Economic meltdown: Counting the real cost of Peter Dutton’s nuclear fantasy

Almost six months since the Federal Coalition first announced their nuclear scheme, they’ve finally released the costings. And as we expected, they’ve cooked the books. 

That’s a shame: any debate about Australia’s clean energy future should be based on sound, best practice economics. So we thought we’d help out, by filling in some of the gaps in the Federal Coalition’s nuclear scheme. 

What we found is astounding: up to $490 billion of costs that are underestimated or excluded entirely – meaning their scheme would cost more than twice as much as what they’re claiming. And that’s only scratching the surface: there are many other costs that we can’t put a number to, that will still cost Australians dearly. 

Here’s a rundown of the costs that Dutton left out:

1. Meeting Australia’s growing electricity needs: an extra $115 billion

As Australia’s population and economy grows, keeping up with the community’s electricity needs is essential. The Australian Electricity Market Operator’s plan for our grid, the Integrated System Plan, expects power demand to double by 2050 under the most likely scenario. 

This scenario ensures that we have enough electricity to slash climate pollution by switching to cleaner and cheaper electric vehicles, and switching heavy industry from using fossil fuels to electricity or green hydrogen. If we fail to make these changes, Australians will pay the price, both in terms of worsened climate change, but also by buying more petrol, gas and coal at an estimated cost of up to $501 billion. 

The Federal Coalition’s nuclear costings ignore these necessary changes, and assume we’ll need less electricity under a ‘progressive change’ scenario, in which Australia has fewer EVs, and a dirtier industrial sector, meaning a likely failure to reach net zero by 2050.

We can’t just opt out of these important changes: they’re necessary to secure a safer future, and for Australia’s future economic prosperity. The Coalition’s own modelling shows that simply meeting our future energy needs would add $115 billion to the cost of their plan – an increase in cost of more than 50%.

2. Acknowledging the true cost of building nuclear: an extra $16 billion, and up to $46 billion

The Federal Coalition’s current nuclear costings assume a price of $10,000 per kilowatt. While this may be a reasonable capital cost for a nuclear facility in some countries which have built nuclear reactors regularly over many years – like South Korea – it is drastically unrealistic for a new nuclear scheme in Australia, where we have never built nuclear power reactors. This estimate is also highly unrealistic compared to recent projects in other Western democracies, including the US, Finland, and France – all of which have decades of experience in nuclear power.

Adopting a more realistic cost estimate, based on recent projects in these countries, would increase the cost by at least $16 billion. If the capital costs further escalate, to the level of the blowouts seen at the Hinkley Point C project in the UK (now costing up to $97 billion), the total cost of Dutton’s nuclear fantasy could increase by up to $46 billion by 2050.

3. Including the full cost of fueling and operating a nuclear reactor: an extra $5 billion, and up to $20 billion

The Coalition’s current nuclear costings use a very low estimate for maintenance and fuel costs. The CSIRO estimates that these costs would range from about $40 to $60 per megawatt hour, considering fuel, maintenance, waste management, and other operating expenses. Dutton’s costings currently assume only $30 per megawatt hour – with no explanation.

Using the CSIRO’s more realistic and evidence-based estimates reveals that the true cost of this nuclear scheme is at least $5 billion higher than promised and could reach up to $20 billion by 2050. These high maintenance costs would persist throughout the reactor’s lifespan, leaving Australia with a high-cost nuclear fleet for decades.

In contrast, renewable energy and storage have significantly lower maintenance costs. Our current plan, led by renewables and batteries, will further reduce these costs. The Federal Coalition’s plan, on the other hand, would extend the life of aging coal plants, which are expensive to maintain and increasingly unreliable. This will lead to higher electricity bills for consumers well into the 2030s, even though nuclear reactors would not be operational for another decade.

4. Counting the real costs of at least 1.6 billion tonnes of climate pollution: an extra $308 billion

Dutton’s nuclear scheme would produce 1.6 billion tonnes of climate pollution by 2050, over a billion tonnes more than Australia’s current plan. 

While we may not immediately feel the financial impact, we will pay the price with a future characterized by more frequent and severe unnatural disasters, lower economic prosperity, reduced agricultural yields, and increasingly unbearable outdoor working conditions. Australians cannot afford a future where climate change remains unchecked.

It’s possible to quantify the cost of climate change using a cost-per-tonne metric. Doing so reveals that Dutton’s climate and energy policy would lead to at least $308 billion in climate pollution costs between 2025 and 2050. This is over $250 billion more than our current plan, which would significantly reduce climate pollution by building more renewables and storage.

Importantly, this estimated 1.6 billion tonnes only refers to climate pollution caused by burning coal and gas for electricity. However, this nuclear scheme would also lead to fewer electric vehicles on the road, and more climate pollution from industry, which could add a further 700 million tonnes of additional climate pollution.

Where does this leave us?

After accounting for all of these costs, we can see that Peter Dutton’s nuclear scheme would cost Australians at least $775 billion in the low case, and up to $821 billion in the high case. This more than double the Federal Coalition’s initial cost estimate, an increase of between $444 and $490 billion by 2050.

Even this estimate this still excludes many costs which the Federal Coalition has not yet revealed and which we could not estimate, including:

• The cost of delaying coal closures: Delaying the closure of the Eraring coal generator could cost NSW taxpayers up to $225 million per year. Peter Dutton’s plan sees many coal generators delayed beyond their announced lifespan, and all generators delayed well beyond AEMO’s expected closure date in our current plan. Delaying these closures is not free: the coal generator’s owners will be demanding compensation.
• The cost of buying and remediating current coal generators: The Federal Coalition would have to force energy companies to sell the land where nuclear reactors are proposed to the Government, and then undertake major projects just to make the sites suitable for a nuclear reactor. 
• The cost of waiting for nuclear: The estimates made here all assume that the Federal Coalition could achieve their stated timelines, with the first nuclear reactor operating in 2036, with 13 GW built by 2050. This is incredibly unlikely: the first nuclear reactor is unlikely to be ready for at least 20 years, taking 15 years for construction alone. With the first project not being completed until about 2045, even more climate pollution would be produced in the meanwhile, unless more renewables were built.
• A myriad of other costs: Including the costs of changing regulations and laws, training a new nuclear workforce, borrowing hundreds of billions of dollars to build nuclear reactors (and paying the debt bill), and managing nuclear waste safely both in the short term, and in a permanent location for 100,000 years (in Canada, managing the waste from their nuclear program is expected to cost at least $33 billion AUD)

Methodology and assumptions:

Nuclear costings are based on Frontier Economics’ report two. As data from this report has not been released, values were extracted from charts using WebPlotDigitizer. This introduces a small margin of error.