The Myth of a Path Not Taken- the Paley Commision Report

A myth within the anti-nuclear movement that I find particularly galling is summarized neatly by this excerpt from a 2000 op-ed by Arjun Makhijani:

One of the official reviews of the resource situation in the early 1950s was conducted by a commission appointed by President Truman, called The President's Materials Policy Commission. It came to be known as the Paley Commission, after its chairman.

In the energy sector, the prime area of concern that the Paley Commission addressed was petroleum. The 1952 report predicted oil shortages by the 1970s. Furthermore, the Paley Commission made a strong negative assessment of nuclear energy and called for "aggressive research in the whole field of solar energy - an effort in which the United States could make an immense contribution to the welfare of the world." The Commission also encouraged work on wind energy and biomass. However, despite the Commission's conclusions, a significant renewable energy effort was not made until the oil crisis was upon the US in the 1970s.

Given the assessment that nuclear energy could meet only a modest fraction of energy requirements at best, it seems illogical that nuclear energy was pursued vigorously rather than solar and other renewable energy sources. Evidently, it was assumed that renewable energy sources would not provide the same propaganda capital in the Cold War as nuclear energy. Interestingly, a lack of government money for renewables was accompanied by a lack of corporate research effort and an absence of interest on the part of large numbers of scientists and engineers.

Anti-nuclear activists from Amory Lovins to Harvey Wasserman have cited the existence of the Paley Commision report as evidence that renewable energy was seriously considered during the 1950s, only to be rejected in favor of nuclear energy. However, this is simply not what happened.

I'm not sure that this blog has any readers old enough to remember the Korean War, which provided the historical context for the Paley Report. What is generally forgotten in the United States is that many of the same sorts of economic controls were imposed during the Korean War as were in WWII. One particular area in which these controls had particularly significant effects was in the area of raw material supply. Between the demands of war industries and the Office of Defense Mobilization stockpiling materials for a potentially global and nuclear war, serious deficits emerged. With these came understandable anxieties about the long-term outlook of America's supply of raw materials. The Paley Commission was assembled during the last years Truman Administration to produce an authoritative report addressing the subject.

The report was published in mid-1952 and remains an interesting document, as it provides insight into how less optimistic economists projected intermediate-term economic growth in the early 1950s. The commission presented a projection of what the American economy would look like in 1975. There is a serious caveat, however: the Paley Commission report was incorrect in almost all of its predictions, often by an enormous margin.

It's true that the Paley Commission predicted that there would be oil shortages in the 1970s. However, it also predicted that there would be coal shortages, and chromium shortages, and shortages of almost everything else. In short, rather than being a prescient prediction of the future, the Paley Report was like a stopped clock that is still right twice a day.

The basis of the Paley Report's errors lies in its overall economic projections. It underestimated GDP growth and private domestic investment enormously, while simultaneously anticipating massive increases in demand for certain raw materials that never materialized. The Paley Commission was also pessimistic about the prospects for commercial nuclear power. As a result, they predicted massive energy shortages that were radically different qualitatively than those that actually occurred.

It is true that the Paley Commission recommended massive investment in renewable energy technology. But this was a result of its errors, not because it was presbyopic. Its authors thought that solar water heaters would be necessary because there would be insufficient fossil fuels and nuclear-generated electricity would be unavailable. In practice, they were wrong on both counts. And the actual document is not exactly something Amory Lovins would endorse. Richard N. Cooper wrote in 1975 that "... the report gave little encouragement to true conservation, and only general encouragement (rather than concrete recommendations) to the development of substitute materials."

Anti-nuclear activists who cite the report make much of its pessimistic expectations for nuclear power. But this was not because the commission had some magic insight into the problems that nuclear generation would encounter. It was more that they assumed that raw materials shortfalls would affect nuclear generation as well, and underestimated the speed at which the technology would mature. It's important to remember just how primitive existing nuclear reactors were in 1951- most of them were crude plutonium-production reactors, and many respected nuclear experts believed that it would be many decades before their commercial exploitation became remotely practical. It is unreasonable to expect the Paley Commission to have been aware of the ongoing reactor research that would produce practical reactors- after all, much of it was highly classified. This changed not because of some Cold War propaganda plot, but rather because the PWR emerged as a highly promising technology soon after the report was published. At the same time, reactor research in Idaho, Tennessee, and elsewhere had produced five different potential commercial reactor designs , with plans to build operational versions of each by the early 1960s. The enthusiastic participation of large utilities in this research program indicates that they expected nuclear power to be a highly lucrative endeavor.

The historical influence of the Paley Report was minimal. This was not because it failed to suit Cold War propaganda needs, but because it was wrong. Wrong about economic growth, wrong about growth in the demand for raw materials, and wrong about the practicality of nuclear power. Once Korean War-era government controls were lifted and reactor research progressed this became abundantly clear, and economists became optimistic that technological advancement would obviate the effects of any supply deficits that emerged. And so far, this optimistic view has been absolutely correct. In any case, the Paley Report is not proof that there was a "path not taken," but rather an indication of how short-sighted pessimistic predictions of the future often are.