In economics we use a term called comparative advantage: Generally speaking, it is the theory that countries should specialize in the production of goods and services they can produce most efficiently. Sounds simple enough, right? It is often linked to that taboo word, globalization. While globalization is largely responsible for increasing the prosperity not only in the United States but also in developing countries, it still has its critics. A prime example is nuclear power and the French.
An article in today’s Tennessean reports that Tennessee Valley Authority awarded the French company AREVA $239 million in contracts over the past few years nuclear power related services. Just by reading the article, it’s hard to tell if this is a good thing or a bad thing. Argun Makhijani, president of the Institute for Energy and Environmental Research, calls the French sales pitch “misleading” and claims that “They haven’t solved the problem of nuclear waste.”
There isn’t a need to vilify the French for providing nuclear services to the United States; if anything, we should be thankful. This is the reality: The United States hasn’t built a new nuclear reactor in over three decades – don’t you think that the industry here at home would atrophy just a little? The French, on the other hand, have done just the opposite. They’ve been building their nuclear industry for years – enough to provide nearly 80% of the country’s electricity through nuclear power. You can check out France’s full profile here. One of the key nuggets of information to take away from this site is this:
The present situation is due to the French government deciding in 1974, just after the first oil shock, to expand rapidly the country’s nuclear power capacity. This decision was taken in the context of France having substantial heavy engineering expertise but few indigenous energy resources. Nuclear energy, with the fuel cost being a relatively small part of the overall cost, made good sense in minimizing imports and achieving greater energy security.”
Now, there are two caveats worth mentioning. Even though the French have a comparative advantage in nuclear energy services today, that doesn’t mean U.S. nuclear companies will be off the grid forever. The truth is that a plethora of nations are turning to nuclear energy to meet rising energy demands and carbon reduction objectives. The U.S. nuclear industry once thrived and it can compete in the global market again. Breaking down trade barriers and eliminating unnecessary tariffs are part of Heritage expert Jack Spencer’s 10-step plan to revive the U.S. nuclear industry. It’s not just about opening our markets but encouraging other countries to open theirs as well so that we can export our goods and services.
The second caveat is that we needn’t do it exactly like the French. As the article mentions, the French government owns about 90% of AREVA. We’d prefer it if the government stayed away with the exception of providing stable regulation and proper oversight. Furthermore, just because the French reprocess used nuclear fuel, it doesn’t mean the U.S. has to embark on this path right now. Granted, it does have its advantages, but doesn’t it make sense for the U.S. to start building some reactors first – to prove that the investment is worthwhile. The federal funding for research and development of reprocessing proposed in the Gang of 10’s New Energy for America plan isn’t needed. We should leave it to the private sector to determine if and when reprocessing becomes a part of our strategy to manage used nuclear fuel. I know this doesn’t immediately solve the problem of the 58,000 tons of nuclear waste we have in this country, so if you want to read about a comprehensive, free-market strategy to manage it, read this paper.