Over the past few decades, switching to clean sources of energy has become a major trend in economies and for the population of the world.
Clean energy or renewable sources of energy is the type of energy derived from environmentally sustainable and renewable sources, like sunlight, wind, geothermal heat, water and others. However, there is also one very controversial source of energy that might seem very dangerous and even deadly for use: nuclear energy.
Nuclear energy is a form of power generation that uses nuclear reactions to produce electricity. It is a complex and controversial topic, and there are many economic factors to consider when evaluating the use of nuclear energy nowadays.
To start a more in-depth analysis of nuclear energy for the economy, let’s take a look at the main advantages and disadvantages of this source of energy.
- Some of the most obvious drawbacks of nuclear energy for many economies will be the safety risks it brings with itself. With the example of the nuclear accident in 1986 at the Chernobyl nuclear power plant in Ukraine, we have seen what potential catastrophic impacts a meltdown at one power plant can cause to the whole region, its people and the environment. Due to the accident the USSR Finance ministry lost approximately $12.6 billion in just 3 years after the accident. On top of that, the country had to pay an additional $3.5 billion for the cleansing of the contaminated area. After this, a series of investment withdrawals followed. The business confidence had fallen completely and the economic reputation of the area was forever lost. Among 600 workers in the power plant, 134 suffered severe illnesses from radiation and 28 died in the first three months after the accident; many fell sick with leukemia, cataracts and cancer after being exposed to high doses of radiation. As a result, 4,000 additional deaths from radioactive exposure were recorded over the following years.
- High capital cost: Building a nuclear power plan is expensive. Based on the Synapse Energy Economics research, “The construction cost estimates for new nuclear power plants are very uncertain and have increased significantly in recent years. Companies that are planning new nuclear units are currently indicating that the total costs (including escalation and financing costs) will be in the range of $5,500/kW to $8,100/kW or between $6 billion and $9 billion for each 1,100 MW plant.” Moreover, the construction of the new nuclear plant may take up to 5-10 years to build; with this new and rising industry, the cost of factors of production can vary significantly year-by-year. As a result, many middle income countries with abundant resources of uranium are still reluctant to pursue these goals. For instance, Kazakhstan (a middle income country) is the number one uranium exporter in the world, but the construction of nuclear power plants have been neglected for the past 30 years.
- Limited fuel supply. Nuclear energy is technically not a renewable energy source, although it is a “clean” source of power. Even though it is not a fossil fuel, uranium is extracted from underground uranium ores, which also may result in the risk of uranium depletion. The more scarce the earth’s uranium resources will become, the more expensive extraction will be. As a result, the already high cost of production may increase in the future, offsetting all the cost reductions that technology creates.
- Impact on the environment. The major drawback of nuclear energy is the potential radioactive waste leakage into the environment around the power plant. And yet, no government has taken any actions to safely manage this waste. Furthermore, the production of nuclear energy requires the mining of uranium, which can have a significant environmental impact. Uranium mining can lead to water pollution, soil erosion, and destruction of wildlife habitats. It can also expose miners to harmful radiation.
Nuclear energy has several economic advantages over other forms of energy, including its low operating costs, its ability to provide stable and reliable baseload power, and its minimal greenhouse gas emissions. Here are some statistics and proof to support these economic advantages:
- Low operating costs in the long run: After it is all built and set, nuclear power plants can be advantageous in relatively low operating costs compared to other forms of energy. According to the U.S. Energy Information Administration (EIA), the average operating cost of a nuclear power plant in the United States in 2020 was 2.14 cents per kilowatt-hour (kWh), compared to 6.81 cents/kWh for coal-fired power plants and 3.27 cents/kWh for natural gas-fired power plants. This is mostly due to the fact that nuclear power plants have high capacity factors (the percentage of time a power plant is generating electricity) and require comparably little fuel.
- Stable and reliable baseload power: Nuclear power plants are well-suited for providing stable and reliable baseload power, which is power that is available around the clock to meet the minimum level of demand. This is because nuclear power plants can operate continuously for long periods of time without interruption, unlike some other forms of energy that are dependent on weather conditions, such as wind and solar. According to the World Nuclear Association, nuclear power plants have an average capacity factor of around 80%, compared to around 25% for wind power and 15-20% for solar power.
- Minimal greenhouse gas emissions: Nuclear energy has minimal greenhouse gas emissions compared to other forms of energy, such as coal, oil, and natural gas. According to the Intergovernmental Panel on Climate Change (IPCC), nuclear energy emits around 12 grams of carbon dioxide equivalent (CO2e) per kilowatt-hour (kWh) of electricity generated, compared to around 820 grams CO2e/kWh for coal-fired power and 490 grams CO2e/kWh for natural gas-fired power.
- Nuclear energy is much safer now: Nuclear power plants today become one of the safest and secure facilities in the world. In fact, the risk of radioactive leakage and accidents is highly controlled by several global organizations, such as the International Atomic Energy Agency ( IAEA) that was set by the United Nations in 1957. The organization acts as an auditor of world nuclear safety in every country with operating or constructing nuclear power plants. Nowadays, there are 439 operating nuclear power plants around the world in over 30 countries, which gives a clear understanding that nuclear energy is becoming more and more safe.
In addition to these economic advantages, nuclear energy also has the potential to create jobs and stimulate economic growth. According to the Nuclear Energy Institute, the U.S. nuclear industry supports approximately 475,000 jobs and contributes around $60 billion to the U.S. economy each year.
To sum up, switching to nuclear energy in the short term may not be cost-effective for many countries due to high capital and operational expenses at the start. Natural gas power plants, on the other hand, can be constructed more easily and efficiently and can provide significant returns within two years. However, as advanced technology and innovations emerge, it is expected that the total cost of building nuclear power plants will decrease in the long run. Nuclear energy can also bring numerous benefits to a country’s economy and the environment. For countries heavily dependent on non-renewable resources such as oil and gas, nuclear energy can be a viable alternative in the long term. It can help to diversify the economy, create jobs and improve infrastructure, reduce pollution caused by industries, and enhance living standards globally.