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William O'Keefe
CEO, George C. Marshall Institute

William O'Keefe

William O'Keefe is CEO at the George C. Marshall Institute, a think tank that promotes better use of science in public policy. He is a former COO at the American Petroleum Institute. ALL POSTS

Avoid subsidies as incentive

The promise of nuclear energy is like the horizon, it recedes as it is approached. Proposals to move rapidly from fossil energy for electric power generation to low and no carbon power are predicated on a resurgence of the nuclear option and renewables becoming commercially competitive. It is hard to see either happening any time soon.

EIA projects 10 new nuclear facilities between now and 2030; others pushing cap-and-trade legislation are even more optimistic. Achieving even the most moderate goal seems out of reach. Since early in this decade, it has been clear that the demand for electric power was going to be significant and that meeting that demand while reducing carbon dioxide emissions would require additional emphasis on nuclear. Success in moving in that direction has been slow at best.

Today, nuclear energy is somewhere between 25 and 50 percent more expensive than conventional electric power. With demand currently falling and the prospects for robust economic recovery slight, there are no incentives for private firms to step up investments in nuclear power. The nuclear power industry is calling for very large subsidies ($100 billion) to make the contributions assumed in the House climate bill and the proposed Kerry-Boxer legislation. This call for is on top of the large subsidies already provided by Congress.

If the private sector can not provide or obtain from capital markets the funds needed to expand nuclear power, market forces are sending a strong signal about its prospects. And, it is not a positive one. Loan guarantees are a slippery slope as recent history demonstrates.

The current state of play is unfortunate because we should be aggressively pursuing nuclear power to meet a larger proportion of our electric power needs which are expected to increase between 26 and 36 percent by 2030. Cost is just one barrier; permitting delays. Public resistance remains high as does the risk of litigation. And, even if these obstacles went away, what would happen to nuclear waste? Waste disposal has been studied to death and yet the government dithers instead of acting.

The French provide most of their electricity from nuclear power. They pursue nuclear power as national policy and use standardized designs. We lack both. Congress and the Administration could change this situation but it would take political courage and leadership, qualities that are not in large supply in Washington. While I support actions that would spur greater investment in nuclear, I do not support extensive subsidization. A few years ago, draft energy legislation would have provided limited loan guarantees to jump start investment in new nuclear facilities. That led to a lobbying frenzy that expanded loan guarantees unreasonably. Climate legislation is already too infected by rent seekers. Enough is enough.

By William O'Keefe  |  October 28, 2009; 7:55 AM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg     Del.icio.us   StumbleUpon   Technorati  
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Nuclear power is more expensive than fossil fuel power because many more of the externalities are priced into the cost of nuclear power. Environmental concerns such as containment, radiological controls, and the legal costs to prove that these are adequate drive up the price of nuclear plants.

Fossil fuel power puts significant amounts of carbon into the environment without any consumers paying for this externality (at least monetarily). That is why fossil fuel is cheaper. That is why we need legislation to level the playing field and price externalities into the cost of fossil energy, just as they are already priced into nuclear energy in the form of higher kW/hour costs. This could be done with a carbon tax.

Posted by: opusdpenguin | October 31, 2009 8:08 PM
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There should be more research into small scale nuclear reactors. Small and recyclable 'sealed' reactors with a support industry, like propane, for home and business use, could evolve into a major 'jobs' industry. There are solutions for all of nuclear power problems, all of which must begin with public support. PR has been horrible for the industry, with no counter argument or educational attempts to repair the bad image of 'nukes'. Small scale reactors may be more economical and safer due to the lower energy requirements at the customer site. Surplus energy could be net metered. Consolidation of the production of energy is not always the most efficient or desirable, unless your a big company looking for big profits, and subsidies. Subsidize research and construction of small installations, not large ones, which have proven to be all round energy providing failures, when measured against all current requirements.

Posted by: Mugwamp | October 31, 2009 10:55 AM
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