Energy security begins at home (nuclear power edition)

Liberalise the nuclear power industry

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)

5 thoughts on “Energy security begins at home (nuclear power edition)”

  1. Forgive me Nitin for my ignorance, but I believe that nuclear technology is considered one of best-kept secrets of a national intellectual property. If you are referring to private involvement in extraction of Uranium from land, then I understand your point. But if you’re talking about Uranium enrichment and building of nuclear reactors, isn’t it considered a dangerous domain for private parties involvement in today’s world rich in non-proliferation mindset?

    I might sound foolish or ignorant, but I’m not sure I understand how this whole process operates. I understand that private defense equipment manufacturing organizations do make AK-47, hand granades etc. but since these are anyways available in most countries legally or illegally, one can assume that it won’t make much of difference if Iran or North Korean dictator is able to bribe the CEO of a private firm to get the technology to build AK-47s. But I feel the public opinion would be absolutely different if people come to know that private parties are getting involved in know-how of building nuclear reactors and uranium enrichment processes.

    As a logical extension of above point, I know that even a Government official or scientist can easily be bribed but then that is a different case. Imagine a situation where we hire private soldiers to fight for India in war against Pakistan.. even though Indian army soldiers should be driven by same motives of personal interest and economic incentives, the public opinion would support Indian army soldiers only to fight the war.

  2. Hello Nitin, in response to your post, we need to understand the present nuclear status in our country. Presently, the atomic energy division in India is more concentrated in the use of Thorium and not Uranium as its fissile material. Hence all the reactor topologies which are indigineously developed are based on the thorium material.

    Since the cost of energy produced using thorium is high, such energy generation is not attractive therefore we need to go for Uranium based fissile material. The nuclear reactor design, uranium nuclear material, nuclear waste re-processing all the above processing units are needed for generating nuclear energy and building such indigeneous units is very costly and consumes lot of time to reach a standard where the western countries are presently. Therefore the deal is necessary and it is for the above reasons why indigenous development of uranium plants are not attractive.

  3. Nitin – on a related note

    Do you think there is any down side of Bush declaring the Iranian Republican Guard as a terrorist Organization.
    What I am concerned about is that Bush has not been happy that India has been cohorting with Iran and had even tried to make it part of the 123 agreement.

    With the declaration that the Iranian Republic Guard is a terrorist organization, the US Congress is obligated by law to go after US nationals/companies for certain, but also foreign concerns if they are associated with the “terrorists.” The US Congress can use this as leverage to get the Indians to nix their association with Iran (atleast threaten to). This may accomplish what the clause in the 123 Agreement would have. is there any of this linkage in the Indian media.

    Do you think this issue is worth worrying about?

    Best

  4. Arun,

    Declaring the Iranian Revolutionary Guard a terrorist outfit is foolish, and counterproductive for the US. I wrote this comment on The Washington Realist’s blog:

    I find this whole move absurd…and will undermine efforts to target real terrorist groups (non-state actors). Just like the state-department’s old list of state-sponsors of terrorism. You had Libya, Iran etc on that list. But the terrorists who managed to hit the United States were backed by Pakistan and Saudi Arabia—which went by the label of allies!

    So the Iranian Revolutionary Guards run business operations, as well as sponsor terrorists. So does the Pakistani army, and the ISI. So does the People’s Liberation Army of the People’s Republic of China. And there’s that Western country involved in the Iran contra scandal. Business interests, slush funds, funding terrorists etc.

    Realists will not complain about the hypocrisy of it all. But rather, it’s utility. Is it possible to do whatever that needs to be done to Iran without labeling the IRG as a terrorist organisation? I should think so. So why label them terrorists? [TWR]

    Even if they don’t go ahead with this stupidity, American pressure on India will continue. But India is likely to be able to resist that pressure. Indeed, I find it a sign of lack of imagination (and a narrowly-focussed foreign policy) on India’s part that India is not playing a role in trying to bridge Iran and America.

  5. Himanshu,

    Enrichment itself involves sensitive technology (see this FAQ) but it need not rule out the role of private sector, if proper governance structures are in place.

    Please note that we are talking about civilian use, for electrical power. The analogy would be armed private security guards. They seem to be quite an acceptable substitute for having policemen guarding banks etc.

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