Posted by Daniel Hall on May 2, 2008
Carbon dioxide charges of about $45 per metric ton would probably make nuclear generation competitive with conventional fossil fuel technologies as a source of new capacity and could lead utilities to build new nuclear plants that would eventually replace existing coal power plants. At charges below that threshold, conventional gas technology would probably be a more economic source of baseload capacity than coal technology. Below about $5 per metric ton, conventional coal technology would probably be the lowest cost source of new capacity.
A carbon price of $45 per ton of CO2 is very likely higher than the U.S. could (politically) implement in the near future. Current emissions prices in the EU are around $35/ton right now. If the U.S. passed a bill with similar stringency to Lieberman-Warner — a big political ‘if’ — then the EIA says the 2020 price would be around $30/ton, while the EPA analysis suggests higher, $40-50/ton. If I was guessing I would say it is much more likely that any politically acceptable bill will result in prices of $10-30/ton in the near term.
But I think this is actually the most interesting point about nuclear power right now:
Uncertainties about future construction costs or natural gas prices could deter investment in nuclear power. In particular, if construction costs for new nuclear power plants proved to be as high as the average cost of nuclear plants built in the 1970s and 1980s (adjusted for inflation), or if natural gas prices fell back to the levels seen in the 1990s, then new nuclear capacity would not be competitive…
And this is very possibly the state of the world we are in. Check this recent post from the EU Energy Policy blog. Power plant construction costs have more than doubled since 2000, with much of the rise in the last two years and much of it very related to nuclear construction costs. China particularly is consuming so much cement and steel that global prices for construction commodities are going through the roof.
A couple years ago I was relatively sanguine about the prospects for nuclear power but I am much more skeptical now. I think the big problems are:
1. In the short run the price of global commodities and NIMBYism mean that it is both very expensive and very difficult to build new plants.
2. In the long run bad news about climate change could make nuclear look much more attractive but here proliferation worries me. The long run is all about China and India and other not-so-stable parts of the world. Fine, you can nuke up the U.S. or Europe completely (a la France) but this doesn’t make a huge difference because those places aren’t the future of the emissions anyway. To really make a dent in the emissions trajectory you are talking about a huge number of plants in parts of the world where there are major religious and ethnic tensions (Jammu and Kashmir, western China) or where governments are authoritarian or (perhaps worse) incompetent.
Essentially I think the U.S. and Europe should be thinking now about which energy technologies they’d like to export 20 years down the road. In this regard I’d rather us do a bunch of carbon capture and storage research than try to reinvigorate the nuclear industry.
Here is the MIT study on nuclear power, recommended.