The minor leak at Japan’s Kashiwazaki nuclear power plant showed safety systems working as they should. The plant shut down automatically when the first earthquake tremors hit. But the spectre of a nuclear accident on the scale of Chernobyl still agitates some, who seek to obstruct new plant development. But as energy costs rise, both economic and environmental cases for nuclear power become stronger.
The last US nuclear plant began construction in 1977. The Bush administration committed to expanding the country’s nuclear power generating capacity in 2003, yet no new project has been cleared by the Nuclear Regulatory Commission (NRC). Even with NRC approval, local environmental hearings can hold up construction another half-decade. Until recently, this hasn’t mattered, from an economic perspective. A Massachusetts Institute of Technology (MIT) study in 2003 estimated that electricity from a new nuclear plant would cost 6.7 cents (about Rs3) per kWh, including capital costs, compared with 4.2 cents for pulverized coal and 3.8-5.6 cents for natural gas. However, coal, natural gas and oil prices have soared since then, so even without technological advances nuclear power may be more competitive today.
A carbon tax would tilt the economics further. MIT estimated that a $100 per tonne tax on emitted carbon would raise the cost of coal power to 6.6 cents and natural gas power to 4.8-6.7 cents, even before factoring energy price increases.
Another disincentive to new nuclear construction has been the price of uranium oxide, which has risen from $10 per pound to nearly $130 since 2004, raising the operating costs of nuclear power by about 0.3 cents per kWh. Moreover, 80% of the uranium used in US reactors is imported.
However, there has been only minimal exploration for the fuel since the 1950s boom, and the largest known deposits are in Canada, Australia and Kazakhstan. Thus long-term supplies appear plentiful and the risk of a uranium Opec modest. Once hedge fund speculators have been squeezed, it’s likely that uranium prices will revert to normal levels, albeit higher than the $10 of the 1990s. With oil at $75 per barrel and natural gas correspondingly elevated, the economic case for nuclear power strengthens daily. The environmental case is also strong, unless one believes global warming is a complete chimera. Regulators step out of the way.