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For better or worse, America’s energy future will be determined by political considerations as much as market conditions since all energy sources generate external costs that are not fully incorporated into market prices.
Perhaps the most salient example is CO2 emitted from burning fossil fuels. Most agree that these emissions contribute to adverse climate change. Various taxes, subsidies and regulations are designed to move the economy toward increased reliance on non-carbon-generating solar and wind power. However, what about nuclear power, which also generates zero carbon emissions?
In “The Case for Nukes,” Robert Zubrin notes that building a nuclear power plant in the United States is more costly than almost anywhere else in the world. For example, it takes four years to build a nuclear reactor in South Korea, but a recently constructed plant in the United States took more than a decade to build. Zubrin argues that the main reason is government regulation.
Nuclear safety is obviously important since radiation is dangerous. However, Zubrin argues that nuclear regulations are not proportionate to the actual risks, especially when compared with less stringently regulated wind and solar sources. These, like all energy sources, also impose external costs. Solar panels contain toxic metals that pose external costs in mining and disposal. Wind-generated energy can change local climate patterns and hurt wildlife.
Zubrin argues that nuclear risks are often exaggerated. The 1979 nuclear meltdown at Three Mile Island leaked a small amount of radioactive iodine gas. But the additional amount of radiation was about the same as what a person would be exposed to spending five days skiing or hiking in Colorado.
While U.S. policy inhibits new nuclear facilities, the rest of the world is pursuing the nuclear alternative. Utilities around the world are planning to build more nuclear power plants. China is building the most, followed by Russia and India.
Ideally, energy policy should balance the benefits and costs, including external costs, and structure a national energy policy that maximizes social benefits. However, as the external costs of any energy source are, by definition, unknown, we have only the vaguest idea of what that optimal mix looks like. Moreover, even if energy “experts” could answer the question, there is little assurance that the political process, which is rife with special interests and subject to fear-mongering, would follow its suggestions.
Nevertheless, our hunch is that Zubrin is onto something, and we should consider nuclear.•
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Bohanon and Horowitz are professors of economics at Ball State University. Send comments to ibjedit@ibj.com.
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