May 21, 2008
Nuclear power has been an economic failure, despite being larded with subsidies and shorn of liabilities that face its competitors. Oil price hikes have not made it economic, either.
But the nuclear power industry may soon break through the economic barrier, according to an analysis from the U.S. Congressional Budget Office. Nuclear Power’s Role in Generating Electricity, a study released this month, explains that “the attractiveness of financing a new nuclear power plant depends on investors’ expectations about the costs of emitting carbon dioxide over the operating life of that plant. To the extent that carbon dioxide charges are expected, investment in new nuclear capacity would be more attractive relative to both the construction of new fossil-fuel capacity and the continued use of existing fossil-fuel capacity.”
The CBO adds that “a survey conducted by Cambridge Energy Research Associates in 2006 found that about 80% of utility executives expected a carbon dioxide charge to be implemented within the next 10 years.”
With a carbon-dioxide tax that exceeds $20 per metric ton, the CBO found, a new nuclear plant becomes more economic than a new coal plant. Should the tax exceed $45 per metric ton, nuclear bests natural gas, too. A carbon tax hits coal especially hard: It emits nearly a metric ton of carbon dioxide for every megawatt hour of electricity produced, compared to half a ton for natural gas.