People with a stake in the nuclear energy debate are seizing on events in Japan. It’s unfortunate, really, because the event really isn’t over yet.
But the debate has already cranked up. And it usually shakes out like this:
- Nuclear energy good overall: We should not let this derail the renaissance.
- Nuclear energy bad overall: We need to look to favored energy source X.
“We” in such statements usually means “government.”
But what few people are saying is Japan’s earthquake illustrates why we need a much freer energy market.
So I’m going to say it.
It’s true. In certain areas earthquakes are black swan events like that described by Nicolas Taleb — extremely rare, but in some sense inevitable over time. We might quibble about the state of geological science — which, if better understood, might make such swans “‘grayer” (meaning more predictable) — especially in places like Japan where such disasters are more commonplace. But let me not get too far from my fundamental point.
An unsubsidized energy market, coupled with a robust system of common law, gives energy companies incentives to gather better “local knowledge” about natural disaster risks. Sounds wonky I know, but let me break it down:
First, in a free energy market, you may not see nuclear energy plants built up at all. Why? The capital required to build a nuke plant makes construction cost prohibitive. New technologies may reduce those capital costs at some point, but we can only know that in a freer energy market — i.e. one that neither subsidizes nuclear power, nor constrains it with moratoria. Given stiff competition from other more cost-competitive forms of energy and the absence of subsidy, it’s not clear anyone would build a nuclear plant at all — at least not in the near term.
Second, you might see nuclear plants sprout up in places where the likelihood of an earthquake happening is vanishingly small. For example, I grew up near three nuclear power stations in my home town, Charlotte. It’s possible Charlotte could experience an earthquake, but far less likely than in Japan or San Fran. Without government planning and subsidy, private concerns — fully liable for damages — have far greater incentives to mitigate such risks and build far far away from areas in which the risks are higher — like California (and Japan).
Third, while it’s possible that a true black swan event could rock an area like Charlotte, that is not an argument for not building nuclear plants at all.
Indeed, the idea of banning risk wholesale is just an artifact of the “precautionary principle,” which says essentially we should all live shorter, less comfortable, less prosperous lives to ensure nothing bad ever happens. And that, if you’ll forgive me, is just silly.
So we should neither argue for or against nuclear power as an “alternative energy.” Instead, we should fully liberalize the energy markets and make energy companies fully liable for damage — whether oil spills in ocean waters or nuclear plants near fractious fault lines (even damage from global warming if you could actually prove it in court). The positive incentives these companies would face would be far better than any that government bureaucrats could devise.
The myth of government planning through regulation and subsidy is exposed precisely by events in Japan, where government subsidized nuclear power in a dangerous area. Let’s not forget that. Government failure.
Max Borders is a writer living in Austin. He blogs at Ideas Matter.
