This is an important faction in the United States calling on the government to ‘phase out nuclear energy’. Meanwhile, the Spanish government plans to do this phase out nuclear power by 2035, following similar anti-nuclear pledges from Germany and Switzerland. Adam SmithHis life ended more than one hundred and fifty years before the first nuclear chain reaction took place, yet his ideas are crucial to understanding the current debate over nuclear energy policy.
What might the father of economics think of those trying to steer the market away from nuclear energy? In his An inquiry into the nature and causes of the wealth of nations he wrote:
The market price of any particular commodity is regulated by the ratio between the quantity actually brought to market and the demand of those willing to pay the natural price of the commodity, or the whole value of the interest, labor, and profit.
Nearly two and a half centuries later, some policy makers have still not internalized Smith’s profound insights into the importance of market signals and the law of supply and demand.
Proponents of government directing energy choices often argue that green energy – restrictively defined to exclude nuclear energy – is “the future,” not the past. But even Smith’s writings reference “wind [and] water mills” as established technologies. Half a century ago, an efficient solar energy device spurred the plot from a 1974 James Bond film. Five decades have not changed the belief in some quarters that such a device is just around the corner.
And the subsidies are growing. Solar and wind energy in the United States in 2015 received 326 and 69 times more, respectively in subsidies per unit of energy generated than conventional sources. By 2019, solar energy received up to $320 in government funding, while wind energy received about $57 per megawatt-hour of energy generated, or about 640 to 114 times conventional electricity. according to a study from the University of Texas. And that was before the Biden-Harris administration effective doubled such subsidies in 2023. (Nuclear subsidies pale for comparison).
Most subsidies for solar energy go to: residential installations. Solar energy companies cannot compete without government supportbut receive so much of it that installing roof systems, which cost at least $10,000without prior costs for the consumer, is still profitable. This hurts both taxpayers and consumers, as Smith well understood. He agrees noted of subsidies, “The final payment, instead of falling on the retailer, would have fallen on the consumer, at a significant cost to the retailer’s bottom line.”
It’s easy to spend other people’s money. If Smith noted:
However, because the directors of such companies are managers of other people’s money rather than of their own, they cannot properly be expected to watch over it with the same anxious vigilance with which the partners in a private co-partnership often watch over their own money. …Like a rich man’s stewards,…. give themselves dispensation very easily. Negligence and excess must therefore always, more or less, prevail in the management of the affairs of such a company.
These costly subsidies provide poor returns on taxpayer investments. In 2022, solar energy provided only 3.4 percent of the electricity in the United States, while wind energy generated only 10 percent. This is reported by the American Energy Information Administration. These energy sources fail despite enormous subsidies because they are inherently unreliable; a windless, cloudy day is possible defeat the entire enterprise. As fickle as nature can be, Smith joked that the “elements of human folly and injustice” are more “uncertain” than even “the wind and the waves.” Such folly is clearly visible when it comes to energy subsidy policy.
Considering the boundaries of battery storage technology, these forms of power are simply not scalable and inefficient. Smith was vocal in favor of higher energy productivity, praising the efficiency improvements in early steam power:
In the first fire engines, a boy was constantly employed to alternately open and close the communication between the boiler and the cylinder, depending on whether the piston was moving up or down. One of those boys, who liked to play with his companions, noticed that, by tying a string to the handle of the valve which opened this connection with another part of the machine, the valve opened and closed without his help and left behind. free to enjoy himself with his playmates. One of the greatest improvements made in this machine since its invention was discovered in this way by a boy who wished to save his own labor.
While wasting taxpayer dollars on their favorite energy sources, many bureaucrats discriminate against other forms of electricity, for example by creating rules that limit the creation of new nuclear power plants. mathematically impossible to meet. Such serious overregulation amounts to a ban, as some environmentalists even do to give in.
Favoritism of certain energy sources over others unfortunately seems to be related to political considerations rather than the costs and benefits of each energy source. Smith recognized that complex information about costs and benefits could be distilled and transmitted through price signals. Unfortunately, anti-nuclear advocates have distorted the energy market with subsidies that artificially lower the costs of some energy sources and burdensome regulations that raise the costs of others.
That does not mean that wind and solar energy are never practical. But shedding light on the many drawbacks of these technologies reveals the folly of bureaucracies that prioritize some energy sources over others, instead of heeding the market signals Smith recognized centuries ago. Market prices carry a wealth of knowledge about the usefulness of a particular energy source, and should be ignored only at great risk.
Power outages and energy rationing are the inevitable consequences of ignoring such price signals and instead promoting certain types of energy at taxpayer expense. Think of the rolling blackouts and brownouts that hit New England in 2022, when electricity was rationed after ill-advised policies forced the adoption of politically privileged energy sources over reliable energy sources. Those who heeded market signals predicted this. But these warnings fell on deaf ears in what Smith once said called “the inevitable ignorance of the administration.”
Ultimately, the ‘phase-out plans’ and over-regulation ensure that nuclear energy cannot compete on a level playing field with heavily subsidized but less reliable energy sources. As a result, humanity and the natural environment are deprived of the cleanest, reliable energy source yet devised. If only more policymakers had the sense to embrace Smith’s timeless wisdom.
Andrew Follett conducts research analysis for a nonprofit organization in the Washington, DC area. He previously worked as a space and science reporter for the Daily Caller News Foundation.