The economic characteristics of nuclear power, with high investment cost and fuel costs lower than conventional fuels, make it possible to achieve low electricity prices when reactors supply marginal electricity. The support for nuclear power by the Swedish electricity consuming industry may be understood as efforts to create and defend a situation of over-capacity in the electricity production sector rather than as support for nuclear power as such. Politically the external costs of routine emissions of radioactive materials are difficult to internalise because they, like carbon dioxide, have global long-term effects. However, like the air pollutants already regulated, costs of reactor accidents, as well as the motives for taking on management costs of nuclear waste, are regional and within a generation in time. The market evaluation of accident risks has been deliberately destroyed by legislation set to favour nuclear power reactors. Societal economic rationality may be successfully applied in the energy sector. This paper describes how climate change risks were internalised in Sweden using carbon taxes under favourable political conditions. The resulting development of biofuels was surprisingly successful, indicating a potential for further modernisation of the energy supply system. Possible ways to restore the nuclear risk market in order to internalise nuclear reactor accident risks and waste costs by legislation are described. This may be done without the difficult quantification of environmental costs. Appropriate legislation may internalise the cost while creating conditions for market evaluation of these uncertain costs.
Steering the Climate System: Using Inertia to Lower the Cost of Policy
