Brattle Group study shows value of US nuclear industry
A new study by economists at the Brattle Group has found that the nuclear industry contributes $60 billion per year to the USA's gross domestic product (GDP) in addition to limiting carbon emissions and other economic and societal benefits.
Prepared for the Nuclear Matters campaign, The Nuclear Industry’s Contribution to the US Economy estimates the value of the entire nuclear industry to the US economy and to limiting greenhouse gas emissions. Employing a widely-used dynamic input-output model of the US economy known as REMI (Regional Economic Models Inc) linked to Brattle's simplified model of the US electricity sector to capture the dynamics of power markets and prices, the authors were able to measure the overall value of the US economy both with and without the nuclear industry.
Authors Mark Berkman and Dean Murphy found that the nuclear industry's gross output of $103 billion per year represented an annual contribution of about $60 billion to US GDP. According to the World Bank, the USA's total GDP for 2014 was about $17.4 trillion.
The US nuclear industry accounts for about 475,000 full-time jobs and helps to keep electricity prices low. Without nuclear generation, retail rates would be about 6% higher on average, the report found. It is responsible for nearly $10 billion annually in additional federal tax revenues, and $2.2 billion in additional state tax revenues, because of the boost it gives to the economy.
The 573 million tonnes of carbon dioxide emissions per year avoided by the USA's nuclear plants are worth another $25 billion annually if valued using the federal government's $43.31 per tonne estimate of the social cost of carbon. In addition, US nuclear generation avoids the emission of more than 650,000 tonnes of nitrogen oxides (NOx) and more than one million tonnes of sulphur dioxide (SO2) annually, valued at a total of $8.4 billion based on cost estimates from the US National Academy of Science.
The report notes that these values reflect the incremental contribution of the nuclear industry to the economy, because comparing the performance of the US economy with and without the nuclear fleet "nets off" the contribution of the alternative generation that would be necessary if the nuclear industry did not exist. Without nuclear plants, the economy would rely more heavily on fossil fuel generation, which would mean higher electricity prices, with wholesale prices on average 10% higher and retail prices rising by about 6%. It is this effect on electricity prices that accounts for the majority of nuclear's overall incremental economic impact, the report says.
Increased fossil fuel use would also result in much higher emissions of carbon dioxide and pollutants such as NOx and SO2. "Large-scale renewable energy would probably not substitute significantly for nuclear; intermittent renewable generation is not a direct substitute for the baseload profile of nuclear," the report says. "Absent nuclear, consumers would pay more for electricity, the economy would suffer both in terms of GDP and jobs, and we would face substantially higher emissions of CO2 and other pollutants," it warns.
Recognising value
According to co-author Berkman, the economic and environmental benefits of nuclear energy are often undervalued in national and state energy policy discussions. "It is even more critical to consider the significant value of US nuclear plants in a landscape where several factors threaten some nuclear facilities and could diminish the industry’s contribution to our electricity supply, the economy, and the environment," he said.
Nuclear energy provides almost 20% of the USA's electricity needs, but some plants are at risk of premature closure solely because of market conditions. Units in states with deregulated electricity markets are particularly vulnerable, faced with challenges from the short-term nature of the competitive market and competition from low-cost gas and federally subsidized wind power. Last year, Exelon warned that it could be forced to close several of its reactors to avoid long-term losses. The state of Illinois, where the future of five nuclear units is at risk, is taking its own steps to enhance the competitiveness of nuclear and renewables through a legal requirement for utilities to adopt a low-carbon energy portfolio.
The Nuclear Matters campaign aims to inform the US public about the "clear benefits" of nuclear energy, to raise awareness of the economic challenges that threaten those benefits, and to work with stakeholders "to explore possible policy solutions that properly value nuclear energy as a reliable, affordable and carbon-free electricity resource that is essential to America’s energy future."
Nuclear Matters is co-chaired by former US senators Judd Gregg and Evan Bayh. Gregg said that the report stressed the need to address the underlying challenges associated with premature nuclear shut-downs. "The public and policymakers are seldom offered such starkly obvious public policy choices as working to ensure existing nuclear energy plants continue to operate", he said.
Bayh said that reducing carbon emissions was one of the USA's top priorities, yet existing nuclear plants received "no value" for their ability to generate carbon-free reliable electricity. "Without nuclear power, it would be impossible to achieve our carbon reduction objectives", he said.
Researched and written
by World Nuclear News
