Socio-Economic Assessment of Fusion Energy Research, Development, Demonstration and Deployment Programme

Providing safe, clean and affordable energy supply is essential for meeting the basic needs of human society and for supporting economic growth. From the historical perspective, the constantly growing energy use was one of the main factors, which drove the industrialised countries to the current level of prosperity. Meanwhile, in recent decades, the issue of global energy security became a topic of increasing concern in the international policy agenda. On the one hand, the world is facing the problem of exhaustion of most convenient and cheep fuel reserves. The situation is becoming worse, because of the constantly growing demand in developing countries, and the oligopolistic behaviour of major energy exporting countries. On the other hand, the society is becoming more and more sensitive to the environmental pollution problems, caused by the excessive consumption of fossil fuels. In the face of energy security challenge, national governments ought to implement adequate strategies aimed at liberalisation of energy markets, diversification of energy supply mix, enhancement of energy efficiency, encouragement of investments in energy infrastructures, and promotion of innovation in energy sector. In a longer term perspective, the latter point becomes increasingly important, because the world is relying currently on the consumption of non-renewable fossil fuels, and the development of new safe, clean and resource unconstraint energy technologies is vitally needed. In line with this strategy, the major world economies pursue the joint R&D programme on thermonuclear Fusion technology, which represents numerous advantages due to its inherent safety, avoidance of CO2 emissions, relatively small environmental impact, abundance and world-wide uniform distribution of fuel resources. Considering the importance of the projected environmental and economic benefits of Fusion, the questions are raised whether the current level of financial support is sufficient, and what could be the optimal strategy to proceed with the demonstration of Fusion technology, given the time span and potential risks of Fusion RDDD programme. To put these questions into the context, one has to consider the current trends in energy R&D funding, which has seen a drastic decline ( ~50%) over the last three decades. The liberalisation of energy sector poses additional problem due to the fact that free markets partially failure to provide public goods, such as basic science and R&D, because of the so-called spillover effects meaning that the firms are not able to appropriate the integral results of their R&D investments. Regarding the thermonuclear Fusion technology, the decision makers responsible for national energy policies and allocation of public R&D funds may face the following specific questions: What is the expected net socio-economic payoff (social rate of return) of Fusion R&D programme, including both internal and external costs and benefits? What are the reasonable economic argu