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The Future Role of Nuclear Power in the United States

I. The Near-Term Economic Picture for Commercial Nuclear Generation

There are 103 operational commercial nuclear power plants in the United States today, and a 104th is expected to resume operations in a few years. With only a few notable exceptions they are typically operating very efficiently, that is, at high capacity factors, in an increasingly competitive environment. These plants, by in large, compete favorably with fossil-fueled (coal and natural gas) plants in terms of their respective forward costs (operating and maintenance and fuel costs).

On the other hand, the last unit to enter commercial operation was TVA’s Watts Bar Unit 1 in June 1996, and the last successful order for a U.S. commercial nuclear power plant was in 1973. No energy generation company in the United States has been willing to order and construct a new nuclear plant in more than thirty years, and none have taken anything more than preliminary steps towards purchasing and constructing a new nuclear plant today in the absence of a promise of huge Federal subsidies. This is not because of public opposition; not for want of a licensed geologic repository for the disposal of spent fuel; and not because of the proliferation risks associated with commercial nuclear power. Rather, it is because new commercial nuclear power plants are uneconomical in the United States.

Arguably the best and most current economic comparison of nuclear and fossil-fueled plants is by Professor Paul L. Joskow in a recent interdisciplinary MIT study, “The future of Nuclear Power.” [According to] the MIT Study, in the United States today new nuclear plants are far from being competitive with new natural gas or coal-fueled power plants. The levelized cost of electricity generated by a new nuclear plant is estimated to be about 60 percent greater than the cost of electricity from a coal plant or a gas-fueled plant assuming moderate gas prices.

This scenario would change if there were a significant tax on carbon emissions, or if an equivalent economic penalty were imposed on fossil-fueled plants through a cap on carbon dioxide (CO2) emissions or a requirement that CO2 be sequestered. Nuclear would be competitive with coal if there were a carbon tax of about $100 per ton of carbon ($100/tC), and with moderately priced natural gas if the tax were about $200/tC.

Combinations of high gas prices and significantly lower capital costs could make nuclear plants competitive with fossil fuel plants, but the bottom line is that in the current economic climate, commercial nuclear generation is not even close to being competitive with fossil-fueled plants and there is no easy path to a competitive market for new nuclear plants. This conclusion is underscored further by the availability of abundant energy efficiency and renewable energy resources, which are emerging as nuclear power’s most formidable rivals.

II. The Industry Response To Its Lack Of Ability To Compete In The Power Generation Marketplace

Faced with these marketplace realities, the commercial nuclear industry is pursuing, and is now beginning to receive, taxpayer dollars to subsidize the difference in the cost of nuclear and fossil-fueled generated electricity.

First, in 2001, the nuclear industry succeeded in getting the Bush Administration “to support the expansion of nuclear power in the United States.” Next, in early 2002, the Secretary of Energy unveiled the Department’s “Nuclear Power 2010 Program,” which would provide at last $60 million “leading to a private sector decision by 2005 to order new nuclear power plants for deployment in the United States in the 2010 timeframe.”

As part of the Nuclear Power 2010 program, the federal government is paying one-half the cost of developing three companies’ early site permit application. Notably, these three corporations—Exelon Generation, Dominion Energy and Entergy Nuclear—are among the largest and most successful electricity generation companies, with combined revenues of $37.1 billion in 2003. While quick to grab the taxpayer-supported nuclear pork, none have committed to construct new nuclear plants at any of the sites. The companies recognize that if they make no commitment to build a new plant, the Administration [and Congress] would continue to feed them with an ever-increasing sum of taxpayer-supported largesse [in the Energy Policy Act of 2005].

III. NRDC’s Response

A. Let the marketplace work to address the problems we face and price energy at its full societal cost by internalizing the cost of environmental pollution.

Assuming you believe in economic efficiency and a free market, you should be advocating a reduction in subsidies to energy companies for production of electricity by nuclear and fossil-fueled plants. Moreover, to level the playing field and allow all new innovations to compete, you should support a cap on CO2 emissions to limit global warming or accomplish the same by placing a tax on carbon emissions. You should work to remove the anticompetitive advantages that poorly-controlled, inefficient, incumbent coal-fired power plants presently enjoy over newer, cleaner, and more efficient coal-fired plants. You should devote resources to enforcing the Clean Air Act's new source review requirements, and resist the federal EPA's efforts to weaken those requirements. Finally, you should work to halt the significant damage to western aquifers from coal and uranium mining companies.

B. The innate problems facing the nuclear industry have not been solved.

When a commercial nuclear generating station irradiates a nuclear fuel rod, nuclear power production does not result in significant greenhouse gas emissions and during normal operations the radioactivity emissions produce far fewer health effects than emissions from coal-fueled plants. Despite this one favorable comparison, nuclear power generation has its own set of unique problems?proliferation, reactor safety, and disposal of the nuclear waste. These problems need to be solved before expanding our commitment to nuclear power.

1. The “once-through” fuel cycle is the only viable security and economic option.

There are serious proliferation risks associated with uranium enrichment and the use of plutonium as a fuel. Currently these are not significant problems in domestic fuel cycle activities, but they are a serious problem at the global level, particularly in developing nations with nuclear programs (e.g., our serious security concerns with the domestic nuclear programs of Iran and Pakistan).

[W]e must halt the commercial use of nuclear weapon-usable materials such as highly enriched uranium and plutonium. The MIT Study found that reprocessing and recycling plutonium – which creates weapon-usable material and some of the most radioactive waste in the world – is also uneconomic and likely to remain so for decades to come. For existing commercial nuclear generators (and for any new facilities built in other countries), we should stick to the so-called “once through” fuel cycle, with direct disposal of spent fuel, and strongly encourage other countries to do likewise.

2. Safety of commercial nuclear generation, despite what you may hear, is still a concern.

Fortunately, there has not been a catastrophic nuclear accident in the United States, and no partial core meltdown accident since Three Mile Island in March 1979. The risk of a catastrophic accident is widely viewed to be lower today than it was two decades ago.

In the future, for existing plants, the aging of equipment lessens safety, while our increased knowledge base should continue to improve safety. Ultimately, the safety of a nuclear power plants rests on the ability to sustain a robust safety culture among the plant work force. Whether this can be sustained at 100 or more nuclear plans for decades to come remains to be seen.

3. Nuclear waste disposal must be based on a geologically adequate site, not on standards designed to ensure any site selected is licensed.

The United States government has put all its eggs in the proposed Yucca Mountain basket. When this site was first selected, it looked far more promising in terms of its ability to geologically isolate the nuclear waste than it does now.

To address the growing observation that the proposed site cannot geologically isolate the waste, the Environmental Protection Agency (EPA) gerrymandered the zone of compliance for environmental laws – what is called the “controlled area” – around the Yucca Mountain site to allow for the site to be licensed, rather than protect the public health and environment for generations to come. In the direction that radioactivity is projected to leak from the site, the EPA extended the controlled area from five kilometers (km) to 18 km (from 3 miles to 11 miles). Placement of the controlled area boundary any closer than 11 miles from the site would, in short, mean that future radiation doses might be too high for the site to be licensed.

Also betraying the geological inadequacies of the site, EPA applies its site-boundary dose-limit criteria at 10,000 years from now, even though the projected peak doses occur many tens of thousands of years later. If the first repository sited is done so on grossly inadequate standards, a terrible precedent will have been set for all future repository sites (which may very well be in the West despite the region’s comparative lack of nuclear generating capacity).

In sum, my advice to strengthen the state economies and the wonderful natural environment of the West, you should:

• oppose continued and massive taxpayer subsidies to mature energy technologies, including nuclear power;
• internalize the environmental cost of nuclear, and fossil-fueled plants by supporting a cap on CO2 emissions, and tightening regulatory controls on aquifer polluting coal and uranium mines and uranium mills; and
• call for a repeal of the inadequate EPA regulatory standards for the Yucca Mountain site.

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John Deutch–Co Chair, Ernest J. Moniz–Co-Chair, et al., “The Future of Nuclear Power,” An Interdisciplinary MIT Study, 2003 (hereafter, “MIT Study”); available on line at http://web.mit.edu/nuclearpower/. The economic analysis is consistent with an analysis by A. Siemenski, Deutsche Banc Alex. Brown presented at an IAEA Conference in 2002.
“The levelized cost is the constant real wholesale price of electricity that meets a private investor’s financing cost, debt repayment, income tax, and associated cash flow constraints.” (MIT Study, p. 38.)

Excerpted with permission from a Presentation to the Western Governors’ Association North American Energy Summit in Albuquerque, NM on April 15, 2004. Dr. Cochran is Director of the Nuclear Program at the Natural Resources Defense Council in Washington, DC.

–Thomas B. Cochran