Wednesday, March 16, 2011

The economics of nuclear power, the industry that survives by sucking on the public tit

They weren't great before the Fukushima disaster. Presumably increased safety awareness will make them even more expensive. Robert Reich in Safety on the Cheap 03/15/2011 talks about why the public and the regulators need to stay aware of the pressure to cut corners on safety that is built into the incentive system for corporations under our current laws:

Don’t get me wrong. No company can be expected to build a nuclear reactor, an oil well, a coal mine, or anything else that’s one hundred percent safe under all circumstances. The costs would be prohibitive. It’s unreasonable to expect corporations to totally guard against small chances of every potential accident.

Inevitably there’s a tradeoff. Reasonable precaution means spending as much on safety as the probability of a particular disaster occurring, multiplied by its likely harm to human beings and the environment if it does occur.

Here’s the problem. Profit-making corporations have every incentive to underestimate these probabilities and lowball the likely harms.
And he adds the important conclusion, "It’s also why the public in every nation is endangered if the political clout of its biggest corporations — BP, Halliburton, Massey, G.E., or TEPCO — grows too large."

Chapter 3 of this study from the Strategic Studies Institute (SSI) of the US Army War College, Nuclear Power's Global Expansion: Weighing Its Costs and Risks, Henry Sokolski, ed. 12/31/2010, is on the wonky side but informative. The authors of that chapter write:

The Economist observed in 2001 that "Nuclear power, once claimed to be too cheap to meter, is now too costly to matter—cheap to run but very expensive to build." Since then, it has become even more costly to build, and in a few years, as old fuel contracts expire, it is expected to become more expensive to run. Its total cost now markedly exceeds that of coal- and gas-fired power plants, let alone the cheaper decentralized competitors described below. [my emphasis]
"Wind, cogeneration, and end-use efficiency" are among that latter group. They explain that private capital does not consider nuclear power a good investment anywhere in the world, including the United States, and that public subsidies are required to make it economically viable for private companies.

In other words, this dangerous, expensive source of energy with sub-standard reliability is surviving not on the magic of the "free market," but on the generosity of taxpayers. Public money would be much better spent developing renewable sources that provide cheaper, cleaner and more reliable power.

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