So far, no energy transition has been planned or managed in advance. Moving, for instance, from wood to coal or from coal to oil was the result of price mechanisms which made the transition convenient for everybody. There never was any need for governments to subsidize diesel locomotives to replace steam ones.
Today, we are going through a new energy transition, one that will take us from fossil fuels to renewable energy. The problem is that price mechanisms, alone, may not be sufficient to drive the transition fast enough. Hence, many governments have enacted rules and created incentives designed to favor renewable energy. These measures have been successful in promoting the growth or renewables, but, right now, the incentives are under attack everywhere in a situation of increasing competition for ever diminishing resources. So, the transition is at risk.
As it is often the case, the past can be a guide for the future and we can learn something by looking at a past case of a failed energy revolution: nuclear energy. This story is worth retelling today because of the many points which are starting to appear surprisingly similar to the present situation with renewables.
The nuclear industry started, literally, with a bang; with the first nuclear bomb of Alamogordo in 1945. But nuclear reactors are older than that. The Alamogordo warhead used plutonium produced by the first nuclear reactor in history, the "Chicago Pile" which had started operating in 1942. It had been built exclusively to produce plutonium for military purposes, just as the other reactors of the same period. These early reactors generated a lot of waste heat and it was soon clear that this heat could be used to produce electric power. That was the origin of the concept of "atoms for peace", popular in the 1950s.
In the mid 1950s, the first commercial reactors for the production of electric power appeared and, subsequently, nuclear energy production grew rapidly, to the point that it seemed possible to create an energy system based entirely on nuclear sources, at least for the production of electricity. It was a moment of great optimism and the age of electricity "too cheap to meter" really seemed to be around the corner.
But, in the 1970s, something happened that brought the expansion of the nuclear industry to a screeching halt. From the mid 1980s onward, the number of new reactors has been barely sufficient to replace the old ones, with the total production of nuclear energy slowing down its growth and showing a decline during the past few years (image on the right from Wikipedia). The nuclear industry failed its objective of becoming the world’s main source of electric power; a market that was instead kept by fossil fuels; in particular by coal.
Various interpretations have been proposed to explain the decline of nuclear energy. Often, several different causes are said to have acted together as you can read, for instance, in "Ten Blows that stopped nuclear power." By far, however, the most popular interpretation seems to be that the nuclear industry was killed by the growing environmental movement. It is an interpretation that pleases both nuclearists (it gives them someone to blame) and environmentalists (who see themselves as a powerful force in the issue).
These explanations make some sense. But do you really believe that as many as ten causes all acted in the same direction to explain such a clear trend as the nearly complete stop to the construction of new reactors?And do you really think that the environmental movement could have such a success in bringing on its knees a supposedly healthy industry, considering the success that the same movement is now having, for instance, in stopping the emissions of greenhouse gases from coal plants?
Rather, I propose here that there is a clear single cause that brought nuclear power on its knees in the 1970s. It was, simply, that nuclear energy stopped being subsidized by the US government. At that point, building new plants became unprofitable and the expansion of nuclear power stopped.
The question of the subsidies needs some explanation, because the nuclear industry often claims it needs none. A list of subsidies is given in the 2011 report by Doug Koplow, who, however, seems to have missed what was probably the historically most important subsidy to the Western nuclear industry: the production of plutonium for the US military to be used for military weapons. This market was probably of the same order of magnitude as that resulting from the sales of electricity and was a major source of profit for the owners of nuclear plants (for an estimate of these revenues, see note at the end of this post)
With the expansion of nuclear power, the production of plutonium increased in proportion. But, in 1977, the US senate approved a law forbidding the reprocessing of spent fuel from nuclear plants to produce plutonium. In a sense, it was a badly needed decision, since the growing production of plutonium was creating an economic and strategic disaster. The risk of nuclear proliferation increased with the amount of plutonium produced and the number of warheads in the US and in the USSR military systems was growing out of control with more than 30,000 nuclear stockpiled in the US alone. That gave to the concept of "overkill" a whole new meaning (image source). Apart from the strategic problems it created, plutonium purchasing was also a considerable financial burden for the US government, at that time in a serious financial difficulties generated by the ongoing oil crisis.
The disappearance of the revenues from reprocessing was a major blow to the nuclear industry. It did not send out of business the existing nuclear plants, since the main cost of nuclear energy production is the plant itself. But, in the tight financial moment of the late 1970s, it became nearly impossible to find the large resources to pay for new nuclear plants with the perspective of a return on the investment only for the remote future (if ever). Coal plants could produce higher revenues at smaller initial costs and it is there that investments in energy production were directed. In a sense, we can say that the nuclear industry was a victim of the crisis of the industry that it was supposed to replace: the fossil fuel industry.
The (apparent) end of the oil crisis in the second half of the 1980s eased the world’s financial situation, but it didn’t help the nuclear industry, which had failed in developing lower cost technologies and still couldn’t compete with fossil fuels at the low prices of that period. The new crisis of the first decade of the 21st century reversed the trend again. Today, we see new claims about the need of going nuclear and some evidence of new nuclear plants being programmed. But this nuclear renaissance is slow to start and it may do little more than replace the obsolete plants which badly need to be scrapped.
An interesting point in this story is how the stop to the nuclear subsidies was accompanied by the demonization of the nuclear industry. Up to the early 1970s, environmentalists had been generally neutral and often favorable to nuclear energy. Afterward, instead, the tide turned decisively against nuclear energy, with the fortunate slogan "Nuclear? No thanks" created in 1975. We have no evidence that the anti-nuclear campaign was masterminded by some secret agency (but it cannot be ruled out, either). What we can say is that the campaign was extremely effective in turning nuclear power into the absolute bugaboo of all environmentalists.
Now, let’s move forward to our times and let’s look at the situation of renewable energy. The similarities with the story of the nuclear industry stand out clearly. The renewable industry enjoys significant subsidies from governments and grew rapidly to production levels comparable to those of the nuclear industry. Whereas nuclear subsidies were generated mainly by military needs, subsidies to renewables have been generated by the perception of the horrendous external costs of both fossil and nuclear energy. In the first case (fossils) mainly in terms of climate change, in the second (nuclear) in terms of proliferation, contamination, etc.
The problem with external costs, however, is that they are paid by the whole community while the profits of the activities generating them go only to the owners of the plants. Hence, when subsidies or "internalization" start to bite on profits, fossil lobbies will start fighting back. One of the ways they have to undermine public support for renewables is to use demonization campaigns in the media. These campaigns are especially evident in wind power, but also for photovoltaic power and other clean energy technologies. It seems that this approach is starting to pay off for the fossil lobby. Today, a significant fraction of the environmental movement seems to be considering renewable energy almost as evil as nuclear energy.
We are not yet to the point to see the diffusion of slogans such as "Photovoltaics? No thanks" but never underestimate the power of media and the gullibility of people. PR campaigns tend to generate entrenched legends which, in the long run, are extremely difficult to dislodge from the collective perception. We have examples of this behavior with the demonization of the study "The Limits to Growth" of 1972 and, today, with the demonization of climate science. There is a real risk that a well financed negative PR campaign coupled with punitive financial measures could reduce the renewable industry to something similar to what the nuclear industry is today: obsolete plants and old men reminiscing of past glories.
But the transition to renewable energy is the only hope we have to overcome the resource crisis and the climate crisis we are facing. Renewable energy is showing rapid progress: costs are going down, efficiency is increasing, and new solutions for energy storage are being developed. Renewable energy is now a credible competitor for fossil fuels even without subsidies and it needs not suffer the same failure of nuclear energy. But we need to watch out for a last ditch attempt of the fossil lobby to get rid of a competitor by lies and slandering. We need to keep the momentum for the transition to a better world. And to keep it, we must fight for it.
Note: plutonium subsidies for the nuclear industry.
I haven’t been able to find data on how much money the military paid to the nuclear industry in exchange for plutonium during the 1960s and 1970s. Maybe it is still a military secret, but we can at least make a rough estimation.
First of all, the total amount of plutonium produced for the US military alone is of some 111 metric tons (source). Since plutonium does not exist in the Earth’s crust, all of it must have been created in nuclear reactors. How much is this plutonium worth? At present prices, plutonium is said to be worth something between 1000 and 5000 $/g (source). So, all the plutonium stored by the US military is worth something of the order of 100 – 500 billion dollars. No peanuts, indeed Now, consider that this sum was paid in an arc of time of about 20 years and that today the nuclear industry in the US sells about 40-50 billion dollars of electric power (source). We see, therefore, that the subsidy to nuclear energy coming from the sales of plutonium was very significant.
Let’s try another approach. A 1 GW nuclear plant was reported in 1976 to generate something like 250 kg of plutonium per year (source). At today’s prices, that could be worth between 250 million dollars and one billion dollars. According to the data available (source) a total nuclear capacity of 100 GW in the US generated 790 million MWh, that is, about 8 million/MWh per GW of nominal power. Let’s take a value of 50 $/MWh (source), it follows that a 1 GW nuclear reactor generates revenues for 400 million dollars per year. Again, we see that the plutonium produced by the reactor worth a significant fraction of the revenue from electricity sales, perhaps even more than that!
Of course, these data are obtained using the present plutonium prices; at the time, prices were surely different. And note also that the civilian nuclear industry did not "sell" plutonium to the military – they couldn’t do that because they lacked the facilities to extract and refine plutonium (of the right isotopic composition) from their spent fuel. They just provided their spent fuel rods to specialized plants which would extract and refine plutonium 239 which then was transformed into weapons or stockpiled. The calculation is just an estimate of the value of the plutonium production during the heydays of the nuclear industry, and that must have provided a significant benefit to the industry.
Nuclear power station teaser image via onliner/flickr. Creative Commons 2.0 license.