Nuclear reactors produce radioactive waste that consists of different radioactive elements and their isotopes. Some of these, like cesium, are very toxic; others, like uranium, are less toxic. A stylized story behind waste production is the following: Extracted uranium is packed into fuel rod assemblies, which are used in the reactor to produce energy. After about four years of physics and chemistry, the rods are depleted and removed from the reactor. At this point the assembly contains elements with short (and long) half-lives, and is therefore hot and very dangerous for example to human health. For this reason the waste is stored in water pools and after sufficient time, the waste is removed and stored elsewhere in steel casks. Unfortunately this is where the story ends and, perhaps slightly harshly put, speculation begins - the waste continues to be a toxic problem, but in nowhere in the world has it been completely solved.
However, although the sequel may contain speculation, engineers and natural scientists have done great job in offering solutions to the problem (for an overview of nuclear waste management, see Schaffer (2011). In Finland, for example, the plans are quite far and the nuclear power generators have collected money (from the consumers) to cover the costs of the final solution to the problem. This solution is deceptively simple: Dig tunnels into bedrock, pack the waste in cylinders made of copper and steel and seal the cylinders to the tunnels. The experts say that this is a safe solution, since there are no earthquakes in Finland and since the waste is stored in a way that if one safety mechanism fails another remains active and keeps the waste isolated. As in the canceled Yucca Mountain repository in the U.S., the storage facility allows access to the waste.
Anyway, why is this interesting from an economic point of view? I’m sure there are many reasons, but here’s three I can think of.
Because in every economist there lives a small operations researcher gnome, the first reason must be cost-minimization. There clearly is a trade-off between waiting with the final storage (costly above ground storage) and putting the waste to the tunnel (this too is costly), and for this reason the decision to store the waste should be thought of as an optimization problem, specifically as an optimal timing problem.
As mentioned above, the power producers pay money to a fund that will be used for final reclamation costs. And this gets us to the second reason: How do we, the worried tax payers, know that they deposit enough money to cover the costs? This is a concern for example in Canada. The amount of money that we are talking about is quite large, and it is naive to believe the operators when they report these cost estimates unless they are given incentives to report truthfully.
Third reason is that the public needs to be better informed about the problem and the related costs and possible risks. The point is that by offering correct and clear information to the public about the problem and in particular about the solution, one diminishes the chance that municipalities/counties/states object to using their area for final storage. Another way to increase public support is to offer compensation for the municipality that hosts the storage facility.
Nuclear power production also suffers from other issues such as high construction costs and financial risks (for an overview, see Davis (2012)). Natural gas, and solar and wind power have a cost advantage over nuclear power, and this alone may be sufficient to prevent the construction of new nuclear plants (at least in the western countries). The current plants have been build mostly in the 70’s and need to be decommissioned soon. The waste awaits at the aftermath of the nuclear shut-down.
Written on June 1st , 2018 by Pauli Lappi