August 27, 2007Public PolicySecurity

Energy security begins at home (nuclear power edition)

Liberalise the nuclear power industry

This is an archived blog post from The Acorn.

Many of the pundits, politicians and policymakers currently worrying about the impact of the India-US nuclear deal on energy security need to ask themselves a few hard questions. Let us for a moment, set aside the debate over how big a role nuclear power will play in the decades to come. Let’s just focus on the nuclear power industry itself.

What’s the biggest hurdle preventing India from better exploiting nuclear power? It’s easy to blame the department of atomic energy and its associated corporations. Surely they could do better. Surely they could do with more transparency. But the reality is that not only has the DAE managed to hold its own in the face of an hostile international sanctions regime, but has suffered from the fact that it has only one investor—the central government. And at the best of times, public funds for atomic energy R&D and production come at high opportunity costs—shouldn’t the government increase expenditure on education, vaccination programmes or even thermal power plants, instead of on nuclear reactors? But in its typical dog in the manger’ style, the central government—through the Atomic Energy Act of 1962prevents private sector investment in generating nuclear power.

It’s a similar story with exploiting domestic reserves of uranium. Surely, aren’t those anti-nuclear NGOs and Lefty environmentalists holding up initiatives to expand uranium mining? Well yes. But they are only capitalising and giving expression to the underlying problem—the government is not obliged to pay adequate compensation to land-owners sitting on uranium ore. They lack incentives to make their lands available for mining, and faced with the state’s power to nationalise their property, are likely to find anti-nuclear political agitation a useful tool to protect their interests.

Even without the India-US nuclear deal, the demands of energy security would have dictated that the nuclear power industry be liberalised, along the lines of, say, telecommunications. As in the case of natural gas supplies, the quest for energy security again begins at home. Indeed, one of the major advantages of the separation of civilian reactors from military ones is that the former can be opened up to private investment. There is now no reason at all for the government to retain a monopoly over production of nuclear power—any more than it has a reason to have a monopoly over the production of gobar gas’ (or bio-fuel’, the term in vogue).

(To be continued. Btw, you’ll find relevant links at INI Signal, filed under nuclear)

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