If we’re serious about addressing global climate change, new nuclear power must be part of our strategy. Nuclear power currently accounts for about 20 percent of our country’s electricity production. But by 2050, when the final carbon emission reductions in proposed legislation would take effect, all of our existing nuclear power plants in the United States will be retired (including those approved for 20 additional years of operation).

Add to that another 50 percent of current generating capacity that is likely to be shut down early (in the case of many older coal-fired plants) or will reach the end of its normal operating life by that time, and you get a sense of the monumental task ahead of us. Just to ensure that electricity remains available in 2050, we need to replace about 70 percent of the generation sources currently operating in the United States. And that assumes no growth in demand.

We can assume some gains in energy efficiency and renewable technology development. But to reach the 2050 goal of reducing CO2 emissions by 80-plus percent from 2005 levels while keeping our economy moving forward with reliable electricity, we must build scores of new nuclear plants.

Responsible climate legislation must put in place the framework, policies and incentives to build a new generation of nuclear power plants to meet the country’s electricity needs. Wind, solar, biofuels and other technologies all have a key role in our nation’s energy mix, but nuclear is the only large-scale, emission-free, 24/7 source of electricity generation capable of filling the void we will leave by retiring power plants.

Collapse

It is indeed encouraging to see Congress turning more attention towards nuclear energy as a source of affordable domestic energy. Greater use of nuclear energy is absolutely a necessary step to becoming a more environmentally responsible, energy-producing nation. Nuclear energy is not only the most readily available form of clean-air electricity, but it is also the most sustainable and cost-effective. Of all forms of clean-air electricity, nuclear energy has the smallest impact on the environment. If we invest in this form of power now, we will see benefits for years to come.

In any discussion of climate change, nuclear power is a must. Just like other major sources of clean-air electricity, such as hydroelectric power, wind energy and solar energy, nuclear power plants do not emit any carbon or greenhouse gases. And nuclear energy is the only large-scale, clean-air electricity source that can be expanded widely to produce large amounts of energy. In fact, it makes up nearly 74 percent of the nation’s clean-air electricity.

As we potentially work toward a new generation of nuclear plant development, it is important to note that average nuclear production costs have already declined more than 30 percent in the past 10 years to 1.87 cents per kilowatt-hours, and new and more complex forms of technology are continually being explored to make this cost even lower. Currently, it is the lowest-cost producer of baseload electricity.

We believe that any legislation that addresses climate change and decreased dependency on foreign oil should also encourage increased use of nuclear energy as part of an overall push toward a balanced domestic energy program and should expand tax incentives for construction of new nuclear plants and nuclear electricity generation. It should also provide $2 billion over 10 years from federal energy research, development, demonstration and deployment budgets for demonstration of one to two new advanced nuclear facilities.

Collapse

From a consumer perspective, the key to a reliable, abundant and affordable supply of energy for our country is a very diverse supply of energy. Consumers win when there is competition between and among energy supply options. Reliability and affordability becomes jeopardized, for example, if we become too dependent on anyone source of energy.

It is important to keep nuclear in the mix and increase its capacity. It is a very reliable, secure and importantly, a low carbon option that we need. It is important that we develop a policy that will facilitate the construction of nuclear energy without breaking the bank. Perhaps we can learn from other countries that are driving ahead with construction of new plants. We also must not forget that our existing fleet of nuclear plants are ageing and will need replaced.

Importantly, we do not need cap and trade legislation to build new nuclear plants. If you doubt this, how are countries all around the globe building theirs since cap and trade is essentially non-existent in these countries?

Nuclear power does not fit the bill because it is far from the least cost approach to meeting the need for electricity in a carbon-constrained environment. Nuclear reactors are uneconomic for supply-side and demand-side reasons. Studies by half a dozen major national research, Wall Street and consulting firms estimate power from nuclear reactors costs three or four times as much as efficiency. The California Energy Commission has identified a dozen supply-side options that cost at least 40% less than power from nuclear reactors. The technology-driven expansion of the resource base of natural gas and the bursting of the speculative bubble in natural gas markets has lowered the cost of this fuel, which emits less than half the carbon of coal.

Demand has declined sharply as a result of the recession and a fundamental shift in consumption patterns is expected as households adjust their spending and saving patterns after the debt bubble of the past decade. Combining this shift in demand with the fact that climate policy is eyeing substantial reliance on efficiency and renewables and the need for central station power facilities like nuclear reactors is likely to be dramatically reduced, while the cost of carbon allowances will be far lower than originally thought.

Nuclear reactors are also highly risky projects because the industry has been unable in the past and is currently incapable of designing and building reactors on time and on budget. The leading candidates to be the “reference” designs for new reactors have been subject to constant revision. Recently, the Nuclear Regulatory Commission concluded that the most popular design (which account for 14 of the 29 reactors that are seeking licenses) has not demonstrated that certain structural components of the revised AP 1000 shield building “can withstand design basis loads… This is a situation where fundamental engineering standards will have to be met before we can begin determining whether the shield building meets the agency’s requirements.” 21 of the 29 units have been delayed, cancelled, suspended, or failed to find the needed partners. Of the eight that have not suffered the scheduling problems, half have suffered downgrades in their financial rating or negative financial advice.

Because the economic prospects of nuclear reactors are so dim, even in a carbon constrained environment, its backers have given up any pretence that nuclear reactors can compete in the marketplace. Recognizing that Wall Street won’t support nuclear construction, they have turned to Main Street, seeking to force taxpayers (through loan guarantees) and ratepayers (through charges for construction work in progress and guaranteed cost recovery) to foot the bill. However, shifting risk does not eliminate it. Taxpayers and consumers will end up paying for cancelled plants, excess capacity, and bearing the burden for electricity that is far more costly than need be.

The plight of nuclear reactors can best be seen in the conclusion to a recent analysis of nuclear reactor economics, based on an MIT study that was highly favorable to nuclear reactors in a number of ways and openly sought to promote nuclear power. The best it could dues was arrive at the following, tepid conclusion. “All things considered, the best economic case supporting a significant expansion in nuclear power capacity involves significant CO2 emissions charges, moderate to high fossil fuel prices (including implicit prices reflecting energy security considerations), declining nuclear plant construction costs, and an efficient licensing regulatory framework. (Paul L. Joskow and John E Parsons, “The Economic Future of Nuclear Power,” Daedalus, Fall 2009, p. 58)

None of the four conditions that might make the economics of nuclear reactors attractive is present. The absence of those conditions is not a mistake or market failure; it is actually a market success – capital markets turning thumbs down on an uneconomic technology. It reflects the six fundamental risks that nuclear reactors face in the real world. CO2 emissions charges are projected to be modest because policy is contemplating promoting options that are low cost approaches to carbon reduction (policy risk); fossil fuel prices have moderated and there is growing confidence in efficiency and renewables (technological risk creating marketplace risk,); nuclear plant construction costs estimates have risen substantially (technology risk and execution risk) and the licensing process has proven challenging because designs are not well conceived and site-specific issues are substantial). As a result, the financial risk of the projects has grown to the point where they cannot be financed in capital markets.

Simply put, the economics of nuclear reactors today are a worst case that will cost taxpayers and ratepayers dearly if they are forced to subsidize a new generation of nuclear reactors with loan guarantee and construction work in progress.

Collapse

The major barrier facing nuclear power in this country is not nuclear waste or safety concerns or regulatory constraints or public opposition. The major barrier is financial in nature.

Getting a new power plant built is in many ways a matter of understanding, managing and pricing risk. Those plants with the lowest perceived risk are the ones that receive investment today. That is a major reason why both natural gas and wind have done as well as they have over the last five years.

On the other hand, we have not had a new nuclear plant ordered in the U.S. since the 1970s and the capital cost of a new unit is between $8 and 15 billion, which is more than the balance sheets of most electric utilities. Given a history that includes major defaults on nuclear bonds and other gigantic hits to investors, the barriers to investment in new nuclear are enormous. That is one reason why "right sizing" the technology - smaller plants with a smaller capital investment required - is getting increased attention.

As we are moving into a new carbon-constrained world, there is an understandable interest in the nuclear option, and there will be strong efforts to resuscitate the industry. But even very aggressive nuclear provisions in the legislatiion will be irrelevant if the financial community continues to view the nuclear option as too high risk for comfort.

Collapse

Fuel diversity in electricity generation is critical to the success of a sustainable grid, and nuclear power can and should play a key role in producing clean, baseload energy for the nation. But the reality is that the last new nuclear reactor built in America was 32 years ago—in 1977—and today, despite having received applications for 26 new nuclear reactors, the Nuclear Regulatory Commission has yet to approve a single one, let alone the hundreds that would be needed to do the job that Sens. Kerry and Boxer seem to envision.

The reasons are no secret—many in the environmental community consider nuclear power a danger to both the natural and man-made environment, even though nuclear power emits no carbon-dioxide or other greenhouse gas emissions, making it, from a global warming perspective, the most environmentally benign way to generate electricity. It is also important to note that since the 1970s rapid advances in technology have made nuclear power far safer and more efficient—and the nuclear industry's safety and security standards are the highest in the world.

The American Gas Association (AGA) believes that any climate change legislation should support the increased use of nuclear power as a way to enhance fuel diversity in the generation of electricity, while at the same time meeting our national goal of reducing greenhouse gas emissions. Currently natural gas, the most environmentally friendly fossil fuel, is the fuel of choice in electricity generation. Yet the best use of natural gas—meaning its most efficient and environmentally superior use— is directly in America's homes and businesses.

AGA does not believe that natural gas should not be a part of the electricity generation mix. Rather, we believe that increased fuel diversity, including the increased use of nuclear power, would allow more natural gas to be used directly in the residential and commercial market, where, for more than 40 years, natural gas customers have led the way in increasing energy efficiency and conservation.

Collapse

Electricity consumption is an indispensible contributor to prosperity. That can be seen in the strong correlation between economic growth and electric power consumption As our standard of living population continue to increase, so will our need for reliable and affordable electric power

EIA's forecast to 2030 shows electricity consumption growing between 26% and 36%. Renewable energy is projected to grow much faster than overall electric power consumption but none the less is projected to supply no more than 15% of our electric power needs, even with mandates and large subsidies. So, if we are to meet the needs of a growing economy and growing, more prosperous population while reducing the growth in greenhouse gas emissions, nuclear power should play a more significant role.

In spite of being a proven technology that provides 20% of our electric power needs and one widely used in other countries, especially France, nuclear power is not without its challenges. These include, but are necessarily limited to, cost, waste disposal, political acceptability, subsidies, potential liability, and the creation of moral hazard.

The government through recent legislation has provided loan guarantees, a production tax credit, Price-Anderson renewal, and increased R&D support. While some of this might be appropriate to jump start an industry that has struggled since Three Mile Island, the extent of government subsidies is troubling. Some estimate that subsidies exceed the amount of private capital put at risk. As a matter of principle, government should remove barriers to entry and streamline permitting and then let the private sector respond. And, perhaps, a production tax credit can be justified as a proxy for a price on carbon. But, extensive government involvement creates investment distortions and unintended consequences that are troubling.

Even if the private sector is willing to increase its investment, the cost of new nuclear facilities is very expensive and results in energy costs much greater than coal or natural gas produced electricity. Until the costs of production can be reduced, nuclear power's growth in the market place will and should be limited.

And finally, the government needs to resolve the waste disposal issue once and for all if nuclear energy is to have a brighter future. The failure to move forward with Yucca Mountain or to develop a commercially viable alternative is a serious obstacle to increasing nuclear power as a source of no carbon electricity.

The bottom line is that if the Congress and Administration are really serious about reducing the growth on CO2 emissions there will have to be a more focused and effective public-private effort to make nuclear power more cost effective and politically acceptable to the public.

Collapse

One of the major obstacles holding up nuclear development is policy uncertainty. If a company or a group of companies is thinking about investing $7-15 billion in a new nuclear facility then surely they would want policy environment that will be as favorable as possible.

A cap and trade policy could be helpful to the nuclear industry given that nuclear plants are "green" to the extent that their CO2 output is tiny compared to conventional coal and natural gas plants. Nuclear energy companies could sell credits, if they are given them, to the coal, natural gas and other carbon-effusive industries and electricity producers.

Another policy that needs to be clarified is what to do with the nuclear waste. Right now all of the nuclear waste from commercial facilities (and others) sits in the backyards of these facilities. All of the nuclear energy companies made a deal with the US Government that they would help pay for the Yucca Mountain storage facility. Many billions have been paid for by the nuclear industry, and yet the nuclear industry cannot use Yucca Mountain yet. Many of the people of Nevada and their leaders are against the Yucca Mountain facility. There still remains a huge amount of ambiguity and uncertainty on what to do with nuclear waste outside of the use of the Yucca Mountain facility. The nuclear industry needs to know where this is going before the huge amounts of money needed to be invested in the industry starts to free up.

As I have said in many other venues previously: the nuclear industry is the only energy industry that has been forced to account for all of its waste. If this were done for the coal, oil and natural gas industries the world would be a far different place in many ways. The nuclear industry has faced an extreme cap, and without trade, on its major effluent, nuclear waste, for decades. There are good reasons for this. Nuclear waste is downright dangerous, especially the high-level nuclear waste, such as the plutonium made in most reactors from neutrons attaching to U-238, etc. Containing this waste is important. It is also important, as we have all learned, to contain and mitigate CO2, other greenhouse gases and the pollutants from the non-nuclear parts of the electricity and transport industries.

Other policy and legal obstacles involve where the new plants would exist and what liabilities and other rights and obligations would the nuclear industry need to consider with regard to where the sites will be, decommissioning in the future, and more.

Getting back to the financial issues we can see one of the obstacles to the nuclear industry is the huge amounts of money that are needed to build conventionally sized and configured nuclear plants. It can also take a very long time to complete one of these plants. The bills need to be paid when the plants are being built.

Getting such massive investments together in an environment of policy and financial uncertainty is proving to be very difficult. We are still in a financial crisis. Credit is not as easy as it once was. There are other alternative uses for this money competing with the nuclear industry. Also, we need to consider in projects that take a long time to finish that there will likely be some inflation associated with the huge bailouts and other fiscal and monetary policies used to date and expected in the future. The smart money in the nuclear industry understands that there could be serious cost creep when a project starts. The longer an energy project takes to implement the more complex and important some financial, policy, and economic uncertainties become.

On the other hand, it is clear that many of our nuclear plants are getting old and may be decommissioned in the coming years. This could lead to some significant energy shortages if alternatives to the lost nuclear gigawatts are not built smoothly in as these inevitable changes happen.

It would be a grave error on the part of policy makers and others to rule out nuclear power as an option in the future. If done right it is one of the cheaper ways of making electricity on a large scale. It is also one of the most efficient ways of making electricity on a large scale. (This would be even better if we had a requirement on all future nuclear plants that they use combined heat-power-cooling-etc. as a way to capture the 65-75% of the waste heat that is produced by not only nuclear, but coal, oil, and natural gas plants. It would also make sense to consider such regulations on the entire electricity industry, given that it is the major source of wasted energy in the US. This, of course, would not apply to wind, hydropower, and non-heat generating sources of electricity. But they have their own energy waste issues.)

Nuclear energy production is not a major source of CO2. The largest source of CO2 and other greenhouse gases in the US and in the world is electricity production with fossil fuels. The second is transportation with fossil fuels. Combining nuclear electricity with plug-in vehicles could help to reduce CO2 from at least two major sources of the greenhouse gas and help the US and the world move toward a more sustainable future. Nuclear power can also be turned into something of a renewable energy source via reprocessing and projects like the Global Nuclear Partnership. But there is quite a bit more to be done on this.

There are surely the proliferation and other issues to consider. If we can somehow get a better handle on the proliferation issues by focusing more on alternative nuclear technologies, including those using thorium, we might just get a better handle on this situation. But the proliferation issue is complex indeed, and will likely not be solved in the near future. Energy-Environment-Security connections are daunting to say the least of it.

Getting a better handle on the proliferation issues can also help on the financial, nuclear waste, and other sides of the choice equations to either go forward or not to go forward with nuclear power. The more nuclear power developed throughout the world the more investments can gain from economies of scale in production of units, learning by doing gains, invention gains, and more. Some of these gains could be directed at better ways of enriching and reprocessing nuclear fuels that would lead to safer and more secure outcomes. A rejuvenated and more creative nuclear industry may also have more time and money to put efforts toward helping to resolve the many dangerous and vexing problems associated with the nuclear energy- nuclear weapons nexus.

Should the climate bill include provisions to help revitalize the industry, such as streamlining the process of getting new plants built?

To be blunt: most of the other energy lobbies are pushing hard for their own. The nuclear lobby is part of this rather tough game. Should there be streamlining? Yes, but not at the expense of security, safety, and the environment. The nuclear industry has proven that it can make vast improvements on all three of these issues with the right pressures put on them. The nuclear industry is technologically complex and has some very good engineers and others working in it. They can make this industry a safer, more secure and more environmentally sound industry than it is today -- with the right incentives. Those right incentives could also help the US make sure it has electricity security in the future.

We cannot sacrifice our energy security in the future to bad science and bias. There should be a full review of the environmental, economic, safety, and security issues surrounding all forms of electricity production. However, this will never happen. Maybe muddling through might help at a less than optimal effort.

Alternative energy sources such as solar updraft towers, CSP, wind, tidal, geothermal, and the like do not have proliferation issues, and may have even better environmental impacts than nuclear. However, the diffusion of gigawatts from these sources has not lived up as advertized as yet. The growth in wind and solar has been remarkable relative to how they started. But to make these competitive with nuclear they need to be placed in line on the grids, etc, in a much faster pace and with much bigger investments. Could they be alternatives to the nuclear plants to be decommissioned? This is one of the major questions of the future of energy. So far it does not seem possible. Also, logically, it makes very good sense to make them a much larger investment in the energy portfolio in the future. But these alternatives face financial, technical, and other constraints that need to be worked out as well.

Coal, oil, natural gas, and, yes, nuclear, will need to be considered a part of this portfolio as the US and the world transitions from where we are now in energy to where we need to go. Those who want to change energy systems overnight and shut down their least favorite energy sources are not thinking clearly at all. Alternatives with even greater electricity generation capacity need to be in place. Otherwise, we could see nightmarish economic, political, social and other problems. Electricity is a key part of economic growth and development. Transitions to a new energy future require steady and well-educated leadership at many levels.

The energy and environment choices we make today could have very significant effects on the peace, prosperity and security of many future generations. Let's put bias aside and focus on the best portfolio of energy sources we could have in the future. Nuclear is just one of them, and it has its own set of problems and uncertainties, but it is an important one that should be considered in full seriousness, just as I hope we will consider the others.

Collapse

Cap and trade will be very costly to the economy. In a great irony, many proponents cite studies showing the cost to be very low. The irony because the assumptions in the “postage stamp” studies are inimical to positions these groups take on certain topics—most notably on nuclear energy.

Without going over all the strained assumptions necessary to keep the projected cap-and-trade costs below hundreds of billions of dollars per year, note that a consistent and critical assumption is the doubling of nuclear power generation over the next 25 years.

Since capacity utilization of the current fleet of nuclear power plants exceeds 90 percent, doubling output means doubling capacity. We have about 100 nuclear plants and since we haven’t licensed even one in the past 30 years, doubling the capacity will require a big change from business as usual. Those who would continue to block nuclear power while trumpeting cost estimates that depend on a nuclear renaissance commit hypocrisy of the highest order.

On the other hand, if nuclear power is a viable, cost-effective energy source, it shouldn’t need subsidies. Balancing the damage done by economy-killing taxes in one energy market with inefficient subsidies in another is policy that makes sense only on Capitol Hill and K Street.

Regulatory impediments to safe nuclear power should be removed with or without carbon caps. In addition the federal government cannot continue with its policy of monopolizing the waste disposal stream while completely neglecting its obligations to take the waste. My colleagues Jack Spencer and Nick Loris have outlined a no-subsidy, market oriented nuclear policy here: http://www.heritage.org/Research/EnergyandEnvironment/wm2475.cfm.

Collapse

Representative Barton ought to know – in the case of the nuclear revival, waste disposal is a big elephant in the living room. Let us,for the moment, ignore the problem of storing high level waste – the stuff we don’t know what to do with and thought we could just dump at Yucca Mountain. Let’s look at low level waste – which in theory we ought to be able to take care of. And let us decide if we can really entrust nuclear energy to the nuclear industry and its allies like Barton.

Andrews County, Texas, down the road a fair piece from Barton’s sixth district, just finished a brutal contested election over the fate of a proposed $75 million taxpayer bond to pay for a low level waste site to be run by a company called Waste Control Specialists. The vote was agonizingly close – 642-639 – but the Courts ruled the vote was valid. But yes, this looks awfully much like a taxpayer bail-out. And who is being bailed out?

A chap named Harold Simmons owns WCS. Simmons, a Dallas billionaire, was most prominent recently as the financier of television ads attacking the presidential candidacy of Barack Obama for his alleged connections to former radical William Ayers. Simmons, however, is also a major direct funder of political candidates, including Joe Barton. to Rep. Robert Talton, one of the Republican legislators who stood in his way. Talton turned him into the District Attorney, and the bill was killed -- only to be resurrected and passed later on. Overall, Simmons has spent $150 million to grease this deal. He gave Governor Rick Perry $500,000, so it is perhaps not surprising that the Perry appointed Texas Commission on Environmental Quality approved the permit which would allow WCS to handle much more dangerous nuclear waste than it was designed for.

When Simmons tried to get legislation authorizing the Andrews County site through the Texas legislature, his fellow Republicans fought him bitterly. Simmons just threw his weight around. In fact, he ended up being charged with offering a $60,000 bribe

Simmons wants to make Texas the dumping ground for as much of America's nuclear waste as he can. The site he has chosen sits on top of America's biggest and agriculturally most critical aquifer, the Ogallala. The site has not been properly analyzed for whether or not it can safely store any kind of radioactive waste, much less the huge volumes of enormously toxic stuff Simmons wants to import. An interoffice memorandum submitted to the Texas Commission on Environmental Quality in August 2007 concludes that "Groundwater is likely to intrude into the proposed disposal units ... the Applicant has failed to use numerical modeling to predict the future location of one water table that is expected to intrude into radioactive waste .... the Applicant has not demonstrated that the site is suitable for near surface disposal of radioactive waste." But Glenn Shankle, the executive director of the Commission, overruled his technical staff.

It appears that the other commissioners may not have known of the staff's findings. Three staff members resigned in protest of the decision to recommend the license. In the middle of 2008, Glenn Shankle stepped down from his post, having made sure that the Commission was poised to approve the license for Waste Control Specialists. Six months later he signed on as a lobbyist with the company. One of the staff who had resigned commented of this journey, "Even the mafia was more circumspect."

So we have a major nuclear-waste-disposal facility, recklessly located on top of one of America's premier sources of groundwater, authorized after a tainted legislative process involving attempted bribery, licensed by a regulatory body whose technical staff strongly opposed the permit, under the influence of a governor who is deeply financially compromised, at the direction of a CEO who subsequently took a lucrative position with the applicant.

And we think this industry is ready for a major revival?

Collapse

Nuclear energy is a viable, clean alternative form of energy that can help strengthen America’s energy infrastructure now. But, in order to make that happen, we need regulatory reform in order to speed up the process of approving new nuclear reactors, while ensuring the highest safety standards are observed. Our regulatory structure should be encouraging innovation, not stifling it.

No legislation intended to move us toward clean energy should be taken seriously unless it includes nuclear energy. I fully support efforts to get wind, solar, and other renewables online, but we all know that these sources of energy only get us part of the way toward achieving our clean, domestic energy goals. Modern, industrialized nations like France and Japan are much more reliant on nuclear power to meet their energy demands. In fact, eighty percent of electricity in France is from nuclear generation; they have never had a major accident; and waste that used to be stored is now safely reprocessed and used again. There is no reason the United States cannot vastly increase the portion of our electricity that comes from nuclear energy.

One of the many disappointing part of the House cap and trade bill passed earlier this year was its almost total silence on the issue of nuclear power, while pages of the legislation was devoted to energy efficient light bulbs and Jacuzzis.

This prompted me to introduce the bipartisan bill, H.R. 3448, the SAFE (Streamline America’s Future Energy) Nuclear Act, which would reduce the time needed for approval of a new reactor to roughly two years when certain criteria is met. The reactor design must already be certified and any new reactor must be on or adjacent to an existing generation site in order to qualify. Additionally, the operator must not have any outstanding violations on any current reactor with the Nuclear Regulatory Commission (NRC). My bill makes public safety a top priority in any approval of new reactors.

The SAFE Nuclear Act also better equips the Nuclear Regulatory Commission to approve new designs to compete in the marketplace. Innovation will help us develop safer and more efficient designs that could also help reduce to costs of new reactors.

Finally, my bill establishes a new National Nuclear Energy Council to coordinate the federal government’s nuclear policy. Currently, we have a jumble of conflicting priorities at the Department of Energy, Department of State, and other government agencies when it comes to our nuclear energy policy. If we want to truly advance nuclear energy, we need everyone on the same page.

There is no reason people across the political spectrum cannot embrace a future in which the United States produces a majority of its electricity from safe, clean, nuclear energy. Though we may not all agree on issues like cap and trade, we can all agree that we need to find way to produce the energy that fuels our lives in a way that is environmentally friendly and sustainable. Nuclear power fits that description, and the SAFE Nuclear Act will go a long way toward making that safe, clean future a reality.

Collapse

Provisions to help expand the use of nuclear energy must be part of the Kerry-Boxer legislation if America is to meet the bill’s carbon reduction goals while holding the line on costs to consumers for electricity production.

Leaders from both parties agree that nuclear energy is part of a common-sense, balanced approach as we shift toward low-carbon sources of energy. A diverse portfolio of clean energy sources is essential to protect our environment and promote energy security and reliability and expand our economy. More than 21,000 high-paying jobs will be created by building the 25 reactors now in the federal permitting process, but that is only one element of economic growth that would be generated by these projects. U.S. manufacturing of nuclear energy components will expand, as will workforce development and the service industries to support these facilities.

Nuclear energy is ready now to be a central part of a balanced approach to clean energy diversity. Congress must include a robust nuclear energy title in climate change legislation if the projected expansion of nuclear energy is meet projections developed by the Environmental Protection Agency (187 new reactors by 2050) and Energy Information Administration (69 new reactors for 33% of U.S. electricity generation by 2030.)

Broadly, Congress should expand financing support for all clean energy sources, including nuclear energy. The legislation should also allow for a more efficient, transparent licensing process for advanced reactor projects and provide direction to the nation’s used fuel management policy, including the potential for uranium fuel recycling.

Because carbon-free nuclear energy can produce more electricity than other clean sources, it can lead the way in a low-carbon electricity mix, along with solar, wind and other sources. Policymakers should view the inclusion of nuclear energy as part of a broad solution—a comprehensive energy framework that uses the benefits of all low-carbon energy sources. In addressing this issue last week in New Orleans, President Obama said “There's no reason why technologically we can't employ nuclear energy in a safe and effective way. Japan does it and France does it and it doesn't have greenhouse gas emissions, so it would be stupid for us not to do that in a much more effective way.”

As the president said, nuclear energy is being implemented worldwide to meet the global reduction of greenhouse gases in the near- and longer-term, with 53 reactors under construction around the world. In addition, Germany and Belgium are rolling back moratoria on operating nuclear energy facilities because they are critical to meeting their CO2 goals.

Here at home, scores of fossil-fueled power plants will be closed in the next 20 years because of age or new air quality controls. The federal government must play a role in a private-public partnership to replace this electricity capacity in a manner that enhances energy security and reduces greenhouse gases. If America cannot build new nuclear energy facilities in the numbers needed in the EPA and EIA analyses, the cost of electricity, natural gas and carbon allowances will be higher.

America’s nuclear energy industry is a world leader in safety and reliability, but we lag behind other technologically advanced nations in expanding the use of nuclear energy. Nations like France, South Korea and Japan generate 76%, 35% and 25%, respectively, of their electricity from nuclear energy, compared to 20% in America. If those countries can grow the use of nuclear energy efficiently and safely, it’s time for America to do the same.

Collapse

A simplistic response would be that our government should focus on setting goals and frameworks, and not be in the business of picking technology winners and losers. We all know this is unrealistic. As a nation, we pick winners and losers all the time through our public policies and market-nudging incentives and tax structures. This realization moves us from a discussion of technology selection to a more robust debate over the logic for selecting incentive structures around competing strategies.

First, we are talking about electrical power supply here; however, inside this discussion we must also consider demand reduction strategies and the resultant fuel switching opportunities for a greener supply.

With 2008 EIA data showing electrical consumption in buildings at 72% of the U.S. production, and the work of McKinsey (and others) articulating greenhouse gas abatement investment economics, it's clear that massive and rapid building energy efficiency improvements need to be at the top of the "winning strategies" list. Two complimentary things happen with this as a leading strategy: first, there is an electricity demand reduction (typically cooling loads) and second, on-site direct fuel use is reduced (typically natural gas for heating) that can then be fuel-switched into either lower carbon electricity and/or CHP production (our electricity generation is about 50% coal today) or transportation (displacing oil-based fuels).

With nuclear energy supplying at about 20% of our power today, through a network of low cost, highly depreciated assets, the question is still “what’s next on the supply side?” Looking at the cost projections for renewables and those for new-nuclear, my bets (simultaneous with investment in sweeping energy efficiency improvements) are on renewables…particularly wind.

Collapse

Having failed to birth nuclear power that would be “too cheap to meter,” the nuclear power establishment wants to deliver a nuclear “renaissance,” ostensibly to help save us from climate change. Many proponents of this view believe that excessive regulation and the difficulties of financing projects for a moribund industry are the main obstacles preventing new nuclear reactor construction.

Yet the Nuclear Regulatory Commission (NRC) has already streamlined the licensing process. It has certified two new reactor designs – the Advanced Boiling Water Reactor (the ABWR) and the Advanced Pressurized Water reactor (the AP1000) – independently of any particular reactor order. It is in the process of certifying other designs. Should we abandon even minimal oversight and go back to the lax regulation that contributed to the Three Mile Island accident? Have we forgotten that one of the findings of the Presidential Commission on Three Mile Island was that “NRC's primary focus is on licensing and insufficient attention has been paid to the ongoing process of assuring nuclear safety”? Should the NRC not require new reactors to withstand aircraft impact? Should it not consider earthquakes or water use in a time of drought? Nuclear reactors can be very dangerous if not designed, built, and operated to the most exacting standards. Less oversight could come back to haunt the whole industry financially as did Three Mile Island.

As for incentives, the 2005 Energy Policy Act gave the first several reactors the same production tax credit as new wind power plants. Since then, wind power developers have secured financing for and built more than 20,000 megawatts of capacity – equivalent to about six 1,000-megawatt reactors of nuclear; nuclear has not even been able to get financing for a single reactor. Indeed, Wall Street has flatly refused to finance new nuclear reactors. Why? Because nuclear projects just too risky. They are even less viable now in as the country is mired in a deep economic crisis, with electricity demand well below last year’s levels, even as economic growth has resumed without employment growth.

As a result nuclear power developers want taxpayers to take the financial risk, via loan guarantees, while offering them none of the profit, while investors stand to gain the profit should a project come to fruition. Congress seems only to willing to go along as reflected both in the Kerry-Boxer climate bill and in the Senate energy bill (S. 1642), which in combination would provide vast new loan guarantees with only modest public oversight.

Even with that, nuclear is unlikely to do the job. For one thing with natural gas reserves skyrocketing in this country and around the world. Prices are likely to stay modest. The underlying technology for finding and producing gas has changed substantially. Even at a sustained $7 per million Btu price (well above the recent $3 to $5 spot price) and a medium level carbon price tacked on, combined cycle power plants will likely be cheaper than nuclear with federal loan guarantees or at most about equal to nuclear – with much less risk. Proponents of nuclear power seem to have forgotten that since the 1990s the lack of nuclear orders was not due to over-regulation but to low to modest natural gas prices, despite brief price spikes. As evidence, consider that from 1995 to 2007, total electricity generation in the United States grew by 24 percent, while natural gas generation grew by 81 percent.

While no one has a perfectly clear crystal ball, pursuing nuclear may well result in a landscape littered with unfinished nuclear reactors -- again. Remember this: not a single nuclear reactor ordered after the start of the energy crisis in October 1973 was completed. Over a hundred reactor projects were abandoned. Many of the conditions are similar today. For instance, the relationship of electricity growth to economic growth appears to be changing again, as it did then. Only this time around, taxpayers will be left holding the bag, rather than ratepayers and investors.

I won’t elaborate radioactive waste issues for the moment, other than to say that the French have NOT solved the waste problem. Indeed, in some ways they have made it bigger since reprocessing considerably increases the volume of waste that needs to be disposed of in a deep geologic repository (fission-product vitrified wastes plus long-lived plutonium-contaminated waste).

There is a simpler, more efficient, surer way to a low-CO2 future that does not require us to create more waste or to put tens or hundreds of billions of taxpayer dollars at serious risk. Wind energy is already economical relative to nuclear. Existing natural gas capacity (which is more than three times the nuclear installed capacity) can be redeployed to support renewables. In 2008, natural gas capacity utilization in the United States was only about 26 percent.

Solar thermal power plant costs are coming down; heat storage technology is available. The ensemble is comparable to unsubsidized nuclear even now. With new “power-tower” technology, these plants can be dry-cooled, making it possible to build them in the desert. When combined with efficiency, existing gas and hydropower resources can provide a more secure, reliable, and economical transition to a fully renewable electricity sector in thirty or forty years. You can download my evaluation of the feasibility of a fully renewable U.S. energy system by 2050 free at http://www.ieer.org/carbonfree/CarbonFreeNuclearFree.pdf

The missing ingredient is not technology but political will to create a path to a smart, efficient energy system that will mean real U.S. energy leadership in the 21^st century. Nuclear reactors are just a costly, complex Cold War way of boiling water by sticking radioactive rods in a huge pot. The great lesson of the French electricity sector for the United States and the world is not that we should adopt nuclear or any other particular technology. It is that with a firm policy direction, the electricity sector can be transformed in three decades, and maybe faster.

There may be 60 Senate votes in the compromise described in the October 10, 2009 Kerry-Graham op ed in the New York Times. But putting nuclear and a “Saudi Arabia of clean coal” in the center of energy policy will suck the financial air out of the energy policy arena and marginalize efficiency and renewables. It is also a mistake to think that over-regulation is inhibiting a nuclear revival. As for making financing easier, there are already loan guarantees for nuclear reactors of 18.5 billion dollars in the 2005 Energy Policy Act. Let’s see if the nuclear industry can do something with that before risking vastly more taxpayer dollars. Encouraging Wall Street to throw large amounts of dollars at a nuclear mirage based on federal loan guarantees will generate lots of commissions, but it is not likely to solve our energy problems or be healthy for the federal budget.

Collapse

Nuclear energy is emissions-free and it means real economic growth, jobs and affordable electricity for working families. However, first we'll need to restore some sanity to our nation's nuclear policy, both in the building of new plants and the storage of waste.

The Nuclear Regulatory Commission's published information indicates that the commission staff is conducting safety and environmental reviews for up to 12 of the pending applications by 2011 or 2012. But publicly, Chairman Gregory Jaczko says that he believes the NRC might review just one of the 18 filed combined license applications, covering 28 new reactors, by 2012.

U.S. Rep. Greg Walden, R-Ore., and I have asked Chairman Jaczko to explain his resistance to nuclear power. "In analyzing the pending climate change legislation and making projections about the costs and impacts of such legislation," we wrote, "the Environmental Protection Agency, the Energy Information Administration and other entities have assumed the expanded use of nuclear power in the coming years. The assurance of timely development and expansion of new reactors is critical to future energy supply and is highly relevant to consideration of whether the mandates of the proposed cap-and-trade legislation will be achievable."

Also, back in the summer when we were marking up the Waxman-Markey global warming bill, Rep. Walden tried to add language allowing nuclear energy, as well as any other comparable low-emission source of energy, to qualify under the Waxman-Markey bill's renewable energy standard. Most Democrats voted no and most Republicans voted yes, and the effort lost on a vote of 29 to 26.

Finally, there's the question of waste. The administration decision to turn away from the repository at Yucca Mountain, Nev., seems likely to have significant adverse consequences for the nation and the American taxpayer. For example, the federal government's total potential liability from delays in accepting used fuel and nuclear waste could be significantly higher than the past estimates of $11 billion if Yucca Mountain is no longer an option.

The administration's latest position that the Yucca Mountain repository is no longer an option also raises significant regulatory and legal issues that may not only adversely affect the licensing and development of new nuclear plants, but also may impact existing operating nuclear plants.

Collapse

New subsidies for new reactors do not belong in this climate bill. If we are serious about addressing climate change, then we need to focus on the fastest, cheapest and cleanest technologies. Nuclear is slow, expensive, and polluting. No new reactor will go online in the U.S. before 2020, simply because they are complex and face predictable construction delays. Olkiluoto, the showcase French nuclear reactor being constructed in Finland, is currently 3.5 years behind schedule and 75% over-budget. But more importantly, new nuclear reactors are two to three times more expensive than average efficiency measures and renewable energy costs (6 cents per kilowatt hour compared to 12 to 20 cents per kilowatt hour for new reactors). And nuclear reactor costs are going up, not down as is the case for renewables.

Moreover, we don’t need new reactors to meet climate goals. Numerous studies, including a recent study from the National Research Council, found that energy needs through at least 2030 can be met through existing efficiency technologies alone. The fact is that building new reactors will get in the way of climate goals. Why? Because utilities would be spending the next 10-20 years building risky, long lead-time nuclear projects that sink huge sums of capital in inflexible projects that result in expensive excess capacity. Electricity demand is sharply down due to the current recession and the long-term growth rate is expected to remain lower. This means that (a) there will be little incentive to invest seriously in demand-side management or small renewable projects and (b) even if these projects are required by law, the nuclear project will result in expensive excess capacity, leaving ratepayers to once again bail out the nuclear industry’s “stranded costs” as they did during in the 1990’s deregulation.

All of the current discussion about “adding” nuclear subsidies to the climate bill ignores the fact that the Senate energy bill, which is to be added to the climate bill, is already chock-full of nuclear subsidies. Most importantly for the nuclear industry, the Senate energy bill authorizes unlimited loan guarantees. The nuclear industry asked the Energy Department for $122 billion worth of guarantees in 2008. According to the Congressional Budget Office, the likelihood of default on new reactors is “very high – well above 50 percent.” Proponents argue that loan guarantees are “free” for taxpayers, because the “risk of default” must be paid in advance. The fact is that this risk is extremely difficult to calculate (how much exactly is “well above 50 percent”?). According to the Congressional Budget Office, the government is more likely to underestimate the risk than to overestimate it, leaving taxpayers on the hook to bail out yet another industry from its bad investments.

In addition to unlimited loan guarantees, the Senate energy bill also authorizes the design and evaluation of reprocessing facilities, $5.17 billion for nuclear energy and reprocessing research, and nuclear energy career grants. All of this is on top of the cradle-to-grave subsidies already available for new reactors, such as loan guarantees, “risk insurance,” production tax credits, limited accident liability, and guaranteed spent fuel management.

Although it appears that Congress has forgotten, the Nuclear Regulatory Commission’s reactor licensing process was already “streamlined” in the Energy Policy Act of 1992 to a one-step Construction and Operation License (COL) process, which has yet to be fully tested. In addition, the NRC further truncated the licensing process in 2004 by eliminating the public’s right to take depositions or cross-examine opposing witnesses in individual licensing hearings. The intention of the one-step licensing was to create an application process using standardized, pre-certified reactor designs that can be incorporated by reference into a COL application. Instead, the nuclear industry is attempting to certify reactor designs at the same time it is applying for COLs that refer to these yet-to-be finalized designs. This artificial rush to submit applications was created by deadlines to qualify for $18.5 billion in federal loan guarantees. The stakes are too high to move even faster without adequate public safeguards.

Only one of the 16 applications for new reactors pending at the NRC refers to a design – the ABWR – that has been fully completed and certified by the NRC. (This design has a poor performance record in Japan.) Another design, the AP-1000 was certified, but on October 15, the NRC announced that the design is inadequate because it cannot withstand severe weather and earthquakes. Almost half of the COL applications pending at the NRC refer to this design. Further “streamlining” of the NRC licensing process would jeopardize public health and safety, but it wouldn’t address the real licensing problem: premature submission of incomplete and poor-quality applications by the industry.

So the question remains: who actually benefits from all these proposed nuclear subsidies? Follow the money. The American people don’t benefit. Truly renewable alternatives don’t benefit. Future generations saddled with nuclear waste don’t benefit. There’s a reason Wall Street has stayed away from nuclear. Congress should not provide a lifeline to an inherently risky industry.

[The author thanks Michele Boyd from Physicians for Social Responsibility for her significant contribution to this submission].

Collapse

The talk of the Beltway climate change debate these days is nuclear power. Suddenly a potential compromise has emerged to couple cap-and-trade legislation with provisions to advance construction of new nuclear power plants. But is it real, or just another mirage concocted by the industry’s fiercest opponents?

As of now, one can only speculate. But if last year’s debate on Lieberman-Warner is any guide, one should expect little of anything that matters for nuclear. During the debate, former Sen. John Warner (R-Va.) said, “We’re going to have a nuclear provision, I can assure you of that.” Democratic opposition assured that the final bill was nuclear-free.

Such opposition, of course, is unsurprising. Consider that some of the same senators who now talk of nuclear compromise have plainly identified themselves as staunchly anti-nuclear. During the debate on the McCain-Lieberman bill in 2005, for example, Sen. Barbara Boxer (D-Calif.) said, “Nuclear power is not the solution to climate change, and it is not ‘clean.’”

But let’s assume that the industry’s opponents have a “road-to-Damascus” conversion, and agree to support provisions that can encourage construction of new nuclear power plants, including, to name a few, further streamlining the regulatory process, support for reprocessing, and loan guarantees for new plants. These are steps that Congress can and should take. But we can’t forget the essential point: attaching them to a national energy tax doesn’t cancel out or eliminate a national energy tax.

The national energy tax in question, of course, is cap-and-trade, a misguided, flawed, and ultimately ineffective approach to addressing global climate change. Yes, let’s do things to support more nuclear plants, but those things should be detached from the Waxman-Markey, Kerry-Boxer, Massachusetts-California style energy tax. This tax will affect just about every good and service in the economy. It will mean higher electricity and gasoline prices, fewer jobs, and a less competitive American manufacturing sector. Again, tying nuclear provisions to a profoundly bad idea still leaves a profoundly bad idea.

Some assert that cap-and-trade, or setting a price on carbon, is the prime mover that will usher in the nuclear renaissance. Why, then, do we need nuclear provisions in cap-and-trade legislation at all? Indeed, this is the view of Sen. Tom Carper (D-Del.), chairman of EPW’s Subcommittee on Clean Air and Nuclear Safety, who said recently: "The [Kerry-Boxer] legislation as drawn provides enormous incentives for the generation of electricity from sources that don't create carbon. Nuclear is right there. So there'll be a lot of incentives, just from the way the allowance system will be set up." In other words, cap-and-trade by itself necessarily means more plants.

The Congressional Budget Office (CBO) has a different, more nuanced, view. According to CBO’s report, titled, “Nuclear Power’s Role in Generating Electricity,” the price of carbon must reach $45 per ton before nuclear becomes the technology of choice over natural gas. EPA’s analysis of Waxman-Markey shows that the price of carbon doesn’t reach that threshold until after 2040. Here is the translation: unless the price of carbon goes sky high, we won’t get enough nuclear plants built to meet the carbon reductions mandated in the Kerry-Boxer bill; and, if we don’t get enough nuclear plants built, the price of carbon will go sky high.

The “grand compromise” on nuclear power, which hasn’t even hatched yet, probably won’t have much of anything to encourage the nuclear renaissance. Yet even if it did, we can’t forget that whatever is proposed is being tied to a fundamentally flawed policy that will destroy jobs, raise energy prices, and weaken America’s energy security. Let’s pass an energy policy that makes nuclear power a strong component of our energy mix. But let’s keep cap-and-trade out of it.

Collapse