Nuclear Energy – A Short Detour on the Road to Armageddon
The catastrophe at the nuclear power plants in northern Japan following the earthquake there and the resulting debate about nuclear generation of electricity reminds me of the internal debates we had within the staff of the California Coastal Commission over 35 years ago as we first struggled with the many issues raised regarding the advisability of sighting electric generation facilities driven by nuclear energy along the California coast. This debate occurred during the early years of the coastal planning process in California prior to the completion of the California Coastal Plan.
Sure there were serious environmental issues raised, some over-blown, like the impact of heated waste water on the marine environment and others, like the disposal of the radioactive waste, real and unresolved to this day. There were also safety concerns again some real and some not so. But interestingly, what concerned several of us who at the time were responsible for the land use regulation and planning for the coast were the economic and political implications of the then planned nuclearization of American electrical energy.
You see each nuclear power plant was a giant financial capital sink, each plant costing more and requiring more sunk capital (Investment money not returned if the plant did not ultimately come on-line for its full economic life) than most other individual construction projects. In addition, were all or most of the planned units in the country to be constructed within the times proposed, they could have absorbed most of not all the capital resources available at the time, potentially squeezing out other needed capital projects and increasing the cost of money.
In addition, because the sunk capital costs were so high the only way they could be financed required reducing risks to almost zero. This necessitated ever more governmental assistance in terms of subsidies, guarantees, regulatory exemptions, limits on liability and the like. In effect the taxpayer was paying for or guaranteeing these plants while others were reaping the profits and leaving the environmental costs to future generations of Americans.
So, what else is new? This is the way things work, how things get done right? Most of us looking into it agreed, but some asked the question, why and was there another way.
We were told even back then that this was necessary for the nation to reduce its dependency of foreign oil. Fair enough, but there were alternatives as feasible as these over engineered, frightfully expensive, dangerous and risky projects. For example, although none of us thought it was practical, every home and business in the US could have been fitted with photovoltaic cells for less than the cost of the nuclearization plan with lower demands on the capital market and fewer environmental and social impacts. True the cost of electricity would rise since the photovoltaic cells are less efficient in electricity production than power plants(a problem certainly as subject to future solution as the disposal of radioactive wastes). Nevertheless, even though it can be acknowledged that increasing per unit electricity costs would certainly be a political problem, the fact remained that technically options to nuclearization appeared available.
So what was going on then?
A commitment to nuclearization of the energy grid ment a commitment to a small group of engineering, supply and energy companies and the three or four financial companies large enough to finance such projects. Almost all other potential energy sources do not require such centralizing financing and engineering. The potential profits that could be made by those few large companies from the engineering, construction and above all financing fees, not to mention the potential monopolization of a segment of the energy market made it worthwhile to encourage a consistent public and political relations campaign to benefit themselves.
What they could not tolerate however was risk since the sunk costs were so large. The complexity of the legal and regulatory process in the US supplied such unacceptable risk and coupled with flattening demand and the continuing low price of oil the nuclear electrical generating industry ultimately failed in the United States. In other countries however a powerful cartel of less than a dozen state-owned or state guided firms have spearheaded the growth of the industries in those countries.
Unfortunately, the capital project financial industry in the US could not see smaller decentralized capital projects as worth their efforts (although they continue to search and lobby for large capital intensive energy projects such as wind farms and huge solar arrays). The less capital intensive energy options have fallen to the much smaller investment financing market.
Regretfully, an unintended consequence of the failure of the nuclearization of energy production was its impact on a generation of engineers and engineering schools dependent and expectant on continued growth in the demand for super large capital projects like nuclear power plants. The high-tech boom failed to provide an adequate alternative to employ this excess engineering capacity resulting in civil engineering becoming almost a lost art in the US to be replaced by a demand for and explosive growth of business and financial schools. Unfortunately, as Henry Ford observed, “A business that makes nothing but money is a poor business.”
Note: since this was written a revised and updated version (with comments) has been published in the blog “Daily Kos”.