IAE: Build more nuclear power plants

Kai Ryssdal Nov 7, 2006

KAI RYSSDAL: Crude oil prices slipped just a little today. Back down under $60 a barrel. OPEC still can’t agree on its promised production cuts. And reserves here in the States are expected to have nudged up a bit when those figures come out tomorrow.

But the International Energy Agency released a much more dire forecast today. Oil at $130 a barrel within the next 25 years. Unless we do something. And the thing the IEA wants us to do is build more nuclear plants. Vijay Vaitheeswaran’s with the Economist magazine. Vijay welcome to the program.

VIJAY VAITHEESWARAN: Good to be here.

RYSSDAL: They’re just now coming around to this point of view. They’ve been in business for 30-something years. It’s the first time they’ve made this recommendation.

VAITHEESWARAN: They’re very careful to say they don’t argue for subsidizing nuclear power. But, if you look at the report, it’s pretty clear that they think that nuclear should be part of the mix. Here’s why I think they’ve come around to this view: China is ramping up its burning of coal so much faster than people thought. Within two years, they’ll produce more greenhouse gases from human sources than the United States. And that creates a lot of concern among folks who say we can’t continue using energy the way we use it today. They do talk about renewables — ethanol, about windmills — but nuclear, they think, in some countries, must be part of the solution.

RYSSDAL: You know, the tide has been rising for nuclear power the past couple of years. The White House has come out in favor of it, the Energy Department here, even the Germans have said some nice things about nuclear power plants. Could this be the tipping point?

VAITHEESWARAN: There’s no doubt that the question of global warming has helped nuclear tremendously. But here’s the main obstacle that’s gonna make it very unlikely for us here in America and most European countries to see more nuclear plants: The economics don’t add up. It’s incredibly capital intensive to build a new nuclear power plant, because up to two-thirds of the capital cost of the project is right up front. You can’t get a banker in a liberalized, competitive marketplace to come and fund your new nuclear power plant. That’s why the Bush Administration, when they passed the energy bill in the year 2005, gave enormous amounts of subsidies for the first six power plants that are built — nuclear power plants. Because without them, we wouldn’t even talk about building them in America.

RYSSDAL: I wanted to touch on something else briefly that was in this report. The IEA was critical of the oil industry for not, when you adjust for inflation, not investing enough in new exploration and production of crude oil.

VAITHEESWARAN: Some people have seen this as a sign that the world is running out of oil, or we’re going to hit peak oil. That’s a misreading, actually. It’s true that if you’re Exxon or BP or Chevron, it’s getting a lot harder and more expensive to find oil. That’s only because they’re being locked out of the places where the oil really is. Most of the world’s oil — two-thirds of the proven reserves — are in the hands of just five countries in the Middle East — Saudi Arabia and its immediate neighbors. Russia has another large store of oil. They’ve turned very hostile to foreign investment. So, the problem for oil companies, the Western majors, is this resource nationalism is keeping them out of where the oil is.

RYSSDAL: Well, if nuclear power is not economically feasible, and if oil is tough to get to for Western countries, are we on the cusp, then, do you think, of a new drive for conservation or something like that?

VAITHEESWARAN: The single-most important source of energy, so to speak, and going forward, is going to be the energy that we don’t use. Energy efficiency. If you’re in America, we’re at a 20-year low, pretty much, in terms of new-car efficiency. And, if you look back, Henry Ford’s Model T got better fuel economy than the average new car today. We can certainly do better.

RYSSDAL: Vijay Vaitheeswaran is a correspondent for The Economist magazine. Vijay, thanks a lot for your time.

VAITHEESWARAN: It’s my pleasure.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.