2008-01-13

Nuclear power

The UK government has given permission for companies to build nuclear power stations. The government say that they will not be subsidised by the taxpayer. As long as they really aren't subsidised (including insurance) then that's okay with me, and I'll explain why.

Some complain that, 'the UK doesn't have an energy policy', or 'energy is too important to be left to the free market'. I think that the UK is doing absolutely the right thing in having a free market for electricity. There are two genuine problems in energy at the moment, peak fossil fuels and climate change.

With peak fossil fuels our free market means we're well placed to deal with the problem. As fossil fuels run out, their price will increase. As they increase, two things will happen: more renewable generation will become profitable and usage of fossil fuels will decrease. From Adam Smith we know that both of these will happen in such a way as to maximise the UK's wealth.

Unfortunately, peak fossil fuels won't happen soon enough to avoid climate change, and so we need a carbon tax. A tax on carbon doesn't mean we'll be abandoning our free market.

So back to the original question of nuclear power; this is simply the market working as it should and delivering the best bet in the long and short term.

By the way, I think the companies are mad to build nuclear power stations because:

1. Uranium is running out (peak uranium).
2. Other technologies are improving and look like they'll be more profitable than nukes, when you take into account the huge costs of building and decommissioning and storage of waste.

However, I could be wrong and it's their money they're wasting! And this illustrates the benefit of free markets; it doesn't depend on a single person or institution having all the answers.

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