Tuesday, November 16, 2010

Economics and Energy in the 21st Century: The French Actually Got It Right

One of the most pressing challenges facing humanity as it looks to the future is the issue of energy. Our society has been greatly blessed by the digital revolution, led by computers and the internet. As result of these developments, we have made great leaps in both effectiveness and efficiency in many fields i.e. medicine, accounting, business, science, etc. Furthermore,  thanks to incredible advances in technology, bandwidth, transistors, and storage exist in abundance. However, one thing is certain--we are going to need a lot of energy to run our digital future.

In 2006, Petroleum accounted for approximately 35.9 percent of the world's energy production. Coal accounted for 27.4 percent, and dry natural gas produced 22.8 percent. However, nuclear, hydro, and other energy sources accounted for less than 14 percent of the world's energy production. What is the problem with this picture? Unlike bandwidth, transistors, and storage, the top three sources of our energy production are finite--not to mention the fact that they are the least environmentally friendly.

I know that wind, solar, geothermic, and other types of "green" energy sources are in vogue right now but the question that I want to ask is: Where is the discussion on nuclear power? The fact of the matter is that the technology available for producing alternate forms of energy such as wind, solar, geothermic, etc. is no where near where it needs to be right now, if we are going to significantly decrease global fossil fuel consumption patterns. However, nuclear power currently stands as a viable alternative. I would like to suggest three reasons why I believe that nuclear power is often overlooked but before doing this, let me add a few reasons why it is important that we move away from fossil fuels:

1) It is finite, 'nuff said.

2) Dependence on oil means dependence on international oil from organizations like OPEC.

3) Much of the world's oil rich nations suffer from what economists call "the resource curse." In simple terms, this is the negative situation that results from an economy being overly dependent on one resource-- leading to lack of diversification, innovation, corruption, poor disbursement of wealth, other social problems.

4) Whether and to what extent you believe in global warming, fossil fuels pollute and are certainly not the most desirable from an environmental perspective.

Now let us consider the main reasons why nuclear power has not been and is not seriously being considered in the United States:

1) Fear: I could write an entire post on this but I will simply say that the growth of nuclear power has continually been stemmed by unwarranted fear. The Three Mile Island indecent in 1979 galvanized this fear and was used an effective tool for impeding the growth of nuclear energy. This incident was widely publicized both inside and outside the US, having afar-reaching impact on public opinion towards nuclear power, particularly in the United States. However, it is well documented that this incident resulted in no deaths. Furthermore, technological advances in the field have continued to make nuclear energy safer. According to Wikipedia, "the nuclear industry in the United States has maintained one of the best industrial safety records in the world with respect to all kinds of accidents." In fact, more people die every year as a result of natural gas explosions and coal mining incidents.

2) Disposal: This is a legitimate concern. However, current and future improvements in recycling used fuel has and will greatly abate this problem.

3) Cost: Many argue that nuclear energy is not economically competitive. I will address this later.

4) Special Interests: With creative destruction at work, there will always be those who are opposed to progress. 

I would like to ask a rational person to compare these cons to the following benefits of using nuclear energy:

1) It's clean: Nuclear power is a Carbon free resource.

2) It's economically viable(ish): Though nuclear power currently relies heavily on government subsidies, rising oil prices and innovation could definitely make nuclear power more economically competitive.

3) It could lead to energy independence: By adopting nuclear power, the U.S.A could begin to ween itself of foreign oil. France, without sufficient coal, oil, or gas reserves, relies on nuclear power for about 75% of their electricity needs. This has lead to France being far more energy-independent than other Western nations.

4) It can help lead to a revival of skilled labor and industry in the Unites States: According to the Huffington Post, "Nearly a third of the nuclear work force will be eligible for retirement in a year. With the growth of nuclear reactors all but halted in the 90’s, it left a gap in the age of the workforce that, according to Time, is creating a problem for the industry." However, this "problem" can actually be viewed as a great opportunity for the United States. Rod Adams points this out in his Blog, Atomic Insights.

Just as our society has greatly benefited from a digital revolution, we stand in need of benefiting from an energy revolution. This is one of the few areas where I believe that France has it right. Atomic energy is a viable option currently available to begin to move us in this direction.