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The Issue What are the benefits of nuclear energy? |
Despite controversy over particulars, some general conclusions are possible:
The International Commission on Radiological Protection's Justification Principle (Chapter 7) requires that any practice involving radiation exposures to people must be expected to yield a net benefit, i.e., the benefits should exceed the costs, including risks as costs. For a major policy decision, such as selecting the technology for a large electrical generating plant, simply demonstrating a net benefit is not sufficient: the net benefit for the favoured technology should be shown to be greater than the net benefits for available options. The costs and benefits consist of several components, some of which can be expressed in monetary terms, e.g., dollars, while others are qualitative. The dollar values can be summed but the qualitative factors require subjective judgement of their value by the policy makers who are accountable to the public.
The use of cost/benefit ratios by economists in decision-making has accustomed us to regarding costs and benefits as polarized opposites. However, in real life, costs or, more precisely, differential costs, can be benefits: if the costs of one means of achieving a desirable objective are less than the costs of alternatives the difference represents a saving, i.e., a benefit. This applies not only when the costs and benefits can be expressed in dollars, but also when they are health, environmental or social factors. A consequence is that decision-making should consider the costs and benefits of realistic alternatives, not just those of any one means in isolation.
Generating electricity by any means obviously involves a financial cost, usually expressed in cents per kilowatt.hour. The benefit of using nuclear energy in any instance is the cost of the electricity generated by the most competitive available option less the cost of the nuclear electricity. Even when comparing only the dollar costs of the available options for new plants to supply electricity there is no simple answer. Decision-makers have to assess all relevant factors for their particular circumstances. Nuclear- and hydro-electric plants have high capital costs for their construction, but low operating and fuel costs: fossil-fuelled plants have lower capital costs but higher operating and fuel costs, and the fuel costs increase with distance from the source of the fuel.
Because of the relatively high capital costs of nuclear plants there is an economic incentive to minimize design and construction times so that the revenues can begin as early as possible. In this connection it is encouraging that the seven most recently built CANDU plants were constructed within budget and schedule. The construction times of the two at Qinshan in China were less than those of China's previous six nuclear plants, built by other countries. For the same economic reason plants should operate at a high capacity factor. In 2006, the twenty-six CANDU plants worldwide averaged a capacity factor of 86.4 per cent, up from their lifetime average of 80.6 per cent.
Of existing plants, coal-fired, nuclear- and hydro-electric plants generate the lowest cost electricity. In 1998 an assessment by Natural Resources Canada found that for new plants, ignoring health and environmental costs, natural-gas-fired cogeneration plants probably yield the lowest cost electricity. Beyond that and as a broad generalization, subject to many qualifications, for new base-load generating capacity in Canada, hydro-electric, coal-fuelled and nuclear plants are the lowest-cost options: hydro-electric has an advantage where there are still unexploited sites, coal-fuelled close to domestic coal mines in Western Canada and nuclear in Central Canada. Oil is no longer competitive.
In the assessments of relative costs of generating electricity, nuclear costs include allowances for disposal of the wastes and decommissioning the plants. The fossil-fuelled costs, on the other hand, include no allowance for the damage to health and the environment from their emissions, and the eventual need to decommission or rebuild hydro-electric plants is never discussed. The health effects of radiation have been discussed in Chapter 7. These are insignificant when compared with the health effects of combustion products from fossil fuels. The Ontario Medical Association has estimated that atmospheric pollution from this source causes 1900 premature deaths per year in Ontario alone, and costs the economy over $1 billion per year for hospital admissions, emergency room visits and absenteeism. Worldwide, the World Health Organization has estimated that each year three million people die from air pollution, dominated by emissions from fossil fuels. Vehicles and coal-fired power plants in both the U.S. and Canada are the major contributors to this pollution. Substitution of natural gas for coal is being encouraged but a 1000MWe natural-gas plant releases daily 5.5 tonnes of sulphur oxides, 21 tonnes of nitrogen oxides, 1.6 tonnes of carbon monoxide and 0.9 tonnes of particulates. A 1000MWe photovoltaic solar-electric plant would generate 6850 tonnes of hazardous wastes (toxic metals and solvents) from metal processing alone over 30 years. A similar thermal-solar plant using mirrors to concentrate the energy would generate 435,000 tonnes of manufacturing wastes, including 16,300 tonnes containing lead and chromium.
Use of nuclear power in Canada in the past thirty years has avoided the emission of 32 million tonnes of sulphur dioxide and 7.3 million tonnes of nitrogen oxide that contribute to harmful atmospheric pollution: it has also avoided the emission of 800 million tonnes of carbon dioxide, a greenhouse gas. A study by the Nuclear Energy Agency of the Organization for European Cooperation and Development and the International Energy Agency has found nuclear power to be the lowest cost source of electricity in Europe when external environmental impacts are taken into account. It gave total life-cycle external costs of 3 Euro cents/kWh for coal, 1 Euro cent/kWh for gas and photovoltaics, and 0.1 Euro cent/kWh for nuclear, hydro and wind. The report noted that, since in Europe nuclear power was cheaper than gas in direct costs and competitive with coal, it was therefore the cheapest all round source of electricity when external costs were added to the direct costs.
Nuclear opponents claim that nuclear energy enjoys unfair subsidies, essentially the federal government's support of research and development (R&D). While it is true that the Canadian nuclear industry has benefited substantially from R&D support the amount is much less than for other industrialized countries whose independent nuclear systems have not survived in competition with the U.S. (Table 11). These results show that Canada is the most efficient of the G7 countries in terms of what it spends on R&D per unit of electricity produced. Much of Canadian R&D expenditures is now supported by funding of the CANDU Owners Group, an international association of utilities operating CANDU reactors.
| Nuclear R&D Spending versus Electricity Produced | |||
|---|---|---|---|
| Nation | Spending (U.S.M$) | Electricity (TWh) | $/Electricity ($/MWh) |
| U.S. | 2591 | 748 | 3.46 |
| France | 595 | 395 | 1.51 |
| West Germany | 980 | 169.7 | 5.77 |
| Japan | 2527 | 302.1 | 8.36 |
| U.K. | 198 | 78.5 | 2.49 |
| Italy | 106 | 0 | - |
| Canada | 71 | 83.5 | 0.85 |
Governmental support for R&D on new technologies is normal practice in Canada and elsewhere. The renewable energy sources have received similar R&D support since the oil crises of the 1970s, but this has not resulted in a competitive industry. A study by Houston's Institute for Energy Research estimated that the U.S.'s cumulative 20-year taxpayer subsidy on conservation and non-hydro renewables amounted to US$30 - 40 billion, of which US$5.8 billion were on wind and solar. Fossil-fuel producers enjoy tax relief for exploration, a comparable activity. Overall, nuclear energy would be favoured if all costs were internalized in the assessment.
Nuclear- and hydro-electric plants, because of their capital intensity, are largely inflation-proof once they are built, but this same factor renders their costs vulnerable to high interest rates during construction and to unfulfilled demand-forecasting: if the expected demand does not materialize the income will not be there to pay capital costs for an unneeded plant. On the other side of the balance, the costs of fossil-fuelled plants are vulnerable to cost increases due to natural and political factors over the lifetime of the plant. Oil prices, in constant dollars, varied by a factor of five over the period 1970 to 2000, while natural-gas prices doubled in the winter of 2001. These uncertainties could be completely overshadowed by internalizing the health costs already mentioned, or any change in government policies to reduce global warming (Chapter 10). One of the measures being discussed is a "Carbon Tax" that would penalize those activities that release "greenhouse gases". This, if implemented, would tilt the balance strongly in favour of nuclear plants everywhere. Estimates for the U.S. show that a carbon tax of U.S.$25 - 35 per tonne would make nuclear competitive while U.S.$65 - 100 per tonne would be required to make renewables competitive.
Nuclear- and hydro-electricity, because of their relatively high capital costs, are best used as base-load plants, i.e., to supply the demand that exists 24 hours a day, day in day out. Peak demand is more efficiently supplied by plants such as natural-gas-fired ones with low-capital, high-fuel costs. Thus, the minimum cost solution for a utility consists of a mix of generating capacity. For the same reason, the costs of nuclear electricity, expressed as cents per kilowatt-hour, are sensitive to the operating efficiency actually achieved by the plant. When the plant is out of operation for maintenance or repairs the high capital charges still have to be paid but there is no income coming in. For all these reasons realistic assessments of cost-competiveness can be made only for specific proposals on specific sites.
Wind-generated electricity provides an illustration of economic subtleties. As a generalization again, wind power and other alternative sources derived from solar energy are economically competitive only where there is no access to an electric grid. Where there is a grid, wind energy can make a useful, low-pollution contribution to electricity supply while it is only a few per cent of the system's capacity. However, being intermittent and unpredictable, it requires a backup source for the system to provide reliable supply. If this means that the dependable backup sits idle, receiving no income while having to pay interest charges, the overall cost to the system, and hence to the customer, increases. If, conversely, it is called upon only to satisfy peak demand it will be idle most of the time and hence will price itself out of the market.
Proponents of solar-based technologies have been claiming for decades that these would be competitive if only they received more funding for research, but promising suggestions for research and development have been well supported since the oil crises of the 1970s. Because the energy, sunlight or wind, is dilute and intermittent it requires very large structures for collection and storage, robustly engineered to withstand all environmental assaults for decades. It can therefore never become much cheaper than it is now. Conversely, nuclear- and hydro-electricity, with their very low operating costs, should never become much more expensive: even doubling the price of uranium would increase the cost of the electricity by only five per cent. For this fundamental reason solar-based technologies are unlikely to undercut nuclear- and hydro-electricity for base-load capacity, however much research is done.
The jobs created by the various options is an economic-related factor that does not directly translate into electricity costs to the customer. If coal-fired plants were to be built remote from domestic mines the coal would probably be imported from the U.S., resulting in the loss to Canada of many of the jobs. For all other options the jobs in both construction and operation either are or could be in Canada. Nuclear opponents claim that renewable energy sources would create more jobs than nuclear energy but this would be true for two systems with the same cost to the customer only if the more jobs were lower paid. They also argue that the construction jobs should be excluded, but this would be like claiming that the only jobs in the auto industry are at the gas stations.
Importing coal means that this option does not enjoy the same degree of security of supply as the others. Security of supply is another factor that cannot be quantified but that is very important to governments. Many countries are highly vulnerable to disruptions in fuel supplies, especially of oil and natural gas, whether the disruptions are due to war, political actions, or shortages. In the U.S. replacing coal with natural gas for generating electricity will greatly increase the demand for natural gas: under the North American Free-Trade Agreement Canada will have to share in any resulting shortages. The importance of this factor is illustrated by the Spring 2002 recommendation of the G-8 energy ministers that nuclear-generating capacity should be increased in view of the current excessive dependence on Mid-East oil.
The nuclear industry contributes more than $6 billion to Canada's gross domestic product annually, maintains 30,000 direct jobs plus 70,000 in supply and service industries and contributes significantly to Canada's balance of trade, not just by avoiding the importation of U.S. coal but by the export of electricity, reactors, services, uranium and radioisotopes amonting to $1 billion per year. Each CANDU reactor sold abroad results in about $750 million worth of business for about 150 Canadian companies, representing 13,000 person-years of employment. Canada's exports of uranium currently amount to about $0.5 billion per year and represent nearly one-third of the world's commercial uranium. The value of known uranium deposits in Northern Saskatchewan is about $25 billion. Canada produces about two-thirds of the world's reactor-produced radioisotopes; 85 per cent of all cobalt-60 for cancer treatment; and 30 per cent of the cobalt-60 for sterilizing medical disposables. Nuclear energy and aerospace are the only two Canadian high-tech industries with a positive balance of trade, i.e., we export more than we import. All Canada benefits from a healthy economy that pays for our social programs.
Opponents argue that the nuclear industry receives a subsidy through financial guarantees for exports by the federal government. However, such guarantees are a normal component of the government's industrial policy and are not confined to the nuclear industry (Chapter 14). Opponents also argue that, because most of the companies that manufacture components for CANDU reactors have other business, stopping these exports would not harm them. This argument is specious: in the real, competitive world successful companies depend on a variety of products and the loss of any one is serious. The fact that the companies are not wholly dependent on CANDU business is a strength in that the companies and their expertise can survive on other business between orders for CANDU reactors.
The well publicized cost escalation for Ontario Power Generation's (OPG) Darlington CANDU Station, from a first estimate of $4 billion in 1977 to $14.3 billion in 1992 after construction, is cited by opponents as evidence of the industry's inability to control costs. However, they do not support this claim with any analysis of the causes. While OPG was unquestionably responsible for some of the cost escalation through poor estimating and delays in construction, serious inflation during the construction period and political decisions made major contributions, as documented in "Can CANDU Estimates be Trusted?". Constant criticism of OPG's "debt" is misleading, since this is no more than the equivalent of a house mortgage, which is not normally regarded as a "debt". The "debt" is a problem only if it exceeds the value of the assets produced from it; if the income produced as a result of the investment is insufficient to repay it. Not to share capital costs with future generations using the electricity from these plants would be unfair to past and present generations. Even with the escalated construction costs, the cost of electricity from the Darlington plant was 4.5 cents per kilowatt-hour, the cheapest source of new base-load supply available to Ontario. For comparison, the energy-conservation program of giving away 52-watt bulbs saved energy at a cost of 11.5 cents per kilowatt-hour.
For health effects as for economic costs, the effects are costs when considered in isolation but are benefits when compared with the effects of other options. The nature of the effects has been discussed in Chapter 7. To make valid comparisons between the health effects of available options, all stages in the process must be considered, from fuel mining through waste disposal. Several studies, in Canada and elsewhere, have shown that the health risks to both public and workers from hydro- and nuclear-electric plants are about the same; and much less than those from coal-fired plants. Similar analyses are not as well established for the renewable energy sources but it should not be assumed that they are harmless: some photo-electric materials, such as gallium arsenide are toxic while scraping ice off roof-mounted solar collectors or maintaining 40-metre high wind generators is unlikely to be risk-free. Some of the toxic wastes generated by these sources have already been mentioned.
Even when nuclear energy can be shown to involve less risk to health than the available alternatives, usually coal or natural gas, it is still conventional wisdom to regard its use as costing lives, however few. This view ignores the contribution that electricity generation makes to a country's gross domestic product (GDP), and the fact that about 15 per cent of the GDP is devoted to safety measures while health protection consumes roughly half of provincial budgets. Without a healthy economy we could not afford our health services and without adequate electricity we would not have clean water, sewage plants and food refrigeration that are essential to health. When these factors are considered, investments in productive facilities, such as electricity-generating plants, can result in a net saving of lives.
The benefits to health worldwide from Canadian produced radioisotopes has been mentioned. Consideration of environmental effects in Chapter 10 yields further benefits from the use of nuclear-electricity when comparison is made with other options. These benefits are very real even though they are not yet quantified in dollar terms.
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