Essays on Political And Economic Risks Assignment

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Political and Economic Risks of Nuclear Power GenerationNuclear power production is controversial. Its proponents argue that it is economic, a safe secure in producing enough energy for development. On the other hand, its opponents argue that it is risky, uneconomic and unnecessary (Beck, 1994). This paper focuses on economic and political risk associated with implementation of a nuclear energy plant in Khakariastan. The government influences most uncertainties involved in nuclear energy production. It reacts to pressure from the people. It sets environmental and safety standards, control nuclear waste and decides whether to reprocess spent fuels.

It sets the market electricity structure, energy security and decides whether to support nuclear energy. It is the governments’ concern and in some instances international concern in nuclear energy production. The public on safety grounds does not trust nuclear energy (Beck, 1994). Environmental issues are so far more political than scientific. The government must ensure that power production adheres to UN convention on climate change requirements. Controlling production of green house gases such as sulphur and nitrous oxide is inevitable. Further, measures taken to control environmental pollution should be cost effective.

Thus, the government controls establishment of these projects to ensure environmental issues is handled as required. The government influence decisions no matter the owner of the plant (Beck, 1994). In most business organizations especially where the public is involved in decision-making, decisions made are usually the outcome of economic calculations by considering different means of achieving desired results and selecting the optimum. However, such a method cannot be used in nuclear energy production especially when doing a cost benefit analysis (OECD Nuclear Energy Agency 2007).

Assessing project cost when it is still a blue print and estimating return per capita on electricity production and prices over time is not possible (Beck, 1994). However, comparative analysis and economic calculations play a role judgment of different possible scenarios thereby identifying the most important possibilities and concentrating debate on them. Economic analysis used as the main basis in making a choice is dangerous (Michael and Hartlief, 2003). When considering economic comparative advantage, a number of factors are considered. Capital cost and project time- capital cast vary greatly with time.

This may be due to time taken before authorization and changes in design. Estimating the cost may be done in comparison to other similar projects already in place. Since it is a large scale and long-term project, funding from experience is done after a long-term contract substantial portion of energy with agreed prices and price escalation clauses. However, such a contract would depend on whether the government is willing to reinvest in nuclear power. Nuclear energy production therefore would only be possible with government support (Beck, 1994). The government either directly or indirectly influences nuclear power production.

It may fund the project, license it or through taxation. With nuclear energy, it is only possible to implement it if the government backs up the project. This is after ensuring there is a balance between risks and benefits. Without government backing, a private investor would have to do with a high risk/ low reward project which may not be economically viable (Beck, 1994).

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