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Japan's Impact on U.S. Nuclear Power

Author: Michael A. Levi, David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the Maurice R. Greenberg Center for Geoeconomic Studies
March 14, 2011

Japan's Impact on U.S. Nuclear Power - japans-impact-on-us-nuclear-power


The Japanese nuclear crisis continues to unfold, with the ultimate outcome still unknown, but observers have already turned to the "Day Two" question: What does this disaster mean for the future of U.S. nuclear power? There is no doubt that, on the margin, this will hurt it. How much so remains to be seen.

A look back at last year's Deepwater Horizon oil spill in the Gulf of Mexico should humble any prognosticator. The first few days of that disaster were met mostly with a collective shrug. We have already blasted through that phase in the Japanese situation: It is already clear that this is no small incident.

Within a few weeks of the BP spill, the scale of the actual disaster began to become apparent. Drilling opponents seized the moment to reinforce their prior beliefs, but proponents largely dug in their heels. The nuclear debate has now moved to this second stage: Skeptics have had their beliefs about the risks of nuclear power confirmed, but most pro-nuclear forces are still as enthusiastic as ever.

The evolution of public opinion is still far from over, though. The ultimate policy consequences of the Japanese crisis will depend on precisely how the situation on the ground develops over the coming weeks, just as it did over the oil spill's many months. Those details are impossible to predict right now: Much depends on technical matters that are not known to the public, and on exactly how the stricken reactors respond to the stresses that they are now under. It is safe to say that the death toll from the tsunami itself, which is estimated to already be upward of ten thousand people, will be greater than the human impact of the nuclear situation. But it is equally likely that all eyes, particularly in the United States, will be focused on how the latter evolves.

Nuclear power provides about 20 percent of U.S. electricity, but new construction has been stalled for decades by a mix of high costs and public apprehension dating back to the 1979 accident at Three Mile Island. Opposition to nuclear power has softened slightly in recent years, but the old patterns of debate remain largely intact.

Pro-nuclear forces are unlikely to reverse their prior stance in response to the unfolding disaster. Some in the anti-nuclear camp, on the other hand, may change theirs. Many moderate nuclear skeptics in the environmental community have become more open to zero-carbon nuclear power as part of a grand bargain on climate policy, much as many drilling skeptics had become open to an offshore exploration deal by this time last year. The Japanese disaster, though, may make moderates in the environmental community far more reticent to deal, just as the BP disaster made them less willing to deal on offshore drilling. A big swing within this bloc could have real consequences for U.S. policy on nuclear power.

Many observers have already pointed out correctly that the future of nuclear energy will still come down to costs. But cost and regulation are tightly intertwined when it comes to nuclear power. One of the central drivers of nuclear power's high costs is the uncertainty surrounding regulation and permitting, which drives up project developers' cost of capital. Any big changes to the regulatory process or to power plant design increase uncertainty, at least in the short term, and hence increase the cost of financing new plants. With nuclear power already under pressure from cheap natural gas, regulatory reactions to the latest disaster could tip the balance.

It is safe to say, though, that prediction remains a dangerous task. Less than a year after the oil spill, in the midst of upheaval in the Middle East, the drilling debate has largely returned to its preexisting form. It will not be surprising if nuclear memories are short lived too.

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