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Warmed-over nukes; The climate scare revives the biggest business flop ever

National Post: Lawrence Solomon - March 08, 2008

The world is whooshing to nuclear energy. Just this week, Britain announced 18 new nuclear reactor sites in its bid to reduce its greenhouse-gas emissions. French President Nicolas Sarkozy is on a Mid-East nuclear-selling spree, to cash in on interest in Saudi Arabia, Qatar, the United Arab Emirates, Algeria, and Libya.

The Netherlands has lifted its long-standing opposition to nuclear power -- even the Environment Minister touts the advantages of next-generation reactors. In Eastern Europe, Slovakia, Romania, Hungary, Bulgaria, Lithuania, Poland, Latvia and Estonia all are pursuing the atom.

The United States is revving up for its nuclear renaissance, too. For three decades, nuclear power was in retreat south of the border, with not one new reactor ordered and completed since the reactor accident at Three Mile Island. The U.S. Nuclear Regulatory Commission is now reviewing four applications for new reactors and it expects another 15 by year-end.

The United States --home to more reactors than any other country -- is selling reactors and proselytizing them abroad, too, working with Japan, France, Great Britain, Russia and China to establish the Global Nuclear Energy Partnership: "The purpose of which is to help developing nations secure cost-effective and proliferation-resistant nuclear power, " salesman-in-chief George Bush explained this week.

Whoosh goes Canada, too, with Ontario yesterday inviting bids from four nuclear suppliers, while New Brunswick and Alberta ponder nuclear purchases of their own. Governments tell us that nuclear power is cheap and clean, and the only practical alternative to dirty fossil fuels. In truth, it's none of the above.

Nuclear is the single biggest business disaster in the history of the world. No other technology has failed so big, so often, and so spectacularly. No other technology has needed so much help from so many governments over so long a period of a time. Because of its sorry record, almost all developed nations decades ago scrapped their nuclear-expansion plans.

The U.S. legislation that spurred this new renaissance shows the absurdity of nuclear power's claims to being a competitive technology: Power companies are all but paid to build the things.

To kick-start this clunker of a technology, the U.S. government is providing loan guarantees for up to 80% of a reactor's cost. But because 80% isn't enough, the government is also providing an operating subsidy of up to US$125-million per year over eight years for a typical reactor of 1000 MW. That's an additional gift of US$1-billion per reactor (more for bigger

reactors that are in need of more aid).

But because that still isn't enough to lure utilities back into nuclear construction hell, the energy legislation provides for 100% coverage of the cost of delays for the first two new plants, up to US$500-million each. There's another potential US$1-billion for companies inclined to leap before they look too hard.

But because even that isn't enough, the legislation provides US$2.7-billion in R&D and US$1.3-billion in decommissioning relief, among other sweeteners. All this is on top of existing subsidies, including what may be the biggest one of all: a cap on liability in the event of a serious nuclear accident.

Some government officials, somewhere, may still believe that nuclear power can compete against other forms of power generation. They have no excuse, and have had none since 1989, the year that U.K. Prime Minister Margaret Thatcher privatized her country's power sector, forcing for the first time a market test on nuclear power. Thatcher, one of nuclear power's truest believers, expected private-sector management to enable nuclear power to thrive. To her dismay and bewilderment, privatization -- and the financial disclosures that necessarily followed -- led to the cancellation of Britain's nuclear expansion plans and the immediate demise of the U.K.'s nuclear industry.

The Observer described the industry's unravelling in an editorial entitled "Nuclear Fantasy." "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."

Thatcher did her best to salvage her country's nuclear industry -- when bullying didn't work, she offered billions in subsidies to any private company that would take the reactors as part of a privatization package. To no avail. The government was stuck with the nuclear plants, while the private sector snapped up the rest. Years later, the government did manage to privatize the best of its nuclear plants as a nuclear company called British Energy, and for a brief while investors bought in -- British Energy not only had the pick of the U.K. fleet, it had excellent management. That wasn't enough. But in 2003, its share value had plummeted to less than 1% of its peak valuation and its fate was once more in government hands.

Nuclear power has always been the stuff of dreams --in the 1950s, its proponents talked of nuclear-powered cars and electricity too cheap to meter. It remains the stuff of dreams.

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