Sustainable Development & Nuclear Power
Table of Contents Table of Contents
Introduction Introduction
The Energy Challenge The Energy Challenge
Nuclear Power Facts Nuclear Power Facts
Nuclear Power Advantages Nuclear Power Advantages

Conclusion Conclusion
The Salient Points The Salient Points
Annex I Annex I:  The DECADES Project
Annex II Annex II:  Nuclear Power Case Studies

| Limited Environmental Impacts | Small Waste Quantities | Security of Supply | External Costs of Energy Generation |
| A Wide Range of Applications |


External Costs of Energy Generation

Energy economics

Although security of supply and environmental considerations can provide significant nuclear power advantages, economic justification is a central factor. Studies carried out over the years by international organizations and national institutes have demonstrated that nuclear power has been competitive with other baseload electricity generation alternatives [Fig.: Generation Costs]. Its competitive advantage has depended on factors that vary nationally, such as financial and regulatory considerations, as well as the availability of alternative resources.

Today's capital investment to construct a nuclear power plant is typically some 60% of generation costs, with fuel costs at 20% and operation and maintenance (O&M) costs the remaining 20%. Capital requirements to construct a fossil fuel plant can be significantly lower, with fuel the major generation cost component at some 50% for coal and as high as 70% for natural gas.

As a capital intensive undertaking with relatively long construction periods the competitiveness of nuclear power depends on investment conditions, particularly the interest and payback period of loans. In today's liberalized electricity markets and radically changing financial environment, initial capital investments must be recovered in excessively short time periods involving high discount rates. For discount rates of the order of 5% nuclear power has been competitive with fossil fuels. At higher rates it is difficult to be competitive with gas - particularly with combined cycle - and at 10% not with coal. The economic competitiveness of large hydroelectric projects and capital intensive renewables such as solar has also been adversely affected.


In the long term, the economic competitiveness of nuclear power could significantly increase if externalities - the considerable indirect and external costs of energy generation and use not generally included in the market price - were taken into account. Indirect costs, such as those for waste management and decommissioning, are already components of nuclear generation costs. For fossil fuels, these costs are not yet fully included and could become significant if environmental policies become more stringent.

There would be an even greater impact if external costs for local and regional environmental and health impacts were included, perhaps through more stringent regulatory requirements and various ecological surcharges that some countries already use in the transport and industrial sectors.

For nuclear power most environmental externalities have essentially been internalized in the generating costs by the imposition of numerous costly systems that prevent virtually all radioactive material including waste from entering the environment.

For all fossil fuels the impact on global climate change and environmental pollution are key externalities. For nuclear power the potential impact from a severe accident could be a key externality, although a subsequent discussion will indicate that infrequent events are not. A wide range of site specific ecological and social factors can be key externalities for hydroelectric and renewables.

Climate change

If commitments to restrain greenhouse gas emissions are made at the third Meeting of the Parties to the FCCC in Kyoto this December, policies to reduce global emissions through economic instruments could be considered. Such instruments could include so-called carbon trading that in essence allows emission reductions to be accomplished by a third party at a price - a difficult mechanism at the global level - or a more direct carbon value tax. The IEA in a recent paper entitled Climate Change and Nuclear Power's Future has illustrated the effects of a monetary carbon value applied to the cost of fossil fuels that takes into account the production of greenhouse gases.

A carbon value would favour the less carbon intensive fossil fuels, particularly natural gas. Nuclear, hydroelectric and some renewable systems would be unaffected by a carbon value [Fig.: Carbon Value and Generation Costs (Normalized to Gas Turbine)]. As an illustration, if coal generated electricity were 20% cheaper than that from nuclear power, the addition of a carbon value of $30 per tonne to a coal price of $60 would eliminate the advantage. If natural gas generated electricity were 40% cheaper than nuclear power, a carbon value of $200 per tonne would make nuclear power competitive.

Environmental pollution

The assessment of environmental externalities must include impacts for the entire fuel chain and consider occupational as well as public effects on a local, regional and global scale. Methodologies are uncertain at best, but assessments can highlight the major considerations necessary for comparative purposes. The comprehensive ExternE project, carried out by the European Commission from 1991 to 1995, examined externalities for complete energy chains. Elaborate methodologies were developed to monetize impacts so their effect on generation costs could be seen.

The externality cost per unit of energy generated and the estimated equivalent lives lost (based on loss of life expectancy) are shown in Table 4. For equivalent amounts of energy generation the coal and oil plants assessed, owing to their large emissions and huge fuel and transport requirements, have the highest external costs as well as equivalent lives lost. The external costs are some ten times higher than for a nuclear power plant and can be a significant fraction of generation costs. The results also indicate significant values for the equivalent lives lost.

Nuclear power externalities

To evaluate the nuclear power externalities, the ExternE study assessed the impact of a year's operation of a 1 000 MW(e) plant in France including relevant fuel cycle activities. The impact of routine radioactive releases was negligible and occupational exposures were exceedingly low owing to small mining requirements. Less than one equivalent life lost - 0.1 public and 0.02 occupational - in a 300 million European population was attributable to the one year of operation. This calculation included the impact of severe accidents based on a probability methodology.

The severe accident impact is a key element in the assessment, as it could be expected to have a large effect on externalities. However, an infrequent event has only a small impact per unit of energy generated as its consequences must be proportioned to the total amount of energy generated during the time period without a severe accident. As an illustration, the Chernobyl accident's projected consequences of 3 500 additional cancer deaths late in life must be apportioned to the 442 reactors that have operated to date on average for 20 years.