5 5 04 Nuclear Energy Economics and Policy Analysis 1 Interdisciplinary study group Steve Ansolabehere Political Science John Deutch Chemistry co chair Mike Driscoll Nuclear Engineering Paul Gray Electrical Engineering John Holdren Energy Systems Paul Joskow Economics Richard Lester Nuclear Engineering Ernie Moniz Physics co chair Neil Todreas Nuclear Engineering 5 5 04 Nuclear Energy Economics and Policy Analysis 2 The Context If atmospheric CO2 concentration is not to exceed twice its pre industrial value 21st century CO2 emissions will need to be held to half the cumulative total under business as usual trajectory Annual emission rate in 2050 will need to have fallen back roughly to its level in 2000 This will be extremely difficult 5 5 04 Nuclear Energy Economics and Policy Analysis 3 The Context There are four basic options for reducing greenhouse gas emissions from electricity production Increased efficiency in electricity supply and use Increased use of renewables Continued use of fossil fuels coupled with carbon capture and sequestration More nuclear power It would be a mistake to exclude any of the four options from an overall carbon emissions reduction strategy 5 5 04 Nuclear Energy Economics and Policy Analysis 4 The Question What must be done to make nuclear power a significant option for meeting increasing global electricity demand while reducing greenhouse gas emissions 5 5 04 Nuclear Energy Economics and Policy Analysis 5 The Obstacles 5 5 04 Economic competitiveness Concerns over nuclear safety Nuclear waste disposal Nuclear proliferation risks Nuclear Energy Economics and Policy Analysis 6 The Global Growth Scenario 1000 GWe of nuclear capacity by 2050 Nearly 3x current nuclear capacity Would avoid 25 of the increment in global carbon emissions expected in the business as usual case 1 8 GT yr of carbon emissions avoided if the nuclear capacity displaced coal cf 6 GT yr of carbon emissions today Would roughly maintain nuclear s current share of the global electricity market 17 19 5 5 04 Nuclear Energy Economics and Policy Analysis 7 Illustrative nuclear deployment in the global growth scenario RETAINING THE NUCLEAR OPTION AT A MEANINGFUL LEVEL MEANS PLANNING FOR GROWTH 5 5 04 Nuclear Energy Economics and Policy Analysis 8 Findings Economics In deregulated markets nuclear power is not now cost competitive with coal or gas Plausible but so far unproven reductions in nuclear plant capital costs O M costs and construction lead time could reduce the gap but not eliminate it These reductions if combined with policies internalizing the social cost of carbon emissions e g carbon tax cap and trade system could make nuclear power cost competitive 5 5 04 Nuclear Energy Economics and Policy Analysis 9 Results of merchant plant cost model 5 5 04 Nuclear Energy Economics and Policy Analysis 10 BASE CASE COSTING ASSUMPTIONS 5 5 04 Nuclear Energy Economics and Policy Analysis 11 BASE CASE COSTING ASSUMPTIONS 5 5 04 Nuclear Energy Economics and Policy Analysis 12 BASE CASE COSTING ASSUMPTIONS 5 5 04 Nuclear Energy Economics and Policy Analysis 13 5 5 04 Nuclear Energy Economics and Policy Analysis 14 Base 40 year life 85 CF 2000 kW overnight 1 5 kWh includes fuel Reduce Reduce Nuclear Construction Base Cost 25 Equity Debt Equity Construction Times from 5 to 4 years Reduce Gas 40 60 12 nominal net of name tax Reduce cost of Capital to O M to 1 3 Nuclear 50 50 15 Debt Nominal 8 8 Inflation 3 3 Income Tax 38 38 Rate after expenses interest tax depreciation gas coal Real levelized cost cents kWe hr 9 8 7 6 5 4 Gas 3 Range Nuclear 2 Range 1 50 V12 04 03 100 Carbon Tax tonne C 150 200 Pg 15 of 26 Base 40 year life 85 CF 2000 kW overnight 1 5 kWh includes fuel Reduce Reduce Nuclear Construction Base Cost 25 Equity Debt Equity Construction Times from 5 to 4 years Nuclear 50 50 15 Gas 40 60 12 nominal net of name tax Reduce Reduce cost l of Capital to O M to 1 3 gas coal Debt Nominal 8 8 Inflation 3 3 Income Tax 38 38 Rate after expenses interest tax depreciation Real levelized cost cents kWe hr 9 8 Gas High price 6 72 MCF 7 Gas Moderate Price 4 42 MCF 6 MMBTUs Gas Low Price 3 77 MCF 5 4 Gas 3 Range Nuclear 2 Range 1 50 V12 04 03 100 Carbon Tax tonne C 150 200 Pg 16 of 26 Findings Safety Feasibility of global growth scenario will depend on maintaining a safety standard of 1 accident resulting in a serious release of radioactivity over the next 50 years from all fuel cycle activity Implies a ten fold reduction in expected frequency of serious reactor core accidents Achievable with advanced LWR technology other designs Best practices in construction and operation are essential 5 5 04 Nuclear Energy Economics and Policy Analysis 17 SAFETY Contd Historical frequency of core damage accidents in US commercial reactor operations 1 in 3 000 reactor years Estimated frequency of core damage accidents in current US commercial reactor fleet 1 in 10 000 reactor years Core damage accidents expected worldwide 2003 2050 in the study scenario if the latter estimate applies 4 Claimed core damage accident frequency for advanced light water reactor designs 1 in 100 000 reactor years Core damage accidents expected worldwide 2003 2050 in the study scenario if this lower estimate applies 0 4 5 5 04 Nuclear Energy Economics and Policy Analysis 18 Findings Waste management Geologic disposal is technically feasible but execution is yet to be demonstrated or certain A convincing case has not been made that the longterm waste management benefits of advanced closed fuel cycles involving spent fuel reprocessing and partitioning and transmutation of the minor actinides are outweighed by the short term risks and economic costs 5 5 04 Nuclear Energy Economics and Policy Analysis 19 5 5 04 Nuclear Energy Economics and Policy Analysis 20 5 5 04 Nuclear Energy Economics and Policy Analysis 21 5 5 04 Nuclear Energy Economics and Policy Analysis 22 Findings Waste management Geologic disposal is technically feasible but execution is yet to be demonstrated or certain A convincing case has not been made that the long term waste management benefits of advanced closed fuel cycles involving spent fuel reprocessing and partitioning and transmutation of the minor actinides are outweighed by the short term risks and economic costs 5 5 04 Technological advances may change this assessment But for the basic conclusion to change long term risks from geologic repositories would have to be much higher than the performance assessments