United States: The Nuclear Industry's Contribution To The U.S. Economy

Last Updated: July 29 2015
Article by Mark P. Berkman and Dean M. Murphy

This report was prepared for Nuclear Matters.

I. Executive Summary

Nuclear power currently accounts for 19% of U.S. power production, but several factors are at play that may threaten some nuclear generators and could diminish the nuclear industry's contribution to our electricity supply and the U.S. economy. These factors include limited recognition of carbon as a social cost, as well as market factors such as low natural gas prices, flat electricity demand growth, and transmission constraints. At the request of Nuclear Matters, The Brattle Group has estimated the value of the entire nuclear industry to the U.S. economy, and its contribution to limiting greenhouse gas emissions, to inform the discussion of whether and how these factors should be addressed.

Our analysis of the incremental effect of the U.S. nuclear industry has determined that it:

  • contributes approximately $60 billion annually to gross domestic product (GDP) ($103 billion annually in gross output).
  • accounts for about 475,000 full time jobs (direct and secondary).
  • helps keep electricity prices low – without nuclear generation, retail rates would be about 6% higher on average.
  • is responsible for nearly $10 billion annually in additional federal tax revenues, and $2.2 billion in additional state tax revenues, because of the boost it gives to the economy.
  • prevents 573 million tons of carbon dioxide emissions, worth another $25 billion annually if valued at the federal government's social cost of carbon estimate.
  • prevents over 650,000 tons of nitrogen oxides (NOX) and over one million tons of sulfur dioxide (SO2) emissions annually, together valued at $8.4 billion based on the National Academy of Science's externality cost estimates.

These values reflect the incremental contribution of the nuclear industry to the economy, measured by comparing the performance of the U.S. economy with and without the nuclear fleet. This approach nets off the contribution of the alternative generation that would be necessary if the nuclear industry did not exist, to determine its incremental contribution. Without nuclear plants, the economy would rely more heavily on existing and new natural gas-fired generating plants, and to a lesser extent, additional generation from existing coal-fired plants. This greater use of fossil generation would mean higher electricity prices – wholesale prices would be 10% higher on average; retail prices would rise about 6%. It is this effect on electricity prices that accounts for the majority of nuclear's overall incremental economic impact.

Increased fossil use would also result in much higher carbon dioxide emissions and greater emissions of criteria pollutants such as NOX and SO2. Large-scale renewable energy would probably not substitute significantly for nuclear; intermittent renewable generation is not a direct substitute for the baseload profile of nuclear.

The magnitude of the power price effects, and ultimately the economic and jobs effects, could depend on movements in the price of natural gas, since it plays a primary role in setting power prices in most U.S. regions.1 Lower natural gas prices are a primary reason for the current threat to some nuclear plants, of course, but the sensitivity of this analysis to gas prices also points out that nuclear plants help to protect consumers and the economy from the volatility of gas prices. These effects go well beyond what consumers pay for natural gas directly, and even beyond what they pay for electricity, since power prices have a significant effect on the larger economy, as is demonstrated by this study.

Absent nuclear, consumers would pay more for electricity, the economy would suffer both in terms of GDP and jobs, and we would face substantially higher emissions of CO2 and other pollutants.

II. Background

Sixty two nuclear plants comprising 99 reactors operate in the United States, representing over 100,000 megawatts (MW) of capacity and almost 800 million megawatt hours (MWh) of annual generation, as summarized in Table 1.Figure 1. Table 2 and the illustration in Figure 2 define the major electric generating regions in the U.S. Table 2 shows that nuclear accounts for approximately 9% of U.S. generating capacity (almost 20% in some regions), and provides 19% of total U.S. electricity generation.2 These plants operate in 30 states, with many plants clustered in the Northeast, Midwest, and Southeast, as shown in 3 PJM, MISO, and VACAR have particularly large amounts of nuclear, together accounting for over half of U.S. nuclear capacity, though nuclear power accounts for large shares in several other regions as well.

The nuclear industry is an important economic engine both nationally and locally. Nuclear plants typically directly employ 400 to 900 workers, often making them major employers in their local communities.4 According to the U.S. Bureau of Labor Statistics and the Nuclear Energy Institute, the nuclear electric power generation sector employs directly between 50,000 and 60,000 workers. Nuclear vendors and manufacturers add another 60,000 positions.

The nuclear industry, in addition to its contribution to economic activity, has also been recognized for providing reliable supply and for its carbon-free emissions profile. However, some plants are struggling financially at present, for reasons that include limited recognition of carbon emissions as a social cost, low natural gas prices, lack of electricity demand growth, and transmission constraints.

At the request of Nuclear Matters, and to inform the debate regarding whether and how these factors should be addressed, The Brattle Group has estimated the value of the U.S. nuclear fleet to the U.S. economy, as well as its contribution to limiting greenhouse gas emissions. This paper addresses the nuclear industry's contribution to economic activity as measured by its contribution to GDP, employment (direct and secondary), its role in moderating electricity prices, and its role in controlling carbon dioxide emissions.

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1 For example, the economic and jobs effects could be up to twice the values shown here if gas prices were to return to levels seen just a couple years ago.

2 Data from Ventyx's Energy Velocity.

3 These regions, which are based on reliability assessment areas established by the North American Reliability Council (NERC), correspond to the major electricity markets in the U.S.

4 NEI Nuclear Factsheet, http://www.nei.org.

The authors would like to acknowledge the invaluable assistance of Stephen Lagos, Wade Davis, and Paul Organ in preparing this analysis.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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