Coal or Nuclear in New Power Stations: The Political Economy of an Undesirable but Necessary Choice

Abstract

Where gas and hydro are not available and power capacity needs to be expanded, the choice will be between coal and nuclear, for there are few viable alternative options. This paper analyzes the factors that will determine the choice. The internal costs of power generation using coal and nuclear show no clear edge for one or the other. A tilt in favor of nuclear emerges when the external costs, as assessed by experts in the field, are added to the internal ones. Laymen's evaluations of the external costs appear to be at least an order of magnitude higher than the expert assessments, however. Given their high level and strong influence on energy policy making, these evaluations will ultimately determine the choice. But since the laymen's views in this regard are formed in an unsystematic manner and are unstable over time, it is not possible to use economic analysis to determine what that choice will be.