First Brad Plumer in the New Republic, then Matt Yglesias on his site have marveled at the supposedly strange enthusiasm of conservatives for nuclear power. What’s strange about it? It’s pure cold economic rationality. If you wish to move away from carbon-emitting electricity sources, nuclear is far and away the cheapest choice. If we’re not going to rely more on nuclear power, then the reduction in carbon emissions will have to imply some dramatic reductions in standards of living.
Nor is it true, as Matt contends, that only an active state can deliver nuclear power. The United States already draws 20% of its power from nuclear. Until recently, it’s true, the stock market has preferred utility companies that generate their power from coal. Coal is cheap and reliable. But if a carbon tax increased the price of coal, nuclear would come back into vogue – and the regulatory changes needed to facilitate that shift would not have to be very dramatic. Probably more important would be mergers in the utility industry. The rule of thumb in the industry is that a new nuclear plant would cost some $10 billion and start yielding revenue only after 5 to 7 years. That’s a big check to write when the largest utility in the United States, Exelon, has a market capitalization of only $35 billion. Electricite de France by contrast has a market cap of some $85 billion.
It’s a simple formula. Reduced carbon = either radically more expensive electricity or else more nukes. More nukes = bigger utilities. No mystery at all!