strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: October 19, 2009

 
 

An Immodest Proposal for the Next Big Fuel

If nuclear energy represents a genuine way to deal with climate change, let’s test it through a massive joint project involving the U.S., Japan, France, and China.

As the search intensifies for alternatives to carbon-emitting fuels, more voices are calling for a revival of nuclear energy. But nuclear power isn’t like other forms of energy; the nature of the technology and the levels of investment required demand that it be developed differently than other kinds of fuels. The problem with nuclear power is not primarily that it’s dangerous, or even that it’s unfeasible, but that its requisite scale and scope are dauntingly large. To gain the benefits of nuclear power, we would have to think big — bigger than the way most decision makers are thinking about energy projects these days.

Most nuclear operation is currently managed by corporations or publicly held utility companies. But if the intent of a nuclear energy program is to significantly reduce greenhouse gases, then a company, no matter how well managed and funded, is not large enough to manage it. Even national governments are too small. Climate change is a global problem, and it requires genuinely international solutions.

Here, then, is an appropriately large-scale — one might say appropriately immodest — proposal. The United States, France, and Japan should form a coalition to invest intellectual, financial, and manufacturing resources to build nuclear energy capacity. They should locate these projects in China, where new nuclear plants would be designed to replace a major portion of the dirty coal plants that the Chinese government is currently building or operating. This proposal would also reduce China’s oil imports, thus freeing up energy resources elsewhere in the world. And the whole project should be seen as a model for international investment in global resource use.

To justify this idea, we have to dispassionately consider the benefits of nuclear energy. First, generating electric energy from plutonium is clean. Of course, carbon emissions are released in mining, transporting, and processing uranium, but once a nuclear plant has been operating for six or seven years, the energy is carbon-free. Second, nuclear energy is good for managing so-called base-load costs. Because electric power is costly to store, it typically cannot be transferred from times of low demand to times of high demand; this makes wind and solar power generation, with their unpredictable flows of energy, more costly and difficult to manage. By contrast, nuclear power is steady and reliable, with little need for storage to modulate variable rates of generation. Third, although it takes billions of dollars to get a nuclear power plant up and running, it is relatively cheap to operate thereafter. It can supply electricity at a rate that’s competitive with coal, gas, and oil.

To be sure, nuclear energy presents its share of problems, but most of these problems become much less difficult when addressed at a major scale. For example, nuclear plants have typically required massive government subsidies because of the huge expense of building them; at a large scale, the costs per kilowatt go down. Some problems are inherently political: when one factors in the delays, cost overruns, and not-in-my-backyard opposition that is almost inevitable in the U.S., it’s unlikely that nuclear power could ever be cost-effective in the States. Nuclear power is also hampered by the cost of insurance and the opportunity costs of stranding capital in plants that may take 10 or 15 years to go from initial licensing to actual delivery. The problems associated with storing nuclear waste have yet to be resolved. And the danger of proliferation also persists; nuclear plants can be adapted into weapons production facilities, at least theoretically.

Such problems are beyond the scope of corporations, as well as most governments. But the problems start to seem far more manageable when looked at from an international perspective.

And China is the place to set the international plan in motion. This nation of 1.3 billion people, most of whom are rapidly increasing their energy use, is on course to complete and put on line a new coal-fired plant every week. It is the locale where substituting nuclear power for coal will do the most good most rapidly. China is also an optimal country for initiating large projects. A little autocracy goes a long way when it comes to siting and building nuclear plants. Thanks to its single-party rule and strong interest in centralized, sustainable solutions, the Chinese government can approve and build nuclear plants fairly rapidly, avoiding those American-style delays and cost overruns.

But China cannot take on the nuclear challenge on its own. Much of the technology comes from Japan. China also lacks the requisite nuclear experience. France, however, has abundant experience; nearly 80 percent of its electricity is currently generated from nuclear power. The United States also has a large experience base through corporations such as General Electric and Westinghouse, which have long histories with nuclear technology. Further, the U.S. has a vested interest in reducing carbon emissions, since the country produces such a disproportionate share of them.

Concentrating the development of nuclear energy in China, but with international oversight, will have other benefits related to centralization and control. It could reduce competition for a scarce resource — uranium — and thus hold down the price of nuclear fuel. Additionally, almost certainly, it would reduce the danger of proliferation. An international body, such as the International Atomic Energy Agency, might function as a watchdog.

China might welcome a position as the world leader in nuclear power production, even if it means receiving greater scrutiny by such a watchdog group. The country already has nuclear weapons and would like to discourage other nations from developing their own. Being a major producer of nuclear energy will help China further integrate its economy into the world economy. Having these two long-standing enemies, Japan and China, involved together in a project of this scale would probably also be a boon to world geopolitics.

Of course, many questions remain. For example, what would the Russians think of such a plan? How would Germany perceive this business opportunity for France? And the issue of waste disposal will not go away — although now it could be addressed at a global scale. There might be some regions of Earth, perhaps Antarctica, that would be seen as safe for storing radioactive waste; it’s also possible that the waste could be compressed and sent into space.

Yet a further problem: What is to keep the Chinese from co-opting the technology for their own competitive advantage? The best answer may be: Let them. There are three reasons for this. First, the concentration of nuclear technology in China will free up resources elsewhere for investments in innovative clean-energy technologies. Second, China’s success in limiting carbon emissions will benefit everyone. But third and most profoundly, if the recent economic collapse has taught us anything, it is that we must write a new chapter in the history of capitalism. We must rethink the merits of “beggar thy neighbor” competition among nations. There is such a thing as the international common good, and this proposal can serve as a proving ground for new kinds of global public–private partnerships.

This proposal is Swiftian, perhaps, because it involves a seemingly unthinkable idea. It would bring together groups that are not typically considered capable of working closely together — the Chinese, French, Japanese, and U.S. governments, plus a variety of corporations and not-for-profit groups — to collaborate without getting bogged down, combining the best aspects of each organization and its mode of governance.

This proposal would accomplish two more things. It would improve the quality of debate over nuclear power, taking the issue out of the counterproductive rhetorical realm of “you’re either for nuclear power or against it.” And it would show people what they can accomplish if they put their minds to it. If we can retard the burning of coal in China, build nuclear plants there, and reverse the course of climate change, then we can do many other things. Perhaps we could even save ocean life or the rain forests.

We share just one global ecology. We should share the responsibility of keeping it clean.

Author Profile:

  • Jay Ogilvy is dean and chief academic officer at Presidio Graduate School, which offers MBA and master’s degrees in public administration programs based on principles of sustainability. He is also a cofounder of Global Business Network and chair of Esalen Institute’s Global Potentials Program.

     

 

 
Page 1 2 3  | All
 
 
 
Close
Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.

Close