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Ferdinand E. Banks

Ferdinand E. Banks

Ferdinand E. Banks, Uppsala University (Sweden), performed his undergraduate studies at Illinois Institute of Technology (electrical engineering) and Roosevelt University (Chicago), graduating with honors in…

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The Real Nuclear Deal

Berthold Brecht put it as follows: “If you don’t know the truth, you are a fool, while if you know the truth but say that it is a lie, you are a villain." I seldom object to that kind of language, because I used it all the time when I taught financial economics, but it is not appropriate when the subject is nuclear, and so I modified it somewhat for a talk that I recently gave in Singapore: If you don’t know the truth about nuclear energy you are probably too tired or unlucky to find out, because learning enough to feel comfortable when the conversation turns to energy is as simple as locating your name on your birth certificate. On the other hand, if you know the truth but say that it is a lie – which often happens – it generally means that you don’t want to offend certain persons. For example, persons who might not invite you to their parties and dinners if you reject their beliefs about this very touchy subject.

The most important project in energy economics at the present time is accepting that optimal national energy structures of the future will be a mix of all sorts of items – nuclear, fossil fuels, renewables, various alternatives etc. The anti-nuclear booster club wants to eliminate nuclear from that collection, but fortunately they are going to be greatly disappointed. The reason they are going to be disappointed can be explained by referring to what I call the first law of neoclassical economic theory: voters (and others) prefer more to less!

Once this is appreciated, some effort should immediately be put into comprehending perfectly a few basic characteristics of nuclear. This is not always easy, even for me, however I can congratulate myself on my familiarity with a few things. For instance, I know that while some countries, to include China, make a special effort to pay tribute to renewables, where serious business is concerned they will bet on nuclear. They will make this bet because they are able – or will be able – to construct reactors faster and probably cheaper than any country in the world. I know something even more important. I know that when dealing with all energy matters, you are liable to find yourself confronting a whirlwind of lies and misunderstandings.

Mainland China has 14 nuclear reactors in operation, more than 25 under construction, and perhaps 100 are in the planning stages. But even so, the energy directorate in that country is apparently in no hurry to increase the pace at which reactors are produced, because they possess plenty of coal to burn in a clean or dirty manner, and in addition they want to make sure that they are constructing and installing the most efficient nuclear equipment. Perhaps I should mention that the Chinese are in the nuclear business because, given their elaborate industrial agenda, an enormous amount of energy will have to be consumed. Attempting to obtain a majority of this energy from items like wind and solar would be completely and totally counterproductive.

When I write papers or give lectures on oil, my preparation usually begins by examining the situation in the United States, by which I mean the situation going back to about 1931, and then transposing the materials I gain access to into a short but useful survey which includes things like OPEC and the peak oil hypothesis.  Where nuclear is concerned, I always turn to Sweden for an indication of nuclear capabilities and successes.

In order to get environmental issues off the table, I have made a practice of informing everyone in my vicinity that Sweden already has one of the cleanest environments in the world, as most visitors to this country will testify, and in addition has been spared many of the macroeconomic stresses afflicting many other countries as a result of the large oil price increases that took place several years ago. One of the reasons for Sweden’s success in these matters is its large- scale utilization of water power (hydro) and nuclear energy: nuclear supplies about 45 percent of electric generating capacity (in e.g. Kilowatts), and probably more than 50 percent of electric energy (in kilowatt-hours).


The nuclear phenomenon that I teach and insist that my students learn perfectly is that the creation of the Swedish nuclear sector was a brilliant engineering feat. Even so, when those 12 reactors were constructed, a large part of the inherent (i.e. genetic-based) engineering talent in Sweden (as well as other countries) belonged to women, but  for some absurd reason this talent was  not exploited in the most profitable (social and private) economic fashion. For instance, I do not remember a single women being present in my engineering classes at Illinois Institute of Technology (Chicago), or in the large servomechanisms class I attended at the University of California (Los Angeles), or for that matter the mathematics class I commenced at the Royal Institute of Technology in Stockholm.

The obvious conclusion is that since women now make up a sizable fraction of scientific and engineering students in Sweden and elsewhere, and regardless of gender there are many more students in science and engineering, the human input available for the design and construction of reactors has greatly increased, assuming that it will be correctly allocated. In these circumstances I find it easy to claim that the same kind of engineering masterpiece that appeared in Sweden 30 or so years ago could easily be duplicated almost anywhere in the world at the present time if the political will could be mobilized.

Whether this ‘will’ is mobilized or not is largely uninteresting to me, but at the Singapore conference I attempted to explain that the insistence by the German chancellor Angela Merkel that nuclear can be replaced by renewable, amounts to a clear and present attack on the living standards of gainfully employed people in central Europe (and perhaps elsewhere). I make a point of including myself among the potential victims of Frau Merkel’s goofy nuclear retreat, as well as a majority of my students and colleagues, although many of those ladies and gentlemen have the same bizarre ideas about energy as the environmentalist Mr. Jeremy Leggett. I do not expect that German voters will react immediately to the threat posed to their incomes and life styles, but on the basis of what I learned about that country (and Japan) when I served in them with the American army, intelligent voters are not prepared to see their life styles disrupted in an attempt to demonstrate that the possible (nuclear) should be treated as impossible.

When a student of nuclear energy walks through the streets of beautiful summer Stockholm, he or she might conclude that without the contribution of nuclear energy, the standard of living might be lower. As for me, when I walk through the streets of summer or winter Stockholm, I don’t think about the standard of living as such, but the Swedish welfare system, and how my modest pension and possible future medical requirements might be influenced by a total or partial nuclear retreat. They would be influenced in such a way that I could eventually be in very serious trouble, although of course the rich citizens of this country would hardly notice the change.

I engage in many polemics about energy in my articles, lectures and especially my textbooks (2000, 2007, 2011). I also have long conversations with myself on the subject, usually in the silence of my lonely room, This might be why I have received a number of strange mails from a Catalan engineer (who says that he is a PhD from the Massachusetts Institute of Technology) informing me that a large team of experts at MIT have produced research on the cost and desirability of nuclear energy that – in his opinion – casts some skepticism on my humble work on these subjects.


Their research casts no skepticism on my work, because I doubt whether they are capable of understanding my work. The calculations made at MIT or IIT (Illinois Institute of Technology) or CIT (California Institute of Technology) or the storefront university that gave me my economics degree may or may not be correct for the short run, but as for the long term – where the issue is mainly economics – they are probably as wrong as the Dean of Engineering at Illinois Institute of Technology thought that I was when he expelled me from his school for failing physics and mathematics (twice),  and told me to never come back.
Wrong because there are no electricity generating assets on the horizon that are as flexible as nuclear reactors when it comes to providing large amounts of reliable electric power.  Flexible in what way? How can someone look at a nuclear facility and talk about flexibility? The answer is that flexibility in this context means the ability to greatly improve the technology and economics of future generations of reactors, although admittedly improvements will also be made where wind and solar equipment is concerned.

 Readers with an interest in microeconomic theory should also take a look at some aspects of the paper by Fabien A. Roques et al (2006), which views nuclear as a hedge against uncertain fossil fuel prices, and also suggests that it might be fruitful to view energy as a ‘public good’ (like e.g. streetlights and defence). I certainly can accept that, since it is clear to me that investing in energy makes more economic sense than investing in stupid wars on the other side of the world.

 Also, and please note carefully, with nuclear installations located domestically, you know almost exactly what you will get over very long time frames. With other energy resources there can be large uncertainties about fuel availability and prices.  This is why Finland, with Norwegian gas on one side of that country, and Russian gas and coal on the other side, decided to buy the largest reactor in the world from Areva of France. Finland has also decided to purchase one more, large reactor, and perhaps two. What is happening in that country is clear: Finland has one of the best educated populations in the world, so why should they endanger their economic future by playing the energy fool?

I can close by saying that many people are afraid of nuclear energy, which is a very good thing, and that is why I am able to be positive to that resource. If people were not afraid, if they desired an unlimited expansion of nuclear, or a reactor on every street corner, I would have a difficult time being partial to nuclear.  I definitely would not have given a talk at the Singapore Energy Week, or any other Energy meeting, because there is enough hypocrisy in academic economics and in politics without my participation. The bottom line here is that nuclear is nothing to play games with, technically or other-wise. In the hands of the wrong people it can be very dangerous. For instance, if decision makers should make a habit of doing foolish or careless things like putting reactors in the wrong place, it could help destabilize portions of the global economy by causing the abandonment of potentially safe reactors. This may turn out to be a major outcome of the Fukushima tragedy.

By. Professor Ferdinand E. Banks


Banks, Ferdinand E. (2011). Energy and Economic Theory. London, New York and Singapore:
World Scientific.  (2007). The Political Economy of World Energy: An Introductory
Textbook. Singapore and New York: World Scientific’  (2000). Energy Economics: A
Modern Introduction. Dordrecht andBoston: Kluwer Academic.
 Roques, Fabien A., William J. Nuttall, David M. Newberry, Richard de Neufville, Steven Connors (2006). ‘Nuclear power: a hedge against uncertain gas and carbon prices.’ The
Energy Journal, (Volume 27, No 4). 

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  • Anonymous on November 21 2011 said:
    I did not notice a reference to LENR (Low Energy Nuclear Fusion) in this artidle. A test of Andrea Rossi's Ecat device in Bologna, Italy produced 470,000 watts of energy for 5 hours. The customer purchased the device. Since that time Rossi has receive an order for 13 1MW devices from a military customer. Delivery is to be made in 3 months. Orders for 5 kw devices are being scheduled for 2013.I know most "scientists" have dismissed LENR as "pathological," but there will be plenty of time for them to learn.
  • Anonymous on November 22 2011 said:
    No, Sam, I did not mention it because I failed physics twice at Illinois Tech in Chicago, and I do not wanting anyone calling me to their office and calling me hopeless again, which the Dean at IIT did. Wait and see is the right strategy here.

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