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Prospects for Nuclear Power

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  • Lucas W. Davis

Abstract

Nuclear power has long been controversial because of concerns about nuclear accidents, storage of spent fuel, and how the spread of nuclear power might raise risks of the proliferation of nuclear weapons. These concerns are real and important. However, emphasizing these concerns implicitly suggests that unless these issues are taken into account, nuclear power would otherwise be cost effective compared to other forms of electricity generation. This implication is unwarranted. Throughout the history of nuclear power, a key challenge has been the high cost of construction for nuclear plants. Construction costs are high enough that it becomes difficult to make an economic argument for nuclear even before incorporating these external factors. This is particularly true in countries like the United States where recent technological advances have dramatically increased the availability of natural gas. The chairman of one of the largest U.S. nuclear companies recently said that his company would not break ground on a new nuclear plant until the price of natural gas was more than double today's level and carbon emissions cost $25 per ton. This comment summarizes the current economics of nuclear power pretty well. Yes, there is a certain confluence of factors that could make nuclear power a viable economic option. Otherwise, a nuclear power renaissance seems unlikely.

Suggested Citation

  • Lucas W. Davis, 2012. "Prospects for Nuclear Power," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 49-66, Winter.
  • Handle: RePEc:aea:jecper:v:26:y:2012:i:1:p:49-66
    Note: DOI: 10.1257/jep.26.1.49
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.26.1.49
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    Cited by:

    1. Harris, Grant & Heptonstall, Phil & Gross, Robert & Handley, David, 2013. "Cost estimates for nuclear power in the UK," Energy Policy, Elsevier, vol. 62(C), pages 431-442.
    2. Mason, Charles F., 2014. "Uranium and nuclear power: The role of exploration information in framing public policy," Resource and Energy Economics, Elsevier, vol. 36(1), pages 49-63.
    3. Sven-Olof Fridolfsson and Thomas P. Tangeras, 2015. "Nuclear Capacity Auctions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    4. Welsch, Heinz & Biermann, Philipp, 2016. "Measuring nuclear power plant externalities using life satisfaction data: A spatial analysis for Switzerland," Ecological Economics, Elsevier, vol. 126(C), pages 98-111.
    5. Roger Fouquet, 2012. "Economics of Energy and Climate Change: Origins, Developments and Growth," Working Papers 2012-08, BC3.
    6. Lucas Davis & Catherine Hausman, 2014. "The Value of Transmission in Electricity Markets: Evidence from a Nuclear Power Plant Closure," NBER Working Papers 20186, National Bureau of Economic Research, Inc.
    7. Thomas Covert & Michael Greenstone & Christopher R. Knittel, 2016. "Will We Ever Stop Using Fossil Fuels?," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 117-138, Winter.
    8. repec:eee:energy:v:131:y:2017:i:c:p:67-77 is not listed on IDEAS
    9. Solveig Glomsrød & Taoyuan Wei & Torben Mideksa & Bjørn Samset, 2015. "Energy market impacts of nuclear power phase-out policies," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(8), pages 1511-1527, December.
    10. Aalbers, Rob & Shestalova, Victoria & Kocsis, Viktória, 2013. "Innovation policy for directing technical change in the power sector," Energy Policy, Elsevier, vol. 63(C), pages 1240-1250.
    11. Fink, Alexander & Stratmann, Thomas, 2015. "U.S. housing prices and the Fukushima nuclear accident," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 309-326.
    12. Zhu, Hongjia & Deng, Yongheng & Zhu, Rong & He, Xiaobo, 2016. "Fear of nuclear power? Evidence from Fukushima nuclear accident and land markets in China," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 139-154.
    13. Ando, Michihito, 2015. "Dreams of urbanization: Quantitative case studies on the local impacts of nuclear power facilities using the synthetic control method," Journal of Urban Economics, Elsevier, vol. 85(C), pages 68-85.
    14. Roger Fouquet (ed.), 2013. "Handbook on Energy and Climate Change," Books, Edward Elgar Publishing, number 14429, April.
    15. Alexander Fink & Thomas Stratmann, 2013. "U.S. housing prices and the Fukushima nuclear accident: To update, or not to update, that is the question," ICER Working Papers 04-2013, ICER - International Centre for Economic Research.
    16. Roman Mendelevitch & Thanh Thien Dang, 2016. "Nuclear Power and the Uranium Market: Are Reserves and Resources Sufficient?," DIW Roundup: Politik im Fokus 98, DIW Berlin, German Institute for Economic Research.
    17. Linares, Pedro & Conchado, Adela, 2013. "The economics of new nuclear power plants in liberalized electricity markets," Energy Economics, Elsevier, vol. 40(S1), pages 119-125.
    18. Huhtala, Anni & Remes, Piia, 2017. "Quantifying the social costs of nuclear energy: Perceived risk of accident at nuclear power plants," Energy Policy, Elsevier, vol. 105(C), pages 320-331.
    19. Managi, Shunsuke & Guan, Dabo, 2017. "Multiple disasters management: Lessons from the Fukushima triple events," Economic Analysis and Policy, Elsevier, vol. 53(C), pages 114-122.
    20. Sexton, Steven & Eyer, Jonathan, 2016. "Leveling the playing field of transportation fuels: Accounting for indirect emissions of natural gas," Energy Policy, Elsevier, vol. 95(C), pages 21-31.
    21. Huhtala, Anni & Remes, Piia, 2016. "Dimming Hopes for Nuclear Power: Quantifying the Social Costs of Perceptions of Risks," Working Papers 57, VATT Institute for Economic Research.
    22. Christian von Hirschhausen, 2017. "Nuclear Power in the Twenty-First Century: An Assessment (Part I)," Discussion Papers of DIW Berlin 1700, DIW Berlin, German Institute for Economic Research.
    23. Roger Fouquet, 2013. "Low-carbon economy: dark age or golden age?," Chapters,in: Handbook on Energy and Climate Change, chapter 32, pages 682-708 Edward Elgar Publishing.

    More about this item

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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