New study pours cold water on nuclear shipping economics

The commercial case for nuclear-powered shipping remains highly uncertain, with new research suggesting the technology could become competitive by 2040, but only with dramatic reductions in reactor costs and effective global carbon regulation.

A study published today by University College London’s Energy Institute examines the total cost of ownership of nuclear-powered containerships, comparing them with conventionally fuelled and ammonia-powered alternatives.

A conventional containership costs $119.6m in the model, compared with $148.5m for an ammonia dual-fuel vessel. The nuclear equivalent ranges from $228m under optimistic assumptions to $582m for first-of-a-kind reactor technology.

Reactor costs are the decisive variable, ranging from approximately $2,600 to $12,400 per kWe. The researchers calculate that reactor production costs would need to fall by as much as 80% for nuclear propulsion to become commercially attractive, reductions that have yet to be demonstrated.

Under the most favourable assumptions, nuclear becomes the cheapest propulsion option from 2040, but only when the IMO’s proposed Net-Zero Framework is included, allowing nuclear vessels to earn revenue from surplus emissions credits. Without that framework, none of the nuclear scenarios beats conventional shipping.

The study also challenges the argument that nuclear propulsion could transform container shipping economics by allowing vessels to travel considerably faster. At 25 knots, the modelled vessel covers 32% more distance annually than at 14.85 knots, but requires more than three times the installed power. The resulting increase in reactor costs outweighs the additional transport capacity.

Even these estimates may flatter nuclear propulsion. The model excludes nuclear-specific insurance, reactor maintenance and hull integration costs, while decommissioning expenses remain highly uncertain.

Insurance and liability emerge as particularly serious obstacles. Existing nuclear liability conventions were designed for stationary reactors rather than vessels crossing international borders.

The researchers suggest the first nuclear-powered merchant ships will probably require bilateral agreements between willing governments before a global regulatory framework can emerge.

The central question is who will finance the expensive first generation of nuclear ships before the economies of scale needed to make the technology competitive materialise.

“Nuclear can compete, but only with much cheaper reactors and a global emissions policy, and neither exists yet. How both develop over the coming years will decide whether nuclear has a place in shipping,” commented Farah Bziker, a researcher at UCL Shipping and Oceans Research Group.

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