Nuclear Power in the Context of Climate Change : Comparing the Cost of Nuclear and Fossil Fuel Power Plants with a Carbon Tax

Concerns about climate change have led many to advocate for future reliance on nuclear power, a constant low‐​carbon energy source. But nuclear’s high capital costs have historically precluded its ability to be cost‐​competitive with fossil fuel generators. Would nuclear power be cost‐​competitive if the climate‐​change damages of carbon emitters are included in the cost of electricity? A new nuclear power plant built at construction costs recently experienced in the United States and Western Europe could be cost‐​competitive with coal if there is a reasonably sized carbon tax, but to have costs equal to a new natural gas combined‐​cycle plant would require a minimum carbon tax of $265 per metric ton of CO2 averaged over the lifetime of the natural gas plant (approximately $196 per metric ton in 2020). At construction costs 55 percent lower than the average costs of recent Western nuclear projects, nuclear could be a viable option for private investors compared to a natural gas combined‐​cycle plant, but only if there is a moderately sized carbon tax (a minimum of $70 per metric ton averaged over the next 30 years; roughly $51 per metric ton in 2020) and the projected natural gas price is high