Is Nuclear Energy Cost-Effective?

Is the real problem with nuclear energy not its low-probability/high cost disasters (read Japan’s $245 billion nuclear catastrophe), but its cost-effectiveness?

John Farrell, at Renewable Energy World, makes that argument.  He argues that nuclear is actually third most expensive source of energy, and makes the case for investing in renewable energy.  He has nice graphs, but most of the analysis rests on one 2009 study from the Institute for Energy and the Environment at Vermont Law School.

On the other hand, the World Nuclear Association, looking at US electricity costs, argues that nuclear is cheaper than coal, gas and oil energy.

And then there’s still recent study from PriceWaterhouseCoopers that found Sweden’s hydro and nuclear energy production far more cost-effective than looking to wind energy.

But in any case, forecasting future costs of energy might be beside the point:  the real is, what happens when nuclear energy is cut out?

First, here’s a graph that shows the significant role nuclear, coal and natural gas play in America’s energy portfolio. (Naturally, driving eats up most of America’s petroleum consumption.)

And then Germany’s nuclear phase-out will lead Germany to rely more on gas and oil, increasing CO2 emissions.  But, owing to Europe’s carbon trading scheme, this could in turn spur Europe to turn to cleaner sources of energy.  Whether the increased push for renewable will lead, long-term, to a cleaner future faster than with nuclear in the mix is still unclear.

But, finally, one caveat should be noted:  the Gulf Oil Spill cost approx. $40 billion–or 1/5 the cost of Japan’s nuclear disaster.  Now, in 2007, the United States spent $1.233 trillion on energy.

The numbers are there; and policy-makers will have to decide whether the cost of not using nuclear energy outweighs the danger of a low-probability/high-cost nuclear accident.  But, at least in the United States where there is no cap and trade system, nuclear energy will seem to beat out renewable energy sources in the near-term when it comes to quickly generating energy and lowering America’s carbon imprint.