Facing Energy Demands and Rising Costs,
Policymakers Consider Nuclear Options (11/06)

The following column by AGI/AIPG Geoscience & Public Policy Intern Timothy J. Donahue is reprinted from the November 2006 issue of The Professional Geologist, a publication of the American Institute of Professional Geologists . It is reprinted with permission.

An intense energy discussion has been fueled by heightening concerns about greenhouse gas emissions, the wish to reduce dependence on foreign oil and rising energy costs. Accordingly, the Congress and the executive branch are considering ways to stimulate growth in the nuclear energy sector to help alleviate some of the strain on our future resources and our environment. Nuclear energy currently generates about 20% of U.S. electricity from 103 nuclear power plants. Showing a strong commitment to nuclear energy, Congress provided some incentives for new nuclear power plants in the Energy Policy Act of 2005 (EPACT 2005). The Bush Administration proposed the Global Nuclear Energy Partnership (GNEP) in their fiscal year 2007 budget request, which has also been modestly supported in Congress. Even with some incentives, however, the expansion of the nuclear power industry faces several hurdles, primarily high construction costs, high capital investment risks, and nuclear waste storage issues.

The first commercial nuclear power plant came online in Shippingport, Pennsylvania in 1959. Low operating costs and rapidly increasing energy demand encouraged the development of nuclear energy in the 1960s and through the late 1970s. The risks of nuclear power came to light after an accidental release of radioactive gas at Three Mile Island in 1979, which prompted many new safety laws regulating the construction and operation of nuclear facilities. The resulting increase in the time and cost of construction, coupled with a substantial drop in the cost of fossil fuels, made nuclear energy less competitive compared to fossil fuels. These factors caused nuclear power development to stall in the mid 1980s. A partial meltdown of the Soviet Union's Chernobyl reactor in 1986 highlighted the risks associated with nuclear power. The last reactor built in the United States became operational in 1996. No new licenses to build or operate a nuclear plant have been issued since 1979.

Congress demonstrated renewed support for nuclear energy by providing the following incentives in EPACT 2005: loan guarantees, production and construction tax credits, risk protections for investors, liability limits on potential lawsuits and the $1.2 billion advanced nuclear research center called the Next Generation Nuclear Power Project (NGNPP). The NGNPP aims to examine the feasibility of generating hydrogen with the heat from nuclear fission. In addition, EPACT 2005 includes funds for academic scholarships for nuclear physics and engineering students and grants for related research projects.

Another indication of support among policy-makers for expanding nuclear energy is the new Bush administration proposal, the Global Nuclear Energy Partnership (GNEP). This program would advance nuclear recycling technologies and share nuclear technology with developing nations to meet their growing energy demands. The developing countries would use secure partners to provide the nuclear fuel and handle the nuclear waste. The hope is that developing countries would rely less on fossil fuel-fired power plants that emit greenhouse gases.

Promoting the use of nuclear waste recycling for power generation is a major shift in U.S. policy. Improvements in safety and efficiency of recycled nuclear waste, advanced primarily by France and Japan, makes safe, clean and efficient nuclear power plants for developing countries more practical and cost-competitive. Furthermore, a geological repository may be constructed in Russia to store nuclear waste. GNEP partners are the U.S., France, and Japan; India and Russia may join the partnerships in the future.

Congress has had a mixed reaction to GNEP. The Senate Energy-Water Appropriations subcommittee fully funded GNEP at $250 million as requested by the administration, however, the House cut the funding in half and focused the funds on an existing program, the Advanced Fuel Cycle Initiative. The House was concerned about starting a new program, expressed consternation about the vagueness of GNEP and raised serious questions about nuclear waste disposal.

The nuclear power industry has responded to the incentives provided by EPACT 2005. According to the Nuclear Regulatory Commission (NRC), 13 new plants are being considered for construction, and another seven license applications are possible. The NRC also approved construction of a separate nuclear material enrichment facility in June, the first in the U.S. Aligned with the objectives of the administration's GNEP proposal, the $1.5 billion plant would produce 105,000 metric tons of nuclear fuel per year.

Despite the multitude of issues address in EPACT 2005, there are several security, waste disposal, and logistical concerns yet to be addressed by policy-makers. There is still no permanent storage facility for nuclear waste in the U.S. The Yucca Mountain geologic repository will not receive waste until 2017 at the earliest, if at all. GNEP addresses this by promoting nuclear waste recycling and permanent storage in Russia, though these programs have not yet been approved by Congress. Nuclear recycling and trading nuclear technology has also raised concerns about nuclear weapons proliferation, especially because India, a potential GNEP partner, has not signed the Nuclear Non- Proliferation Treaty.

According to the Energy Information Administration, even if several new nuclear power plants are built and all 103 of the older plants continue to operate, nuclear energy will only represent 15% of U.S. sources for electricity generation in 2030 because while the nuclear power supply will increase a small amount, the demand for energy will grow even faster. Thus although there is renewed interest in expanding nuclear power capacity in the U.S., the incentives in EPACT 2005 and the promises of GNEP are perhaps not enough to overcome a decrease in total nuclear capacity with a concomitant increase in fossil-fuel capacity. Currently, coalfired plants and natural gas-fired plants represent 50% and 20%, respectively of U.S. electricity generation and these percentages are expected to increase in the future. More drastic policy changes and probably significant federal investment may be needed to significantly boost U.S. nuclear power capacity.

This article is reprinted with permission from The Professional Geologist, published by the American Institute of Professional Geologists. AGI gratefully acknowledges that permission.

Please send any comments or requests for information to the AGI Government Affairs Program.

Posted December 3, 2007

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