The two blows that killed the industry

Lawrence Solomon
National Post
August 1, 2009

No industry in history has held more promise, been more welcomed, received more favours and failed more spectacularly than the commercial nuclear power industry.
When U.S. president Dwight D. Eisenhower launched a civilian nuclear program in the early 1950s, it was to universal acclaim. Not only would nuclear reactors be safe and provide electricity that was too cheap to meter, it would help redeem a technology that had unleashed horrors at Hiroshima and Nagasaki.
Governments wholeheartedly backed nuclear power, as did the corporate world and the general public.

When anti-nuclear protesters in the 1950s and 1960s marched in favour of nuclear disarmament, they often coupled their desire to “Ban the Bomb” by advocacy for commercial nuclear power, in the hope of turning swords into ploughshares.  When the modern environmental movement began in the late 1960s and early 1970s, environmental groups, too, supported commercial nuclear power, Energy Probe among them. They saw nuclear power as a hopeful alternative to coal, the dominant polluting fuel.  There was no shortage of goodwill for commercial reactors; the failure of this technology to succeed was internal to itself.

Eisenhower was first to face facts on nuclear power’s limitations when, to usher in this new industry, he created the Atomic Energy Commission (AEC).  To Eisenhower’s surprise and that of the AEC, a study that it commissioned determined that a credible industrial accident at a modest-sized reactor near a modest-sized city could kill 3,400 people, injure 43,000 and cause $7-billion in property damage.  Although the risk of such an accident was low, the potential damage rendered nuclear plants uninsurable. Governments needed to step in to exempt electric utilities and manufacturers such as General Electric from liability — otherwise, these companies told governments, they could not risk being wiped out in the event of a serious accident.  But even after governments provided exemptions from liability, nuclear reactors were proving to be uncompetitive.

Energy Probe first opposed nuclear power on economic grounds, when its 1974 report found Ontario Hydro’s expansion plans to be uneconomic.  Only later would environmental groups add health and safety concerns to their critiques of nuclear power, and for good reason: In an attempt to gain economies of scale, reactor manufacturers tried building ever-larger reactors, leading not only to often-colossal cost overruns as the technology’s complexity stumped designers, but also to the larger health and safety risks that accompanied the up-sized reactors.  Because all nuclear plants were operated by utilities that were either government-owned or government-regulated, and without the financial discipline or disclosure required of private sector firms, the nuclear industry was able to expand well into the 1970s.

Then two blows hit the nuclear industry; it would never recover.  The first, a partial meltdown at Three Mile Island in 1979, led to more stringent safety regulation that further raised the industry’s costs while casting doubt on many of the safety and reliability claims that the industry had made.  The 1980s saw the cancellation of expansion plans and waves of defaults, such as the multi-billion default facing bondholders in the Washington Power Supply System.   The second blow — the United Kingdom’s privatization of the power industry in 1989 — utterly destroyed what was left of the industry’s credibility.

An editorial in the Observer, entitled “Nuclear Fantasy,” summed it up.

“It has taken the cold stare of the City [London’s financial district] to penetrate the veils of secrecy and deceit that have long enveloped the nuclear industry,” it wrote.

“Privatization has proved that nuclear power is hopelessly uneconomic and saddled with decommissioning costs that no private company could accept without huge guarantees from the government.

“Yet from the 1950s to a few months ago, anyone who breathed the slightest doubt about its viability was met with a blizzard of faulty figures and downright lies.”

The industry was now dead in the West, even if it took a while for Western governments to accept it.  Ontario became one of the very last Western jurisdictions to learn, although the lesson never seemed to completely sink in.

Successive Ontario governments came to power in the 1980s and 1990s promising (but failing) to stop the Darlington [Darlington Nuclear Generating Station, located on the north shore of Lake Ontario in Clarington, Ontario, near Toronto, is comprised of four reactors. Planned in the early 1970s and constructed between 1981 and 1993, its cost overruns led to the effective bankruptcy and dismantling of Ontario Hydro, a provincial crown corporation. The Darlington reactors have a total output of 3512 MW (capacity net) and 3740 MW (gross net).] nuclear power station.  Darlington became one of the last plants to be completed in North America, coming in 10 years late, six times over-budget and bankrupting Ontario Hydro.

Nuclear power’s chief failing, then as now, remains economic.

Have governments now learned that nuclear power cannot compete? The facts on the ground say yes. History says no.

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