Uranium and Nuclear Power: Past, Present and Future

Transcription

1 Uranium and Nuclear Power: Past, Present and Future Charles F. Mason H.A. True Chair in Petroleum and Natural Gas Economics Department of Economics & Finance University of Wyoming Laramie, Wyoming 2 October, 2012 Uranium and Nuclear Power, C. Mason, SER /17

2 Déjà vu All Over Again At end of WWII, US government wanted to encourage new uranium industry various incentives, including strong price signals that era ended in mid-1960s, whence nuclear power industry took root strong growth in uranium market followed, up to Three Mile Island incident (28 March, 1979) conventional wisdom: TMI sealed Nuclear power s fate no new Nuclear plant built from that date forward* beginning of the end for Nuclear power? Uranium and Nuclear Power, C. Mason, SER /17

3 Déjà vu All Over Again At end of WWII, US government wanted to encourage new uranium industry various incentives, including strong price signals that era ended in mid-1960s, whence nuclear power industry took root strong growth in uranium market followed, up to Three Mile Island incident (28 March, 1979) conventional wisdom: TMI sealed Nuclear power s fate no new Nuclear plant built from that date forward* beginning of the end for Nuclear power? fast-forward... to 21 st Century Uranium and Nuclear Power, C. Mason, SER /17

4 Déjà vu All Over Again At end of WWII, US government wanted to encourage new uranium industry various incentives, including strong price signals that era ended in mid-1960s, whence nuclear power industry took root strong growth in uranium market followed, up to Three Mile Island incident (28 March, 1979) conventional wisdom: TMI sealed Nuclear power s fate no new Nuclear plant built from that date forward* beginning of the end for Nuclear power? fast-forward... to 21 st Century solid growth in nuclear energy until Fukushima Daiichi reactor meltdown, 11 March 2011 beginning of the end for Nuclear power? Uranium and Nuclear Power, C. Mason, SER /17

5 Time path: price of uranium U.S. Dollars Real Value Nominal Value U 3 O 8 Real Value U 3 O 8, 1979 USD Uranium and Nuclear Power, C. Mason, SER /17

6 Time path: Nuclear Power Million KWh percent of electricity generated year Annual Nuclear Power Nuclear share Uranium and Nuclear Power, C. Mason, SER /17

7 Time path: Nuclear Power, Capacity Utilization Million KWh percent of capacity utilized year Annual Nuclear Power Nuclear capacity factor Uranium and Nuclear Power, C. Mason, SER /17

8 Time path: Nuclear Power, Summer Capacity Thousand KWh Thousand KW year Annual Nuclear Power Summer Nuclear Capacity Uranium and Nuclear Power, C. Mason, SER /17

9 Time path: Electricity Production, Various Fuels Million KWh year Million KWh Electricity from Nuclear Electricity from Coal Electricity from Natural Gas Uranium and Nuclear Power, C. Mason, SER /17

10 Time path: Various Fuels, Summer Power Capacity Fossil Fuel Capacity year Nuclear Capacity Coal Capacity, MW Nuclear Capacity, MW Natural Gas Capacity, MW Uranium and Nuclear Power, C. Mason, SER /17

11 Nuclear Power: Global Role Uranium and Nuclear Power, C. Mason, SER /17

12 Time Path: Global Nuclear Capacity Million KW Number of Nuclear Plants in Operation year Global Capacity Global Plants Uranium and Nuclear Power, C. Mason, SER /17

13 Nuclear Power: Historical Global Expansion Uranium and Nuclear Power, C. Mason, SER /17

14 Why Nuclear Expansion? Uranium and Nuclear Power, C. Mason, SER /17

15 Carbon Policy and Nuclear Power kg CO 2 per kwh for coal kg CO 2 per kwh for natural gas plausible impact: pressure towards reduced use of both fuels as inputs into electricity then increased pressure for usage of Nuclear energy In North America and Europe also in FSU, BRIC countries induces increased demand for Uranium Uranium and Nuclear Power, C. Mason, SER /17

16 Implications Coal is faltering Natural Gas is rising rapidly Nuclear continues steady growth, particularly if oil prices continue to rise meaningful carbon policy is enacted huge new deposits of Natural Gas apparently at hand what about Uranium? likely push towards new exploration, new development Uranium and Nuclear Power, C. Mason, SER /17

17 Optimal behavior: resource extracting firms privately optimal rate of extraction sets current rents equal to discounted future expected rents expectation depends on current beliefs but also manifest anticipated extraction next period in this way, current production is indirectly influenced by current exploration if current exploration rises, this increases expected future finds, which in turn motivates larger production today Uranium and Nuclear Power, C. Mason, SER /17

18 What do we know? privately optimal exploration balances current marginal exploration cost against future expected benefits value of expected finds (negative?) impact of current exploration on future find rate, which will adversely impact payoffs two periods hence expected value of information current exploration yields inform n, changes future beliefs this is true for other firms as well possibility of public good aspect to information also possibility of using information for speculative purposes evidence suggests speculation governed past exploration increases in D, associated sharp increases in production and exploration would seem to reinforce this conclusion similarity to first decade of 21 st century striking likely implication: over-exploration continues on a global scale? Uranium and Nuclear Power, C. Mason, SER /17

19 What can we learn from the past experience? strong price signals lead to over-exuberant exploration this excess exploration likely motivated by speculation excess exploration spills over into extraction levels, yielding social over-production attendant welfare losses from over-exploration, over-production can we draw useful insights from the record of solid prices in 1950s, strong run-up in prices in early 1970s to guide policy going forward? evidence suggests a role for (international) governmental intervention tax on exploration? (larger) severance tax on produced ore? Uranium and Nuclear Power, C. Mason, SER /17