Closing nuclear plants “an economical aberration”

No source of energy is 100 per cent safe: closing a nuclear plant for safety issues is an irrational decision, a true economical aberration. Closures should only be decided upon economical reasons. Our future, in the long period, lies with renewables, but nuclear does have its own share of an energy mix. A proposal for the next President of France: a carbon tax can help avoid the explosion of an energy price bubble, whose social and political consequences would be hard to bear.

 

Jean-Marie Chevalier is a leading expert in economics, and in the economics of energy policies. Professor of economics at the University of Paris-Dauphine, he is also Director of the Centre de Géopolitique de l’Energie et des Matières Premières, Senior Associate at Cambridge Energy Research Associates (CERA, Paris office), member of the Board of Directors of Nexans, member of the Economic Analysis Council in France.
He loves to depict himself as a disciple of Descartes, and as such he always preaches that “We must look at things in a rational way. Economists must be rational”.

Recently he has been guest to an Italy-France roundtable organized in Milan by Università Bocconi’s IEFE (Centre for Research on Energy and Environmental Economics and Policy), a top level thin-tank in all that is energy and economics. Professor Chevalier started his contribution to the roundtable by claiming the superiority of economics when taking decisions concerning energy policies.

 

“Closing nuclear plants for safety reasons? That is economic aberration, a destruction of value. We should close what does not work, not what works”.

 

As for safety, Jean-Marie Chevalier is convinced that is not an issue: it is still economics that should lead the way. Safety comes afterwards, it cannot be considered an acceptable reason for closing a nuclear plant, as “there is no 100 percent safe energy source: each has its own strengths but also its weaknesses”. Our focus, then, should be on increasing the efficiency and modernity levels of our sources of energy.

 

“Each country has its own agency dedicated to the control of nuclear power plants. I believe France has a very competent agency, with a proven track record over all these years. If the agency says that a plant should be closed, because it is safer, more efficient or otherwise, then we should close it. If you need invest money in it, let’s say 200-300 million euros, in order to improve its efficiency or safety, then it should be up to the management company to assess the cost of the investment, its economics with regard to electricity production costs, and take the decision. But if the agency says that a plant is fine, why close it? As mentioned, it is what does not work properly you should close, not what is running efficiently”.

 

Can Nuclear energy help us reduce CO2 emissions and struggle against global warming?

“In France many claim we do not need any more nuclear power plants. On the other side, China is planning to build 25-30 plants within the next twenty, thirty years. Theirs is a good choice: China has an energy balance with an elevated level of carbon emissions, and this is beginning to cause them problem”.

Building so many nuclear plants, though, will not change the Chinese situation in terms of CO2 emissions. Our very future lies within renewable sources. Though Jean-Marie Chevalier does not sound very confident in our chances to counter climate changes and global warming.

 

“If I consider what our energy future in the short and medium term will be, the crucial point, in order to really break this situation of high carbon emissions and combat climate change, is to switch to renewable energy. But I am equally sure that we are going to fail to contain the increase in global temperatures below two degrees as it was hoped by the International Panel on Climate Changes.

 

One way to stimulate the shift to renewables is to increase the prices of energy through tools such as carbon taxes. A radical change in well-rooted policies.

 

“It is a widespread opinion that energy is cheap in France. It is not that prices are low, the various governments have simply locked their increase. So the current price of electricity in France does not reflect its real cost. And in a pre-elections period we can not expect things to change”.

 

A tight political control over prices has resulted in a sort of energy bubbles thats scares Professor Chevalier. If that bubble breaks, it could be like an earthquake. Actions are needed to make it release its energy slowly and under control.

 

“The awakening, when it happens, will be traumatic. Some scenarios foresee a 55% increase in energy prices between 2010 and 2022. Such an increase leads to a serious consequence: energy poverty. It is socially unsustainable. People will find themselves on the street, unable to bear the costs of energy bills”.

 

How to respond to such threat, the question coming silently from the audience in Milan.

“On the case of prices and the cost of electricity I had an idea, very personal. I have not sold it to any presidential candidate, yet. Increase dramatically the cost of energy, perhaps through a carbon tax. With two basic goals: the first is to finance the transition to renewable energy, because that is where our energy future lies; and secondly, to manage situations of energy poverty, in place of checks in favor of those who cannot afford the bills we should leverage on incentives to allow them to change their car, their heating system”.

 

A final thought, before leaving the roundtable.

“Efficiency and modernity: these are the two fundamental aspects of the issue. We must focus on increasing the efficiency of each energy source. And then you have to keep in mind that each source has its strengths but also its weaknesses. The 100% security does not exist”.

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One Response to Closing nuclear plants “an economical aberration”

  1. Pingback: Mergers and Market Competition Separate Energy Princes from Regulatory Frogs « Zap! Crackle! Pop!

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