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HOME > Nuclear Power Economics      
Nuclear Power Economics

What is the relationship between the economics of nuclear power and the proliferation of nuclear weapons?

When security and arms control analysts list what has helped keep nuclear weapons technologies from spreading further than they already have, energy economics are rarely, if ever, mentioned. Yet, large civilian nuclear energy programs bring states quite a way towards developing nuclear weapons (to learn more see the Proliferation Danger of Light Water Reactors by Victor Gilinsky, et. al. and Swords to Plowshares: The Military Potential of Civilian Nuclear Energy by Albert Wohlstetter et. al.) and it has been energy economics, more than any other force, which has hampered most states’ plans to develop such projects.

Certainly, over the last half century, every major government in North America, Asia, the Middle East, Latin America, and Europe have planned to build nuclear power plants, but market realities prevented most of these plans from being fully realized. There are now calls for another “nuclear renaissance”. For detailed description of how far this nuclear expansion might go, see Nuclear Power: How Much More? by Sharon Squassoni.

If nuclear power became truly too cheap to meter, could assure energy security or eliminate greenhouse gas emissions economically, private investors would be clamoring to bid on nuclear power projects without governmental financial incentives. However, so far private investors have all stayed clear of putting any of their own capital at risk. The reason why is simple: Private investors fear that nuclear energy’s future will rhyme with its past. In the 1970s and 1980s, new nuclear power projects ran so far behind schedule and over budget, most of the ordered plants had to be cancelled. Utilities and utility investors were bitten financially and the banking sector became wary. Today, private investors are hesitant to bet on nuclear power because long lead times, rapidly rising costs and the difficulty in predicting how energy markets and technologies will perform in the next two decades. For more details on the economic history and prospects for nuclear power, see The Economics of Nuclear Power and Proliferation Risks by Jim Harding).

Overnight Capital Costs Projections for New Power Reactors (2008 $s/installed KW) -- High and Rising
This graph, which reflects some of the most recent nuclear cost projections, is based on a chart originally generated by Mark Cooper and spotlighted by Sharon Squassoni. See, Mark Cooper, The Economics of Nuclear Reactors: Renaissance or Relapse? Vermont University, Institute for Energy and the Environment, June 2009 and Sharon Squassoni, The U.S. Nuclear Industry: Current Status and Prospects under the Obama Administration, Nuclear Energy Futures Paper No. 7, The Centre for International Governance Innovation, November 2009.

The nuclear industry also still faces competition from traditional fossil fuels and new alternative energy sources that are becoming cheaper to produce and more efficient as the scale of production facilities grows and technology improves. (For more on the alternatives to nuclear power see Nuclear Power: Climate Fix or Folly by Amory Lovins) The latest concerns about carbon emissions and global warming have bolstered political support for expanding nuclear power. However, even in France, the most nuclearized state, carbon emissions are growing and foreign energy dependencies have not declined (for more on France's domestic program and its role in promoting nuclear power abroad, see Nuclear France Abroad, by Mycle Schnieder).More important, there are a number of quicker, cheaper ways to accomplish this including expanding the use of natural gas -fired plants (which produce roughly half the carbon emissions of coal plants), improving the efficiency and upgrading the technology underpinning the electrical grid, developing distributed electrical systems and improving the efficiency of the end use equipment. (For more on the U.S. government's plan to subsidize domestic nuclear power and cost comparisons between nuclear and the alternatives see Doug Koplow’s Nuclear Power as Taxpayer Patronage.)

Unfortunately, nuclear power projects have been used in past as covers for weapons development, and today there is still no way to completely safeguard civilian nuclear plants and materials from being diverted to military purposes despite the IAEA’s best inspections efforts. (See NPEC's book Falling Behind for an examination of the IAEA's challenge of ensuring safeguards.) Given these risks, clarifying the economics of nuclear power programs and developing creative ways to leveraging these findings to help discourage the spread of the most dangerous, uneconomical nuclear activities ought to be sought. For some possibilities, see Market Fortified Nonproliferation, by NPEC executive director Henry Sokolski.

Learn More:

The Proliferation Danger of Lightwater Reactors by Victor Gilinski et. al.

The Economics of Nuclear Power and Proliferation Risks by Jim Harding.

Nuclear Power as Taxpayer Patronage by Doug Koplow

Nuclear Power: Climate Fix or Folly by Amory Lovins

Nuclear France Abroad by Mycle Schnieder

Falling Behind an NPEC commissioned book edited by executive director Henry Sokolski

Market Fortified Nonproliferation by NPEC executive director Henry Sokolski

Nuclear Power: How Much More? by Sharon Squassoni

Swords to Plowshares: The Military Potential of Civilian Nuclear Energy by Albert Wohlstetter et. al.

The Nonproliferation Policy Education Center (NPEC), is a 501 (c)3 nonpartisan, nonprofit, educational organization
founded in 1994 to promote a better understanding of strategic weapons proliferation issues. NPEC educates policymakers, journalists,
and university professors about proliferation threats and possible new policies and measures to meet them.
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