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September 9, 2008

Conservatives Love Nuclear Energy, But Their Vaunted Free Market Does Not


There are a few things that nuclear energy has been over the last 50 years. It has been comparatively clean. It has been safe. It has been reliable.


On the other hand, there is something that nuclear power hasn’t been, which is an attractive investment for private capital. That, not hairy-arm-pitted environmentalists, is why nuclear energy went cold soon after Three Mile Island, not because of the incident itself. If environmental concerns and safety issues were all that were necessary to derail an entire industry, the nation would not today be dependent on coal energy, what with its high-profile links to pollution and global warming, and high-profile disasters getting it out of the ground.


John McCain wants to build 45 new nuclear power plants. Barack Obama says he supports nuclear energy as a part of the nation’s overall approach to energy. OK, fine, for starters, let’s figure out how to get the necessary capital to invest in nuclear energy.


Nuclear energy today has its strongest support among conservatives, who’ve latched onto it presumably because after two decades of being wrong about global warming and the costs of a fossil fuel-based economy, nuclear gets them a foot back into the door. Many talk glowingly out of one side of their mouths about the glories of the market, which separates the men from the boys through competition, where the best wins out – if only government would get out of the way. From the other side of the mouth comes talk about nuclear energy, and they point to France as a model of how to do nuclear right.


The problem is that France, like most countries, doesn’t operate its utilities based on the free market. The French – heavily influenced by a bonafide communist shortly after World War II – nationalized their utilities and picked nuclear energy decades ago as a winner in the marketplace. Today, the French stand as a thorny example of how it’s not always best to let the marketplace pick winners and losers. While the French lead the world in nuclear research, the United States struggles with next-generation reactors. Today, because the French emphasized nuclear energy long, long ago, American free market conservatives are pointing to what in this country would be derided as an unacceptable, un-American act of socialism as the model of how to do things.


Nationalizing their utilities provided the French with a solution to what in our market-based system has long kept nuclear power down. How to attract the necessary investment capital.


At question, really, is risk, and not physical risk. Waste and protecting the facilities from terrorists are hurdles that could be overcome. In fact, conservatives again point to the – in their parlance – socialistic France for a solution to the issue of waste, recycling most of it and burying what remains encased in glass deep underground.


It’s paper risk that prompted the long dormancy of the nuclear industry. It flamed out in the 1970s because of design changes, extended construction periods and considerable cost overruns. The market, naturally, reacted very negatively to this and decided that coal and natural gas would be a better investment, in part because the risk for those comes after construction. For nuclear energy, where plants were derailed mid-construction by a loss of financial incentive and regulatory uncertainty, the risk exists entirely during the construction phase.


What’s changed? Well, for starters, the nuclear industry says it has. It says that it will lower construction costs and minimize design flaws by adopting standardized designs, and that it is researching things like pebble bed reactors from South Africa and ways to recycle uranium into additional fuel.


We’ll see. This year, the Wall Street Journal reported that nuclear operators have revised costs for building new plants dramatically upward. Much of that is associated with rising costs in every construction-intensive industry, but that doesn’t make nuclear any more competitive.


The nuclear industry says it’s learned from its failures and changed. The question is whether it’s wise to take a blind leap of faith on those promises.


© 2008 North Star Writers Group. May not be republished without permission.


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