from liability for future hazards?

Nuclear, to be sure, has many advantages over other alternatives currently on the table: It is plentiful, clean, and, in the long run, cheaper than other fuel sources. What's more, unlike wind and solar, it is capable of generating a steady supply of energy without disruptions due to the weather. Yet nuclear's share of the American energy market has effectively remained stagnant at about 19% for the last many decades. France, by contrast, gets about 80% of its energy from nuclear.

Is this because of an overly cumbersome regulatory process and political opposition to nuclear plants? Or are potential investors daunted by the prospect of nuclear's heavy upfront capital costs?

William Tucker, an award-winning journalist and author of Terrestrial Energy: How Nuclear Power Will Lead the Green Revolution and End America's Long Energy Odyssey, believes that nuclear's challenges in America are not economic—they are political. Existing nuclear power plants are raking in $1 million a day, he points out, something that has, ironically enough, triggered calls for a windfall profit tax on these plants. Yet few new nuclear plants are being built in America right now. "Both Wall Street and the utilities fear that, as soon as the first proposal comes out of the box, environmental and opposition groups will gang-tackle it, exploiting the public's fear about safety and nuclear 'waste,'" he explains.

Comments

DannyK|10.22.08 @ 3:19PM|#

Nice! I should print out and laminate Jerry Tucker's post for future reference.

BakedPenguin|10.22.08 @ 3:52PM|#

Yes, and now nuclear energy is funky!

|10.22.08 @ 3:57PM|#

I find myself agreeing with both. Nuclear is great, and subsidies should be removed. I think we will end up with nuclear power - but we should be in no rush to do so immediately. Technology will make this power source viable, and rushing in with early generation tech will only lock us in to expensive energy. Let the Frogs and the Finns subsidize nuclear. When we need it, we can liscense the best solution that emerges.

Darrel|10.22.08 @ 4:13PM|#

Frogs with Fins? This nucular thing can't be good.

Kaiser|10.22.08 @ 4:15PM|#

Slightly OT:


I am a firm disbeliever of man made global climate change. I am not however against alternative energies. I just don't think tax payers dollars should be going anywhere near funding alternative energies. I am a big fan of nuclear energy and have been or a long time, but I do realize the down sides to it as well. It seems to me though that people want a "cure all" when it comes to alternative energies. Something that will just replace fossil fuels but in reality we need a combination of all of them to sustain what fuel has done for us.

Let us not forget too that IF we could completely replace all of our energy usage with alternative methods, we would still need crude oil and lots of it. Many people forget or don't realize that (I don't want to quote percentages here because I don't know for sure) a lot of our crude oil goes to things that have nothing to do with energy. Rubber, nylon, vinyl, plastics, many synthetics, ASPIRIN ffs, etc the list goes on.

|10.22.08 @ 4:17PM|#

As a nuclear design engineer, I'm ever so pissed off at Jane Fonda and Barack Obama.

Nuclear is anathema only to those who have no fucking clue how it works. The average person is completely clueless when it comes to energy generation and words like nuclear just sound scary.

If I see another anti-air pollution advertisement depicting a power plant's cooling towers releasing clean water vapor I'm going to choke a vegan.

Brandybuck|10.22.08 @ 4:18PM|#

Considering that it's gum'mit that's dragging down nuclear power, I'm quite sure it would be quite sustainable without their intervention.

Kolohe|10.22.08 @ 4:28PM|#

Excellent articles. Two small things:

1) Is it just me, or did Ms Dalmia assiduously avoid taking a stand? Or was she the 'moderator'? (no pun intended. ok yes it was.)

2) Mr Taylor's assement that a carbon tax would be $2 per ton seems a little lowball to me. I recall seeing figures of around $10 per ton (which itself seemed a little low end) when Lieberman/Warner was being debated.

Kaiser|10.22.08 @ 4:33PM|#

Phalkor:


That is another thing about nuclear energy that pisses me off. So many people view it as an evil entity, associate it with things like bombs and chernobyl. Keep in mind I am just a laymen here but as I understand it it is merely steam. The reaction from the plutonium or whatever is used basically just super heats water and the steam created powers turbines etc etc. Maybe we should re-name it, sort of like how they re-named the bailout to rescue.

nonPaulogist|10.22.08 @ 4:33PM|#

Nobody knows whether or not it would be a good idea to expand nuclear power because the price information that should be provided by the free market is absent.

As a former Navy Nuke, I know that Nuclear regulation is excessive and misguided.

Everybody is just guessing. McCain's central planning is almost certainly calling for a less than optimal solution. We might need more Nuke plants and we might need less, but McCain's call for 45 is just pulling a number out of a hat.

|10.22.08 @ 4:34PM|#

When I was in colorado they started dismantling rocky flats. Needless to say, the press coverage was less than nook-u-lar friendly. I guess people equate power plants using uranium with spilling tanks full of Plutonium solution into the groundwater.

TallDave|10.22.08 @ 5:06PM|#

Yet, despite all this government prompting, investors do not seem very confident about undertaking the risks.

Well, given that all their work will probably be wasted if Obama is elected, you can't really blame them for ebing cautious.

The latest generation of nuke plant designs can compete, if the government will get out of their way.

What's scary is that the global warming people and the anti-nuke may be in charge. This is a recipe for nationwide blackouts starting in a few years -- and it will take a long time to fix.

nonPaulogist,

Did you know there's a Navy fusion project that might give us cheap fusion power? Another libertarian Navy nuke has been writing about it quite a bit.


http://www.classicalvalues.com/archives/2008/10/fusion_report_2_1.html

Alice Bowie|10.22.08 @ 5:07PM|#

Nuclear energy SHOULD BE AVOIDED !!!

Keep Dope Alive !!!

John McCains plan to build 45 Nuclear Plants right here in America would HELP our enemys

There will be no need for Iran, Russia, and our next enemy to invest a penny in nuclear technology...The BOMBs would be right here waiting for our enemys to blow them up and make several miles around the plants uninhabitable for 100s of years.

What do we do with the waste
Yea Yea Yea ... it's safe ... i'm just a wimp and a tree hugger. I think it sounds stupid.

Where would they put these SAFE Nuclear Bombs (i mean plants) ???

You can be sure that it would be near the POOR minority areas....no where near McCain, Bush, Cheney, etc.

Alice Bowie|10.22.08 @ 5:12PM|#

I know you Macho Men see me as a little wimp. I should be strong...Like Macho Man Adolph Guiliani...

He wasn't afraid of Terrorist. In fact, to prove to the world how he wasn't going to let terrorist get in his way...He setup NYC Emergency Command Center in the World Trade Center....STUPID IDEA.

I saw Guiliani on 9/11, running for his life right next to me...He wasn't TOO MACHO THEN.

|10.22.08 @ 5:42PM|#

"Yet it is so powerful that its environmental impact is 2 million times smaller than fossil fuels or the various forms of renewable energy."

William Tucker with a gigantic math FAIL. That sentence makes no sense.

Neu Mejican|10.22.08 @ 5:47PM|#

I am a firm disbeliever of man made global climate change.

What an odd thing to have a "firm" disbelief in.
I can understand a skeptical stance, but a firm disbelief?

Nuclear is unlikely to become the power source of choice without active subsidies.
http://www.rmi.org/sitepages/pid467.php

Isn't it time we forgot about nuclear power? Informed capitalists have. Politicians and pundits should too. After more than half a century of devoted effort and a half-trillion dollars of public subsidies, nuclear power still can't make its way in the market. If we accept that unequivocal verdict, we can at last get on with the best buys first: proven and ample ways to save more carbon per dollar, faster, more surely, more securely, and with wider consensus. As often before, the biggest key to a sound climate and security strategy is to take market economics seriously.

nonPaulogist|10.22.08 @ 8:06PM|#

Thanks for the heads up, Tall Dave. I'll check it out.

ARM Legal|10.22.08 @ 11:04PM|#

Uranium is down to $44/lb - also the nuclear fuel cycle includes serious costs in the mining of uranium especial In Situ Leach mining in the aquifers because release of contaminants gets to drinking water and harms the people and environment. So, the economics need to include some measure for the damage caused by uranium mining especially when fuel is not recycled.

These are excellent discussions - I can say first hand that the NRC has a giant rubber stamp and they approve most things with no real questions asked unless there has been a spill, leak, or citizen action.

Today, in fact, the Vermont Yankee nuclear plant had to be evacuated due to radioactive leaks when a cover was being changed.

The only reason these nuclear power merchants have made so much loot is that the construction costs were off-loaded to electricity rate payers as so-called "stranded-costs" when the companies went bankrupt after Three Mile Island and Chernobyl and the actual plants could then be bought for about 1x annual revenues.

It should also be stated that most uranium companies and nuclear companies are foreign owned and/or foreign controlled.

Daniel Reeves|10.22.08 @ 11:52PM|#

If Tucker's point is that nuclear energy costs a lot... that's true. But as of now it's the most efficient enviro-friendly energy source in terms of capital.

Alice Brown, I'd rather have a nuclear power plant by my house than a coal power plant. Only in Russia has a nuclear power plant ever killed anyone, and even that was less than 100 people. Never in the U.S. Never. This is in contrast to the thousands that die from coal emissions every year in the U.S.

|10.23.08 @ 2:58AM|#

The thing that pisses me off is that the environmentalists talk out of both sides of their mouths on Yucca Mountain. They make this intellectually dishonest argument that goes something like this:
1. Say that it's unsafe because of the radioactive waste.
2. Say you'll support it when there's a long term solution for storing waste.
2. Oppose any and all efforts to construct a long-term waste storage facility.

That allows them to continue to pretend to be reasonable by claiming they just want nuclear power to be "safer", while simultaneously being totally fucking dishonest shits who are simply out to make sure that no nuclear plants ever get built because of some kind of insane attachment to the belief that radiation is evil.

Not only that, but by diverting us into arguing over long-term storage facilities, it detracts from the much more important point that radiation isn't NEARLY as dangerous as they have painted it as.

The next time some anti-nuck wack job comes out arguing against Yucca Mountain, we should say okay, we're fine with that cause radiation isn't that big a deal.

After all, even if it did excape after 10,000 years, all it would do is cause a marginal increase in lifetime cancer rates.
BIG DEAL!

|10.23.08 @ 9:48AM|#

Why isn't anyone talking about uranium, where it comes from and how much of it is still left to pillage?

Both experts fail to mention that uranium mining does not have a great track record at being "clean". In countries such as Niger, where international environmental and health standards are not imposed, uranium mining has been devastating to local populations and the environment.

And given that uranium is mostly imported, I'm not sure how anyone can talk about nuclear contributing to "energy independence".

Lastly, experts estimate that at the current level of nuclear production, there are about 80 years worth of uranium reserves left in the world. So if this nuclear renaissance were really to take place, I guess it would be short lived.

|10.23.08 @ 10:53AM|#

My concerns about nuclear energy (apart from the usual wepaons and waste stuff):
Convnetional nuke power uses 20% more water than conventional coal energy. Where are we going to get the additional water?

Conventional nuke power requires tremendous amounts of skilled labor to design, construct, manage, and maintain. Where will tha t labor come from?

As mentioned above, the international market for uranium sets the base price. How would we become 'independent' based on an international commodity?

90% of NEW energy plants today in the US are Natual Gas based. How does the nuclear industry plan to compete against that without subsidies?

~A|10.23.08 @ 12:42PM|#

Sam-Hec,
Natural gas is only really used for peak power needs, not baseload production. The options for baseload production are pretty much nuclear and coal. Take your pick on whether the downsides of one are worse than the others.

|10.23.08 @ 1:15PM|#

That's true. It is also true that NatGas plants start/stop quicker, and can respond to demand quicker either than nuclear or coal...thus there is less waste as compared with leaving the latter two on standby all the time. And NatGas can be made smaller and more distributed. Conventional nuke power needs to get Unconventional before it can compete imo.

For alternative renewable baseload I would fight for advanced Geothermal and wave/tide power...maybe unconventional (high altitude) wind energy

|10.23.08 @ 1:35PM|#

Sam-Hec:
Could points.
First, I'm not sure that 20% figure reflects the total water usage or just per plant. If it is per plant, then it is an advantage, since nuclear plants produce many times more electricitry than a typical coal plant. Besides, a 20% increase in water consumption is realtively benign compared with all the pollution produced by coal. Moreover, the water is just heated and discharged, so it's going back into the environment pretty clean anyway.


Second, labor isn't really an issue. Most of the jobs would in in construction. There's a shortage of skilled engineers in the US, but that's been that way for decades. Hire Indians. They are familiar with nuclear technology, and don't pose a threat to the US.

Thirdly, natural gas is only clean when compared to coal. It eliminates some of the more hazardous emissions leading to acid-rain, and produces a bit less CO2, but you're still basically burning fossil fuels.

|10.23.08 @ 5:14PM|#

Hazel Meade,
That figure is per Therm or KW/hr.

Warmer water can actually be very bad for any thing otherwise alive down stream.

Which brings up another point. Droughts lower river water levels which warms up river et al temperatures. Nuke plants have been shut down because of this, until river temps lowered.

To be fair this is a very awkward detail for any energy source which requires a water medium.

Unconventional nuke power may devise a work around. But we can hardly get new nuke plants up within a decade; unconventional nuke plants will take longer. Wishing won't make it so.

Labor is an actual issue. While laergely unskilled construction labor is abundant, critical skilled labor in nuclear engineering and administration for existing plants aren't being fulfilled. Few new graduates want to work in Nuclear Energy.

Any conventional power plant is cleaner than coal. And we are discussing 'energy independence' in this thread more than emissions controls.

Douglas Gray|10.23.08 @ 10:42PM|#

A breast cancer map from Centers for Disease Control showsthat within a 100-mile radius of nuclear reactors, two-thirds of all U.S. breast cancer deaths occurred between 1985 and 1989. This map of nuclear power plants in the U.S. identifies them as the major cause of breast cancer in the U.S., as well as nuclear weapons labs in New Mexico, Idaho, Washington and California.

Cancer clustering is nothing new. At one plant back East, after five years of operation, the cancer death rate was nearly 60% higher.

Even low level radiation in the water near Navajo reservations has caused a spike in cancer.

So, if you don't mind a little more cancer, nuclear plants are OK.

|10.24.08 @ 4:05PM|#

Most of Mr. Taylor's arguments about nuclear being uncompetitive do not hold water. He lists all the ways nuclear may be subsidized, but then deliberately ignores much larger subsidies that are recieved by other sources. Fossil fuels recieve more subsidies than nuclear, and renewables recieve vastly larger subsidies per kW-hr of generation (along with outright mandates for their use).

And that's just the direct monetary subsidies. The largest subsidy of all is fossil fuels' priveledge of just dumping all their wastes/toxins directly into the environment, for free. Nuclear has to spend massive sums to prevent even a tiny chance of this happening. Western nuclear plants have never killed a member of the public, or had any measurable public health impact, over their entire ~40-year history. Fossil plants (mainly coal) cause ~25,000 deaths every single year in the US alone (hundreds of thousands worldwide) and they are the leading cause of global warming. And yet, they don't have to pay a dime in compensation (let alone prevention). The ANNUAL environmental, health and monetary impacts of fossil fuel plants vastly exceed the total impact of a severe meltdown event (the thing that Price Anderson insures against).

Whereas nuclear's total external (environmental and health) costs (including mining, accident risk and waste management, etc..) are estimated to amount to only a fraction of a cent/kW-hr. Meanwhile the external (pollution) costs of fossil fuels are enormous (~6 cents/kW-hr, enough to double coal's price). If you add this "free pollution" subsidy to the direct economic subsidies they recieve, one finds that fossil fuels are much more expensive than nuclear. The only sources nuclear has not been able to "compete" with are dirty conventional fossil fuels, and this is only because their massive external costs are not counted.

The fact that external costs (mainly those of fossil fuels) are not included in the market price is the biggest problem (failure) of current energy markets. The best thing to do would be to tax or limit CO2 emissions, air pollution, and foreign energy imports (mainly oil and gas), and see what happens. Let the market then decide what to build.

Nuclear would do just fine in such a scenario. Coal would be rendered uncompetitive. As people try to replace coal with gas, the price of gas (which is already starting to run out in North America) will increase dramaticallly. As a result, nuclear will easily be able to compete with gas for baseload generation. As for renewables, not only are they not any cheaper than nuclear, their intermittentcy will limit their practical use to ~25% of total generation, at most. We still will need traditional plants for the remaining 75%.

The bottom line, if we ever put hard limits on CO2 emissions, nuclear's future is very bright, even with no subsidies. To anyone who would disagree I say, "let's find out".

|10.26.08 @ 9:23AM|#

I was with you until this:
"As for renewables, not only are they not any cheaper than nuclear, their intermittentcy will limit their practical use to ~25% of total generation, at most. We still will need traditional plants for the remaining 75%."

Intermittence can be resolved at low cost through smart grid, and by battery (of some type) backup. ('battery backup' includes, pumped water reservoirs, compressed air, etc, not just chemical batteries.)

Not all renewable energies are intermittent. Solar Thermal, GeoThermal, Wave/tide, and high altitude Wind are all 24/7/365 energy sources. If we try, the development and broad installation of these will take less than the 15 years it takes from initial investment of a Nuke plant to it's first sale of energy.