The Nuclear Option
From the August 15 / August 22, 2004 issue: Time for policymakers to get over the China Syndrome.
Aug 15, 2005, Vol. 10, No. 45 • By SPENCER ABRAHAM
NOW THAT CONGRESS HAS PASSED an energy bill with incentives for the development of more nuclear power, it remains to be seen whether this will lead to robust investment in nuclear energy and a new generation of nuclear plants. Results will depend on the response of some key players, specifically Congress, the investment markets, the environmental community, and the nuclear energy industry itself.
Congress included liability limitations, tax incentives, loan guarantees, and risk insurance in the recent energy bill, and these should help reduce or remove some of the biggest obstacles to new nuclear plants. Congress deserves credit, but its job isn't finished, because no new plants will be built unless there is a clear procedure for disposing of their waste.
When Congress established Nevada's Yucca Mountain as the site for a permanent repository to store America's nuclear waste, it also created a complicated statutory and regulatory framework that has enabled opponents to delay the project through litigation and regulatory manipulation. Hence, a project that was supposed to be completed by the new century is still, at best, years from being finished.
In 2002, the Bush administration and Congress acted decisively and appeared to have the project back on course. But the courts have again derailed the program with a decision that is the least sensible yet. The EPA had established a set of radiation requirements for Yucca Mountain with a time frame of 10,000 years. And the Department of Energy spent billions to determine how to construct such a repository. Then the D.C. Court of Appeals ruled that since it is possible for there to be radiological emissions from nuclear waste for up to 300,000 years, the EPA's 10,000-year standard was insufficient.
The ruling implies the EPA must set 300,000-year standards and that the Energy Department should be prepared to show regulators that such standards can be met. This tortured result, which could mean additional billions of dollars and more years of delay, can be sensibly corrected by Congress without jeopardizing the public safety. So can other ambiguities inherited from previous legislation and other court rulings. Then, the Department of Energy would be able to apply, in a timely fashion, to the Nuclear Regulatory Committee for a final and, it is to be hoped, favorable determination of safety and feasibility.
Will capital markets underwrite new nuclear projects? The outlook is good. Nuclear plants have always enjoyed low operating costs and, given the current price of oil, they are much more competitive than in recent years. Congress's actions, especially its provisions aimed at reducing risk, should enhance the appeal of nuclear investments. Also encouraging is the fact that more financial institutions have been monitoring their investments from a clean energy perspective, emphasizing projects that promise lower carbon and other kinds of emissions.
Utilities will still be hesitant, however, to build new facilities if they expect environmentalists will try to stop them. Familiar charges that nuclear energy poses unacceptable environmental and safety risks and that more nuclear plants in America will somehow contribute to greater worldwide nuclear proliferation have always been effective at slowing or stopping projects.
But before environmentalists embark on this course, they have to decide which they dislike more: global warming or nuclear power. During the energy bill debate the environmental community's two top priorities were establishing a federal carbon limit to address climate change and a renewable energy standard to require America to use solar, biomass, geothermal, and wind energy to provide 10 percent of our power generation by 2020.
Ignored in this advocacy were some relevant facts. Nuclear energy already provides 21 percent of our power supply without any carbon emissions. However, because we haven't built a new nuclear plant since the 1970s and electricity demand continues to swell, that percentage will be down to about 15 percent by 2020. So, even if we increase the share of renewables from its current 2.2 percent to 10 percent by 2020 (and that's a heavy lift), almost all of that reduction in carbon emissions will be offset by the reduced role nuclear power will play. In fact carbon emissions will increase, since the combined nuclear and renewables contribution of 25 percent in 2020 will have to be measured against a much larger total power generation level. Without any new nuclear facilities, the carbon emissions from oil-, gas-, and coal-powered generation will be almost a third higher by 2020.