Nuclear power plant by the sea in Vandellos (Tarragona, Spain)

"The Economics of Nuclear Energy Markets and the Future of International Security"

Working Paper 2008-01-08, Risk Management and Decision Processes Center, Wharton School of the University of Pennsylvania

January 2008

Authors: Erwann O. Michel-Kerjan, Debra K. Decker, Former Associate, International Security Program/Project on Managing the Atom, 2006–2011

Belfer Center Programs or Projects: International Security

ABSTRACT

This paper discusses the evolution of nuclear energy markets and key drivers of the growing "nuclear renaissance." We focus on uranium, the largest part of the nuclear fuel markets, and analyze market demand, supply, and prices since the 1970s. We review the forces impacting this market—historically and prospectively—and note proliferation concerns surrounding nuclear energy: i.e. the same facilities that enrich uranium for electricity generation can also enrich it further for nuclear weapons.

We discuss proposals currently being offered by the international community to counter this proliferation challenge and propose a complementary solution: the development of a market-based approach that relies on what has become the largest industry in the world, insurance and finance. We analyze the feasibility of such an “Insure to Assure” approach, developed in conjunction with the public sector, and its implications for international security and nuclear energy markets (including the possible commoditization of enriched uranium).

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Full text of this publication is available at:
http://opim.wharton.upenn.edu/risk/library/WP2008-01-08,EMK,DD_ENEM.pdf

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