The Magazine

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
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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.

Moreover, given the life expectancy of most of today's nuclear units, plants will begin closing around 2022, after which the nuclear share of our power supply will decline more sharply. By 2055 the percentage will be zero, as the last American plant goes off line. Therefore, unless renewables have swollen to 24 percent by that date (a very heavy lift), the failure to build more nuclear power plants will mean even more reliance on carbon-based power in both actual and percentage terms later in the century.

In short, antinuclear environmentalists must rethink their position because without nuclear power it's unlikely any major country will achieve significant reductions in emissions, such as those called for by the Kyoto protocol.

THE FINAL QUESTION, then, is whether the nuclear industry is itself prepared to take a bullish approach if the foregoing developments transpire. With justification, the nuclear industry has been very cautious about new plants for years, content to focus on keeping existing facilities in operation for as long as possible. But the time has come for engagement, especially if Congress acts to address the waste issue.

The industry has an important story to tell. Nuclear power is not only the best available means to reduce emissions, it is also the best way to curb America's dependence on imported energy. Also to be touted is the industry's exceptional safety record over the past 25 years. And the new generation of reactors (ones developed since 1979 but not yet built in the United States) are even safer than those in operation today.

It is a propitious time for the nuclear industry. In addition to the new energy bill, the current administration favors nuclear power, and the public is eager to seize upon innovations that will allow us to reduce emissions and gain greater energy independence. This is not a moment to let slip by.

Spencer Abraham, the former U.S. secretary of energy, is a distinguished visiting fellow at Stanford University's Hoover Institution.