The Economist  [Printer-friendly version]
September 6, 2007


A nuclear revival is welcome so long as the industry does not repeat
its old mistakes

In March 1986 this newspaper celebrated "The Charm of Nuclear Power"
on its cover. The timing wasn't great. The following month, an
accident at a reactor at Chernobyl in Ukraine spread radioactivity
over Europe and despair in the Western world's nuclear industry.

Some countries never lost their enthusiasm for nuclear power. It
provides three-quarters of French electricity. Developing countries
have continued to build nuclear plants apace. But elsewhere in the
West, Chernobyl, along with the accident at Three Mile Island in
Pennsylvania in 1979, sent the industry into a decline. The public got
scared. The regulatory environment tightened, raising costs. Billions
were spent bailing out lossmaking nuclear-power companies. The
industry became a byword for mendacity, secrecy and profligacy with
taxpayers' money. For two decades neither governments nor bankers
wanted to touch it.

Now nuclear power has a second chance. Its revival is most visible in
America (see article), where power companies are preparing to flood
the Nuclear Regulatory Commission with applications to build new
plants. But the tide seems to be turning in other countries, too.
Finland is building a reactor. The British government is preparing the
way for new planning regulations. In Australia, which has plenty of
uranium but no reactors, the prime minister, John Howard, says nuclear
power is "inevitable".

Managed properly, a nuclear revival could be a good thing. But the
industry and the governments keen to promote it look like repeating
some of the mistakes that gave it a bad name in the first place.

It's going nuclear's way Geopolitics, technology (see article),
economics and the environment are all changing in nuclear power's
favour. Western governments are concerned that most of the world's oil
and gas is in the hands of hostile or shaky governments. Much of the
nuclear industry's raw material, uranium, by contrast, is conveniently
located in friendly places such as Australia and Canada.

Simpler designs cut maintenance and repair costs. Shut-downs are now
far less frequent, so that a typical station in America is now online
90% of the time, up from less than 50% in the 1970s. New "passive
safety" features can shut a reactor down in an emergency without the
need for human intervention. Handling waste may get easier. America
plans to embrace a new approach in which the most radioactive portion
of the waste from conventional nuclear power stations is isolated and
burned in "fast" reactors.

Technology has thus improved nuclear's economics. So has the squeeze
on fossil fuels. Nuclear power stations are hugely expensive to build
but very cheap to run. Gas-fired power stations -- the bulk of new
build in the 1980s and 1990s -- are the reverse. Since gas provides
the extra power needed when demand rises, the gas price sets the
electricity price. Costly gas has therefore made existing nuclear
plants tremendously profitable.

The latest boost to nuclear has come from climate change. Nuclear
power offers the possibility of large quantities of baseload
electricity that is cleaner than coal, more secure than gas and more
reliable than wind. And if cars switch from oil to electricity, the
demand for power generated from carbon-free sources will increase
still further. The industry's image is thus turning from black to

Nuclear power's moral makeover has divided its enemies. Some
environmentalists retain their antipathy to it, but green gurus such
as James Lovelock, Stewart Brand and Patrick Moore have changed their
minds and embraced it. Public opinion, confused about how best to save
the planet, seems to be coming round. A recent British poll showed 30%
of the population against nuclear power, compared with 60% three years
ago. An American poll in March this year showed 50% in favour of
expanding nuclear power, up from 44% in 2001.

Fear of fission Yet the economics of nuclear still look uncertain.
That's partly because its green virtues do not show up in its costs,
since fossil- fuel power generation does not pay for the environmental
damage it does. But it is also because nuclear combines huge fixed
costs with political risk. Companies fear that, after they have
invested billions in a plant, the political tide will turn once more
and bankrupt them. Investors therefore remain nervous.

How, then, to get new plants built? America's solution is to lard the
industry with money. That is the wrong answer.

Nuclear and other clean energy sources do indeed deserve a hand from
governments -- but through a carbon tax which reflects the benefits of
clean energy, not through subsidies to cover political risk. Exposure
to public nervousness is a cost of doing business in the nuclear
industry, just as exposure to volatile prices is a cost in the gas

It may be that fears of nuclear power are overblown: after all, the UN
figure of around 4,000 eventual deaths as a result of the Chernobyl
accident is lower than the official annual death-rate in Chinese coal
mines. Yet there are good reasons for public concern. Nuclear waste is
difficult to dispose of. More civil nuclear technology around the
world increases the chance of weapons proliferation. Terrorists could
attack plants or steal nuclear fuel. Voters will support nuclear power
only if they believe that governments and the nuclear industry are
doing their best to limit those risks, and that such risks are small
enough to be worth taking in the interests of cheap, clean energy.

One of the reasons why the public turned against nuclear power last
time round is that it found itself bailing the industry out. It would
be wrong, not just for taxpayers but also for the industry, to set up
another lot of cosy deals with governments. The nuclear industry needs
to persuade people that it is clean, cheap and safe enough to rely on
without a government crutch. If it can't, it doesn't deserve a second