# Nuclear Power in the Context of Climate Change 

##### Comparing the Cost of Nuclear and Fossil Fuel Power Plants with a Carbon Tax 

Nuclear power offers a low-carbon option for electricity generation. But it is high-cost relative to fossil-fuel generation, particularly combined-cycle natural gas power plants.

July 26, 2022 • Working Paper No. 68 

By [David Kemp](https://www.cato.org/people/david-kemp) and [Peter Van Doren](https://www.cato.org/people/peter-van-doren) 

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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.

[![Working Paper 68 Cover](/sites/cato.org/files/styles/serial_cover_phone/public/2022-07/working-paper-68-cover-new.jpg?itok=t_h2W4W-)](https://www.cato.org/sites/cato.org/files/2022-07/working-paper-68-revised-3.pdf) 

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##### Nuclear Power in the Context of Climate Change 

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##### About the Authors 

[![David Kemp - cropped](/sites/cato.org/files/styles/author_picture/public/2024-03/david-kemp-cropped.jpg?itok=xLe2PPTT)](/people/david-kemp) 

##### [David Kemp](/people/david-kemp)

Former Policy Analyst, Cato Institute

[![Peter Van Doren](/sites/cato.org/files/styles/author_picture/public/2021-01/Peter%20Van%20Doren.jpg?itok=H1lphT-7)](/people/peter-van-doren) 

##### [Peter Van Doren](/people/peter-van-doren)

Senior Fellow and Editor of *Regulation*

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](mailto:pvandoren@cato.org) 

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