Grumpy Economist: Nuclear Power and Growth

Jason Crawford’s “Source of Progress” blog What happened with nuclear power has become an important reading for many reasons, including economic growth, climate, and regulations.This is right Why is nuclear power out of control Written by Jack Devanney on my must-read list.

Perhaps the important economic issue of our time is this: Is economic growth over? Are we running out of ideas? Or is our decades of growth slowdown the result of hardening, over-regulation, and crony capitalist rent-seeking political systems? Nuclear power provides an interesting case study.

In the 1950s and 1960s, costs fell rapidly. The laws of economics say that the cost of an industry tends to follow the power law as a function of production: that is, every time production doubles, the cost will drop by a constant percentage (usually 10% to 25%). This feature is called the experience curve or learning curve. Nuclear energy followed the learning curve until around 1970, when it began to reverse and costs began to rise:

Over time, plotting on the linear y-axis, [note mulitplicative scale in the last graph] The effect is more significant.Dewani calls it “cork” because of the soaring cost of nuclear power construction in the United States

Read it carefully. Construction costs in the United States skyrocketed in the 1970s. South Korea’s construction costs are not. The blue dot will not continue, because the United States just stopped the construction of nuclear power plants, not because we solved the cost problem.

The graph also shows that by the 2000s, construction costs in South Korea and India were still very low. Elsewhere in the text, Devanney mentioned South Korea, which was not able to be built at a price of approximately US$2.50/watt until 2013.

The standard story about nuclear costs is that radiation is dangerous, so safety is expensive. The book thinks this is wrong: nuclear energy is made safe and cheap. It should be 3 c/kWh-cheaper than coal.

The post continues to discuss security issues, you should read the issue, but I will not summarize it.

For us, the key points are: This is a clear case of the end of growth. We know why. We did not run out of ideas. Regulations killed the industry.

At present, the NRC approval process takes several years, and the cost is as high as hundreds of millions of dollars.

why? Among other reasons, Crawford also cited a beautiful allegory of incentives (today’s second economics lesson).

Incentive measure 1: Cost never decreases

The excessive focus on low radiation levels has led to the development of a regulatory standard called ALARA: to reduce radiation as reasonably as possible. What definition is “reasonable”? This is an increasingly stringent standard. As long as the construction and operating costs of nuclear power plants are based on other power modes, they are reasonable.

This seems to be a wise approach until you realize that it by definition eliminates any chance that nuclear power is cheaper than the competition. Nuclear energy companies cannot even innovate to get out of the predicament. With the support of ALARA, any technology, any operational improvement, and any cost reduction will only give regulators more space and more excuses to promote stricter safety requirements. , Until the cost rises again to make the price of nuclear energy a bit more expensive than everything else. In fact, this is worse than that: it essentially says that if nuclear energy becomes cheap, then regulators will not have done their job.

He provided some lovely anecdotes. The point is that when overall energy prices rise, regulators need more “safety” expenses, but when overall energy prices fall, they obviously won’t lower prices. This is why nuclear energy eventually becomes more expensive. or,

The new rules will apply to factories already under construction. In 1974, the Sequoia Plant’s General Accountability Office conducted a study and recorded 23 changes: “The structure or components must be demolished, rebuilt or added due to necessary changes.” The Sequoia Plant began construction in 1968. The scheduled completion date is. It cost 300 million U.S. dollars in 1973, but it was actually put into operation in 1981 and cost 1.7 billion U.S. dollars. This is a typical experience.

Incentive measures 2: 3, CYA, and payment for delayed

People who work at NRC are not anti-nuclear. They are strongly nucleophilic-which is why they went to work for the nuclear agency in the first place. But they are subject to the system logic and its incentive structure.

The NRC has no authorization to increase nuclear power, nor does it have any targets based on its growth. They got nothing to approve the new factory. But they do have any problems. For regulators, there is no upside, only downside. No wonder they will be delayed.

In addition, when the power plant goes online, the NRC will not benefit. Their budget is out of proportion to the gigawatts produced. Instead, the nuclear companies themselves pay the National Verification Commission for the time they spend reviewing applications, close to $300 an hour. This creates illegitimate incentives: the more indirect costs and the more delays, the more revenue the agents will earn.

Here is more information about how it went wrong.

May forget. It is possible to stifle technological progress and growth.

How to solve?

In the final analysis, what we need is not some reforms, but “metaiete”: a deep regret that changed the way of thinking of the entire industry. Dewani is not optimistic that this will happen in the United States or any rich country. They are too comfortable and too able to raise funds for the illusion of “100% renewable energy”.

It’s too easy. Not only the United States, but also the alphabet soup of international organizations are trying to impose these illusions on poor countries.

On the contrary, he believes that the best prospect for nuclear energy is a poor country that strongly needs cheap, clean electricity. (I think this is the reason why his company ThorCon is building a molten salt reactor fueled by or in Indonesia.)

Nuclear and Carbon

There is an obvious statement at the beginning of this article, but there is a repetitive statement: if we are to decarbonize the economy-which means a massive increase in electricity-and also allow people around the world to escape poverty, then only nuclear energy can do it.

“Nuclear energy is.. Scalable, dispatchable and dispatchable resources (that is, on-demand), almost emission-free energy. It occupies very little land, consumes very little fuel, and generates very little waste. This is the world The technology needed to solve energy poverty and climate change.”

Final thoughts

I want to know how we should remember the costs and benefits of Hiroshima and Nagasaki every anniversary. This is usually manifested in the horror caused by bombs to Japanese civilians, rather than saving the long war, the violent attack of the B29 fleet, and the innovation of the home island.

But let us indulge in some counterfactual history. If we don’t see what nuclear bombs can do, then our economy is likely to enjoy widespread cheap nuclear energy. There will be no global warming, climate change. And economic growth would have been much greater, especially in poor countries. Of course, if we do not see the horror of the two small nuclear bombs, the United States and the Soviet Union are likely to use larger bombs at some point, increasing the terror a thousand times.

If you want to say something obvious about safety, proliferation, and the possibility of a new design, please read this post or this book first.

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