Thoughts On Nuclear Energy

I have a long technical article that I plan to study and improve when I am invited to visit the Stockholm School of Economics for the purpose of giving the kind of brilliant lecture on nuclear energy and nuclear economics that they both need and deserve. Whether the algebra involved is digested by my audience to the necessary degree is less important, because the problem is that too few persons are conversant with non-technical energy issues that are relevant for the lives of themselves and their families. What I want to do in this short article is to present several important facts that readers should make an effort to remember.

The nuclear facility at Fukushima was constructed about 40 years ago from blueprints prepared 5 or 10 years earlier. Suddenly it was a victim of one of the most powerful earthquakes  experienced in Japan in the last 200 years, and also in the path of a destructive tsunami that featured waves up to 40 meters high. The tsunami killed more than 18,000 people along Japan's north-east coast and forced the evacuation of 150,000 residents from villages and towns close to the Fukushima Daiichi plant. But – as noted by the Canadian nuclear engineer and executive Malcolm Rawlingson in a comment on the site EnergyPulse – the survival of the Fukushima nuclear facility (with only one fatality) could be described as a structural miracle. Similarly, as indicated by the testimony of the Swedish diplomat and nuclear expert Hans Blix, its survival demonstrated what we can  expect from future generations of (technologically superior) nuclear facilities!

As much as I hate to say it, Rawlingson might be mistaken about a detail of the Fukushima tragedy. Just the other day I reviewed a publication which claimed that there were not one but two fatalities at the Daiichi installation. Notice the word ‘might’. But as Rawlingson noted, when the tsunami began, persons ran into instead of away from the Fukushima facility.

In my new energy economics textbook ENERGY AND ECONOMIC THEORY (2015), and elsewhere, I point out that we are living in a very different world from the one presented in our Econ 101 literature, where it is taken for granted that beautiful rationality is present or accounted for in every nook and cranny of modern communities. But where is the rationality when a tsunami takes place in Japan that involves several casualties in a nuclear facility, and on the other side of the world, in Germany, the holder of the highest political office immediately throws in the nuclear towel. I don’t think that we need to discuss the competence or incompetence of the German chancellor in the present contribution, but about a year prior to the Fukushima incident, Frau Merkel  was telling anyone willing to listen that Germany needed more nuclear.

Here a quotation is useful. According to Professor Richard Muller of the University of California, “The great tragedy of the Fukushima accident is that Japan shut down all of its nuclear reactors”! Put more sublimely, the decision makers in that country chose to ignore rather than ridicule the crank criticism whose intent was to convince us  that – as the excellent Perry Sioshansi (2011) informed friends and neighbors –  nuclear was on its last legs,

After Fukushima Ms Merkel changed her tune, and the opinion here is that she did so  because she and her team believed that there was a political reward  to reap by joining the anti-nuclear booster club, which is probably correct. For instance, someone in Germany who criticized one of my articles listed tsunamis as one of the dangers associated with the presence of nuclear installations, even though the probability of a tsunami on the banks of the Rhine or near the beaches and discos of the marvelous Swedish West Coast is not very large.

All of this is discouraging to those of us with a belief in conventional logic, but let me assure you that while Germany might temporarily “lock down” nuclear facilities located in Germany, they will never abandon electricity generated in nuclear reactors -- at least as long as German voters prefer a higher to a lower standard of living. Put another way, for every kilowatt of nuclear-based power lost because of temporary nuclear closures that might take place in the largest economy in Europe, another will be obtained from somewhere else in Europe, although probably later rather than sooner.

Notice the word “temporarily” in the above paragraph. "Temporarily" means that in the long-run the disinformation campaign that Chancellor Merkel and others launched and still employ is almost certain to run out of steam. Even so, remembering that the replacement for nuclear is not and will not be German wind power and solar, but coal and energy imports from surrounding countries, it could be argued that the present German behavior may bring about a severe welfare loss in all of Europe. What I am thinking of here is not just expensive energy, but expensive energy in conjunction with negative ‘vibes’ from the so-called ‘European refuge crisis’.

Consider the following. The former Swedish prime minister suggested to his compatriots a few months before that crisis began that they should “open their hearts” and accept about 85,000 immigrants. A few weeks following that appeal I asked a very intelligent acquaintance about  her opinion of this option, and she replied that Mr Reinfeldt could take his heart and ‘shove it’. I could be wrong, but I don’t think for a moment that Germany will open its heart to the immigrants now arriving in the manner that Chancellor Merkel believes is possible and desirable, and the same is definitely true of the persons that I taught financial economics in Sweden many years ago. I don’t remember any of those exceptionally talented young ladies and gentlemen giving the impression that they were short of ‘walking-around money’, but on many occasions they openly made it clear that an increase in immigration was something that should be avoided if it were humanly possible.

I look forward to the day when Chancellor Merkel provides modest teachers of economics like myself with an easily read description of how her energy ambitions were thwarted by impatient voters, who became tired of her absurd intentions to find a replacement for nuclear-based electricity, and who became aware of what her Energiwende was going to mean for their standard of living. In such a publication it is likely that I will encounter a reference to rogue economists, know-it-all nuclear shills, and busybodies who fail to share her grotesque vision of the optimal strategy for increasing Germany's "competitive advantage," and who in addition, reject the nuclear (and energy) gospel preached by true believers such as engineering Professor Neven Duic of Zagreb University (Croatia).

Social benefits and costs

Not long ago I was informed by Professor Duic that nuclear was a lost cause, and the energy future was going to be wind, solar thermal (PV), and natural gas. These items are always worth mentioning and discussing because they are high on the wish list of Dr. Merkel and her foot soldiers. Of course, wind and PV have been on energy menus for decades, but even so -- globally -- they hardly come to three or four percent of the aggregate energy supply, while nuclear provides about 19% of the electricity supply in the U.S., and 14% globally. Thanks to China and Russia, it is easy to show that the global production curve for nuclear is up and not down, and it will likely rise faster once the next generation of nuclear equipment (Gen 4) appears and provides a demonstration of what it can do.

When speaking of China and Russia, readers might find it useful to examine a survey authored by Professors Paul Joscow and John Parsons from MIT (2012). These two scholars state that “talk is cheap”, following which they say that the ‘nuclear renaissance’ that persons like myself believe in is mostly hope or hype.

Maybe so, but it is not hope or hype to China and Russia. China is a long way from the summer jazz and dancing at Stockholm’s ‘Skansen’, but not Russia, and I have informed everyone who looks as if they might find my point of view worthwhile that Russia will eventually become the richest country in Europe. Achieving that goal will be made easier by their positive attitude to nuclear.

Moreover, without large subsidies it may happen that wind and solar may never exceed the above mentioned percentages, although I am ready to accept that subsidies are justified to bring wind and PV up to their ‘equilibrium’ level, whatever that happens to be.  However, while I am unable or unwilling to argue for nuclear subsidies in every country, I am quite willing to insist in my brilliant Stockholm School of Economics lecture that although the comparatively large nuclear energy output in Sweden was initially subsidized, when the final 'social' accounting was made by those of us who understand this issue, the Swedish reactors did not cost Swedish taxpayers -- as a group -- a penny. 

As for the natural gas that has caught Professor Duic's fancy, this sounds to me like a 'bet' on shale gas. If the promise of shale gas is not fulfilled -- which is definitely possible where Europe is concerned -- then German or other European politicians with a genuine recognition of energy needs should closely examine the history of natural gas prices, production and expectations before sounding off about how natural gas (together with wind and PV) can keep the energy wolf away from their doors. Bad economic news seems to be originating from shale ‘plays’ in the U.S., and I see the word ‘scam’ more often than ever in the energy sites that I peruse.

I'll conclude by confessing that there are no questions that I would like to ask Professor Duic, even though he sent me a diagram showing the development of wind, PV natural gas and nuclear that is completely, totally and unambiguously without the slightest scientific value, although he probably thought it to be the real deal. Incidentally, I have every reason to believe that Professor Duic is a talented engineer, but he is a babe in the woods when the topic is energy economics. The same can be said for many members of my audience at the Stockholm School of Economics.

I would though – if it were possible –  ask Angela Merkel a question that I intend to ask my students the next time I teach energy economics.  Denmark is the promised land of wind energy, and yet wind apparently supplies less than twenty six percent of that country's electricity. Please explain why it does not supply thirty percent, and then ‘wake the town and tell the people’ (as they say in the song with the same title) where the rest of Denmark's electricity comes from. In case you don’t know but would like to know, most of it comes from the burning of coal and imports, and while absorbing that answer, make a special effort to note and inform friends and neighbors that the highest electricity prices in Europe are in Denmark and Germany. 


Banks, Ferdinand E. (2015). Energy and Economic Theory. Singapore, London and New York: World Scientific.

Roscow, Paul L. and John E. Parsons (2012). ‘The Future of Nuclear Power After Fukushima’. Economics of Energy and Environmental Policy.

Sioshansi, Perry (2011). ‘Japan Rethinks Its Nuclear Future’. IAEE Energy Forum. (Fourth Quarter)

Disclosure: None.

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