The Failures of the “Nuclear Renaissance” and Lessons for the Future

By Vineet Gangireddy

In the early 2000’s, the term “Nuclear Renaissance” was widely used to refer to the supposed rebirth of the nuclear energy industry to help alleviate growing concerns about greenhouse gas emissions and fossil fuels. Countries around the world viewed nuclear power as the most prominent low-emission energy source and sought to increase their respective nuclear capacities as such. For example, the Energy Policy Act of 2005 in the United States provided loan guarantees and up to $2 billion dollars for nuclear power plants to reduce the high up-front capital costs that plague the construction of new nuclear power plants.1 However, despite the strong international effort in support of such initiatives and the general advantages of nuclear energy in general, over the past 20 years, there has been a worldwide increase of just 2 reactors from 439 nuclear reactors in 2001 to 441 in 2020 and an overall nuclear energy production increase of 6.2%. This paper will examine the economic and environmental advantages and drawbacks of nuclear energy generation as well as how policy and public sentiment have shaped the current nuclear energy landscape to explore the reason for the occurrence of such dismal results.

Nuclear energy presents a particularly challenging economic conundrum: fuel costs, the cost of maintaining their facilities, and greenhouse gas emissions are lower than that of fossil fuels and profit margins are much higher overall, but despite being massively profitable in the long-term, the initial cost of building a nuclear power plant that corresponds to negative returns for the first several years of construction drives away potential investors. This initial start-up cost is primarily why nuclear energy has not become nearly as much of a commercial fuel market as fossil fuels and even solar has. Thus, government incentives such as the loan guarantees and subsidies given in the Energy Policy Act of 2005 are necessary to create a financial backing for building new nuclear power plants. However, even though various international governments have created adequate incentives to bolster nuclear energy investments, nuclear power plants were not constructed en masse and many were even shut down in the following years. A major cause of this was the 2008 Financial Crisis and subsequent recession that limited the funds that investors had to invest in risky projects with long-term payoffs, such as a nuclear power plant. In conjunction, the earthquake-caused Fukushima-Daiichi nuclear disaster in Japan decimated public sentiment towards nuclear energy and its safety despite the actual accident leading to no deaths. Following this disaster, governments around the world reexamined their own nuclear plants and policies, shutting down many of their plants and creating policies to move away from nuclear energy sources. For example, Germany completely shut down 8 of its nuclear reactors and will shut down the rest by 2022, France plans on moving from 70% of its energy coming from nuclear to less than 50%, and 94% of Italians voted to stay completely non-nuclear. Public sentiment towards nuclear energy remains contentious to this day with a 2016 Gallup poll finding that only 65% of Americans personally favor nuclear energy.4In addition, a majority of Americans would not be in favor of having a nuclear power plant within a 50 mile radius of their homes and many expressed concerns of possible terrorism on such nuclear energy sources. The problematic economics of building nuclear power plants from the ground up in conjunction with the waning support from the public and governments has led to the lack of growth in nuclear energy over the past couple of decades. 

Despite these recent failures of nuclear power, the near future holds significant possibilities for growth in the nuclear sector. One primary reason for this is the increasing instability of fossil fuel prices and supply due to instability in oil and natural gas producing regions and the dependence of most Western countries on imported oil. Nuclear energy presents a steady supply of energy that is quite evenly distributed across the world (and particularly abundant in the United States) and has a low storage cost. In addition, the rising prices of fossil fuels that will surely occur as their limited supply is used up will make the economics of building nuclear power plants much more feasible and drive investors into the nuclear sector similarly to the massive investments in the solar and wind sectors in recent years. In the long-term, nuclear power also presents a shield from the general volatility of fuel prices since the main costs of nuclear power lie in facility-related costs rather than in acquiring fuel, which is promising for use in developing countries in more deregulated power grids. The final consideration relies on public sentiment towards nuclear power. Polls taken very recently have found slight growth in support of nuclear energy since 2016 and also saw that the vast majority of Americans are in favor of nuclear energy being part of the mixture of energy sources in the future. In addition, people who are more informed about nuclear energy in comparison to other energy sources are overwhelmingly favorable towards nuclear energy.5 Therefore, nuclear energy seems set to grow significantly in the coming years despite its failures over the past couple of decades. In fact, total output from nuclear energy has been steadily increasing since its drop following the 2011 Fukushima Daiichi disaster. 

The foreseeable growth of nuclear energy presents promising possibilities for reducing emissions and moving away from environmentally harmful fossil fuels, but we must carefully consider its downsides and past failures every step of the way. For the future, it will be essential for us to ensure the safety of new and existing nuclear plants from terrorism, natural disasters, and accidents, provide incentives for more investments in the nuclear sector and the renewable energy sector, and, most of all, inform the public as much as possible about energy issues, the efficacy of nuclear power, and the perils of climate change. If we are able to do this, then nuclear power will continue to play a major role as the most prominent zero-carbon fuel source for the foreseeable future, reducing our dependence on fossil fuels and paving the way for a sustainable world.