The Nuclear Gamble:
Neoclassical and Ecological Economic Arguments, Including Consideration for
Global Warming and Sustainability
University of Waterloo
Department of Environment and Resource Studies
ERS 490: Honours Thesis
Submitted by:
Dave Campanella
20098933
May 3, 2007
Submitted to:
Professor Jennifer Clapp
1
Article I.
Acknowledgements
I would like to express my sincerest gratitude to my thesis advisor, Professor
Jennifer Clapp, for her extraordinary guidance, generosity, and patience.
2
TABLE OF CONTENTS
Page
1. Introduction
1.1 Rationale
1.2 Thesis Outline
1
1
2
2. Overview of Nuclear Industry
4
3. Major Issues Surrounding Nuclear Energy
3.1 Nuclear Market
3.1.1 Investor Uncertainties
3.1.2 Government Assistance
3.2 Fuel Supply
3.3 Nuclear Waste
3.4 Carbon Dioxide Emissions
3.5 Safety
3.6 Nuclear Weapons Proliferation
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9
9
12
15
21
24
26
28
4. Economic Concepts
4.1 Growth
4.2 Capital
4.3 Technology
4.4 Externalities
4.5 Efficiency
4.6 Ethics
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31
34
36
37
39
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5. Economic Analyses of Nuclear Energy
5.1 Neoclassical Economics
5.2 Ecological Economics
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42
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6. Major Current Energy Policy Issues
6.1 Global Warming
6.2 Sustainability
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53
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7. Conclusion
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8. Bibliography
67
3
LIST OF FIGURES
Page
Figure 1. Global breakdown of Nuclear Energy Production by Country in 2003
5
Figure 2. Development of World Nuclear Power Industry in numbers of
reactors and GWe, from 1956 to October 21, 2004 Global breakdown of
Nuclear Energy Production by Country in 2003
7
Figure 3. Distribution of Reactors Operating in the World as of October 2004
8
Figure 4. Age Distribution of Shutdown Nuclear Reactors in the World as of
August 31, 2004 and the Mean age of Shutdown
8
Figure 5. R&D expenditures of IEA governments from 1992 to 2005
13
Figure 6. Fast-Breeder technology design
16
Figure 7. Energy timeline of a typical nuclear reactor
25
Figure 8. Graph depicting MU and MDU with increasing production and
consumption
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Figure 9. Energy costs and gains of nuclear energy
54
Figure 10. Distribution of uranium deposits among major geological reservoirs
according to concentration
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Figure 11. Declining fraction of net energy received from nuclear power as the
ore grade of uranium used falls
57
4
The Nuclear Gamble: Neoclassical and Ecological Economic Arguments, Including
Consideration for Global Warming and Sustainability
1.0 Introduction
1.1 Rationale
Where the world will derive its energy from in the future is a very complex issue
about which experts have been speculating for decades. Major components of the global
energy system have recently become much less viable: coal has become increasingly
politically-unacceptable in the face of global warming concerns and the security of a
continuous supply of oil and natural gas has become questionable with the current
political instability in the Middle East. As of yet, there is no 'perfect' energy source that
is clean, safe, cheap, and abundant. Many, however, believe nuclear energy is the
answer. The Canadian Nuclear Association (CNA) has taken to promoting the industry to
the public through a series of promotional TV ads, in which CNA claims nuclear power
to be clean, reliable, and affordable. In 1954, the Chairman of the US Atomic Energy
Commission (AEC) famously quoted the potential of nuclear power as being able to
supply energy “too cheap to meter” (Smith, 2006a). Nuclear advocates also assert that
the industry has a minimal environmental impact and a potentially limitless supply of
fuel. Given the current geopolitical climate, and the huge investments directed toward
nuclear technologies coming from the booming economies of China and India, it would
appear that the world could be on the verge of a nuclear renaissance.
In this context it is important to probe the true motivations supporting nuclear
power. Can the industry truly be considered an economically viable energy source into
5
the future? How does nuclear power fit into the broader context of energy policy
questions concerning sustainability and global warming?
1.2 Thesis Outline
The purpose of this thesis is to examine the question of whether nuclear power is
in fact economically viable. If it can be argued that the economics does not support
nuclear power, then the ambitions for continuing the industry must lie elsewhere. In the
undertaking of the economic analysis, this thesis will apply two widely differing schools
of thought: neoclassical economics (NCE) and ecological economics (EE), to perform a
comparative and interpretive analysis of nuclear power. NCE dominates current
economic discourse, both academically and in policy making. It is based on a number of
assumptions, including the need for and possibility of continual economic growth, and
primarily focuses on ensuring an efficient allocation of resources via a freely operating
market mechanism. EE is a relatively young field of study that emerged as a critique of
NCE and some of its fundamental assumptions. While agreeing with NCE about the need
for an efficient allocation of resources, EE argues that the overriding concerns of the
economy should be sustainable scale and a just distribution of resources.
It is important to employ these two different approaches to economics in
undertaking this analysis because they employ two very different sets of assumptions.
Thus, to be complete, a full economic analysis must consider both approaches. The
thesis starts by outlining the major issues of nuclear power under debate in academic
literature: the nuclear market, fuel supply, waste, CO2 emissions, safety, and nuclear
weapons proliferation. Next, NCE and EE are compared with regard their approach to
6
key economic concepts, including growth, capital, technology, externalities, efficiency,
and ethics. The information of the previous two sections is then combined in order to
evaluate the economics of nuclear power using the theories of NCE and EE. Lastly, two
main energy policy considerations, global warming and sustainability, are included in the
analysis in order to determine the extent to which nuclear power fits the criteria. In
conclusion, I will argue that since neither of the economic theories provides a wholly
favourable view of nuclear power, and because nuclear fails to meet the criteria of major
policy considerations, the support for nuclear power witnessed in recent years must
primarily be politically motivated. A few hypotheses regarding these motivations will
subsequently be provided.
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2.0 Overview of Nuclear Industry
Nuclear energy is founded on the nuclear fission reaction, in which heat and other
by-products are released when the nucleus of an atom absorbs an additional neutron,
causing the atom to split apart. In fact, this is the same reaction that occurs in a nuclear
weapon, the difference being that a nuclear reactor controls the reaction and focuses the
heat released towards boiling water, which produces steam that drives a steam turbine.
There are several different reactor designs in the world, based on the type of moderator
used to control the nuclear reaction. The most common reactor type in use in the world is
the Light-Water reactor (LWR), whose design is rooted in US naval development
research on powering submarines (Vogt, 2004). LWRs use a natural water moderator
and require natural uranium, the uranium mined from the earth, to be enriched in order to
increase the relative abundance of the fissile uranium-235 atom from its common
occurrence of 0.7 per cent, to approximately 3-5 per cent (Walters, 2004). Canada has
designed its own reactor called the Canadian Deuterium Uranium (CANDU) that uses a
heavy-water moderator, and can run on a supply of natural uranium, which consists of
99.3% non-fissile uranium-238 (Walters, 2004). The infamous Chernobyl reactor in
Ukraine used a graphite-moderator, and such technology is limited to Russia (Jaccard,
2005).
There are 442 nuclear reactors online today, with the largest number, 104,
operating in the US (Uranium Information Centre (UIC), 2007). Nuclear energy provides
approximately 16 per cent, 2 500 TWh, of the world’s electricity (Jaccard, 2005) and is
limited to only a handful of countries: 30, including 7 ex-Soviet Union countries (UIC,
2007). As a percentage of national electricity generation, France is the highest with 79
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per cent of its electricity generated by nuclear reactors, while the US is 19 per cent and
Canada is 15 per cent (Reyes & King, 2004). The total production of nuclear energy is
highly concentrated among wealthy countries: US, 780 TWh; France, 430 TWh; Japan,
280 TWh; and Germany, 154 TWh (UIC, 2007), with industrialized countries as a whole
accounting for about 80 per cent of the nuclear capacity (Jaccard, 2005). The global
breakdown of nuclear energy in the world is illustrated below in Figure 1.
Figure 1. Global breakdown of Nuclear Energy Production by Country in 2003. (Schneider &
Froggatt, 2004).
The basic science which led to the development of nuclear technology was carried
out in Europe throughout the early decades of the twentieth century. By 1930,
projections of nuclear power’s future prominence were already being made. At the
World Power Conference of that year in Berlin, Sir Arthur Eddington told the audience “I
am going to tantalize you with a vision of vast supplies of energy far surpassing the
wildest desires of the engineer - resources so illimitable that the idea of fuel economy is
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not to be thought of” (Reyes & King, 2004). By 1938, the accumulation of knowledge
about radioactive elements led to the first controlled fission reaction (Podobnik, 2006).
Shortly afterwards, the US began its notorious Manhattan Project, which resulted in the
development of the atomic bomb and its subsequent detonation in 1945 at Hiroshima and
Nagasaki, Japan. Just one year later, the US created the Atomic Energy Commission and
sanctioned the construction of civilian nuclear reactors (Podobnik, 2006).
It was clear that the US had lost its monopoly on nuclear technology in 1949
when the Soviet Union detonated its own atomic bomb. The US response to spread
nuclear technologies to key allies in Western Europe and East Asia was captured by
President Eisenhower’s famous “Atoms for Peace” speech, in which he claimed that
nuclear power would solve humanity’s energy difficulties by the end of the century
(Podobnik, 2006). Britian, France, West Germany, and Japan all had established civilian
nuclear energy programs with assistance from the US by the 1960s, while the Soviet
Union mimicked American tactics and spread its nuclear technology to Czechoslovakia,
East Germany, Poland, Romania, Bulgaria, and Hungary (Podobnik, 2006).
By the mid-1980s, nuclear power had become a significant source of electricity in
these regions, with US generating capacity reaching a high of 530 TWh in 1989
(Podobnik, 2006). However, with the high-profile nuclear accidents at Three Mile Island
in 1979 and Chernobyl in 1986, public acceptability of nuclear power plummeted
(Podobnik, 2006). After decades of strong government support, massive public
resistance to nuclear power reduced investment in the industry and substantially slowed
its growth (Podobnik, 2006). Global aggregate electricity production from nuclear
10
reactors peaked in 2002, after a steady and significant decline in the growth rate since the
late 1980s, which can be seen in Figure 2 below.
Figure 2. Development of World Nuclear Power Industry in numbers of reactors and GWe, from
1956 to October 21, 2004 Global breakdown of Nuclear Energy Production by Country in 2003.
(Schneider & Froggatt, 2004)
The global average age of a reactor in 2004 was 21 years, which also roughly
corresponds with the global mean of the age at which a reactor is shutdown, as can be
seen below in Figures 3 and 4.
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Figure 3. Distribution of Reactors Operating in the World as of October 2004 (Schneider & Froggatt,
2004)
Figure 4. Age Distribution of Shutdown Nuclear Reactors in the World as of August 31, 2004 and the
Mean age of Shutdown (Schneider & Froggatt, 2004).
These three graphs combine to illustrate that the industry went through a
remarkable growth phase from the mid-1950s to the early 1980s, where the growth
slowed to the point where today the average age of a reactor is older than the average age
a reactor is shutdown.
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3.0 Major Issues Surrounding Nuclear Energy
The following section outlines some of the major issues currently under debate
over the suitability of nuclear energy. Each issue framed below impacts the economics of
the nuclear industry. In order to undertake a thorough economic analysis of nuclear
energy, it is important to first detail some of the problems and concerns surrounding the
nuclear energy option.
3.1 Nuclear Market
3.1.1 Investor Uncertainties
Since the birth of the commercial nuclear power industry in the 1950s, the private
sector has shown to be hesitant in committing investment capital (Podobnik, 2006).
Building a nuclear reactor is a massive, material and capital intensive undertaking, with a
construction period averaging 10 years (Hughes, 2006a; Storm van Leewen, 2006a).
Privately financing a new reactor requires a large amount of capital to be acquired
upfront amid a number of uncertainties that make the investment risky. The planning and
construction of new reactors are vulnerable to being significantly delayed due to political
or social opposition, a costly occurrence that adds significantly to the capital expenditure
due to the prolonging of the loan incurred for construction (Giles, 2006). Local
opposition to the building of nuclear reactors has shown to be quite strong, as a large
majority of people strongly oppose reactors being built within 25 miles of their home
(Ansolabehere et al., 2003).
Combined with the technical complexity of nuclear reactors, final construction costs
are notorious for being much higher than estimated. In Ontario, the construction of the
13
province’s five nuclear reactors: Pickering A, Pickering B, Bruce A, Bruce B, and
Darlington, all exceeded their estimated capital costs from a low of 40 per cent over, to a
high of 270 per cent (Winfield, Jamison, Wong, & Czajkowski, 2006) . In the US, cost
overruns on nuclear reactor construction projects in the 1980s went as high as 700 per
cent (Public Citizen, 2001). Hoping to assuage these fears of investors, the US Energy
Policy Act offered energy companies $500 million of coverage for losses due to
construction delays, but investors still remain skeptical (Giles, 2006).
Upon completion, the profits from a nuclear plant are dependent on the amount of
electricity supplied and the price at which it is sold. The dynamics of the energy market
can be critically different than the projections made when deciding to build a nuclear
reactor, since energy supplies with shorter construction periods could have been built and
absorbed any excess supply (Lovins, 2005). To add to the uncertainty, capacity at which
a reactor will eventually operate is unpredictable, and actually often lower than predicted
due to unforeseen technical issues. In Ontario, the nuclear fleet was forecasted to operate
at 85-90 per cent capacity, but today is actually only operating at around 50 per cent
capacity, largely due to unexpected performance and maintenance problems (Winfield et
al., 2006). Some technical problems with reactors have been so severe that they have
required major refurbishments or even premature shutdowns, significantly reducing
projected revenues. Reactors designed to have operational lifetimes around 40 years
have required massive investments in structural overhauls after only 25 years, and these
too went over budget (Winfield et al., 2006). With less electricity to sell, and thus lower
revenues, the rate of return on the initial capital investment can be prolonged
significantly, if not eliminated altogether.
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Additionally, the uneasy public sentiment towards nuclear power creates a precarious
regulatory climate that could potentially manifest in harsh regulations that might
jeopardize the expected profits from a reactor. After financing the construction of a
reactor, power companies may, for instance, find themselves subject to a new
government tax or initiative that levies additional costs on the sale of nuclear energy.
For these reasons, private investment in the nuclear industry involves heavy initial
costs amid large uncertainties. Such an investment scenario has led most investors to
conclude that the risk is simply not worth the reward (Kidd, 2005). This has contributed
to the global stagnation and likely decline of the nuclear industry: worldwide, less than
ten per cent of the capacity, and less than one per cent of the new orders, officially
forecasted roughly thirty years ago have actually been realized (Lovins, 2005); in
Western Europe and North America, which is home to roughly two-thirds of global
nuclear capacity, no orders outside of France were placed in the last two decades of the
twentieth century; and, no new reactor has been built in the US in more than a quarter
century (International Atomic Energy Agency (IAEA), 2004; Smil, 2003). The limited
investment in the nuclear industry is also illustrated by the average age of the global
nuclear fleet being above the average age a reactor is shutdown (Schneider & Froggatt,
2004). Government investment has also declined recently, which would also have
contributed to the declining growth rate of the nuclear industry (International Energy
Agency, 2006; World Nuclear Association (WNA)). However, according to a report by
the World Nuclear Association, new polls show that nuclear power is regaining public
support worldwide, which may serve to improve future investment scenarios (WNA).
15
But without significant and rapid investment in new nuclear growth, the industry is set to
follow a path of slow demise (Smil, 2003).
3.1.2 Government Assistance
Initially adapting nuclear technology from weapons to commercial electricity
generation was an expensive job, and the US government was highly involved. From
1947 to 1999, the US government subsidized the nuclear industry to an estimated total of
over $115 billion (Podobnik, 2006). This is a staggering amount, especially when
compared to only $5.7 billion in support for solar and wind during the same period
(Podobnik, 2006). Governments worldwide have also been extremely influential in
supporting the future of the industry: from 1980-1990, the members of the International
Energy Agency1 (IEA) spent $74 billion dollars on civilian nuclear power research, over
60 per cent of the countries’ total energy-related R&D budgets (Podobnik, 2006).
Nuclear has continued to receive the majority of IEA government R&D energy
investments, although it has declined slightly, as evident in Figure 5 below.
1
As of 2007, the 26 member governments of the IEA included: Australia, Austria,
Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Japan, Republic of Korea, Luxembourg, The Netherlands, New
Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, and
the United States
16
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Figure 5. R&D expenditures of IEA governments in US$ from 1992 to 2005 (IEA, 2006)
Recently, the governments of the EU, Japan, US, Russia, South Korea, India, and
China have committed a sum of $13 billion over 30 years to support further R&D in the
nuclear industry (Walter, 2006). Clearly, government investment in energy systems has
been predominantly focused in the nuclear industry, as opposed to other forms of energy
production such as wind, solar, hydro, or even energy efficiency.
In order to encourage the development and acceptance of the nuclear industry,
governments have resorted to forms of indirect subsidies. One such form of the subsidy,
the US government offering coverage for construction delays of reactors, was mentioned
earlier, but it is also common for governments to accept responsibility for the waste
17
generated by the nuclear industry. By not having to account for the additional costs such
responsibility demands, this can act as an indirect subsidy towards the nuclear industry.
In Canada, nuclear waste is the property of the Ministry of Natural Resources; in the US
it belongs to the Department of Energy; and in France nuclear waste is governed by the
French National Agency for Radioactive Waste Management. The total cost of the final
disposal of nuclear waste, including spent nuclear fuel (SNF) and high-level waste
(HLW), is largely unknown, since no final disposal of SNF or HLW has ever been
performed. However, large sums have been invested by these government agencies in
planning and investing in possible disposal methods. In the US, the current DOE’s
Yucca Mountain project has already cost an estimated $9 billion dollars after two decades
of effort, yet is still unlikely to be operational in the next decade (Smil, 2003).
Some Western governments have also indirectly subsidized the nuclear industry
through the regulation of the insurance market, as standard insurance policies have
proven to be incompatible with the industry. Although the risk of a catastrophic accident
is relatively minimal, the costs of such an incident would be gigantic, a risk no insurance
company is willing to take unless at premiums that are so high as to be unacceptable to
nuclear utilities (Rothwell, 2002). This failure of the insurance market led the US
government to pass the Price-Anderson Act in 1957 to assure investors in the industry by
limiting their liability, and Canada later followed suit in 1976 by enacting the Nuclear
Liability Act. In the US, the legislation has meant that reactor owners must acquire $300
million insurance coverage from a private insurer, of which one American company
provides the entire fleets’ coverage, and additional insurance premiums must only be paid
retrospectively in the case of a nuclear accident that exceeds $300 million in damages
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(Public Citizen, 2004; Rothwell, 2002). These retrospective payments cannot surpass
roughly $95 million per reactor, meaning that in total the insurance pool provided by
private interests is approximately $10 billion (Public Citizen, 2004; Rothwell, 2002). In
Canada, the Nuclear Liability Act limits the reactor owners to $75 million, and exempts
manufacturers of reactor components from any possible liability (Heyes & Heyes, 2000).
Meanwhile, Chernobyl has cost the nations of Russia, Ukraine, and Belarus over $350
billion, and the US Nuclear Regulatory Commission estimated that a severe nuclear
accident would cost $314 billion, in 1982 dollars (Public Citizen, 2004). These
regulations amount to an indirect subsidy to the nuclear industry because they conceal the
inherent risk involved in the energy production that would otherwise have to be
accounted for by the industry.
3.2 Fuel Supply
The supply of uranium, as the fuel for a nuclear reactor, could potentially be
limited because it is an exhaustible mineral resource. However, the debate varies
substantially about when such a fuel shortage could arrive. The world’s known economic
resource of uranium was estimated in 2006 to be 3.5 million tonnes (OECD, 2006),
enough to sustain the global nuclear industry at its current rate of consumption for 50
years (WNA, 2005; Preston & Baruya, 2005). But some institutions and academics, like
the World Nuclear Association, believe supplies will inevitably be much larger, in fact,
enough to last the industry over 200 years at the current use rate (WNA, 2005), and when
including the future development of technology, the supply becomes virtually limitless.
However, others disagree, and their argument is mainly based on the varying ore grades
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at which uranium is found in the earth. This point will be expanded in later sections. A
key factor in the debate over the future supply of uranium is the claim by nuclear
advocates, such as Patrick Moore and James Lovelock, that a number of potential
technologies and unconventional sources of uranium have potential as viable alternatives.
Fast-breeder reactors are theoretically designed to convert the large non-fissile
portion of natural uranium (uranium-238) into fissile plutonium. These reactors even
have the theoretical possibility of actually producing more fuel than they consume,
potentially multiplying the uranium resources fifty-fold or more (WNA, 2005). Breeder
technology is extremely complicated and involves three independent processes working
together in unison, as outlined below in Figure 6.
Figure 6. Fast-Breeder technology design (Storm van Leewen, 2006a)
First proposed in the 1950’s, the fast-breeder reactor concept was the source of
considerable nuclear hype, including the “too cheap to meter” energy prediction (Storm
van Leewen, 2006a). The concept’s vast potential led to intensive development programs
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in seven nuclear countries: US, UK, France, Germany, USSR/Russia, Japan, and India
(No 2 Nuclear Power, 2007). However, after five decades and investment of many tens
of billions of dollars, not one of the three separate processes required has run successfully
on its own, let alone in full harmony (Fleming, 2006). Although Japan, Russia, and
France have built prototype fast-breeder reactors, so far they have merely acted as typical
fission reactors, albeit with rampant accidents, as the fuel fabrication and reprocessing
components of the reactor have not been proven to work successfully (Storm van
Leewen, 2006a). Fast-reactor technology involves developing technology to separate, as
well as create, plutonium, creating additional weapon proliferation and waste
management concerns. Dismal results and the associated weapons proliferation concerns,
contributed to the cancellation of the fast-reactor research in the US (Winfield et al.,
2006). Although it is impossible to make a prediction of the long-term status of fastbreeder technology, five decades of global research have yet to produce a successful
reactor, and the MIT study concludes that the technology is currently infeasible and is not
expected for at least three decades (Ansolabehere et al., 2003).
Another long-term goal of the nuclear industry is the harnessing of nuclear fusion,
the type of energy that powers the sun. Fusion is the energy released when nuclei are
combined, or ‘fused’, as opposed to current reactors, which are built on the power of
nuclear fission, or the splitting of nuclei. Because of the immense attractiveness of
nuclear fusion’s possible ability to supply vast amounts of energy, it has received a lot of
attention and research dollars. A new 30-year deal was recently signed by the EU, Japan,
US, Russia, South Korea, India and China to supply $15 billion for new fusion research
(Ansolabehere et al., 2003; Walter, 2006). There are still major theoretical and physical
21
roadblocks to nuclear fusion and the concept has already witnessed considerable setbacks
since its inception. As a recent German study concluded in 2002, “over almost 50 years
in which fusion research has been going on, the difficulties in developing a fusion plant
have been repeatedly underestimated, with the result that the horizon for implementation
had to be pushed further and further into the future” (Storm van Leewen, 2006c). The
feasibility of successfully developing such technology is still of course questionable, as
all the research efforts thus far have only resulted in realizing 10% of the immense heat
required (Storm van Leewen & Smith, 2005).
Potential candidates to be substitutes for conventional sources of uranium are
granite, seawater, thorium, and plutonium from old nuclear weapons or the reprocessing
of nuclear waste. In his book “The Revenge of Gaia”, Lovelock states that “there is a
superabundance of low-grade uranium ore: most granite, for example, contains enough
uranium to make its fuel capacity five times that of an equal mass of coal” (Lovelock,
2006). The average uranium content in granite is roughly 4 grams per tonne of granite, or
a 0.0004 per cent concentration (Storm van Leewen, 2006a). A 1 GW reactor requires
160 tonnes of natural uranium for a year’s full-power electricity production (Storm van
Leewen, 2006a). To supply this reactor with uranium from granite, 530 PJ of energy
would be consumed in the extraction process while only 26 PJ of electricity would be
provided by the reactor (Fleming, 2006). Therefore, the concentration of uranium in
granite is far too low for it to be considered a plausible substitute for conventional
uranium with current technology. In addition, the low concentration would mean vast
amounts of tailings would be produced. Supplying the same reactor for a year with
22
uranium from granite would generate a pile of granite tailings 100 metres high, 100
metres wide and 3 kilometres long (Storm van Leewen, 2006a).
Another potential resource of unconventional uranium is seawater. Seawater
contains 3.3 milligrams of uranium per cubic meter, and with an estimated world volume
of 1.37 billion cubic kilometres of seawater, there is approximately 4.5 billion tonnes of
uranium in the oceans (Storm van Leewen & Smith, 2005). Although it is technically
possible to extract this uranium, the process is a massive undertaking that would be
economically impractical (Storm van Leewen & Smith, 2005). The uranium is present in
such minute amounts that the volume and speed of seawater required to be processed is
enormous. Methods proposed by US and Japanese studies are estimated to require 2-4
times the energy than the uranium would eventually produce in a conventional nuclear
reactor (Fleming, 2006).
Alternatives to uranium also exist. Plutonium, which does not exist in nature,
could be sourced from the spent fuel of other reactors or from nuclear weapons, and
could be reused in a new nuclear fission reaction. The conversion of weapons to energy,
although likely applauded by most people, is widely believed to be politically infeasible
and would have relatively negligible results: converting all weapons-grade plutonium in
the world would only fuel 60 additional reactors (Fleming, 2006). Reprocessing involves
the separating out of unused fissile materials from nuclear waste and fabricating it into a
mixed plutonium and uranium oxide fuel (MOX) that can be reused in a nuclear reactor.
Such a process is currently being used in Europe, Japan, and Russia, where the uranium
and plutonium in nuclear waste are removed and recycled back into the fuel cycle
(Ansolabehere et al., 2003). In total, the global reprocessing of nuclear waste is
23
estimated to displace 2,000 tonnes of uranium (Winfield et al., 2006), or some three per
cent of the total fuel supply (WNA, 2005). Patrick Moore, an ex-Greenpeace leader
turned nuclear enthusiast, is highly supportive of reprocessing as a method for increasing
the nuclear fuel supply and often mentions it to placate worries of nuclear fuel shortages
(Moore, 2007a; Moore, 2007b; Moore, 2007c; Moore, 2007d). The reprocessing
technique, however, exacerbates concerns regarding nuclear power. Such a process
requires the isolation of weapons-grade plutonium, and around 200 tonnes (Winfield et
al., 2006) has already been accumulated worldwide. Reprocessing thus involves
additional weapons proliferation risks (Ansolabehere et al., 2003), enough so that the
process has been banned in other nuclear countries, such as the US and Canada (Winfield
et al., 2006). Furthermore, reprocessing actually creates more high-level waste than the
once-through fuel system (Winfield et al., 2006). Reprocessing also significantly
increases the cost of nuclear energy. The MIT study found that reprocessing was roughly
4.5 times more expensive than the standard fuel process (Ansolabehere et al., 2003).
Therefore, reprocessing involves weapons proliferation risks, additional high-level waste,
and extra costs, but has only offset a minimal amount of uranium.
Thorium is another theoretical substitute for uranium. Thorium is a naturally
occurring element that is found in most rocks and soils in an abundance three times that
of uranium (WNA, 2005). Although not fissile itself, thorium-232 can be converted to
fissile uranium-233, through a process similar to that designed with the fast-breeder
reactors (WNA, 2005). However, the process is even more complex than that of fastbreeders, which has already proven to be exceptionally difficult (Fleming, 2006). Even if
the complexities could be overcome today, the start up requirements and nature of the
24
breeding process dictate that it would take decades to begin the first thorium-based
reaction, and centuries for the expansion of the thorium reactors to match current nuclear
capacity (Fleming, 2006). Currently, the price and relative abundance of uranium make
the massive R&D investments required in further thorium research unattractive (Jaccard,
2005).
The development of substitutes for uranium or processes that could preclude the
need for substitutes would appear to be currently economically, and technically,
impractical, but the possibility for technological development still exists.
3.3 Nuclear Waste
Perhaps the most substantial issue with nuclear power is that of its waste stream.
There are different categories of nuclear waste, ranging from low-level waste to highlevel waste (HLW), which includes spent nuclear fuel (SNF). During the operation of a
nuclear reactor, many objects become slightly contaminated with radioactivity, such as
protective clothing, hand tools, and cleaning supplies, which only pose a threat to human
with direct contact (Winfield et al., 2006). Nuclear reactors are not the only producers of
this type of waste, as other industries, hospitals, universities, and government facilities
that use radioactive materials also produce low-level waste. It is still important, though,
that this low-level waste be handled correctly and disposed of safely.
The main difficulty with the nuclear industry’s waste production is that of HLW
and SNF, which are extremely radioactive and can remain so for long periods of time.
Estimates regarding the duration of dangerous radioactivity levels range around the same
length of time that civilization has existed (WWF et al., 2006; Greenpeace, 2006;
25
Ansolabehere et al., 2003; Barnaby, Storm van Leewen, Rogers, Kemp, & Barnham,
2007; Elliot, 2006; Fleming, 2006; Moore, 2007d; Reyes & King, 2004; Winfield et al.,
2006; WNA). The popular new plan for long term disposal of HLW and SNF is to bury
the waste in deep geological repositories, designed to isolate the waste from the
environment for the required time needed for the radioactivity of the materials to
decrease to an acceptable level. According to the US DOE, this is approximately
100,000 years (Ansolabehere et al., 2003), although the half-life of plutonium is 24,300
years, and longer estimates of required isolation have been given.
Currently, HLW and SNF are stored on-site at nuclear reactors in cooling ponds
on the surface, designed to temporarily contain the waste so the most highly radioactive
and short-lived radionuclides can decay. These ponds are becoming dangerously
overcrowded though, as no construction on a deep repository has yet to begin anywhere
in the world (Hughes, 2006c). Plans for such repositories are, however, in various stages
around the world: the governments of Finland, Sweden, and the US have approved plans
for a deep geological repository, while other countries such as France and Russia remain
stalled on the issue, and still others, such as the UK, China, and Japan, have delayed
beginning the development of a repository (Budnitz, 2005).
There are, of course, political, social, and economic obstacles to opening a site
that will house highly radioactive waste for an extended period of time. The ability to
engineer a system that can maintain the isolation of the waste for hundreds of centuries
has been questioned by many (WWF et al, 2006; Barnaby et al., 2007; Elliot, 2006;
Fleming, 2006; Hughes, 2006c; Smith, 2006b; Winfield et al., 2006). A repository would
have to be designed to be capable of withstanding any unknown future disturbances, such
26
as earthquakes, continental shifts, rising water levels, or even political instability,
terrorism, or other social upheavals; all without precedent or advanced certainty of the
system’s success. Any leaks into the surrounding land or water could be catastrophic for
the ecosystem and surrounding populations.
In the US, the DOE plan to develop a repository at Yucca Mountain in Nevada,
designed to hold 63,000 MT of nuclear waste, has faced considerable setbacks (Smith,
2006b). Chosen for its remote location, long distance from a water table, and an overall
perceived stability for long-term isolation, it was recently discovered that the mountain
lies on a fault line and that the site may not be as dry as previously assumed (Smith,
2006b). Huge opposition has also been mounted to halt its development, both locally and
nationally (Smith, 2006b). However, the Yucca Mountain plan remains ongoing, after 20
years of being the sole location studied by the DOE and a government expenditure of $7
billion (Smil, 2003; Smith, 2006b).
In Canada, the Nuclear Waste Management Organization (NWMO), has
proposed locating a repository in locations all across Ontario, including populous
Southern Ontario locations such as Toronto, Ottawa, and Hamilton, which proved to be
rather unpopular choices for the residents in those cities (Calamai, 2007). Considering
the large opposition to developing a repository, the absence of a final disposal location
for nuclear waste could prove to be a major roadblock to the future expansion of the
industry. By the end of 2005, there was an estimated 53,100 MT of SNF stored around
the country, which will grow above the capacity of Yucca Mountain by 2012 (Smith,
2006b). If one thousand 1 GWe light water-type reactors, using the once-through fuel
cycle, were steadily deployed worldwide by 2050, a new repository the size of Yucca
27
Mountain would have to be completed every three to four years (Ansolabehere et al.,
2003).
Assurances regarding the future of SNF tend to be largely placed in the further
development of technologies, such as an improved recycling system that is safer and
more cost efficient (Ansolabehere et al., 2003). Repositories are currently being designed
so as to allow access in the future, in case such technology is developed (NWMO, 2005).
Hopes also lie in the future of transmutation technology, capable of separating and
changing harmful, long-lived actinides into ones that are faster decaying (Reyes & King,
2004). Recently, a laser the size of a small hotel transformed iodine-129, an actinide
present in nuclear waste that has a half-life of 15.7 million years, into iodine-128, which
has a half-life of 25 minutes (Ledingham et al., 2003). However, the process required the
use of the highest-intensity laser in the world. This Vulcan laser uses massive amounts of
power to produce the needed beam of a million billion watts of energy, equivalent to all
the sunshine falling on the Earth focused onto the end of a single human hair, making it
wholly impractical for wide-spread application (Edwards, 2003).
3.4 Carbon Dioxide Emissions
The desirability of nuclear power due to its alleged carbon efficiency is a highly
debated topic. Since the fission reaction releases no CO2, nuclear power is often
described as a ‘greener’ alternative to fossil-fuel energy sources (NWMO, 2005;
Lomborg, 2001; Moore, 2007d; Murphy, 2006; Richter, 2005; WNA). Anti-nuclear
advocates insist a full life-cycle analysis of nuclear energy is required in order to gain a
true account of its carbon emissions (WWF et al., 2006; Diesendorf & Christoff, 2006;
28
Fleming, 2006; Storm van Leewen & Smith, 2005; Winfield et al., 2006; Greenpeace).
When these life-cycle analyses are undertaken, it becomes evident that many processes
outside of the actual fission reactor emit a significant amount of CO2 into the
atmosphere: Canada’s nuclear industry is estimated to release between 468,000 and
594,000 tonnes of CO2 per year (Winfield et al., 2006). Fossil-fuel energy is consumed,
and thus CO2 is emitted, during the construction, operation, and eventual
decommissioning of a reactor, a timeline that can last over a century (Storm van Leewen,
2006a). A full estimate of the energy consumption and output over the lifetime of a
typical reactor is detailed below in Figure 7.
Figure 7. Energy timeline of a typical nuclear reactor (Storm van Leewen, 2006a)
Similarly, CO2 is released during the mining, milling, enriching, and transporting
of uranium, as well as during the handling of the nuclear wastes, including the possible
construction of deep geological repository (Smith, 2006b). Estimates regarding the
aggregate carbon impact of nuclear power vary widely, from impossibly small to being
29
worse than coal (WNA, 2005; Fleming, 2006). These estimates are based on a number of
assumptions, including the ore-grade of the uranium being used, the type of reactor, the
lifespan of the reactor, technology involved, and attempts to account for the largely
unknown impacts of decommissioning and final disposal. Clearly though, consideration
of nuclear power’s carbon impact cannot be limited simply to the fission reaction, and to
gain a realistic estimate of the industry’s actual carbon output, the scope of examination
should be widened to include each step in the process of producing power.
3.5 Safety
In today’s geopolitical climate of the War on Terror, safety has become a serious
global consideration. The extreme toxicity of radioactive materials and the destructive
capabilities of a nuclear reactor set the nuclear industry apart from other energy sources
with regard for safety. Safety concerns must be factored into every facet of the nuclear
energy system, from the design of the reactor core to the handling of SNF. A nuclear
disaster such as Chernobyl is a devastating example of the potential damages that could
be inflicted by a reactor meltdown, in terms of human health, environmental damages,
and economic repercussions. The near-catastrophic incident at Three Mile Island also
reflected the safety concerns of nuclear power, as the public perception of the industry
plummeted in the US afterwards. Nuclear advocates claim that the accident forced
sweeping changes throughout the nuclear industry in the US and that engineers can, and
have, designed systems to be inherently safe. The current safety philosophy used in the
design of nuclear reactors is one of “defense-in-depth”, where the safety systems must be
redundant, diverse, and independent (Reyes & King, 2004; Smil, 2003).
Accordingly,
30
the risk of a major catastrophe is relatively minute, but anti-nuclear advocates argue that
regardless of the probability, the devastating result of such an accident does not warrant
the risk (WWF et al., 2006; Winfield et al., 2006; Greenpeace).
The risk of a terrorist attack is also a safety concern. After 9-11, security
personnel at nuclear reactors across the US were increased substantially, reflecting the
administration’s concern (Ansolabehere et al., 2003). Still, it would be ignorant to
assume that such a large and attractive target for terrorism could ever be completely
secure. Opportunity also exists for any shipment of SNF to be hijacked en route to a final
repository, or for invaluable plutonium to be stolen and sold to the highest bidder.
Concerns in North America over the extra amounts of separated plutonium generated
during the reprocessing of SNF resulted in the passing of laws banning those types of
processes (Winfield et al., 2006). The future of the nuclear industry includes the
possibility of regular international shipments of SNF, which greatly increases the
exposure of the industry to possible accidents. Even shipments of SNF to deep
repositories within national borders, which have not yet occurred, amount to a risk of
public safety.
The possible public health risk posed by nuclear reactors is a highly contentious
topic. Nuclear advocates claim that the releases of radiation from a reactor are less than
the doses emitted daily from natural sources, and fall within various regulating
committees’ range of acceptable radiation levels (Hughes, 2006b; Reyes & King, 2004;
Smil, 2003; WNA). Others, such as Dr. Chris Busby and Dr. Helen Caldicott, believe
differently. Citing evidence of the appearance of cancer clusters around the vicinity of
nuclear reactors, they claim that the nature of the low-level radiation emitted from the
31
reactors is inherently different than natural radiation because it is man-made and thus
interacts differently with the human body (Hughes, 2006b). The human health effects of
the low-level radiation from a nuclear reactor are uncertain, as the science from one side
is rejected by the other, and the appearance of cancer-intensive areas around a reactor
cannot be conclusive evidence to prove a direct cause and effect relationship.
3.6 Nuclear Weapons Proliferation
Nuclear weapons have, of course, an intimate tie to nuclear power. The
technology and materials required are very similar, and the historical spread of nuclear
weapons has long accompanied that of nuclear power (Podobnik, 2006). Historical
examples serve to illustrate the futility of attempting to separate the technology of nuclear
power from the ability to create nuclear weapons. Around 1955, China received a
nuclear reactor from the Soviet Union, with the intention of peaceful use of the
technology (Podobnik, 2006). Shortly afterwards, due to political tensions, Soviet
assistance was discontinued, but China was still able to detonate an atomic weapon by
1964 (Podobnik, 2006). Similarly, in the 1950s, India was aided by Western countries in
constructing a nuclear reactor (Podobnik, 2006). Throughout the 1960s Indian physicists
built up their knowledge of nuclear technology, and in 1974 India successfully detonated
a nuclear weapon (Podobnik, 2006). Likewise, after Pakistan received initial help in
building a civilian nuclear reactor through the late twentieth century, the country was able
to complete the construction and continue on to assemble a nuclear weapon even after
international assistance was mostly halted over weapon proliferation concerns (Podobnik,
2006). The current international political tensions involving Iran are largely based on
32
fear of the country extending its current civilian nuclear power technology to developing
nuclear weapons.
The ability to easily transfer from reactor technology to the construction of a
nuclear weapon is mainly associated with the enrichment of uranium. Natural uranium,
which contains 0.7 per cent of the fissile atom uranium-235, must be enriched for most
types of nuclear reactors so that uranium-235 atom is present typically in concentrations
of 3-5 per cent (Walters, 2004). Once the enrichment technology is gained, it can be
applied to create weapons-grade uranium, which has uranium-235 concentrations of 85
per cent or higher (Ansolabehere et al., 2003). The relatively simple transferability
between the technologies is also due to a nuclear reactor’s creation of plutonium, or
specifically plutonium-239. When uranium undergoes fission, plutonium-239 is
produced as a by-product, another fissile element that is a key component of nuclear
weapons. The element’s presence in SNF, along with unused uranium-235, means that
SNF is a potential source of weapons-grade material. Reprocessing technology is
designed to isolate and extract the uranium and plutonium portions of SNF in order to
reuse them in future fission reactions, but essentially generates significant quantities of
weapons-grade materials and thus contributes to concerns over nuclear weapons
proliferation.
In summary, the major concerns over nuclear energy include investor uncertainty
surrounding nuclear reactors and the historically high levels of government subsidies, the
possibility of a fuel shortage, the long-term disposal of HLW and SNF, the amount of
carbon emissions associated with the entire nuclear process, public safety and health
concerns, and the potential for nuclear weapons proliferation.
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4.0 Economic Concepts
In order to provide a full economic assessment of nuclear energy, it is important
to first outline the different approaches to economics. The following section provides a
comparative and interpretive analysis of neoclassical economics (NCE) and ecological
economics (EE) with respect to major economic concepts that are useful in the analysis of
nuclear energy. These concepts include the ideas on growth, capital, technology,
externalities, and efficiency.
NCE has been the mainstream economic thought of the past century, and has
dominated the economic discourse of professionals and major economic institutions since
its inception. For the purpose of this thesis, branches of conventional economics such as
natural resource economics and environmental economics will be incorporated under the
broad heading of neoclassical economics since they largely employ the NCE assumptions
and principles. Ecological economics integrates the knowledge of both economics and
ecology by making both fields more inclusive of the other’s influences. While one could
argue that EE is in part derived from NCE, it is also a reaction against it. EE contrasts
itself against NCE through differing priorities of economic policies and assumptions
regarding the natural world.
A clear understanding of the differing economic views on these concepts will
allow for a subsequent comparative economic analysis of nuclear power. Applying both
NCE and EE to nuclear power will serve to more fully illuminate the economic details of
the energy system, since the foci of the two economic approaches are vastly different, yet
both find central faults with the nuclear option.
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The following section uses information predominantly sourced from “Ecological
Economics” (Daly & Farley, 2004), and “Environmental and Natural Resource
Economics” (Tietenberg, 2002).
4.1 Growth
Both NCE and EE focus substantial attention on economic growth, although for
very different reasons. NCE views economic growth, or the expansion of the size of the
Product (GNP) or Gross Domestic Product (GDP). These indicators are thought to
operate as signals of health in the economy and are seen to be directly linked to human
well-being. According to NCE, the economy must be constantly growing in order to
realize economic improvement and to avoid a declining standard of living. If GNP for a
country stagnates or falls, it is considered in a negative period or ‘recession’, and if
profits for a company decline, it sends warning signals to investors to question their
investment. NCE thus places a strict emphasis on continued and perpetual economic
growth. The growth fixation in NCE can be linked to timing of the school’s
development. It emerged in the eighteenth century, when the main sources of scarcity in
society were labour, capital, and material goods, while the supply of natural capital
appeared limitless. This manifested in the design of the neoclassical economic model of
the economy, which placed the ecosystem within the closed super-system of the
economy, meaning the economy could theoretically undergo unlimited growth. The
subsequent economic policies were thus based on developing what was scarce, and
ignored consideration for environmental frugalness. In this regard, the policies proved to
be exceptionally efficient and the amount of capital and material goods grew
35
exponentially. However, the growth in the economy allowed for a vast increase in the
rate of natural resource depletion (Ehrlich, 1999; Goldsmith, 1997; Mabogunje, 2002;
UNDP, 1998), and a new factor of scarcity became evident to some economists and
academics.
Rather than being fixated on increasing growth, for ecological economists the
overriding concern is scale: the size of the physical dimensions of the economy relative to
the ecosystem. In other words, the physical demands of the economy on the biosphere,
through natural capital depletion and emission of pollution, should not exceed the ability
of the biosphere to provide life supporting services. The flow of matter and energy from
raw materials, through the economy to the ecosystem’s waste sinks, is called the
throughput. EE views the throughput as governed by the laws of thermodynamics, a
physical set of rules that govern our universe. The first law of thermodynamics states
that energy and matter are neither created nor destroyed, but that they merely change
forms. The second law of thermodynamics deals with entropy, which is defined as the
amount of energy unavailable to do work. The Law dictates that energy and matter
follow a one-way street, from low entropy, or energy and matter available to do work, to
high entropy, or energy and matter unavailable to do work. These laws combine to show
that the continuous growth demanded by NCE is physically impossible. The First Law
means that all goods of the economic system are based on inputs of natural resources,
since something cannot be created from nothing, and these resources ultimately end up as
waste outputs, since nothing can be destroyed. The Second Law means that the economy
must continually rely on inputs of natural resource, because there is no such thing as a
“perpetual motion machine” that can have its matter and energy outputs fully reused as
36
inputs. Any attempts to recycle matter and energy in the economy will always expend
some of that matter and energy, so there is a continuous draw of natural resources as
inputs to the economy. Therefore, the growth of the economy is limited by the natural
boundaries of the biosphere.
Furthermore, while the NCE model conceives the ecosystem as a subsystem of
the economy, EE places the economy as a subsystem of the ecosystem to illustrate the
natural boundaries to economic growth. By placing the economy within the ecosystem,
EE sees opportunity costs to economic growth that do not exist in NCE, allowing the
scale of the economy to be measured at the margins using the marginal utility (MU) and
marginal disutility (MDU) tools, as depicted below in Figure 8.
Figure 8. Graph depicting MU and MDU with increasing production and consumption (Daly, 2005)
MU here is defined as the satisfaction gained from increasing the production and
consumption of the economy by one unit, while MDU measures the amount of sacrifice
(experienced in the form of resource depletion, pollution exposure, use of labour, loss of
leisure, etc) needed to achieve that increased level of production and consumption. The
optimal scale of the economy is then determined to be where MU equals MDU, and
37
economic growth past this point is considered uneconomic because more is sacrificed
than is gained through the additional size of the economy. Although accurately
measuring MU and MDU is currently difficult, rich countries are thought to be close to,
or already past, this optimal scale point. Conversely, NCE theory does not conceive an
opportunity cost to growth, so consideration of an optimal scale point and the MDU to
growth is completely absent. EE therefore explicitly recognizes that there are limits, or
natural boundaries, to growth, and a key objective is to keep the size of the economy
within those limits. Hence, the emphasis of EE is on manoeuvring the economy towards,
and especially not past, the optimal scale point. At this level of production, the benefits
received by society of economic production are equal to the sacrifices made to attain that
level of production. The disparity between unlimited and limited growth partly derives
from differing ideas about capital.
4.2 Capital
Capital can be divided into two categories: natural capital and human-made
capital. Natural capital consists of assets provided by nature that produce a flow of
natural resources and natural services, while human-made capital consists of assets used
to generate income, such as factories and sewing machines. NCE focuses primarily on
human-made capital, and considers natural capital as having no intrinsic value. Value is
only added to natural capital through the application of human-made capital and/or
labour. Thus, minerals in the earth, such as copper or gold, are essentially worthless until
they are mined. Similarly, trees in a forest have no value until they are made into lumber
or other products. The NCE belief that unlimited economic growth is possible is partly
38
based on the idea that human capital is a good substitute for natural capital. The
economy can grow and consume ever more amounts of natural capital, even to the point
of depletion, as long as the stock of natural capital is replaced with human capital.
In 1977, a neoclassical economist named John Hartwick illustrated the
substitutable relationship between natural capital and human capital, by arguing that
consumption could last indefinitely if the assets generated from natural resources were
invested in human capital to ensure the total capital stock did not decline. An important
historical example of this argument, known as the Hartwick Rule, is the island of Nauru,
where huge reserves of phosphorous rock were discovered. As the phosphorous was
mined, the islands ecosystem was largely destroyed. But, a trust fund was created for the
island’s inhabitants that consisted of a huge sum of money. The needs of the islanders
are now mainly met through the spending of their financial capital rather than the natural
resources or natural services of the island’s ecosystem. This is a process called weak
sustainability, which is to maintain the sum of the human and natural capital stocks.
Conversely, EE views human capital and natural capital as being mainly
complementary, not substitutable. Natural capital and human capital are inherently
different from each other, EE asserts, because human capital, like labour, is a
transforming agent that transforms a flow of resources into a flow of product, whereas the
natural capital is that which is being transformed. Therefore, although it would often be
possible to substitute one transformation agent for another, such as a MAC for a PC or
even a calculator with a mathematician (labour), and one could often substitute one
natural resource for another, such as copper for silicon, the relationship between the two
categories is mainly complementary and not substitutability. Hence, EE supports
39
following strong sustainability, the maintaining of the stock of natural capital on its own,
since it has become the limiting factor of production. An illustration that natural capital
is the limiting factor is that of the fisheries: the total catch of fish has now become limited
not by the number of fishing boats, but by the amount of fish in the sea, and increasing
the number of boats will not increase the size of the catch.
4.3 Technology
Technology plays a crucial role in NCE theory. In order to indefinitely supply the
economy with resources, technology must be ever improving. Technological
developments will prolong the availability of resources by increasing the efficiency of
resource use and resource extraction. If the economy can continuously be producing the
same amount of goods with fewer resources, as well as allowing for the extraction of
more resources with less energy, the economy can grow indefinitely. As well, if the
supply of a resource becomes scarce, the price for that resource will constantly be driven
higher, which promotes the development of technology that can create substitutes for the
scarce resource, or allow for more efficient use of that resource. Thus, technology can
provide a continuous supply of resources. Such beliefs have been famously promoted by
the work of Julian Simon, a neoclassical economist who once summed up the potential of
continuing technological development by stating, “…natural resources are not finite in
any meaningful economic sense”, and that “The stocks of them are not fixed but rather
are expanding through human ingenuity. There is no solid reason to believe that there
will ever be a greater scarcity of these extractive resources in the long-run future than
40
now. Rather, we can confidently expect copper and other minerals to get progressively
less scarce” (Simon, 1996).
EE places far less reliance on technology. Although in some cases technological
development may in fact be able to increase efficiencies, ecological economists are wary
about structuring the direction of the economy to continuously depend on technological
abilities, preferring better policies instead that may negate such techno-dependency. The
‘rebound effect’ phenomenon also contributes to ecological economists’ prudently
pessimistic view towards the abilities of technology. When technology allows for the
more efficient use of matter or energy, the result is often not a decrease in the aggregate
use of that matter or energy, but rather an increase. For example, although society uses
more fuel-efficient cars than five decades ago, a greater number of cars are used more
frequently now, such that the overall effect is an increased use of fuel. Continuous
technological developments do not thus guarantee a decline in the economies’ resource
and energy consumption. As explained earlier, EE incorporates the laws of
thermodynamics in its economic model, which contradict the NCE assumption that
technology can provide a continuous supply of resources. No level of technology can
bypass these physical laws that govern our universe, so technology should not be relied
upon to perform impossible miracles.
4.4 Externalities
An externality is defined as an outcome of a transaction between two people that
affects a third-party who had no involvement in the exchange. Examples of these are
everywhere in our economic system, from the noise pollution of airports to the water
41
pollution due to pig farming. NCE acknowledges the existence of externalities, but sees
their existence as limited and solvable, primarily through market-based tools. These
thinkers often propose to internalize externalities into transactions, in order to allow the
market to recognize and account for their existence. This will allow for the market to
continue the efficient allocation of resources by adjusting for the additional costs caused
by the externality. Internalizing costs might, for instance, come in the form of a tax to
polluters or the creation of a market to allow for the trading in pollutants, such as the
proposed carbon emissions market. Either way, internalizing externalities often relies on
placing a price on non-market goods and services, including those supplied by nature.
EE takes a different approach to the question of externalities. These thinkers
argue that improved policies are the better method to account for externalities, since they
are perceived as all pervasive throughout the economy. Internalizing the externalities by
placing a value on natural resources and natural services, although not completely
rejected by EE, is believed to be fraught with problems. For instance, having to
constantly recalculate the price of the natural resources and natural services as they
became increasingly scarce, and thus more valuable, would be an incredibly expensive
and resource-intensive task. Also, relying solely on the feedback of the price-mechanism
in deciding the ‘efficient’ amount of natural resources is inadequate to account for the
complexities of ecosystems, which may escape the people placing the value on it, and the
range of human values and physical needs dependent on the natural resources. Although
the valuation of natural resources and natural services may be required in certain
instances, ecological economists argue that focusing predominantly on adjusting the scale
of the economy will work to solve many externalities.
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4.5 Efficiency
The overriding principle of NCE is to ensure an efficient allocation of resources.
In order to achieve efficiency, neoclassical economists promote free markets: markets
that are allowed to operate without the constraints of government interference. The
market mechanism, through the ‘invisible hand’ manoeuvring of supply and demand, will
tend to adjust production towards an efficient allocation of resources. Thus, NCE
advocates free markets, where the market mechanism is allowed to adjust to equilibrium
and dictate prices accordingly, free from the constraint of government. Government
interference in the market, through subsidies for instance, is seen as inefficient because it
distorts the markets ability to efficient allocate resources.
The argument for free markets is based on many assumptions, including that
humans are rational consumers that will always attempt to maximize their utility, which
is directly correlated with income and wealth. An increase in wealth should always be
strived for because it results in increased well-being. Thus, with each individual striving
to maximize their profits, an optimal allocation of resources can be reached across the
entire economy because wealth, and hence utility, will be as large as possible. This profit
mechanism is a central theme of NCE, and is referred to as the profit motive.
Optimal allocation is measured according to Pareto efficiency. Pareto efficiency
is achieved when someone cannot be made better off without making someone else worse
off. Overall, NCE is primarily focused on achieving efficiency because it increases
productivity and wealth.
43
In contrast to NCE, EE places efficiency at the bottom of three overarching goals:
sustainable scale, distributive equity, and efficient allocation. Economic policy should be
crafted so as to focus on these three goals in that order of priority. Ecological economists
argue that although the market is able to achieve an efficient allocation of resources in
some respects, attaining a sustainable scale and distributive equity requires imposing
quantitative restrictions on the market which presupposes the market’s ability to allocate
resources efficiently. For the environment, an efficient allocation of resources can reduce
the impact of the economy and so is important, but establishing a sustainable scale and an
equitable distribution of resources is vital. Therefore, although EE acknowledges the
importance of efficient allocation, it emphasizes that precedence should be given to
issues of scale and distribution.
4.6 Ethics
From economics’ inception as a field of study with Adam Smith's “Wealth of
Nations”, it has since morphed into what its proponents insist is a value-free science. The
early workings of economists such as Adam Smith, David Ricardo, and Thomas Malthus,
were mainly theoretical, but modern times have seen economics thoroughly infused with
mathematics, in attempting to base the field on hard data so as to raise the school from
being more philosophical to an empirically measurable, positive science. In 1890, Alfred
Marshall published a key text called the “Principles of Economics”, which brought the
quantification of economics into the mainstream (Wagner, 1981). Since the mid-1900 in
particular, mathematical models have become a major tool utilized in NCE for assessing
economic policies. Neoclassical economists thus enthusiastically dismiss ethics from
44
their analyses. NCE prefers a positive approach that determines the intergenerational
allocation of resources strictly through the market. Since consumers’ prefer to exploit
resources today rather than tomorrow, the future value of resources can be discounted
accordingly and the market can thus balance the future costs and benefits with those that
occur in the present. The neoclassical economist Julian Simon is quoted as expressing
this market-based theory by saying “Because we can expect future generations to be
richer than we are, no matter what we do about resources, asking us to refrain from using
resources now so that future generations can have them later is like asking the poor to
make gifts to the rich” (quoted in Russo, R. 2006).
Conversely, ethics are welcomed in EE, and the inclusion of values is considered
a necessity. Instead of describing ‘what is’, as NCE does, EE describes ‘what ought to
be’: the size of the economy ought to be sustainable, and the distribution of wealth ought
to be just. Ecological economists support internalizing the socially conceived values of
sustainability and justice into the market, so that the efficient allocation of resources
determined by the market can reflect these social values. Ethical judgements are included
in EE approaches to economical issues such as the consumption of natural capital. EE
takes a normative approach based on ethical considerations of intergenerational justice,
meaning that the current generation has a duty to persevere an adequate amount of
resources in order to confer upon future generations their inalienable right to sufficient
resources to provide a satisfactory quality of life.
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5.0 Economic Analyses of Nuclear Energy
Using the relevant economic concepts discussed in the previous section and the
differing theoretical views on them, as well as viewpoints of prominent thinkers
belonging to each ideology, a full economic assessment of nuclear power from both
views can be established by applying these economic theories to the major issues of
nuclear energy currently under debate that are outlined in section 2. Although the
theories’ views on certain issues are substantially different, both theories would seem to
come to the same conclusion about nuclear power: it is simply uneconomical.
5.1 Neoclassical Economics
The ultimate tool of neoclassical economics is the profit mechanism, determined
through markets of supply and demand for a good. However, no natural market for
nuclear reactors exists: costs are high and unpredictable and the production level of
electricity is uncertain, leading investors to be unwilling to supply financial capital to
build reactors (Lovins, 2005). Additionally, the nuclear industry has been distorted by
government interference through substantial subsidies, skewing the results that would
have occurred through the operation of the ‘invisible hand’. Failing the profit mechanism
means that nuclear energy is fatally flawed through the lens of NCE, and should be
considered uneconomic.
However, Amory Lovins is one of the few neoclassical economists that is willing
to completely follow through with the theory and admit that nuclear energy is fatally
flawed. Others, such as the Cato Institute and the WNA, stop short of this conclusion,
preferring instead to insist that the market failures surrounding the nuclear industry are
46
fixable (Kidd, 2005; Rothwell, 2002). Geoffery Rothwell, from the Center for Economic
Policy Research, reports that “commercial nuclear power is the world’s most regulated
industry” and that “if nuclear energy cannot compete…it should not be subsidized”
(Rothwell, 2002). Steve Kidd, head of Strategy and Research at WNA, concedes that
“financing new nuclear build in the financial markets will prove very challenging”, due to
the uneasiness of investors (Kidd, 2005). Conclusions such as these indicate the market
failures surrounding nuclear energy, but both reports focus on the possibility of solving
these market failures, rather than admitting the fallacy of ‘economical’ nuclear energy.
Perhaps political pressure on the imperativeness of supplying increasing amounts
of energy is so strong that neoclassical analysts are willing to excuse nuclear energy’s
fatal flaws. A review of reports on the nuclear industry would seem to support this claim,
as nuclear assessments tend to be predicated on the assumption for the need of a growing
energy supply (Ansolabehere et al., 2003; Jaccard, 2005; Richter, 2005; Smil, 2003;
Rothwell, 2002; Kidd, 2005). For example, the MIT team based their study on the idea
that “all options should be preserved” (Ansolabehere et al., 2003), and Richter states that
the demand for nuclear is largely based on the need “for much more energy to support
economic growth worldwide” (Richter, 2005). Both reports then proceed to advise how
governments and industry might manipulate the market so as to create more viable
economics of nuclear energy (Ansolabehere et al., 2003; Richter, 2005). Thus, analyses
become focused on how best to make nuclear power more acceptable, rather than strictly
applying a NCE assessment. When nuclear energy is viewed under this context of
ensuring a growing energy supply, it is often labelled as a type of “necessary evil”. Since
coal plants are prominent targets for global warming regulations, increasing the energy
47
output from coal plants becomes more questionable and highlights nuclear power as a
possible alternative for base load power. Despite the serious economic, social, and
environmental concerns surrounding nuclear power, it remains to be viewed by most
policy makers as a reliable source of continuous electricity that is relatively cheap to
operate, while renewable energy sources and natural gas have reliability and supply
concerns (OPA, 2005). Under assumptions of necessitating a growing energy supply, the
question becomes how to make nuclear energy work, not whether nuclear power should
be working.
The future of the nuclear industry is acknowledged to depend on the development
of future technologies, sharing the techno-optimism of neoclassical economists. Human
ability to efficiently solve the environmental and health risks of nuclear waste is currently
insufficient. The recycling of spent fuel rods is deemed too dangerous and costly in
Canada and the US, and storing the nuclear waste in deep geological deposits essentially
bestows the problem on future generations. This absolute reliance on future generations
to continually advance technologies is central to neoclassical economic theory. Even
with the design of nuclear reactors, the ‘real’ promises of nuclear technologies are
purported to lie with future designs that incorporate breeder technology or implement
nuclear fusion. It should be noted however, that imagined at the outset of nuclear
technology to be only twenty years away, forty years later the estimates for the
development of commercial fusion power continue to place it twenty years on the horizon
(Jaccard, 2005).
Theories on the substitutability of human-made capital and natural capital are also
apparent in the regulating mentality of some countries regarding the nuclear industry. In
48
order to offset some of the recognized externalities of nuclear power generation, such as
dealing with the waste, human-made capital is accumulated in the form of a fund (Giles,
2006). Thus, the hazards of the industry are theoretically compensated with the capital.
Often, the fund is collected through a levy the nuclear utility places on the cost of its
electricity, meaning the public is paying. Therefore, property rights regarding some
externalities are given to the nuclear power plant owners, giving them the right to create
hazardous waste and putting the onus on the public to pay for the control of pollutants. In
Canada, the responsibility of nuclear waste actually falls on the Ministry of Natural
Resources, while in the US responsibility is given to the Department of Energy.
Although neoclassical economic theory dictates that such a scheme should still result in a
‘socially optimal’ outcome, it means that the owners and operators of nuclear power
plants are often free from the burden of dealing with the expensive and troublesome issue
of their waste.
As for potential issues affecting the future of nuclear energy, neoclassical
economists use their set of theories to offer solutions. Concerns raised over the future
supply of uranium are steadfastly denied. As with the supply of any finite resource,
neoclassical economists believe the price mechanism will ensure a relatively endless
supply. Current reserve estimates are dependent upon the price of the resource as well as
the current technology, and thus the ability to profitably extract the resource. If prices
increase or technological development allows for more efficient resource extraction,
lower-grade deposits of the resource that were previously uneconomical to extract may
become economically viable, thus increasing reserves. Currently, the World Energy
Assessment limits the definition of uranium reserves as deposits that cost less than $130
49
per kilogram to recover, translating to a global resource base of 5,410 EJ. If that cut-off
is doubled to $260 however, the resource base increases to resources of uranium that are
equivalent to 7,100 EJ of energy (Jaccard, 2005). Additionally, a price increase gives
incentives to explore for more of the newly priced resource, while technological
developments may allow for extraction of previously inaccessible deposits, both leading
to increased reserves. For instance, a high uranium price could theoretically result in the
new deposits of uranium or the ability to economically extract uranium from granite or
seawater.
On the other side of the equation, consumers would also be affected by the rising
price of the resource. Incentives will push consumers to pursue recycling and more
efficient use of the resource, as well as searching for possible substitutes. Rising uranium
prices for example, could make reprocessing SNF more economical, or result in the
development of technology to exploit reserves of thorium. The cycle of the price
mechanism is joined by the fact that the increase in reserves from a higher price
subsequently leads to a lower price, and thus increased demand. Therefore, through the
cycle of increasing and decreasing prices leading to growing reserves, the supply of
uranium can be argued to be relatively infinite. These assumptions regarding the price
mechanisms determination of the supply of uranium are widely accepted by neoclassical
economists (WNA, 2005; Ansolabehere et al., 2003; Jaccard, 2005).
Mainstream economists would also tend to applaud the idea of creating an
international market for nuclear waste. Countries facing enough domestic opposition to
the burial of the waste inside their boundaries and having enough money to pay for it,
could deal with countries willing to purchase the nuclear waste for the right price.
50
Instances have already occurred where deals were made to import nuclear waste into
Britain, Russia, and North Korea (Trade and Environment Database, 1997; Nuclear
Information and Resource Service, 2004; Brown, 2004). A global market for nuclear
waste could result in an efficient use of resources if an equilibrium of supply and demand
is reached. Instead of trading a ‘good’ however, nuclear waste would be considered a
‘bad’, meaning the market mechanism could still deliver efficient use of resources when
contracts for importing the nuclear waste match the market equilibrium price and quantity
which reflects the trade-off society is willing to accept between the existence of the ‘bad’
and the monetary compensation. Therefore, if Australia decided to build a massive, deep
geological repository in the middle of the country, it could import the SNF from other
countries who did not have repositories, for a price that sufficiently compensated the
people of Australia. Such a scenario could potentially be Pareto efficient.
Although NCE theory can be applied to the nuclear industry in order to espouse
certain beliefs of NCE, such as techno-optimism and the limitlessness of natural
resources, the industry’s fatal flaws ultimately determine it to be uneconomic. The risks
involved for investment are too high and the rewards are too uncertain to warrant the
capital needed to supply nuclear power, and the market recognizes this fact: if nuclear
power was an efficient allocation of society’s resources, the market would have created
incentives for its existence by itself. Government assistance in attempt to support the
nuclear industry by creating artificial market incentives, conflicts with the laissez-faire
values of neoclassical economics. Therefore, from the viewpoint of NCE, nuclear energy
can be argued as uneconomic.
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5.2 Ecological Economics
Ecological economics does not necessarily oppose all NCE theories, and would in
principle agree that nuclear power is uneconomic solely based on the neoclassical
analysis. Additionally though, ecological economics would broaden the scope from
which to view the nuclear industry. Although ecological economics deals with a number
of issues, the key differential from neo-classicalism has become the concept of an optimal
scale economy, as opposed to unlimited growth. If economic policies are not based on
ensuring continuous growth, less emphasis would be placed on ensuring a growing
energy supply while more emphasis would likely be placed on capping the aggregate
energy demand and increasing the efficiency of the energy system. Therefore, ecological
economics stresses adopting policies which promote a sustainable economy, meaning that
promoting nuclear power as the only feasible energy production method that will allow
for the continued trajectory of the economy would be viewed as inappropriately
addressing the issue. The underlying problem is not a lack of electricity generation, but
foremost a scale issue. The current structure of the economy may promote inefficient
power usage, but it primarily places undue pressure on continuing the growth of the
economy and hence the energy supply.
Subsequently, ecological economics would view the trade-offs involved with nuclear
power production as relatively undesirable. Unquestionably, the nuclear fuel cycle
involves high environmental costs: the mining and milling of uranium generates large
amounts of radioactive tailings, the building of a nuclear reactor is extremely resource
intensive and its operation regularly emits harmful radiation, and the discharge from the
reactors is highly toxic and radioactive. Put simply, generating nuclear energy requires a
52
vast amount of physical throughput, which ultimately results in waste. The problem with
nuclear waste in particular is its extremely hazardous nature. Therefore, nuclear power
greatly increases the economy’s impact on natural capital at both ends: the depletion of
environmental sources and its pollution of environmental sinks, and this is viewed by EE
as highly unsustainable. In exchange for these and other “bads”, the current generation
receives additional electricity and possibly some positive externalities such as medical
uses of radioactive isotopes (Nuclear Energy Agency of the Organisation for Economic
Co-operation and Development, 2003). In developed economies, an estimated ten per
cent of residential energy consumption is used to keep the plethora of electronic gadgets
on ‘standby’ mode, in order to save time from the device having to be fully started
(International Electrotechnical Commission, 2005). When contrasted in this manner, it is
easy to see that the utility gained from the electricity used to perform such
inconsequential acts is likely much lower than the natural capital sacrificed to supply that
electricity.
The extent of the trade-off can be seen through an analysis of throughput, the
metabolic flow from raw material inputs to waste outputs measured in energy and/or
matter. The laws of thermodynamics state that matter and energy cannot be created nor
destroyed, and that the flow of throughput moves linearly from low-entropy to highentropy. Therefore, the throughput is a depletion of low-entropy environmental sources
and the pollution of environmental sinks with high-entropy wastes. On a rudimentary
level, throughput can be applied to nuclear power as the conversion of low-entropy
uranium into high-entropy elements of nuclear waste. The waste absorption capacity of
the ecosystem, its ability to assimilate and recycle waste, is an ecosystem service upon
53
which all life depends. Overwhelming the waste absorption capacity of ecosystems leads
to disastrous effects, as can currently be seen with the dire predictions of the effects of
global warming due to the over abundance of CO2 in the atmosphere. Nuclear waste
contains elements including uranium and plutonium, which have a half-life of 4.47 billion
and 24,300 years, respectively (Winfield et al., 2006). Although uranium and plutonium
are ubiquitous throughout the earth’s crust and ocean, they exist there in highly diluted
states. After being used in a nuclear reactor, they are released into the environment in
substantially increased concentrations that make them extremely hazardous. The creation
of these hazardous elements increases humanity’s impact on the ecosystem and places
substantial stress on the ecosystems’ ability to absorb wastes. In general, the use of
nuclear power generation greatly increases the economy’s aggregate impact on the
ecosystem, through the creation of highly toxic substances that cannot easily or naturally
be absorbed by ecosystem services (Daly & Farley, 2004).
The NCE approach of depending on the future abilities of technology to solve the
waste problem and other inefficiencies is viewed as unduly optimistic from the EE camp,
which would prefer a more prudently pessimistic viewpoint in light of the large
uncertainties involved. Will current technologies be able to completely isolate the
nuclear waste from the biosphere into the indefinite future? Will technology be
developed in the future that could somehow eliminate the waste soon enough and with
acceptable costs? Will the development of nuclear technology eventually lead to the
ultimate power source, such as nuclear fusion, or is it just a pipedream that will expend
valuable resources? Assuming the outcome of all these questions will be positive is to
take a large gamble that stakes the welfare of future generations. A flourishing nuclear
54
power industry does not leave much room for a margin of error, a key policy factor EE
believes is necessary. The outcome of a major nuclear accident would be catastrophic,
and the opportunities for error are so widely spread, from the attacks on or malfunctions
of the reactor to the transportation and burial of nuclear waste, that notwithstanding the
small probabilities involved, the opportunity for disaster exists. A failure such as
Chernobyl places so much stress on the biosphere that few could likely be tolerated
without an ecological disaster, otherwise stated as marginal disutility reaching infinity.
Therefore, EE would agree with NCE in disapproving of nuclear energy on the basis
of the absence of a natural market, but would also criticize on additional grounds.
Nuclear power is essentially not required, as the scale of the economy needs to initially
be resolved. Additionally, nuclear energy puts undue pressure on the waste absorptive
capacity of the ecosystem, greatly chancing an ecological disaster. Furthermore, relying
on technological developments to safely handle the waste is too risky and the nature of
nuclear power leaves little room for a margin of error. Thus, from the EE perspective,
the pursuit of nuclear energy is an unjustifiable gamble.
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6.0 Major Current Energy Policy Issues
Concerns over the future of the world’s energy system stem largely from the global
issues of global warming and sustainability. The threat of global warming has caused
many policy makers to reflect on the composition of their domestic energy production
and its emission of greenhouse gases. Planning to limit the release of greenhouse gases
has placed a spotlight on nuclear power and its potential role in future energy supplies.
With recent oil price shocks and the current geopolitical turmoil in the Middle East, many
policy makers have also become concerned about energy security, and the ability to
source a sustainable supply of energy. In this context, nuclear power again appears
favourable to policy makers because it can divert the need for foreign energy supplies and
uranium can be sourced from politically secure countries such as Canada and Australia.
Furthermore, “sustainability” has taken hold in the current political culture, and whether
as a buzzword or a legitimate concern for the future, sustainability has become a stated
policy objective of many energy institutions. Nuclear energy is promoted by its
advocates as a chief energy source in this sustainable future.
Political drive to respond to these issues of global warming and sustainability may
serve to fortify political support for nuclear power, despite its uneconomic nature. Such
an approach may be warranted, considering the seriousness and potential impacts of the
issues if they remain unresolved. A closer examination of the two issues though, reveals
that incorporating nuclear energy into the responses may be counterproductive, and this
conclusion can be made independent of the economic framework used.
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6.1 Global Warming
The success of global warming initiatives rests on the reduction of GHG emissions
into the atmosphere and the rate and effectiveness in which this can be performed.
Nuclear advocates claim that since the fission reaction inside the nuclear reactor and its
generating of electricity releases no GHGs, nuclear power is a viable option for
combating global warming. However, other considerations must be taken into account.
First, although the process of actually generating electricity from fission does not
release GHGs, as mentioned above the life-cycle of nuclear power does create substantial
amounts of CO2 releases. The uranium must be found, mined, milled, enriched, and
shipped to the reactor, each step requiring inputs of energy that would currently be
carbon-based. The construction of the reactor requires energy inputs, as does its
operation and maintenance and its eventual decommissioning. Finally, the nuclear waste
must be handled and disposed of, again requiring the expenditure of energy. There are a
number of unknown variables, including the true energy cost of handling the nuclear
waste since it has since never been done and any process would take a long time, but
estimates of the total energy costs have been made. Under various assumptions, the
actual net energy gained from a nuclear reactor over its lifetime is limited to negative,
meaning if it is assumed that most energy would be carbon-based, the capability of a
nuclear reactor to limit the release of GHGs is quite limited.
The timing of energy expenditures and gains over the lifetime of a nuclear reactor
is also critical. The Stern Review on the Economics of Climate Change, a 2007 report for
the UK government, states that “what we do in the next 10 to 20 years [with respect to
CO2 reduction] can have a profound effect on the climate in the second half of this
57
century and in the next” (Stern, 2007). As well, recent reports by the Intergovernmental
Panel on Climate Change stress that action to curtail global warming must being
immediately (IPCC, 2007). Expanding the nuclear industry in order to fight global
warming is thus contradictory, as the average construction time of a nuclear reactor is ten
years. This means that carbon dioxide will continue to be released during those ten years,
while the benefits from that capital expenditure would not be realized until 2017 if
construction began today. On a global scale, a nuclear renaissance to fight global
warming would thus serve to initially aggravate the problem, in order to realize limited
benefits in the long term. Figure 9 below, serves to illustrate this trait of nuclear energy.
Figure 9. Energy costs and gains of nuclear energy (Storm van Leewen, 2006a)
As well, to stimulate a global renaissance in nuclear power, massive investments
must be made that would inevitably detract funds from other, likely more efficient,
initiatives to fight global warming.
6.2 Sustainability
58
The concept of a sustainable energy system was highlighted in Agenda 21 by
addressing the need for “all energy sources…to be used in ways that respect the
atmosphere, human health, and the environment as a whole” (IAEA & IEA, 2001). The
Association of Power Producers of Ontario extends the concept to include energy security
concerns in their definition: “Renewable or sustainable energy systems are those systems
which provide energy services to people without significantly depleting resources,
harming the environment or compromising the ability of future generations to use the
same kind of energy services” (APPrO, 2004). To what extent is nuclear power able to
meet these requirements?
The sustainability of nuclear power can be examined through its inputs and
outputs. Nuclear power remains a fuel-based power generation method, and requires the
input of uranium. A major study has recently been published that details the importance
of considering the ore grade of the uranium, something most projections of future
uranium supplies do not account for (WNA, 2005; UIC, 2006; OECD, 2006; Preston &
Baruya, 2005; Richter, 2005; WNA). Natural uranium, which consists of 0.7% fissile
uranium-235, is found in varying grades measured by the relative abundance of uranium235 per tonne of rock. An ore grade of 0.1% signifies that one kilogram of uranium-235
is present in one tonne of rock. As with other minerals, the richest, easiest to discover,
and most accessible deposits are predominantly mined first. Currently, most uranium
originates in mines from Canada, where ore deposits are as high as 20 and 50 per cent
(UIC, 2006). However, the majority of current global known resources are low-grade ore
of less than 0.1 per cent (Storm van Leewen & Smith, 2005). Below, Figure 10 depicts
59
the distribution of uranium deposits among the major geological reservoirs according to
ore grade.
Figure 10. Distribution of uranium deposits among major geological reservoirs according to
concentration (Storm van Leewen, 2006a)
The energy costs of extraction are proportional to the grade of ore, thus an ore
grade of 0.1 per cent requires 200 times more energy than an ore grade of 20 per cent
(Storm van Leewen & Smith, 2005). Since the eventual purpose of the uranium is to
60
generate energy through a nuclear reaction, the amount of energy required to extract the
uranium is imperative in considering its usefulness. If the energy output of a nuclear
reactor is taken as a constant, eventually a limit will be reached where the energy needed
to extract the uranium equals the energy gained from its use in a standard nuclear
reaction. The influential work of Jan Willem Storm van Leeuwen has revealed that based
on net-energy gains, the lower limit of useful uranium supplies is a grade of 0.02 per cent
(Storm van Leewen & Smith, 2005). Therefore, as the nuclear industry continues and the
rich ore deposits are depleted, the net fraction of energy produced by the fleet of reactors
will steadily decline until it reaches zero. At current global generating capacity levels,
and with no new discoveries of rich ore deposits, this is estimated to occur at around
2070, and the scenario is depicted in Figure 11 below.
Figure 11. Declining fraction of net energy received from nuclear power as the ore grade of uranium
used falls (Storm van Leewen, 2006b)
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Additionally, as the amount of energy required to extract the needed uranium
rises, the CO2 output of the nuclear industry will increase accordingly.
These estimates are of course based on current technologies and uranium prices.
Development of future technologies may improve the energy efficiency of uranium
extraction and/or that of the nuclear reaction. However, the exponential rise of energy
requirements due to the falling concentrations of ore extracted is inevitable (Storm van
Leewen, 2006c). Technology may be able to lower the energy threshold further, for
instance, from 0.02 to 0.015, but this would only increase the extraction of uranium by
500g, totalling an insignificant amount of uranium. As well, the MIT study concluded
that nuclear energy generation will have to rely on current reactor-type designs for at
least the next three decades (Ansolabehere et al., 2003). And with the long construction
times and other impediments to new reactor construction, a widespread deployment of
more efficient reactors may be too late to effectively impact the uranium reserves.
A rise in the price of uranium may also spur on exploration for further deposits
and boost the pursuit for uranium alternatives. Although the chance of discovering
additional large, high-grade ore deposits is unknown, the deposits that are easiest to mine
and discover are already in production. And with an estimated 70 per cent of uranium
resources situated on lands inhabited by indigenous peoples, the push for additional
uranium deposits may result in negative social consequences (Preston & Baruya, 2005).
The current status of possible substitutes for uranium in the future all have serious flaws,
as previously outlined, and cannot be expected in the near future. Clearly the future of
the nuclear industry is rife with uncertainties. However, the fact that there is a lower
limit to the fuel supply that may likely be approached within the next several decades
62
means that the supply of uranium as a fuel for nuclear reactors is not guaranteed in the
long-term.
Another factor affecting the sustainability of nuclear energy is its waste stream. A
sustainable energy system should respect not only human health, but the ecosystems’ as
well. In the five decades since nuclear energy’s inception, several thousand tonnes of
highly radioactive nuclear waste have been created around the world (Winfield et al.,
2006). With no better response to the issue available, and in the hopes of one being
developed in the future, the global stock of SNF mostly lays submerged in temporary
holding blocks located at nuclear reactor compounds. Releasing these radioactive
substances into the biosphere would result in major health and ecosystem catastrophes.
For nuclear power to be considered a sustainable energy source, such an event must be
guaranteed to never occur. Proposed long-term solutions for dealing with SNF so far are
reprocessing, deep geological repositories, and transmutation. Although reprocessing is a
method of decreasing the volumes of waste through recycling, the risks and costs of such
a system have been deemed unjustified in North America. Regardless, reprocessing does
not solve the waste issue because not all of the nuclear waste can be recycled indefinitely.
The capability of a geological repository to completely isolate the nuclear waste from
contact with the ecosystem for the 10,000 years that the DOE requires is uncertain. If a
nuclear renaissance was to occur, in order for nuclear energy to play a substantial role in
the global energy system of the future, an abundance of sites similar to Yucca Mountain
must be discovered and built. Transmutation technology is as of yet not capable of
widespread use. Therefore, since the generation of electricity from nuclear power cannot
63
necessarily avoid catastrophic damage of the ecosystem, it cannot be considered a
sustainable energy source.
Finally, a large nuclear industry is not compatible with renewable sources such as
solar, wind, and geothermal, which are considered to be major components of a
sustainable energy system (WWF et al., 2006; Winfield, Horne, McClenaghan, & Peters,
2004). Nuclear reactors require major capital investments that mean the lifetime and
productivity of the reactor are essential for ensuring low fixed costs. The investments in
nuclear are also sunk over an extended period of time, from construction to
decommissioning, which could last over a century. Therefore, investing in additional
nuclear energy shapes the future energy system for an extensive period of time, while
relying heavily on projections of a highly growing energy demand in order to justify the
expansion. Such investments could otherwise be given to renewables or demandreducing or energy efficiency projects. Nuclear power is also highly centralized,
meaning that the electrical system is built around a main power source and then
distributed out to consumers through transmission lines. Conceptions of sustainable
energy futures though, tend to be based on a decentralized view, meaning that power will
be produced either on-site or locally (Mitchell & Woodman, 2006; Winfield et al., 2004).
However, long-time investments in nuclear reactors perpetuate an energy structure based
on large, centralized sources. Nuclear power thus locks society into a highly-centralized
energy system that depends upon continual energy demand increases, a future that cannot
be considered sustainable (Mitchell & Woodman, 2006; Winfield et al., 2004).
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7.0 Conclusion
In order to perform a thorough economic analysis of nuclear energy, it was
imperative to outline a number of currently debated issues surrounding the industry. The
historical context of nuclear technology has seen strong government support, while the
private sector has shown to be reluctant to adopt or invest in the technology. Concerns
have been raised over the future supply of uranium, and the ability to develop viable
substitutes. Possibly the most pressing issue of nuclear power is the production of SNF,
which is highly radioactive and extremely hazardous to the environment and humans.
Although plans for the long-term disposal of nuclear waste globally favour deep
geological repositories, the logistics of such a scenario and the ability for such a design to
sufficiently isolate the waste are questionable. The carbon output of nuclear power
ranges drastically, but is clearly substantially higher than the measure given by some
nuclear advocates based solely on the fission reaction, as required processes on either
side of the fission reaction require inputs of fossil fuel energy. The potentially
destructive nature of nuclear power means there are inherent safety concerns. Although
nuclear engineers have laboured to minimize these risks, the occurrence of nuclear
disasters has led to substantial public uneasiness regarding nuclear technology. Concern
for safety also revolves around the potential public health risks posed by the low level
radiation regularly emitted from nuclear reactors. Finally, nuclear power has always been
intimately connected with nuclear weapons and this close relationship creates
apprehension towards nuclear technology due to worries it could aid nuclear weapons
proliferation. All of these problems ultimately affect the economics of nuclear power.
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In order to explain these affects, the problems must be incorporated into an
economic context. Neoclassical economics and ecological economics are two conceptual
frameworks that have widely different emphases for the structure of a model economy.
These divergences are highlighted in the theories’ views on growth, capital, technology,
efficiency, and ethics. To provide a full account of the economics of nuclear energy, it is
imperative to include both theories’ perspectives.
While NCE is established on the axiom that an economy with an efficient
allocation of resources leads to a maximization of aggregate welfare, EE subordinates the
importance of efficient allocation to its more dominant concerns of sustainable scale and
distributive justice. They also perceive the natural world in widely different ways. NCE
basically views nature as a warehouse of value-less resources, available for production in
the closed, outer system of the economy. Unlimited growth of the economy is essential,
possible, and can be fuelled by an endless supply of resources. Sustainability should be
sought after by maintaining the total of the sum of the human and natural capital.
Constantly improving technology is vital in accomplishing these tasks, as it increases
efficiencies and allows for unlimited growth and capital substitution. Any ethical
considerations should be absent from the economic discourse, as NCE is a value-free
science that is positive in nature. Most importantly though, the market should be
allowed to freely allocate an efficient production of resources.
EE on the other hand, views nature as the system in which the economy exists.
Unlimited economic growth is impossible due to the existence of opportunity costs of
growth and the laws of thermodynamics. The relationship between natural capital and
human capital is predominantly complimentary, and thus strong sustainability, the
66
maintaining of the natural capital stock, should be pursued. A techno-pessimistic
viewpoint should be taken, with a greater reliance on better economic policies instead.
Technological developments are susceptible to phenomena such as the rebound effect,
which can see efficiency gains result in increased, not decreased, consumption. As well,
technology remains ultimately governed by the laws of thermodynamics, which cannot be
circumvented, so technological development cannot provide unlimited economic growth.
Imposing social values, such as sustainability and justice, onto the economy is viewed as
essential and ethical considerations, including intergeneration ethics, should be included
in economic theories.
However, even with these differing views, the two schools of economics can
arguably be seen to agree in their overall negative assessments of nuclear power.
Obviously though, the particular problems of the industry emphasised by the NCE and
EE analyses reflect the divergent assumptions of the two frameworks. Although nuclear
power fulfills certain requirements of NCE, such as allowing for a growing economy and
the pursuit of a techno-optimistic future, it fails the profit mechanism essential to NCEs.
Nuclear power suffers from market failure, as widely noted among neoclassical
economists. The uncertainties surrounding investments in nuclear reactors, both in terms
of costs and profits, have caused private actors to deem the technology not worthy of
investment. Governments have also highly distorted the market through direct and
indirect subsidies, including accepting responsibility for nuclear waste and limiting the
liability from a nuclear accident. Without the market freely allocating resources towards
the production of nuclear energy, nuclear power cannot be considered economic in NCE
terms.
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EE stresses additional problems with nuclear power that make it uneconomical
according to its worldview. Foremost, it is a question of scale. EE would argue that
pursuing an inherently hazardous energy technology such as nuclear power in order to
ensure a continuously abundant energy supply reflects the improper emphasis placed on a
growing economy. Resolving the scale issue would result in alleviating the need for
nuclear power. Additionally, the trade-offs involved with nuclear power would be
viewed as awry. Society sacrifices substantial natural capital and resources due to the
vast amount of physical throughput demanded by nuclear power, and in return gains
energy used for increasing less beneficial means. Furthermore, nuclear waste places
incredible stress on the waste absorptive capacity of the ecosystem, and EE argues that
we cannot rely on the future development of technology to solve the waste issue. Nuclear
power does not leave much room for a margin of error, since the result of a major nuclear
reactor accident or a leak of hazardous waste would be catastrophic for humans and the
ecosystem, even if the probability of such events is limited. The current generation who
may benefit from nuclear energy, largely does not have to pay for the consequences
involved, as the occurrence of a catastrophic accident would more likely fall on future
generations. EE would argue that this is unethical, as it does not adhere to
intergenerational justice. Therefore, it can be argued that neither NCE nor EE approves
of the nuclear industry on economic grounds.
The argument of this thesis was that nuclear power cannot be considered
economical, and the reason for its continued existence must then be political. To
substantiate this argument, major issues that currently influence energy policy were
included in the analysis. Although the uneconomical nature of nuclear energy may have
68
been overlooked in order to resolve the pressing political issues of global warming and
sustainability, upon closer examination of the issues it can be argued that nuclear energy
cannot play a beneficial role in policies aimed to solve these issues.
A life-cycle analysis of nuclear energy reveals that its ability to limit GHG
emissions is limited, and major investments in increasing the production of nuclear
energy will see an immediate rise in GHG emissions due to the long construction time
required for the reactors.
The “sustainability” of nuclear energy was also found to be questionable. The
required uranium input of nuclear energy is limited by the grade of the ore, which
contributes to the uncertainty of the industry’s ability to last throughout the century. And
while nuclear energy’s production of extremely hazardous waste greatly increases the
potential for a severe environmental disaster, the nature of nuclear energy makes it
incompatible with a future energy supply based on renewables.
Although it is not within the breadth of this thesis to prove what the actual
political motivations for nuclear power are, some speculative starting points for further
research may be provided. The development of nuclear technology was largely tied to
the US military-industrial complex, and its promotion as a viable source of future energy
may still partly reside in pressure from this group. Nuclear technology may also have
been a case of a technology in search of a demand. The technology’s link with nuclear
weapons, and the eliteness of the “nuclear club”, may encourage countries to pursue the
development of nuclear power programs for reasons of national prestige. Thus, not to
pursue nuclear power could be viewed by nations as accepting a sub-par position in the
geopolitical. Or, nuclear power may be a manifestation of the dominant culture, which
69
places superior belief in the capability of technology, and others are pressured to follow
suit. Whatever the reason(s) for nuclear energy, it can be said that the theories of NCE
and EE are fundamentally opposed to its existence, and it is inept at fighting global
warming while also failing to meet the broader criteria of a sustainable energy future.
70
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