By Martin Adams, Energy Editor, Economist Intelligence Unit
Once on the cusp of a renaissance, the nuclear industry now risks being sent back to the Dark Ages. This is the impression that emerges from much of the commentary in the months since the crisis at the Fukushima Daiichi nuclear power plant in Japan. Before the devastating earthquake and tsunami on March 11th, atomic power enjoyed a return to prominence among planners in the United States and elsewhere. Now, a commonly-held view is that the nuclear industry will see a slowdown in growth, if not an outright decline. In a mixed but memorable metaphor, one commentator recently declared that Fukushima had “cut off at the knees the nuclear spring and has produced an eternal autumn.”
This doom and gloom at the global level is misplaced, and the U.S.’s continued support for nuclear power is a crucial part of the reason why. Granted, in some other countries the Fukushima crisis has undermined political support for nuclear power. Runaway anti-nuclear sentiment recently swung elections in Germany, and in short order Switzerland and Italy also rejected nuclear power. Japan, still reeling from its traumas, said it will build no new reactors, when before it envisioned a new fleet.
Yet the popular and political backlash against nuclear in the U.S. has been far more muted. That is also the case in many—indeed most—other countries. But what is happening in the U.S. arguably matters more than in any other country, given the country’s position at the head of the league of nuclear nations in terms of existing capacity.
It is true that, even before Japan’s nuclear accident, prospects for the vaunted nuclear renaissance in the U.S. had dimmed somewhat due to the uncertain political will to subsidise it. Fukushima will not help. In the coming decade, the incident’s impact in the U.S. is likely to be felt most keenly through the debate it has triggered on “uprating”, whereby more power is squeezed out of existing reactors. The Economist Intelligence Unit expects that greater suspicion of this practice will feed into slower capacity expansion and we have reduced our forecasts accordingly.
Yet it would be easy to overstate the impact of a far-flung crisis. Nuclear’s future in the U.S. actually looks a little brighter than its present. The U.S. needs energy from somewhere and, thanks to climate change and energy security concerns, both Democrats and Republicans support sticking with America’s existing nuclear program. Congressional hearings following Fukushima have not been free from political point-scoring, but few politicians have argued that the U.S. should follow Germany and walk away from nuclear. There are also plans from the Obama administration and some in Congress to push a new breed of so-called small reactors, billed as a safer species of nuclear plant.
During the timeframe covered by our forecasts (up to 2020), sweeping new building plans are not expected. But construction or pre-construction work is under way at the sites of five new reactors, and there are few signs that these will be blocked. Thus, despite all the fuss, by 2020 we expect the U.S. to have 109 GW of nuclear capacity, meaning a total of 8 GW of nuclear capacity will be added this decade. This does not match the ambitious additions in a fast-growing economy like China. But neither is it exactly a bleak picture for America’s nuclear industry.
When it comes to new building, U.S.-based nuclear equipment manufacturers stand to receive further succour from an expanding global industry, especially in China. Following Fukushima, we revised our forecasts for the top ten nuclear countries—accounting for some 85 percent of global capacity. Where appropriate, we revised those down, but it soon became clear that Germany and Japan represent exceptions to the rule.
A closer reading of the international response to Fukushima shows that most governments’ stance towards nuclear energy has changed far less than doomsayers assume: nuclear energy is a response to long-term trends, and hence not easily abandoned or replaced. The need for new sources of electricity to power economic growth persists, and the promise of nuclear in bolstering energy security and reducing carbon emissions makes it an appealing option. We expect China to go from 10.1 GW of capacity in 2010 to 63.1 GW in 2020, an increase of more than 500 percent.
Today, the top 10 countries have around 320 GW of nuclear infrastructure between them; by 2020, this capacity will swell to 405 GW. And this only tells part of the story, as countries from Eastern Europe to Africa also take an interest in going nuclear. Despite Japan’s crisis the overriding global trend over the next decade will be growth.
Taken together, you could call it something of a renaissance.
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