Subsidies to Nuclear Power in the Inflation Reduction Act

David Kemp andPeter Van DorenLast month, the United States enacted theInflation Reduction Act (IRA), purportedly to address rising inflation. In practice, though, the act mainly serves as a vehicle for some of President Biden ’s and the Democrat’s legislative priorities. The act includes many provisions to subsidize clean power plants, including nuclear generators.Many believe that nuclear is the perfect solution to climate change. It is a zero-carbon power source that is nearly constantly available unlike intermittent renewable sources, such as wind and solar. Ourrecent working paper examines the economics of nuclear power and concludes that it is very high-cost relative to natural gas generators. Most importantly in the context of climate change, we also determine that the potential climate benefits of nuclear are insufficient to offset its costs.From the 1960s to 1980s, many nuclear power plants were built, but nuclear construction costs rose dramatically resulting in a severe decline in new construction. Very few plants have been built in the United States and Western Europe in the past several decades. In fact, the most recent projects in the West (the United States, France, the United Kingdom, and Finland) have experienced numerous issues with quality control, supply chains, and labor force management, leading to a more than doubling of construction schedules and costs. The fact that nuclear construction costs increased dramatically in countries with different regul...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs