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The problem then is much less economics than politics. 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." Once again completion times will extend 10 years and beyond and costs will rise to $15 billion. In fact opposition groups are already challenging new proposals even before they reach the NRC licensing stage. "We're still in a situation where pretty much everybody wants to be second," notes Roger W. Gale, a former Energy Department official and now a utility consultant.
This is unfortunate because, as far as "nuclear waste" is concerned, the problem could readily be solved by reprocessing. Almost 100 percent of the material in a spent nuclear fuel rod can be recycled for additional fuel or industrial and medical isotopes. The problem is that America banned nuclear reprocessing in the 1970s under the illusion that it would somehow prevent nuclear weapons from proliferating around the world. Several countries have since built nuclear weaponry and it had nothing to do with plutonium from American reactors.
The French now have complete nuclear reprocessing and get one-third of their reactor fuel from spent rods. Other isotopes are extracted for commercial sale. The remaining "waste" is all stored beneath the floor of a single room in La Hague—25 years worth of producing 75 percent of France's electricity.
The fate of the Yucca Mountain Nuclear Repository—which has been entirely funded by the industry through taxes on every kilo watt of energy generated over the last 20 years—is evidence of the power of opponents to derail nuclear. Thanks to them, the government has been hampered in completing the site on schedule and it will likely never become operational because of environmental opposition. Indeed, Exelon Corporation, which owns the largest fleet of reactors in the country, won a $300 million settlement from the Department of Energy for its failure on Yucca.
Now nuclear utilities have pioneered "dry cask storage," an on-site system that is good for at least 100 years. Because of nuclear's great "energy density"—the energy generated from a given volume, mass, or collection area—the waste generated by nuclear is vanishingly small. Three years worth of spent rods from a 1000-MW reactor can be stored in a cask four times the size of a telephone booth. But Greenpeace and the Nader organizations—who remain beguiled by the idea that an industrial economy can be run on so-called "renewable" energy—exploit NIMBY (Not in My Backyard) fears to oppose nuclear plants housing on-site disposal. This has injected uncertainty and made nuclear power too risky to justify the high up-front investment.
Some free market advocates bring up the Price Anderson Act that caps the liability of the industry in case of accidents to question its viability. They maintain that if the industry had to buy full insurance, it would make nuclear power uneconomical compared to other fuels. But the fact of the matter is that caps on liability are in no way unique to nuclear. The coal mining industry also benefited from liability caps against black lung disease. Major hydroelectric dams around the country carry no liability insurance because they are all federally or municipally owned and exempted by sovereign immunity. If anything, the nuclear industry carries far more insurance than any other industry. Under Price-Anderson, every reactor in the country can be assessed $100 million for an accident by another reactor. That puts total coverage for any accident at $10 billion. As the industry says: "We are all hostages to each other." That's despite the fact that coal kills 30,000 people a year according to Environmental Protection Agency estimates, whereas Chernobyl—a bizarre foul-up that will never happen again—claimed only 60 lives directly attributable to the disaster.
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. Coal is familiar and politically entrenched and so people don't question the danger it poses. Solar and renewables are showered with subsidies and mandates because they have won popular favor even though they are very low density energy sources.
The real solution then to making nuclear energy economically feasible may lie in changing the popular perception of nuclear as forbidding and dangerous. People should consider nuclear as natural as the ground beneath their feet (hence I have titled my forthcoming book Terrestrial Energy). The slow breakdown of uranium atoms is what heats the core of the earth to temperatures hotter than the surface of the sun. When we build a nuclear reactor, we are only reproducing this process in an isolated environment. Yet it is so powerful that its environmental impact is 2 million times smaller than fossil fuels or the various forms of renewable energy. If powering the world with virtually no environmental impact can't be made economical, what can be?
William Tucker is an award-winning journalist whose book, Terrestrial Energy: How Nuclear Power Will Lead the Green Revolution and End America's Long Energy Odyssey, has just been published by Bartleby Press.
Jerry Taylor: Nuclear Energy: Risky Business
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. But that day is not on the horizon and government policies can't accelerate the economic clock.
Many free market advocates support nuclear because it costs less to generate nuclear power than it does to generate electricity from any other source (save, perhaps, hydroelectric power), thanks to nuclear's low operation and maintenance costs. However, someone has to first pay for—and build—these plants and the rub is that nuclear has very high, upfront construction costs ranging from $6-9 billion. By contrast, gas plants cost only a few hundred million dollars to build and coal a couple of billion depending upon the capacity and type of plant.
This raises the opportunity and risk costs of nuclear, making it unattractive to investors. Capital-intensive power facilities take longer to build, which means that investors have to defer returns for longer than if they had invested elsewhere. What's more, electricity markets have a very peculiar pricing mechanism that makers it harder for nuclear to maximize returns compared to gas-powered or other plants. In essence, there are two electricity markets: a market for base-load power (electricity sold 24-hours a day) and a market for peak power (electricity sold as needed during peak demand periods like hot summer days). Much of the demand for new power—and thus much of the profit available to investors today—is found in the peak market. But nuclear power plant construction costs are so high that it would take a very, very long time for nuclear facilities to pay for themselves if they only operated during high demand periods. Hence, nuclear power plants are only profitable in base-load markets. Gas-fired power plants, on the other hand, can be profitable in either market because not only are their upfront costs low but it is much easier to turn them off or on unlike nuclear.
Nuclear's high up-front costs don't just mean delayed profits, it also makes nuclear a more risky investment, especially since 20 states have scrapped policies that used to allow investors to charge rates that would guarantee their money back. This means that investors in new nuclear power plants are making a multi-billion dollar bet on disciplined construction schedules, accurate cost estimates, and the future economic health of the region. Bet wrong on any of the above and the company may well go bankrupt. Bet wrong on a gas-fired power plant, on the other hand, and corporate life will go on because there is less to lose given that the construction costs associated with gas-fired power plants are a small fraction of those associated with nuclear plants.