Nuclear Energy Coming or Going Peter Schwarz Professor

Nuclear Energy: Coming or Going? Peter Schwarz Professor of Economics, Belk College of Business and Associate, Energy Production and Infrastructure Center (EPIC) UNC Charlotte of 13 1

Outline • Introduction • A Brief Economic History • Regulation • Private Cost • Social Cost of 13 2

Introduction (1) • Case for nuclear energy • Baseload power • 20% share of electricity generation in U. S. • Reliable • None of the emissions associated with fossil fuels • Energy security • 100 year supply • Similar for global supply • Static analysis appropriate given that today’s decision to use uranium has little impact on future availability of 13 3

Introduction (2) • Case against nuclear energy • Construction cost can exceed $10 billion • Ten or more years to build Reprocessing used in France • Large scale to minimize average cost • High levelized cost • Costs and size consistently exceed projections • Unique design characteristics • Ever-increasing safety requirements • Safety issues • High-level radioactive wastes • Remain active for 100, 000 years or more • No permanent solution • Yucca Mountain still being deliberated • Temporary solution: On-site storage of 13 U. S. banned in 1977. Fear of nuclear proliferation. Even though President Reagan lifted ban in 1981, we do not reprocess due to a combination of risk and high cost. 4

Brief Economic History (1) • Nuclear fission • 1917: Ernst Rutherford “split” the (nucleus of) the atom • Bombarded it with alpha particles • Occasionally dislodges a proton • Changes element • Energy released (E = mc 2) • Released neutrons start self-sustaining chain reaction • If uncontrolled, get explosion • 1942: Enrico Fermi produced first controlled self-sustaining reaction • Initial interest was bomb to end WW II. • 1946: Atomic Energy Commission established to look for peaceful uses. • 1953: “Atoms for Peace” • Nuclear submarines • 1957: First large-scale nuclear energy plant • Shippenport, PA of 13 U 235 used in nuclear reactors. As compared to U 238, it is easier to cause fission and the 5 release of energy.

Brief Economic History (2) • U. S. and globally (Japan, France, and other countries) • Rapid growth in 1960 s and especially beginning in 1973 in wake of rising oil costs. • Growing doubts about safety • What to do with spent fuel waste? • 1979: Three Mile Island partial meltdown. • No deaths or injuries • Nevertheless, led to a virtual moratorium on new plant construction. • Occurred 12 days after the movie, “The China Syndrome” (nominated for 4 Academy Awards). • 1986: Chernobyl: the most serious accident • Used a different technology than U. S. plants • No containment building • Not the same safety culture • Nevertheless, reinforced the fears about nuclear energy of 13 6

Brief Economic History (3) • 2000 s: Talk of nuclear renaissance • Increased attention to carbon emissions, climate change • 2005: U. S. Energy Policy Act • U. S. Department of Energy (DOE) offered incentives for new nuclear plants. • Advanced designs compared to 1960 s, 1970 s-era plants • 16 applications • Then came Great Recession • 2011 • Fukushima • Plant built in 1960 s. • Located by Pacific Ocean; nuclear plants require large quantities of cooling water. • Hadn’t been upgraded based on updated information • Regulatory capture (Recall Stigler (1971)) • Renaissance ends • Even if Japan’s experience unlikely elsewhere of 13 7

Brief Economic History (4) • Germany accelerates phase-out of nuclear energy • Subsidized renewables • Very costly • Returned to coal (lignite) • Now has some of highest electricity prices in the EU • Japan shuts down nuclear plants • Had accounted for 30% of electricity generation • High electricity prices even before Fukushima • Few energy reserves • Returning to nuclear energy • Deregulating its electricity industry of 13 8

Brief Economic History (5) • Fission vs. Fusion • Fission • Strength: No carbon, NOx, Sulfur emissions • Weakness: Possibility of radioactive release • If reactor core overheats • Ordinary (light) water reactor • Water moderater (slows the reaction) and coolant (keeps fuel from overheating). • Backup cooling system- Backup generator to provide power to cooling system. • Containment building to prevent radiation from escaping • Fusion • Fuse lighter elements together • Potentially produces much more energy than fission • But so far, energy required to initiate the reaction exceeds energy produced • Research ongoing at France’s ITER (International Thermonuclear Experimental Reactor) of 13 9

Brief Economic History (6) • Pressurized Water Reactor (PWR) vs. Boiling Water Reactor (BWR) • PBR most common in U. S. • Pressurized water reaches 300 degrees without boiling • Hot water pumped from reactor vessel to second water supply away from fuel source. • Hot water creates steam to spin turbine, drive generator, and produce electricity • Unused steam condensed back to water, recycled to create more heat • BWR • Higher thermal efficiency- only a single circuit • Reaction easier to control by monitoring water around core • Less radiation, fewer components • But requires larger reactor vessel because of larger amount of steam released in accident • Allows small amount of radiation to get into turbine system • Workers must wear protective clothing. • https: //www. clpgroup. com/nuclearenergy/Eng/power 4_1_ of 13 2. aspx 10

Regulation (1) • Origins of nuclear energy with government, not market • Find peaceful uses to justify continued research • Nuclear submarines • 1957: Shippenport, PA, First large-scale nuclear plant owned by U. S. DOE • Operated by Duquesne Power and Light, a private company • U. S. Atomic Energy Commission (1946) • Charged with regulating and promoting civilian commercial uses • Inherent conflict (Recall Stigler (1971) (Capture) Theory of Regulation) • 1957 Price-Anderson Nuclear Industries Indemnity Act • Limited liability of nuclear operators in event of an accident • 1975: Nuclear Regulatory Commission (NRC) succeeds AEC • Concerns about cozy industry-regulator relationship continue. • 2005: Extension of Price Anderson, loan guarantees, production tax credits of 13 11

Regulation (2) • Spent Fuel • 1982 Establishment of Nuclear Waste Policy Act to identify permanent waste site • Beginning in 1983, electric utilities contribute 0. 1 cent/k. Wh (paid by consumers) • Towards establishment of permanent waste site • $75 billion collected • Some spent on site preparation of Yucca Mountain • Obama (with urging by Senate Majority Leader Harry Reid) abandoned project in 2010 • In 2013, fee suspended since no prospects for permanent site. In what state is Yucca Mountain? Hint? What state did Harry Reid represent? of 13 12

Regulation (3) • Spent Fuel (cont. ) • Temporary sites • Spent fuel rods stored at reactor sites in lined concrete pools reinforced with steel rods. • As pools reach capacity, utilities move some of the older spent fuel to dry casks. • U. S. NRC originally pronounced method safe for 30 years. • Recently extended it to 60 years. • Reprocessing • Used in France, where nuclear accounts for about 75% of energy used to generate electricity. • Only a small fraction of uranium used to generate electricity is spent. • Recycle and use again (closed loop) • In U. S. , President Ford suspended and President Carter banned reprocessing • Fear that separated plutonium would fall into wrong hands. • Currently makes little economic sense as long as price of uranium remains low. Mixed-Oxide (MOx fuel) Mix of plutonium and uranium. Plant under construction. Savannah River Site, Georgia of 13 13 Multiple cost overruns, time delays.