March 23rd, 2011
I have been thinking about energy policy – a field in which I claim no expertise – as the ongoing catastrophe unfolds at the Fukushima nuclear reactor. The quandary is that, as Jeff Sommer argues in an article in the New York Times on Sunday March 20 entitled “A Crisis that Markets Can’t Grasp,” markets have not succeeded in putting a price on the long-run costs associated with disposing of nuclear waste (the best case) or of dealing with nuclear disasters (the worst).
It is clear to me that the nuclear industry has underestimated the risks and, as a consequence, failed to invest sufficiently in risk mitigation. What would nuclear energy cost in Japan if its plants were built to a standard secure enough to resist a magnitude 9 earthquake and resulting tsunami? If plants had to be built to that standard, would Japan have invested very much, or even anything, in nuclear energy?
Similarly, the Times article referred to the $ 6 billion nuclear power plant built at Shoreham, Long Island, and decommissioned in 1989 before ever going into operation. The key argument in public opposition was the impossibility of evacuating populated areas of Long Island in the event of a nuclear disaster.
To make intelligent energy policy decisions, we need to compare alternative energy sources in terms of their capital cost, operating cost, ongoing environmental impact, and potential for, and impact of, catastrophes. Nuclear energy now looks much worse in terms of either the latter factor or the cost of mitigating it. The immediate reactions of newspaper columnists – the predictable first draft of history – do not in any quantitative sense deal with those complexities. As the Fukushima story plays out – and it will certainly be a long-running story – we’ll begin to get a sense of more realistic costs and tradeoffs than have been estimated in the past.
A personal note on the Japanese story. An article in the New York Times assessing the role of the Japanese government in reacting to the crisis quoted Masahiro Horie, a former senior government official who is now a dean at Japan’s National Graduate Institute for Policy Studies. The name seemed familiar, and indeed it turned out that I had interviewed Mr. Horie – then a budget examiner in the Ministry of Finance – twenty five years ago for an article I wrote about public management in Japan (“Management of the public sector in Japan: are there lessons to be learned,” in Canadian Public Administration, summer 1986, pp. 175-96). Mr. Horie was particularly forthcoming and helpful with my research then, and I vaguely recall not only an interview in his office, but also a restaurant lunch.
He and I re-established contact by email. In his view, the “strong social cohesion, solidarity, and mutual assistance” of the Japanese people will enable them to “overcome these difficult times and stand up again.” I certainly hope he’s right.