Roundtable on “Is nuclear power green?” [1] 

Introduction

The association launched the initiative to organize this roundtable in the winter of 2022, following the disclosure by the European Commission of the taxonomy of financial instruments contributing to the energy transition. Press headlines announced that the EU considers nuclear power as “green energy”, provoking those who publicly express their concern over the civil nuclear sector’s environmental impacts. This sector that is rooted in the Normandy region, where the association’s annual conference was held. Nuclear power became topical since the return of the war in Europe and stress on the energy markets, as well as in the political debate during the French election campaign on the program to launch a new wave of construction of nuclear plants.

To the extent that the issue is one investment choice, we could expect a voluntary implication of economists in this decision-making process. There is a demand for more economic analysis on the investments in nuclear power. In France, this call is highly topical since the National Commission for Public Debate will launch a large-scale consultation of stakeholders on the possibility of engaging in a long-term public program for the development of new nuclear plants. Contributions from economists are expected and welcome, particularly from economists specialized in the fields of energy, environment and natural resources. This panel offered the opportunity to address this complex issue, the answers to which have very long term implications.

From the outset, the speakers proposed to reformulate the question posed. Indeed, nuclear power, even if it provides decarbonized electricity, exerts a variety of environmental impacts that clearly preclude us from referring to it as a green technology. However, each of the alternative technologies for producing decarbonized electricity also has multiple environmental impacts. The question, then, is rather which gradation of green would best qualify nuclear power.

Economic evaluation and prospective studies

To what extent investment in nuclear power is cost-effective to meet the target of carbon neutrality by 2050? Prospective studies typically suppose that this technology, as compared to other carbon neutral energies, has the advantage of being dispatchable and the drawback of being relatively costly. What is the efficient share of nuclear power in the future carbon neutral energy mix?

The studies recently published by RTE, ADEME, the Négawatt association and CIRED do not carry a clear-cut and unanimous conclusion. The answer varies according to crucial parameters (future costs and performance) that are highly uncertain. In the RTE analysis the option with a share of nuclear power is slightly less costly, while in the ADEME studies, the cost with and without nuclear power is almost the same. In CIRED’s work, nuclear power might play a role only if the future cost of building nuclear power plants proves to be 50% below current costs. The historical records do not show any such development. EDF announced an estimated cost for the 7^th EPR plant at only 700 million euros less than the cost of the 1^st plant, estimated to 12.7 billion euros.

Given that the role of nuclear power in the energy mix of carbon neutral scenarios is very sensitive to the estimated construction cost, its role is seriously undermined once one takes in to consideration externalities that are usually overseen. These include external costs related to the risks of accidents or attacks. These risks are substantial, in light of the current geopolitical developments and the emergence of new means of sabotage, as shown by the digital attack on enrichment facilities in Iran. Given the great uncertainty about the reduction of the costs of nuclear power, some observers conclude that massive investments in this technology should be avoided, and rather suggest focusing investments on renewable energy production and storage technologies, such as hydrogen, batteries and pumped storage in hydroelectric power plants. The development of the green hydrogen sector seems to be a crucial issue, also able to meet specific niche uses, such as air transportation.

The costs of tackling for the intermittency of renewable energies are taken into account in prospective studies, whereas that is most often not the case for nuclear power, which is assumed to be dispatchable. The cost of intermittency accrues mainly form the investment in storage infrastructures. It is worth noticing though, that also the availability of nuclear electricity is somewhat intermittent, as the result of unexpected shutdowns of reactors for extraordinary maintenance or security inspections. A large share of the power supply could be affected if the issue the issue concerns elements of the industrial design used for several reactors. Moreover, climate change should increase the frequency of unscheduled shutdowns due to water.

Methodological issues and challenges

In the 1980s and 1990s, economists took part to the public debate with their analyses on the development of nuclear power plants. The issues of irreversibility and waste were notably addressed. What progress has been made since then? What are the most difficult challenges for economic analysis in this field?

Discounting plays a crucial role in these analysis on very long term horizons (as in the study of climate policies). The choice of the discount rate for long-term public investments has evolved considerably. Today this discount rate includes three elements: a rate of preference for the present (almost zero in applications), the expected rate of economic growth (for intergenerational justice), and finally an insurance element related to the correlation between the return on the specific investment and economic growth.  The approach adopted for the counter-assessment of the socio-economic evaluation of the CIGEO radioactive waste disposal site involved the formulation of two scenarios without uncertainty, based on scenario specific discount rates. In a second step the uncertainty on the realization of the different scenarios is explicitly taken into account.

Clearly, there are large uncertainties on the scenarios of the evolution of societies and technologies. Faced with such large uncertainties, how can one provide policy guidelines without running the risk of discredit? The first step is to refer to the estimates obtained by researchers in the relevant fields, and to allow oneself the possibility of updating them. It is also useful to distinguish the type of uncertainty. Decision makers shall be fully aware of the uncertainties that characterize future scenarios. The method used for the counter-expertise commission for the CIGEO project illustrates a useful approach. Using information on the characteristics of the radioactive waste disposal project, the commission built two scenarios that are very different in terms of long-term socio-economic developments. In an optimistic scenario, economic growth continues for a long time before fading away, and institutions remain strong, namely to allow continuing maintenance of a surface waste repository and management of a possible incident. In a pessimistic scenario, the economy experiences a long-lasting and irreversible decline, and the society loses its ability to manage surface waste storage. In the latter case, the evaluation suggests to invest for the permanent deep-ground repository option because of its insurance feature. Instead, the optimistic scenario suggests avoiding deep-ground disposal, preferring the alternative of perpetuating non-permanent surface waste storage because its recurrent costs, though perpetual, matter less for the net present value of the project than in the case of the very high upfront cost of the permanent deep-ground waste disposal. This approach allows us to identify the critical factors (in particular the probability associated with the optimistic scenario) that tip the balance in favor of the permanent deep-ground repository towards an unfavorable advice. Thus, the approach offers public authorities a decision-making tool, relying on economic evaluation based on cost-benefit analysis. The same approach could be used to evaluate investments in building new power plants or dismantling old ones.

Political divides and economic analysis

In the French context, public investment in nuclear power is subject to an additional, political, consideration. Indeed, French political parties are polarized around two opposing stances, one criticizing the intermittency of renewable energies, the other criticizing the cost and risks of nuclear power. If these positions become central in defining political affiliations –as was the case for GMOs or shale oil and gas, will the results of economic analysis be able to affect investment choices?

When building scenarios, one should carefully consider the political acceptability of the technologies involved. To be fair, in some of the scenarios the energy transition turns out to be economical. For example, in the scenario estimated by France Stratégie, the average cost of the electricity system in 2050 (100% carbon free with 30% nuclear) is lower than that which would prevail for the current energy mix. Prospective studies often abstract from the diversity of impacts among actors, depending on their sector of activity, their income or their assets. Nevertheless, the most common approaches use models that make it possible to represent the trade-offs of intergenrational justice.  Recently, heterogeneous agents models have been applied to climate policy analysis, delivering results on the distributional impacts of energy transition policies. This approach makes it possible to take into account the redistributive consequences of various scenarios. Hopefully it will stimulate a dispassionate public debate.

Trust and a symmetry of information seem crucial for a calm and useful public and scientific debate. In this respect, concerns have been raised about the transparency of the expertise in terms of methodology, as well as autonomy from special interest groups. Concerning the French government plan to invest in new nuclear plants, the Cours des Comptes pointed out the lack of transparency of the expertise involved. The cost estimates and scenarios taken into account by the public administration are based on a model developed by the EDF company and applied to internal data. Neither the scientific community, nor the NGOs, could evaluate the relevance and the structure of the model, nor access the data used.

Conclusion

With such a subject on the table, given the political context and the current geopolitical context in the background — which unfortunately reminds us of the nexus between civil and military nuclear power — one could have expected an explosive debate. This was not the case during this panel discussion. The lively exchange of views suggests a shared willingness to contribute to collective decision-making for a choice that is both strategic and long-lasting, possibly irreversible.

[1] The roundtable discussion took place on September 9, 2022 during the FAERE annual conference in Rouen, organized by Olivier Beaumais (University of Rouen-Normandy, LERN) and Mouez Fodha (University of Paris 1, PSE), with presentations by Aude Pommeret (University of Savoie Mont-Blanc, IREGE) and Philippe Quirion (CNRS, CIRED). This summary is based on the remarks of the two panelists and the interventions from the audience, recorded by Francesco Ricci (University of Montpellier, CEE-M). It does not represent the position of the FAERE association on the subject matter.