As nuclear energy is getting an extensive discussion in the comments thread, I thought I’d repost this piece I wrote this more than a year ago. The only change since then is that the evidence for human-caused climate change has become even more overwhelming, though there are still plenty of people who combine global warming denialism (or a long track record of denialism, with no admission of error) with the claim that “nuclear power is the only solution to climate change.”
Repost
My column in yesterday’s Fin was about the option of nuclear energy as a solution to the problem of climate change, an issue that’s been discussed a few times here already. One point I didn’t make is that the availability of nuclear-generated electricity as a ‘backstop’ technology puts an upper bound on the costs of a strategy that would reduce CO2 emissions enough to stabilise atmospheric concentrations (this is much more than Kyoto which aims only to stabilise emissions from developed countries, as a first step to a solution).
Nuclear option premature
With the Kyoto protocol in force, and evidence of rapid climate change mounting up day by day, it’s not surprising that there has been renewed interest in nuclear energy as a source of electricity, free of emissions of greenhouse gases. What’s surprising is that so many of the participants in the debate seem to be restating positions that have been frozen in time for twenty years or more.
The debate over uranium mining provides an example. Labor’s ‘three mines’ policy was a grubby internal compromise reached in the early 1980s. It owed a lot to the interaction between geographical and factional alignments and almost nothing to a rational evaluation of the issues. It made no sense even at the time, yet it is still defended by some as an appropriate policy for the future.
The central reasoning underlying the anti-uranium campaign was rendered obsolete by the late 1970s. It was assumed that nuclear power was set for rapid growth, and that restricting the supply of uranium was the best way of constraining that growth. Meanwhile, nuclear proponents were looking at ‘fast-breeder’ reactors that would generate their own plutonium and thereby avoid the uranium shortage.
But the stagnation of nuclear power after the Three Mile Island accident meant that the shortage of uranium never developed. Releases from military stockpiles after the end of the Cold War have ensured a continuing supply. The availability of uranium is not a constraint on nuclear power and is unlikely to become one. Restrictive Australian policy might raise the world price, but that would merely benefit other suppliers at our expense. Similarly, the fast breeder reactor is commercially dead. France pulled the plug on its Superphenix reactor in the late 1990s, and Japan’s Monju has been mothballed for a decade.
If the opponents of nuclear power seem stuck in the 1980s, many of the supporters seem to back in the 1950s, still selling a dream of limitless clean power, ‘too cheap to meter’, and obstructed only by baseless fears. If the experience of the past thirty years has taught us anything, it’s that this dream is illusory.
Nuclear power can be clean (at least compared to the main alternatives), it can be safe and it can be cheap, but it apparently can’t be all three at once. In the aftermath of the Three Mile Island meltdown, it was pointed out by some that no-one had died, and it was suggested that nuclear power was being held to excessively tight safety standards, compared to those prevailing in the Soviet Union, which was forging ahead while nuclear energy stalled in the West. The Chernobyl disaster put paid to that claim.
In the ensuing decades, there have been repeated claims that the problems have been solved and that the stage is set for a renaissance of nuclear power. There has been much less in the way of concrete achievement.
It is hard to assess the costs of nuclear power because of its long stagnation. Large-scale construction has mostly been undertaken in countries where nuclear power attracts government subsidies, usually linked to military objectives, as in France. The main issue relates to capital costs. With the low interest rates prevailing currently, nuclear power looks marginally competitive with fossil fuels, but a complete analysis, including a proper allowance for waste disposal, would almost certainly yield substantially higher costs.
It would be foolish to foreclose any options, but a return to nuclear power looks premature at this stage. There are lots of conservation options, and alternative strategies such as tree planting, that could yield savings in emissions at significantly lower cost. Only when these options are exhausted would an expansion of nuclear power make sense.
In the meantime, it would be helpful if advocates of nuclear power could clarify their own position regarding climate change. While many are happy to score points against environmentalists by pointing to nuclear power as a solution to climate change, a surprisingly large number simultaneously push the claims of the handful of scientists (mostly not experts in the field, and many with glaring conflicts of interest) who deny the reality of human-caused climate change.
Not only does this undermine the case for re-examining the nuclear option, it undermines the credibility of its advocates. If an individual or lobby group disregards the massive body of evidence on climate change, often on the basis of a predetermined political or interest-group agenda, what reliance can be based on their claims about the safety and cost-efficiency of nuclear power?
John Quiggin 
SimonJM,
What would be wrong about us exporting more uranium? As has recently been pointed out, our uranium exports have resulted in savings in GHG emissions equal to our GHG emissions. If other countries are comfortable with the economics and risk profiles associated with nuclear power is it our business to say they cannot buy our uranium to use in their reactors?
Andrew Reynolds
�What would be wrong about us exporting more uranium? As has recently been pointed out, our uranium exports have resulted in savings in GHG emissions equal to our GHG emissions. If other countries are comfortable with the economics and risk profiles associated with nuclear power is it our business to say they cannot buy our uranium to use in their reactors?�
Haven’t heard that one could you provide a link?
Andrew if I thought that it actually saved CO2 emissions and that we took back the waste for storage I just might consider it. This would incorporate the Cradle To Grave concept after all that is being promoted in Europe for batteries and white goods.
But if you take the whole cycle form Cradle to Grave I think it’s CO2 emissions benefits would not be anywhere near what is being claimed and the huge cost of construction, security and decommission would be better spent on energy efficiency and renewables. Please excuse my skepticism until I learn more about that report.
I’ve also just heard a report that the cost to decommission old UK reactors goes into the billions.
Ok these countries are prepared to bare this cost –I won’t factor in world wide security problem that could impact on us- and risk, is it still OK?
Financially sure, ethically I don’t think so. First while governments may think the risk and cost acceptable often the public are the ones made to suffer the consequences both health and financially.
Next I don’t think it is acceptable to profit from selling that which clearly has many negatives so we can get a short term financial gain while others bare these costs, that they had no need to bare.
Factor in this diverts capital away from new energy sources that don’t have those security decommissioning and waste problems that these tax payers will be paying for years to come.
Basically do I want to profit by causing another community to bare a huge unnecessary financial burden? No
Simonjm,
Can only find it on a google in a speech from Downer. The wording was “Australia’s current uranium exports account for almost 2 per cent of total world electricity and countries using Australian uranium avoid CO2 emissions of the same magnitude as Australia’s own CO2 emissions from all sources.”
He may not be a paragon of truth telling, but being wrong on easily falsifiable scientific data is not common.
On the morality question: I understand your point. My point is, however, provided that community chooses to bear that burden, or feel that this burden is appropriate for them then I cannot see a problem. As I have said before, I also feel that offering a cradle to grave solution would be appropriate – if any country in the world can do it, we can due to our geology and size.
I would also say that any GHG emissions that result from the production, storage, enrichment and any other processes associated with nuclear power would be dwarfed by huge magnitudes by the savings in GHG derived from not buring coal, oil, gas or other fossil fuel.
Katz,
Not much time to write now, but quickly, restrictions on what types of loss are covered in a claim are strictly written into the policy document which is a legal contract. There is no such thing as “normal” insurance. Insurance is whatever the contract says it is. In regards to the type of insurance that is available and what it says about underwriting risk, you have ignored the vast majority of my post, from which you can infer under what circumstances insurers are willing to sell coverage and for what reason those contingencies exist. I suggest you reread.
One of the reasons insurers would not be willing to write insurance is that they are not legally allowed to charge the appropriate amount for the expected value of claims (present value that is) and for the risk premium around that. Another is that this expected value and variability is unknown, and that therefore underwriting it is inconsistent with business practices aimed at keeping one in business. The bottom line is that “risk” is neither one dimensional, nor in all of its dimensions does it account for the nature and extent of insurance coverage available in the insurance market. Sorry Katz, you’ll have to go deeper than that.
PS Insuring nuclear would have been a far more profitable underwriting business than insuring oil tankers in the last 50 years by a few million light years. How to explain that I wonder? Could it be insurance companies don’t like profit?
“The bottom line is that risk is neither one dimensional …”
NOT True.
The bottom line is the last line and it reads: “… be insurance companies don’t like profit?”
gordon,
I hope you know that “nobody” doesn’t seem to include the members of this blog. Or perhaps you’d like to demonstrate how it would be possible to- without increasing nuclear power generation- reduce carbon emissions without reducing global output over any meaningful time horizon (cold water fusion aside). As an aside, it’s better not to take a high-handed tone when you don’t know what you’re talking about.
Speaking of, this just in: you’re having written something does not prohibit its reintroduction to a thread. What are you, the blogger of record? That said, your congruence on the subject does justify a reexamination of my position.
SimonJM,
That cost is factored into CBA’s of nuclear, fyi.
Seeker,
This is why I used the term “global GDP” and not “higher efficiency”. And you fancy I’m the one with the ignorant straw man? Good call. What I would to know is, how- outside of conservation, which is the low-hanging fruit- can power needs be met without increasing carbon emissions, or shrinking the global economy? Nuclear skeptics are unwavering in their ideol… uh, belief that nuclear power is not part of the solution. So, what then? The solution I favor is to use any and all means available including nuclear to the extent it is cost effective, and not to cow-tow to anti-scientific rants of ideologues. I tend not to like these whether they come from the right or the left.
So, someone, anyone, please explain how, a) the cost of substituting massively less cost benefit efficient alternative energy sources for nuclear to meet surplus power needs doesn’t matter much or b) that there is no such difference. Knowing a little on the subject, I should have fun reading answers to b. Perhaps someone will even pick up on that notorious white elephant, wind. In any case, your serve.
Majorajam from what I’m hearing nuclear is only economically feasible if it has huge government subsidies and security decommissioning and waste storage are not factored ina nd in fact taken up by the government and tax payer.
& its not just from sites like http://www.pilgrimwatch.org/economic.html it was only the other night on the 7.30 Report one energy consultant was adamant that without massive subsidies no investor will touch it.
Hard to see given the huge costs of insurance, decommissioning, security, waste transport and storage how it could come out ahead of alternatives.
On decommissioning alone some report has just come out that its going to cost billions to decommission old Uk reactors.
“So, someone, anyone, please explain how, a) the cost of substituting massively less cost benefit efficient alternative energy sources for nuclear to meet surplus power needs doesn’t matter much”
Easy: There is no need for surplus power.
Majorajam
“There is no such thing as “normalâ€? insurance. Insurance is whatever the contract says it is.”
Agreed. Let’s move on.
“In regards to the type of insurance that is available and what it says about underwriting risk, you have ignored the vast majority of my post, from which you can infer under what circumstances insurers are willing to sell coverage and for what reason those contingencies exist. I suggest you reread.”
No I haven’t. The point is that property developers still construct buildings despite the lack of, or expense of, eathquake insurance. They self-insure. The nuclear industry declines to self-insure.
“One of the reasons insurers would not be willing to write insurance is that they are not legally allowed to charge the appropriate amount for the expected value of claims (present value that is) and for the risk premium around that.”
This is a mysterious comment. Are you alleging that this prohibition pertains across the board, or is it specific to only the nuclear industry? If the former, please provide information re the legislation you refer to. If the latter, do you have any non-disingenuous explanation why third party nuclear damages should be indemnified, capped and disperse by legislation for the nuclear industry alone?
“Another is that this expected value and variability is unknown, and that therefore underwriting it is inconsistent with business practices aimed at keeping one in business.”
This is gobbledegookese for “bad risk”.
“The bottom line is that “riskâ€? is neither one dimensional, nor in all of its dimensions does it account for the nature and extent of insurance coverage available in the insurance market.”
No argument here. This has been my point all along. And except for the nuclear industry, unless you come up with that general legislation hinted at above, both insurers and insured arrive at an acceptable balance between risk and coverage without public subscription.
“Sorry Katz, you’ll have to go deeper than that.”
No I don’t, at least not in the direction that you are pointing.
Andrew – “I would also say that any GHG emissions that result from the production, storage, enrichment and any other processes associated with nuclear power would be dwarfed by huge magnitudes by the savings in GHG derived from not buring coal, oil, gas or other fossil fuel.”
However that is not really the point. What other people, including me, are saying is that the same GHG savings can be done at a lower cost, with none of the waste/proliferation issues and faster with other form of generating power like renewables that are far more carbon nuetral than nuclear power.
The Howard government does not need an inquiry to decide that renewable power is not a serious contender however it does set up an inquiry to examine only one of the options. This to most people smacks of a comittee set up to whitewash the already decided direction and that nuclear power will be accepted no matter whether it is economic or not and Australian taxpayers will just have to foot the bill. I, as an Australian taxpayer, do not want to foot the bill for John Howard and his mining mates preconcieved notions and naked self interest.
So here is one person that is really open minded:
“An environmental scientist appointed to the Federal Government’s nuclear task force has defended the safety record of nuclear power and says that, along with uranium enrichment, it can be achieved safely.”
http://www.abc.net.au/news/newsitems/200606/s1658069.htm
So he has already decided, Ziggy is a nuclear scientist and has just resigned from ANSTO – hardly a good start for a open minded comittee that is expected to consider all angles. As far as I know Warwick has no ties to the nuclear industry and seems a good appointment however he can be easily overruled on technical matters as he is an economist.
Perhaps this is the real reason we need nuclear power:
http://www.geocities.com/JIMGREEN3/weapons.html
” The government is extremely keen to maintain Australia’s seat on the Board of Governors of the IAEA. A foreign affairs bureaucrat said in 1993, “(Australia’s) role on the Board of Governors is central to our ability to influence the direction of control within the nuclear industry and the control of nuclear weapons. It is the only body in the world which looks at those issues on a week to week basis and that is fundamental.” (Cousins, 1993.)
The government claims that operating a nuclear research reactor is necessary to shore up the IAEA position. That claim is open for debate, and in any case the position is not put to good use. As nuclear campaigner and researcher Jean McSorley (1996) argues, “It would not be a bad thing if Australia were in there pushing for stricter safeguards, a separation of promotion and watch-dog activities and stringent safety laws. If Australia did that it would, more than likely, lose its Board of Governors seat. So, Australia has to be part of the promotional stakes to keep within the upper echelons of the IAEA.””
So it seems that nuclear power is a foregone conclusion – why muck around wasting money on an inquiry?
On decommissioning, maybe SimonJM is thinking of this report from the UK Sustainable Development Commission, which says in part:
“In April 2005, the Government launched the Nuclear Decommissioning Authority (NDA), to manage the task of cleaning up the contamination left on the sites of the 40 nuclear reactors that have operated in the UK. Very conservatively the costs are estimated at tens of billions of pounds over the coming decades.140 The transfer of assets and liabilities from British Nuclear Fuels (BNFL) to the NDA is considered to remove ‘polluter pays’-type obligations from BNFL. As the State is providing an advantage to a company, the EC considers that it falls into the category of potentially prohibited ‘state aid’. An in-depth inquiry has been instigated.141”
And on contemporary nuclear safety issues, the same report has this juicy little snippet:
“Days after Labour Government officials seemed to be reopening the nuclear door, news emerged of a leak of 20 tonnes of plutonium and uranium dissolved in nitric acid at the Thorp reprocessing plant in Sellafield. Classified on the International Nuclear Event Scale as a ‘serious incident’, it was a poignant reminder of the Windscale reactor fire – whose scale and impact were kept secret from the British public for 25 years – that led to the plant being renamed Sellafield. The contemporary
leak resulted in calls from the EU Commission for tougher safety standards. Soon after, it was reported that the Nuclear Decommissioning Authority wanted Thorp to shut for good. This was due partly to the fact that it was a loss-making operation, and partly because the controversial nature of reprocessing is seen within the industry as a potential barrier to winning the argument for a new generation of reactors.132”
People might be interested in the World Alliance for Distributed Energy (WADE) site here.
The Rocky Mountain Institute library of energy-related downloads is here.
“In other words, fossil fuel users have cross-subsidised nuclear generators”
This kind of claim seems funny to me. Haven’t we all been subsidizing fossil fuels by dumping their wastes into the environment?
And I remember some years back people sounding an alarm over chemical waste from silicon chip manufacturing. Photovoltaics use the same substrate, and would be needed in much larger quantities (square meters per household vs. square centimeters.) And then there’s batteries. I see no reason to believe that nuclear (with waste which is radioactive but also much smaller in quantity) is necessarily more expensive than alternatives. It might be, but I don’t know; I’ve never seen a full cost analysis of nuclear, let alone of alternatives *with full waste accounting*.
Damien,
“I’ve never seen a full cost analysis of nuclear, let alone of alternatives with full waste accounting. ”
There are two possible explanations. Either you have incomplete information or it does not exist.
Whatever the answer to the ‘full waste accounting’ question, it is not the only relevant one. There is the problem of unwanted by-products (negative externalities). ‘Full waste accounting’ is at most a sub-problem of the problem of negative externalities and the difficulties in getting negative externalities ‘internalised’. In commercial terminology, ‘third party insurance’ is relevant here. This item keeps on being edited out so to speak.
Damien:
“This kind of claim seems funny to me. Haven’t we all been subsidizing fossil fuels by dumping their wastes into the environment?”
This may well be true. The trouble is that under existing juridical arrangements it is impossible to make fossil fuel users responsible for the harm done on the global scale. That is because it is almost always impossible to link a specific polluter to specific damage. And one of the reasons for that is that to a certain extent we are all responsible.
But this is not the case were a specific nuclear reactor to blow up. It is possible to be quite specific about the cause of the harm and the cost of the harm. The only outstanding questions would be duty of care and negligence.
Commercial third party insurance companies know these facts. Knowing them, they refuse to touch nuclear reactor business on a commercial basis.
There are three broad approaches to the apparent inconsistency that you mention:
1. Broaden the net of socialisation of costs associated with economic activities to encompass not only nuclear power but an as yet undefined list of economic activities.
[SOCIALISM!]
2. Broaden the definitions of “duty of care” and “harm” under the law of negligence to encompass activities you complain of in relation to fossil fuel users.
[JUDICIAL ACTIVISM!]
3. Be up-front and admit that certain activities are beyond the scope of traditional civil administration. This is the equivalent of declaring martial law to persist over an as yet undefined class of economic activities.
[CORPORATISM!]
So, Katz, the difference between nuclear power and fossil-fueled power is the legal framework in which they operate, not so much the actual harm.
Just checking.
AR,
I trust you are not trying to be deliberately obtuse.
I believe I have shown how the single legal framework treats differently the different kinds of harm done by fossil fuel and nuclear fuels.
This has much to do with the way in which laws governing negligence evolved.
Let’s imagine a highly unlikely counterfactual:
If nuclear generators could smuggle the fallout arising from meltdowns into the background radiation then I imagine that nuclear generators may stand some chance of avoiding responsibility for harm in the same way as fossil fuel users have done.
To make the point quite plain AR. Fossil fuel users and nuclear generators do different kinds of harm. Note that I haven’t made any statement about the relative magnitude of the harms done. This is a different question again.
But even a half-wit can see why that is a forelorn hope.
And insurance companies aren’t run by half-wits. That’s why they cover fossil fuel users but not nuclear generators.
“And insurance companies aren’t run by half-wits.”
No, in some cases those running insurance companies make half-wits look like geniuses. HIH, anyone?
What’s the half-life of a half-wit?
“What’s the half-life of a half-wit?”
Based on the HIH experience, about two and a half years.
How unfortunate that nuclear generators didn’t approach HIH for coverage when Williams et al were being so generous with their shareholders’ funds.
Victoria urges renewable energy focus
The Victorian Government says Australia should invest more in renewable energy, instead of spending money to investigate a nuclear power industry.
Energy Minister Theo Theophanous says Victoria is a step ahead of the Federal Government, and commissioned a study on nuclear power more than a year ago.
He says it found it costs double to produce power from nuclear energy compared with coal.
Mr Theophanous says a nuclear industry is not commercially viable.
“If you’re going to pay double the price why not put in wind farms?” he said.
“Why not use renewable energy, which is even cheaper then nuclear energy?
“It’s a no brainer – go down the path of a nuclear industry which costs twice as much in production of power and also have the long-term problem of what to do with the waste.”
http://www.abc.net.au/news/newsitems/200606/s1655493.htm
Hmmm no surprises there.
The final nail in the pro-nuclear argument
http://gristmill.grist.org/story/2006/6/8/165835/4175
If GW is any indication there can never be a final nail for some. 😉
Just because someone calls it a final nail doesn’t mean it is one.
CANDU reactors don’t need enrichment, so no CFCs. Admittedly, they don’t make full use of the uranium.
The article claims France’s Phenix (a breeder) has been out of operation; in fact it seems to still be going, as it has since 1973.
“Millions of years” storage time seems to be garbage. U-238 is the main thing which lasts that long and something with a 4.5 billion year half-life barely counts as radioactive. Also, it’s “natural”, having come from the ground int he first place; it’s hardly going to ruin the environment. Plutonium has a 20kiloyear half-life but can be burned — that’s not hypothetical, much current power comes from plutonium bred within a reactor. The real problem, the final fission fragments, are said to become less radioactive than the original ore in 500 years, which is what happens to something which is really radioactive.
The article claims 40 year replication time for breeders, which seems rather low compared to the 1.2 breeding ratio I see elsewhere. Ten year doubling time here
http://hyperphysics.phy-astr.gsu.edu/hbase/nucene/fasbre.html
Katz,
This is not the point. The point, reiterated a few times now btw, is that you cannot assess the extent of risk of nuclear accident from the extent of coverage available in the insurance market. You should know that while “risk” will factor largely into that equation, it is only through the interaction of risk and legal and other considerations, that the observed outcome in the insurance market can be explained. This leads to the second point:
I’ll allow that this is mysterious if its lack of grammatical clarity is interpreted as you have interpreted it. In frenetically getting the thing out, I wrote “One of the reasons insurers would not be willing to write insurance is that”, when I actually meant, “One of the reasons insurers would not be willing to write insurance is if“, so my bad notwithstanding the verb “would” as opposed to “are”. In any case, again, this comment regards the interactions of risk and legality, which is a critical determinant of the extent of coverage. Related to that is the culture of liability, which though not on the books or part of the common law is a factor in the risk equation. In the US, this culture has gone past ludicrous speed and is long-since in insane territory (though I am not one of these morons who believe tort is the root of all evil, there are serious problems with the damage award process). This affects the economics of nuclear as well as other services in the economy, notably the health related.
You’re better than that Katz. “bad risk” is the gobbledegookese. “Bad risk” is a term you use when you want to hand wave in a point. What I have said alludes to the two components of the economic cost of policy coverage, which in a competitive market should relate a certain way, (i.e. depending on market levels of risk premia, natural discount rates etc.) to the insurance premium. The problem arises when these two components are not quantifiable, or when regulations on premiums prevent insurance companies from charging appropriately for them. In particular, in the absence of uncertainty about the risks of nuclear, and given the lack of regulations on its pricing, only the logistical issues with a burgeoning insurance market, (e.g. the ‘liquidity’ of the policy liability in the reinsurance market, etc.), would prevent the existence of coverage on nuclear power.
This is disingenuous. Your point all along has been that insurance companies don’t want to underwrite nuclear and that this somehow proves that nuclear is unsafe- a “bad risk”. This point is weak-kneed, ill-supported hand waving which you can either keep trying pass off on the ignorant as bible or do some homework and support- or even perhaps reject- properly. If it’s the latter, I would be happy to hear what you come up with.
PS Damien raises an excellent point. We do subsidize the fossil fuel power industry by letting them emit their waste into the atmosphere, water table, etc. etc. even as regulations about smoke stacks and the like mitigate this free pass. The cost could however easily be passed onto them by fuel taxes, (easily in terms of mechanics of how such a tax would work, not the politics of getting it enacted over the tsunami of misinformation that would be generated in response). In other words, it is worth bearing in mind that subsidies abound in the power industry.
Simonjm,
The site posted contains not one single cost benefit analysis, or even a proper accounting of costs, (i.e. in units of the present value of power generated), but rather arguments about line items. These have their place, but only within the context of a CBA. The fact that the economics of nuclear get no airing on that site is only one of the signs of its remarkably poor standard of analysis. I particularly like the conclusion that nuclear isn’t green because it requires power to construct and decommission plants. Apparently, in such an instance, only coal generated power will do.
Also btw, your comment
can only be described as comical. Hand waving the very shaky economic ground on which ‘other’ alternatives reside, notably wind, is very much up the alley of the site cited, but for those of thus who read a bit here and there, it’s a mighty big motza ball to swallow.
Majorajam,
Nice mixture of flattery and deprecation.
“Your point all along has been that insurance companies don’t want to underwrite nuclear and that this somehow proves that nuclear is unsafe- a “bad riskâ€?.”
Not quite correct.
While perhaps I haven’t denied explicitly the implication that insurance companies don’t want to underwrite the nuclear industry because the nuclear industry is “unsafe”, neither have I ever claimed this to be the case. Dogz’s failure to grasp that point was a matter of amusement for me.
Let me return a little flatery. Your comment:
“What I have said alludes to the two components of the economic cost of policy coverage, which in a competitive market should relate a certain way, (i.e. depending on market levels of risk premia, natural discount rates etc.) to the insurance premium. The problem arises when these two components are not quantifiable, or when regulations on premiums prevent insurance companies from charging appropriately for them. In particular, in the absence of uncertainty about the risks of nuclear, and given the lack of regulations on its pricing, only the logistical issues with a burgeoning insurance market, (e.g. the ‘liquidity’ of the policy liability in the reinsurance market, etc.), would prevent the existence of coverage on nuclear power.”
Is an elegant statement of the case.
Counter-intuitively, perhaps, one of the difficulties is that there is, as you say, an “absence of uncertainty” in regard to the risk profile of the nuclear industry. This is a case of market failure. And note how close in meaning your formulation is to mine:
“insurers and insured [cannot] arrive at an acceptable balance between risk and coverage without public subscription [because both insurers and insured have practically identical expectations about the risks entailed in third party insurance coverage for the nuclear industry].”
Gordon,
Fyi, there’s been another strawman citing on this blog, though I confess I’d rather a straw brain than whatever he’s using.
Katz,
Happy to find someone with which I can have civil discussion. Regarding your point,
This is only a plausible explanation if both sides believe the cost of insuring nuclear to be prohibitive. That may be the case, but it is a pretty difficult to square that view with the empirical evidence, i.e. one representative accident in a half-century. You’d think it would’ve occurred to a profit motive exec in that time that there have been far more claims resulting from policies sold to oil companies than would’ve resulted from insuring nuclear. Perhaps these two actually disagree on the risks, and/or disagree on the approach to mitigating them. This is the paradox of insurance- it increases the likelihood of the insured incident transpiring.
In any case, IMHO, there are several other more likely candidates than the one you posit, including nuclear’s liking its chances at the public trough, and still more likely is a combination of factors. I’m not saying that I know why there isn’t an insurance market for nuclear. I’m only saying that the reasons will require a great deal of diligence to reveal.
Majorajam,
“In any case, IMHO, there are several other more likely candidates than the one you posit, including nuclear’s liking its chances at the public trough, and still more likely is a combination of factors. I’m not saying that I know why there isn’t an insurance market for nuclear. I’m only saying that the reasons will require a great deal of diligence to reveal.”
I mostly agree. This behaviour is mysterious, which is where this conversation began weeks ago.
My point of departure from your explanation for the behaviour of insurance companies in relation to the nuclear industry is that I believe that the consensus about risk is the independent variable that influences all of the other behaviour that you have alluded to.
But as you say, it would require great diligence and more expertise than I have to prove that fact.
Let me conclude by saying this mystery makes me cautious.
Majorajam
Even if that site didn’t others have and the bottom line is that there are substantive subsidies as the consultant on the 7.30 Report said no investor will touch it. Compare that to money being thrown at renewables!
Oh and comical? Really? Coming from a person who made this statement?
“Finally and most importantly, anyone that thinks we can cut carbon emissions globally over an extended horizon only with conservation is kidding themselves. This is similar to a company thinking it grow earnings by cutting costs- works for a short time but is ultimately unsustainable, (at some point, cost cuts require revenue cuts. This point, it turns out, is very short term). So, if your position is that we should shrink global GDP, and with it, the well being of billions, then by all means.�
Who cannot understand the fundamentals of efficiency in you aren’t cutting costs by cutting production but by being more efficient with inputs. Lovins has done plenty of work on the quick payback periods for such investments that lead to future profits. Note the strawman.
Plenty of others would beg to disagree with your unformed position. Do a bit of reading from A Lovins and get back to me.
Energy’s ‘low hanging fruit’
http://news.bbc.co.uk/2/hi/science/nature/4633160.stm
“Without being too flippant, it’s a no-brainerâ€?
well at least for some not biased.
“Hand waving the very shaky economic ground on which ‘other’ alternatives reside, notably wind, is very much up the alley of the site cited, but for those of thus who read a bit here and there, it’s a mighty big motza ball to swallow.�
The Renewable Mix
http://www.worldchanging.com/archives/002705.html
Wave, wind, sun and tide is a powerful mix
Research at Oxford shows how renewables can plug Britain’s energy gap, says Oliver Tickell
http://www.guardian.co.uk/life/opinion/story/0,12981,1481539,00.html?gusrc=rss
Smart Grids, Grid Computing, and the New World of Energyhttp://www.worldchanging.com/archives/002152.html
I suppose you just simply don’t read widely enough. Glad to helped you out.
Simonjm,
Brilliantly babbled. “As the consultant on the 7.30 Report said”. Is that your version of a footnote? Holy man. As regards investment flows, risk and return in this arena tends to be nine parts political and a tenth of a part fundamental. I have a family member in the solar business and they are making money hand over fist because of massive subsidies. If they went away, so would the business.
Who said anything about cutting production. You should try working your brain before your fingers. The point was and remains that cost cutting, or consumption cutting can and should be done for a time (and in fact would if the entire economic cost of power was passed to the users of power) but that it has limits. I would explain to you the concept of deminishing marginal returns, but I have to show some respect for my time.
On to your sources. The BBC piece was a real eye-roller. First indication was actually a point made in favor of nuclear:
Apparently there are all kinds of fossil fuel deposits in Afghanistan. The author ought to pass the word to exploration companies, who’ve apparently not been made aware. In any case, just dropping that in with absolutely no qualification or care shows a cavalier attitude to one’s own credibility. This segues nicely into the tip of an analytical iceberg this study’s conclusions are bound to be sunk by:
Apparently eliminating a massive chunk of the UK capital stock will not affect economic growth much. Could be worth your while to read the fine print though.
The second source is actually an argument against a claim I never made- that the intermittency of non-nuclear alternative power generation is an impediment to its becoming a substantial portion of power generation. It seems you can find links to notionally related material but haven’t quite figured out how to read them yet.
The third source is actually just the second, repackaged. This retort is turning out to be even more underwhelming than I expected. Quite a feat. That said, having had to read two articles on the same thing, a point occurred to me about alternatives, (which nonetheless I continue to like), that echos JQ’s original post. Namely:
To resolve the intermittency issue, the Oxford study recommends a whopping 35% wind generated power which at best is already a notoriously unreliable and inefficient method of generating power. Adding to that, it furthermore recommends dispersion of these generators- to “smooth out the supply curve�- meaning that wind turbines will be taken from areas where wind is strongest, to where less power can be generated. All of which is to say that non-nuclear alternatives can get around “intermittency� and be reasonably efficient, but they cannot do both at the same time.
What do you know? Taking that sad response seriously was not a complete waste after all.
Majorajam pt1
The 7.30 Report was just to illustrate that it is consistent with the general point that the only ones supporting the Nuclear industry are only ones saying it’s economically viable or I suppose those wanting us to sell more Uranium. Let me know when you find one not connected to the lobby that says its economically feasible.
“In the US direct subsidies to nuclear energy total US$115 billion between 1947 and 1999 with a further US$145 billion in indirect subsidies. In contrast subsidies to wind and solar combined during the same period totalled only US$5.5 billion�
31 December 2005 Our nuclear future The Science Show
God what the renewable industry would give to get that sort of support & the subsidies that nuclear continues to need.
BTW is that family member getting ‘massive’ solar living overseas as what I’ve heard about the state of renewable funding and subsidies in Australia is that it was just enough up till now & has been cut and those in the industry may be forced overseas.
http://www.renewableenergyaccess.com/rea/news/story?id=11338
“The point was and remains that cost cutting, or consumption cutting can and should be done for a time (and in fact would if the entire economic cost of power was passed to the users of power)� but that it has limits.
Well I did jump at inputs as I couldn’t fathom where else you could be coming from. As yes there is a point where there is diminishing returns but we are NOWHERE NEAR that point either with industry or the public consumption.
Again efficiency isn’t THE solution but a part of the mix of solutions to see us through the oil and AGW problems, it not only makes economic sense but giving us time to find better energy solutions.
I’m more than happy to see all alternatives on the table including nuclear but I seriously doubt the credibility of any pro-nuc’s/ renewable skeptics who won’t at least support energy/ resource efficiency in the interim as one of the first steps towards a solution.
That one is a no-brainer, sorry you think that’s sad, it really says a lot. If you cannot acknowledge that point alone it’s pointless going on.
Pt2
Regards the BBC source even if you don’t agree with his analysis, don’t be so obtuse, his point being the cost of military force to secure REGIONAL SECURITY to secure oil supplies not to secure oil reserves in Afghanistan.
You have a point on the housing and economic growth but given
“In conducting the analysis of energy demand, Tyndall’s DUK avoided being too prescriptive about desirable end-use technologies. In contrast to a “best practice” approach to legislation, Tyndall’s DUK report favoured a minimum-standard framework, within which, for example, no objection to four-wheel drive cars existed, provided they achieved some minimum fuel economy figure (perhaps 50mpg by 2012)â€?
& that we could do a lot better with a ‘best practice’ approach. Now it can be argued whether this evens up for the other two but to cherry pick without noting this point is disingenuous. Tisk Tisk
Well given all you said was it wasn’t economic OK but a common argument against the economics of renewables is to include the intermittency problem plus I wanted to emphasize the new smart grids. You haven’t given anything of substance to go on you just want to have a free shot.
“whopping 35% wind generated power which at best is already a notoriously unreliable and inefficient method of generating power�
Yes I suppose that why new wind farms are going up overseas all the time, go figure.
BTW Demark is already at 20%
“All of which is to say that non-nuclear alternatives can get around “intermittency� and be reasonably efficient, but they cannot do both at the same time.
Nice attempt at spin. If they do the job & are cost effective when all the true costs of the alternatives are considered, all they have to be is ‘reasonably efficient’ if nothing else is better.
Majorajam asks: “…perhaps you’d like to demonstrate how it would be possible to- without increasing nuclear power generation- reduce carbon emissions without reducing global output over any meaningful time horizon…” Simple. Turn off the telly.
And on the subject of regulation, The Independent (UK newspaper) reports (13/6/06) that the “business-dominated Sustainable Procurement Task”, (apparently not a sex-slave-trafficking outfit) is seeking more, not less, regulation in order that Govt. procurement can be put on a more sustainable basis. The report says:
“Firms that bid for the billions of pounds worth of central or local government contracts say they want to be compelled to recycle more, contribute less to climate change, and avoid trading with suppliers who ignore basic human rights, as long as the same rules apply to their competitors.”
Interested readers need to access the link quickly, as the Independent removes articles from online access after only 2 or 3 days.
For what its worth on consideration I’ve sent an email to the author of that BBC linked study to clarify whether he is truly talking about the whole UK housing stock, how much and who would he expect to pay to get this housing stock energy efficient.
Simonjm,
Let me know when you find someone that says it’s not. So far you have offered only links to tragically poor work by ideologues with nary a reference to economics. Have a gander at the Wikipedia site for example which- citing a study done by MIT in addition to a few others- has nuclear better than twice as efficient as offshore wind, and a bit less than that compared to onshore wind, both figures inclusive of the decommissioning costs of nuclear and assuming no backup capacity required to overcome intermittency. Here in the real world, this type of thing has import.
These numbers are incongruent and misleading and- as is consistent with the remainder of your sources- in all likelihood, intended to be. Subsidies should be stated in terms of kWh produced, not raw dollars. As is, the comparison is tantamount to comparing a World Cup final match to a corporate recreational one. Keep trying.
By the way, I’m American. The subsidies to solar I was referring to are the approximately $36 billion of direct subsidies over ten years that the state of California alone just passed a few months back. This is in addition to the massive tax credits afforded solar investment, the direct subsidies of the federal government and those of other state and local governments, which are non-trivial (e.g. New Jersey). So, right now, they’re not going wanting (to the tune of 95% internal rates of return).
I have said this in this thread more than once, but will reiterate: Reducing emissions to combat AGW absolutely requires massive improvements in efficiency of power use across all users. I am fully on-board with that and believe it to be the most attractive, least painful method of cutting carbon emissions (preferably implemented through large carbon taxes rather than regulation where possible). For one, increased efficiency pays economic dividends that help to offset its costs. For another, it doesn’t require all of the environmental drawbacks associated with producing power of all kinds.
My point though has been power production will ultimately have to be increased over a long enough horizon if we are going to have a growing global economy. What’s more, I think many Greens underestimate this need while the guzzle, drill and burn thickos vastly overestimate it. I hope this clarifies my position.
As regards Afghanistan, it was a stupid remark and that type of carelessness is a huge red flag. Keep in mind the importance of integrity in academic work if one is to ever learn anything without going through every minute detail of every source/proof/experiment, etc. And no, we didn’t go to war in Afghanistan for ‘regional security’ and, via that wry conduit, for oil. We went to war there because people in that country with full support from its government were masterminding, funding and logistically supporting operations including such things as flying planes into buildings. So it was a stupid stupid remark (even though, as I said, it was made in favor of nuclear).
All that said, I don’t pretend to know all there is to know about the validity of the work- noted extreme assumptions notwithstanding. I haven’t read the thing and it’s possible there are some good findings about conservation techniques and the like. However, one thing that can be seen from the BBC article is the graph depicting reductions in emissions. These are massively tilted toward households, which casts some light on the extent of the retrofitting/demolishing assumptions. They are likely to be extreme.
Baloney. My point has always been about efficiency. Renewables are not very efficient and nuclear is much more so. That is a good reason to look at nuclear which, in spite of the present cacophony, can add important attributes to installed power generation. This is not to say that renewables should not have their place. They should, and in all probability, will.
Not spin- point. Alternatives in the mix provided by the Oxford study are actually quite inefficient and it appears they are likely to be even less so given the requirement to overcome intermittency (i.e. the supply curve effect).
Majorajam channels Andrew Reynolds when he says that power conservation should be “…preferably implemented through large carbon taxes rather than regulation where possible.”
I refer Majorajam to my comments of May 31 and June 2. My yesterday’s comment about regulation in the UK is also relevant.
I would add that if cost savings by themselves were sufficient to stimulate power conservation nobody would bother to read books like Lovins’ “Natural Capitalism” because they would already have done all the things he recommends.
Gordon, it may be worth your while to try and learn how the price mechanism works before you make yourself look silly. Rolling back to your opus of the 2nd of June:
This inane question, perhaps the least astute comment I’ve ever come across on this blog, is tantamount to asking whether paying companies to emit carbon into the atmosphere would reduce carbon emissions.
See prior comment.
Here I should point out that the way water restrictions are typically instituted is by charging large penalties for water consumption above a cap, i.e. by tiering or reordering the tiering of the price structure, i.e. by the price mechanism. It turns out there is little difference between that policy and a policy of turning off the spigot after a certain amount of water is used except in that the later is far more difficult for the municipality to implement.
In any case, since there is very little in the way of substance in your comments to discuss, I will insert my own question and answer it. Why institute water rationing with punitive penalties over and above capped consumption rather than blanket price rises to overcome a drought? It turns out there is economic rationale for this, however, the conditions that give rise to this rationale are manifestly opposite to those applicable to carbon emissions. In particular, droughts are transient events which can arise quickly and be relieved just as quickly. As such, they call for responsive temporary adjustments to consumption patterns not policy measures that institute long-term structural changes in those patterns. In other words, they require that people cut back for a time. Now, the effect of a price rise on consumption depends on the good in question and the use it is being put to. For water, there is very high elasticity of demand for some household uses such as drinking, cooking and bathing and very low elasticity of demand for other uses such as watering the garden and washing the car.
This is to say that most of the reduction in the usage of water would be met through reduction in low elasticity activities. So the necessary price increase would be determined mostly by that demand curve. However, a general price rise would target all uses equally and, as such, be needlessly punitive especially for those of lesser means. Capping and penalizing consumption, gets around that problem although it does reduce efficient uses of water over and above the arbitrary cap, and creates problems of gaming the system. In a transient drought, these problems are not significant. Over a longer term horizon, they can be.
Thanks for your input Gordon, it’s been informative.
Majorajam – “Baloney. My point has always been about efficiency. Renewables are not very efficient and nuclear is much more so”
Would you care to elaborate on this? What do you mean renewables are not efficient? The thermal cycle of the nuclear power plant is about 36% efficient as this is the practical limit of steam turbines. Efficiency is not really a problem with renewables as the fuel is free. It comes into play with cost/output ratios however efficiency is paramount in thermal systems.
So why do you say renewables are not efficient?
Ender,
The point is about cost of power in economic terms by cost of input (ideally as comprehensive on this point as possible across all power sources, i.e. apples to apples). Solar PV panels could have a 5% efficiency of converting solar energy into electricity so far as the world cared if the cost to produce a megawatt hour using solar was less than that of competing sources. The problem is that even at over 20% which is more or less where the market is, this is not the case. The problem with wind, wave and solar is that they are far less efficient than nuclear on economic cost- externalities of fossil fuels aside- and benefit alone (as otherwise they would no doubt represent a far greater amount of power generated in the world today).
Majorajam – “The problem with wind, wave and solar is that they are far less efficient than nuclear on economic cost- externalities of fossil fuels aside- and benefit alone (as otherwise they would no doubt represent a far greater amount of power generated in the world today).”
How do you figure this? Efficiency is usually a measure of the ratio of work in/work out. It really cannot be applied to economics. What you are saying is that you think that nuclear power has a lower cost/power output ratio. Most reputable studies show that this is not the case.
What study are you basing this claim on? I posted a study by MIT that showed that nuclear power is at least twice as expensive as coal and 20% more expensive than wind in 2003 which has since improved.
CSIRO also thinks that nuclear is one of the most expensive sources of energy. See this report: ‘Energy Transport Sector Outlook 2020’, available on this page: http://www.det.csiro.au
Majorajam says: “Gordon, it may be worth your while to try and learn how the price mechanism works before you make yourself look silly.” But Majorajam has got the definition of price elasticity exactly backwards. He/she says: “For water, there is very high elasticity of demand for some household uses such as drinking, cooking and bathing and very low elasticity of demand for other uses such as watering the garden and washing the car.” Oh, dear!
The only issue of those I raised in my earlier comments which Majorajam addresses is that of rationing by regulation; his/her response is that rationing is really only a special kind of price rise (because it is enforced by fines) designed to fall on less essential uses of the scarce good. He/she says that such means are only used temporarily, implying that rationing is not a long-term solution to a shortage of non-fossil power. It is a good point, but relies on the fact that water (my example) is a necessity. Necessities in short supply are rationed; luxuries are distributed by price. We don’t respond to a caviare shortage by rationing, but we do respond that way to a water shortage. That there are no permanent rationing systems reflects the happy fact that in general necessities in Australia are plentiful. When this ceases, we will see longer-term rationing, though I hope that the “long-term structural changes” Majorajam anticipates would eventually remove the necessity.
I hope Majorajam hasn’t finished yet, because most of what I earlier commented hasn’t been addressed, except by calling me names. Does he, for example, agree with me that a permit system (Andrew Reynolds’ suggestion) equates to a price rise?
The Online Opinion article Nuclear power: not green, clean or cheap” by Richard Diesendorf may be of interest.
Thank you Majorajam at least for clarifying your position on energy efficiency.
Idealogues? Well it is easy to say someone is an ideologue if they just oppose nuclear or that at least some of the reason the US is in Iraq is because of oil; what a loopy proposition after all!!
Nice throw away line to use when you don’t have something substantive to say.
While I think there is bias coming from the nuclear lobby I give them the curtsey of input into the debate. Coming out, mocking and getting personal, to attack the common stance of the opposition that they doubt the cost effectiveness of nuclear when you include all the factors doesn’t add anything to the debate. Let the facts will speak for themselves. If you welcome people getting personal against you in debates fine, others don’t appreciate it.
Quality of links? Well given that you have decided that you don’t need to support with links is a bit rich. Sorry the earlier Dr Mark Diesendorf, Institute of Environmental Studies, UNSW & the Tyndall Centre didn’t meet your approval but I doubt any would. Looking at their partners at the Tyndall Center you can see they are just connected with loopy green lefties anyway http://www.tyndall.ac.uk/general/collab_inst.shtmlnd.
The author did send me a quick email & hope one of his colleagues connected with Lower Carbon Futures The 40% House Project http://www.eci.ox.ac.uk/lowercf/40house.html will provide info on the details of how feasible getting the public housing sector energy efficient really is. So you found the fine print how about we give them the curtsey of backing it up or at least look at their details?
As far a PR & methodology I would have preferred some % of housing + increase of best practice used so not to give skeptics like your-self free shots.
Regarding subsidies going by kWh is hardly sufficient, surely you have to consider other costs to do with the development and life cycle of the power source. In a similar way it is valid to compare the waste and safety record of coal to nuclear which is often highlighted by nuc supporters.
This goes for efficiency as well; but as other have picked up not sure on what basis you think this again no links. Regardless this is NOT the only factor in this debate, given your raising of diminishing returns one would have thought you would acknowledge this.
Ender,
I don’t suppose you studied economics. In any case, you should know that ‘efficiency’ is very prominent in the economic cannon to say the least (that the words efficient and economical are practically synonyms should be a tip off).
Perhaps you missed it, but the MIT study did not look at the economics of wind. Not sure what you’re selling, but I’m not buying. The fact is that any study not set out to find otherwise (i.e. incorporating ill-founded unfavorable assumptions) will show that wind is far less economical than nuclear power (not that technology cannot change that, but I am skeptical). One such is that cited on Wikipedia (A 2004 UK Royal Academy of Engineering report)- which by the way you will find under the heading “economics”- having nukes better than twice as efficient as the average of off- and on-shore wind not even counting the requirement for back-up generation capacity to overcome intermittency. Not exactly a bridge-too-far.
The MIT study you cite compared nuclear to coal and gas and found that under no circumstances is it cheaper which I frankly find unsurprising, especially considering capital intensivity and the higher cost of capital. The economic attractiveness of gas btw, is declining quite rapidly and I suspect will continue to do so. MIT did point out that many plausible enhancements to the technology and business environment could make nuclear very competitive to coal. They also cited this story:
“The Finnish parliament in May 2002 approved construction of a new nuclear power plant by the electric utility Teollisuuden Voima Oy (TVO), based in part on the economic analysis of generation options by Risto Tarjanne of the Lappeenranta University of Technology, Finland. A fifth nuclear unit is seen as the superior generation choice to limit imports of Russian natural gas, allow Finland to meet Kyoto Protocol commitments, and guarantee cheap electric power to the Finnish industry. It is important to note that TVO is a nonprofit company that provides electricity to its industrial shareholders at cost, effectively providing a long-term power purchase agreement not likely available to plant owners in a competitive environment.
The economic analysis supporting the decision to build a fifth nuclear reactor compares the economics of a new nuclear plant to a pulverized coal plant, a combined-cycle gas turbine plant, and a peat-fired plant. Low nuclear construction and operating costs, high plant performance, and a 5% real discount rate contributed to nuclear power being the superior choice. The study assumed an initial nuclear investment cost of 1,749 euros/kWe, including interest during construction, and a five year construction period. Using an exchange rate of 1.0 euro / U.S. dollar and inflating to 2002 dollars, the total construction cost used in the analysis is roughly $1,830/kWe, implying an overnight cost of about $1,600/kWe.”
Which is hardly an endorsement of wind as a way around carbon emissions. The long and the short of it is wind has many advantages especially as regards emissions and waste, but it is a maintenance nightmare and highly intermittent. It is a part of a solution to reduce carbon emissions, however, a far smaller part than Greens seem willing to accept.
Gordon,
Indeed, I wrote elastic and meant inelastic. You should thank me as you seem to be satisfied for the cover it provided to dodge my comments. Don’t mention it.
If by a permit system you refer to cap and trade, then I think that it is similar to a price rise, but that it is a different and IMO less desirable way to implement said. The nice thing about a carbon tax is that it goes to all uses of carbon emissions- different forms of transportation, power generation etc. There is a massive extent to which these things can serve as substitutes and ‘cap and trade’ doesn’t lend itself well to all. That said, I admit to not having done the work to show what a complete system of policies would look like and cap and trade may have a role to play.
As regards whether I’m finished or not, I think I am. A carbon tax is as I see it the best way to encourage both conservation of power and substitution of power generation in a way that minimizes the net loss to society of the free power. The types of strategies I think are highly inefficient are those that target standards, for example fuel standards for cars, as rob the market of the ability to make trade-offs which is a rather necessary part of the beast. If you think a carbon tax is not efficient, than please construct an argument to that effect and I will respond to it.
PS The notable thing about water as compared to fossil fuels is not that it is a necessity, but rather that there are few substitutes (there are some in certain uses, but you can’t water a plant with iodine). That imparts differences on the appropriate policy measures.