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High cost of nuclear energy

Marketplace Staff Jul 13, 2006

KAI RYSSDAL: Energy will top the list of things G-8 leaders talk about when they meet in Russia this weekend. Energy security, specifically. And how to reduce dependence on oil. Both Russian President Vladimir Putin and George Bush are backing nuclear power as one way to do that. Earlier this week, Britain’s Tony Blair came out with a nuclear plan too. But commentator Mark Hertsgaard says there’s a catch in what Blair wants to do. One that could settle the question of whether nuclear power makes economic sense.

MARK HERTSGAARD: The catch is that Britain will not subsidize nuclear power. Private investors alone must pay to build and eventually dismantle any new nuclear plants. They also must help pay to dispose of radioactive waste.

This no-subsidy pledge amounts to a revolution in nuclear economics. Not one of the 440 nuclear plants now operating worldwide was built without sizable public subsidies.

Governments have subsidized nukes both directly — through R&D funding and cheap insurance — and indirectly, by allowing electric companies to pass billion dollar cost overruns onto consumers. The US government has historically spent 10 times more on nuclear subsidies than it has for solar, wind and other renewable energy sources.

Nevertheless, nuclear power remains forbiddingly expensive. A recent MIT study calculated that in the United States nuclear costs 50 percent more per kilowatt hour than natural gas. And it costs vastly more than the least polluting form of electricity: energy efficiency.

Investors know this. That’s why nuclear power survives today only in countries like Russia, China and France, where state-controlled electricity systems can ignore market forces.

If G8 leaders want to honor last year’s pledge to fight climate change, they need to understand that going nuclear would actually make things worse.

Because nuclear power is so expensive, it delivers seven times fewer greenhouse reductions per dollar invested than boosting energy efficiency does. Some say, why not have both? But in the real world, capital is scarce. To divert it to nuclear power when efficiency can work so much faster would delay our transition to a low-carbon economy when, in fact, we need to accelerate it.

It’s hard to believe Tony Blair doesn’t know this. In any case, he’s in for a big surprise if he truly expects any nuclear plants will be built anywhere, without continued subsidies from the public purse.

RYSSDAL: Mark Hertsgaard’s latest book is called “Earth Odyssey.”

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