Why Nuclear Energy Could Be the Green Revolution's Secret Weapon

Written By Ethan Ogrodniczuk
The global energy transition is a race against time. As nations strive to achieve climate targets and ensure energy security, the conversation often revolves around renewable energy sources like wind and solar. However, nuclear power—a low-carbon, scalable, and reliable energy source—is reemerging as a cornerstone of the energy debate. Nowhere is this more evident than in China, where state-led initiatives have propelled the country to the forefront of nuclear energy innovation. Drawing on Bloomberg Markets’ article, “China Is Schooling the World On Atomic Power” (2024), this blog post examines China’s nuclear strategy through the lens of environmental economics, exploring concepts such as market failures, prescriptive regulation, and stated preference valuation while considering the broader implications for global energy policy.

China’s Model: Addressing Market Failures

Nuclear power can be considered an example of a market failure—when free markets fail to efficiently allocate resources in socially optimal manner—particularly due to its high upfront costs and public safety concerns. Left to its own devices, the private sector is unlikely to invest heavily in nuclear energy because of these barriers. China’s approach, therefore, has been to internalize this failure by leveraging extensive state support through the deployment of subsidies (Nuclear Business Platform, 2024). Government financing at low-interest rates—as little as 2%—has made nuclear energy economically viable, lowering the levelized cost of electricity (LCOE) for nuclear to $47 per megawatt-hour. Compare this to the private-sector-driven U.S., where financing costs of up to 10% inflate the LCOE to nearly $100 per MWh (Bloomberg Markets, 2024).
By standardizing reactor designs and scaling up production, China has also reduced delays and cost overruns, addressing another classic market failure: inefficiencies in supply chains. This systematic approach—supported by billions in research and development—has positioned China as a global leader in both third- and fourth-generation nuclear technologies.

The Role of Prescriptive Regulation

While China’s state-centric model facilitates rapid expansion, it also raises questions about safety and governance. I believe prescriptive regulation—rules that specify compliance requirements for a given process—for safety and regulatory benchmarks is essential in mitigating the inherent risks of nuclear energy production. China’s post-Fukushima safety checks underscore this point. However, its "culture of secrecy" and incidents like the 2021 suspected leak at the Taishan plant highlight the importance of transparent regulatory frameworks.
However, I suspect that in liberal democracies, despite stringent prescriptive regulations, nuclear energy is likely to meet a certain degree of public resistance, especially in areas near proposed nuclear plants. Thus, how might we measure such opinions? A unique local opportunity would be to conduct a stated preference survey—an economic method for valuing non-market goods—in Pickering, Ontario—the backdrop of one of Canada’s nuclear power plants—which could quantify the value residents place on safety and their willingness to accept nuclear energy production. This approach, rooted in environmental economics, can provide policymakers with data to balance public concerns with the benefits of nuclear power.

Nuclear Energy in the Global Green Transition

The promise of nuclear energy extends beyond China. As the second-largest producer of uranium, Canada has a unique opportunity to play a pivotal role in the global green transition. Reports from the IPCC (2019) and IEA (2024) underscore that “nuclear power can be an important source of low-emissions electricity” (IEA, 2024) for achieving net-zero emissions, especially as intermittent renewables face challenges like energy storage and grid stability.
Moreover, the rapid growth of data centers—driven by tech giants like Alphabet, Meta, and Amazon—has created a burgeoning demand for uninterrupted, low-carbon energy, as further discussed in another Bloomberg Markets article: Power-Hungry Data Centres Are Gobbling Up Texas. Nuclear power, with its reliability and scalability, is uniquely positioned to meet this need. However, without significant state support akin to China’s model, Canada risks falling behind in this critical area. Public investment and subsidies, such as those seen in China’s Belt and Road Initiative, could bridge this gap and spur domestic nuclear development, especially in prairie provinces where a decoupling from oil and gas is needed most.

Policy Under Uncertainty and the Path Forward

One of the key challenges in nuclear energy policy is uncertainty—ranging from construction costs to public acceptance. China’s approach demonstrates that consistent state support can mitigate some of these uncertainties, but this model may not be easily replicable in liberal democracies. Instead, second-best policies like subsidies and tax cuts for nuclear research could help incentivize private-sector investment in nuclear energy.
For Canada, a combination of public investment and market-based instruments could drive nuclear innovation while addressing safety concerns. Additionally, integrating stakeholder input through aforementioned mechanisms like stated preference surveys can build public trust and ensure that policies align with societal values.

Looking to the Future

China’s nuclear strategy offers valuable lessons for the global energy transition. By addressing market failures through state support and prioritizing scale and standardization, China has demonstrated that nuclear power can be both economically viable and scalable. However, replicating this model in on a global scale will require tailored approaches that balance public concerns with the urgent need for low-carbon energy.
As nations like Canada navigate this complex landscape, the integration of nuclear energy into the broader green transition will depend on innovative policy solutions and robust public engagement. Whether through prescriptive regulation, market-based incentives, or public investment, the path forward must be guided by the principles of environmental and welfare economics to ensure a sustainable and equitable energy future■

References

Ethan Ogrodniczuk https://www.ethanogrodniczuk.com
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