Making Clean Energy Safe and Affordable

Foreign Affairs, November/December 2011

In the years following the major accidents at Three Mile Island in 1979 and Chernobyl in 1986, nuclear power fell out of favor, and some countries applied the brakes to their nuclear programs. In the last decade, however, it began experiencing something of a renaissance. Concerns about climate change and air pollution, as well as growing demand for electricity, led many governments to reconsider their aversion to nuclear power, which emits little carbon dioxide and had built up an impressive safety and reliability record. Some countries reversed their phaseouts of nuclear power, some extended the lifetimes of existing reactors, and many developed plans for new ones. Today, roughly 60 nuclear plants are under construction worldwide, which will add about 60,000 megawatts of generating capacity -- equivalent to a sixth of the world's current nuclear power capacity.

But the movement lost momentum in March, when a 9.0-magnitude earthquake and the massive tsunami it triggered devastated Japan's Fukushima nuclear power plant. Three reactors were severely damaged, suffering at least partial fuel meltdowns and releasing radiation at a level only a few times less than Chernobyl. The event caused widespread public doubts about the safety of nuclear power to resurface. Germany announced an accelerated shutdown of its nuclear reactors, with broad public support, and Japan made a similar declaration, perhaps with less conviction. Their decisions were made easier thanks to the fact that electricity demand has flagged during the worldwide economic slowdown and the fact that global regulation to limit climate change seems less imminent now than it did a decade ago. In the United States, an already slow approach to new nuclear plants slowed even further in the face of an unanticipated abundance of natural gas.

It would be a mistake, however, to let Fukushima cause governments to abandon nuclear power and its benefits. Electricity generation emits more carbon dioxide in the United States than does transportation or industry, and nuclear power is the largest source of carbon-free electricity in the country. Nuclear power generation is also relatively cheap, costing less than two cents per kilowatt-hour for operations, maintenance, and fuel. Even after the Fukushima disaster, China, which accounts for about 40 percent of current nuclear power plant construction, and India, Russia, and South Korea, which together account for another 40 percent, show no signs of backing away from their pushes for nuclear power.

Nuclear power's track record of providing clean and reliable electricity compares favorably with other energy sources. Low natural gas prices, mostly the result of newly accessible shale gas, have brightened the prospects that efficient gas-burning power plants could cut emissions of carbon dioxide and other pollutants relatively quickly by displacing old, inefficient coal plants, but the historical volatility of natural gas prices has made utility companies wary of putting all their eggs in that basket. Besides, in the long run, burning natural gas would still release too much carbon dioxide. Wind and solar power are becoming increasingly widespread, but their intermittent and variable supply make them poorly suited for large-scale use in the absence of an affordable way to store electricity. Hydropower, meanwhile, has very limited prospects for expansion in the United States because of environmental concerns and the small number of potential sites.

Still, nuclear power faces a number of challenges in terms of safety, construction costs, waste management, and weapons proliferation. After Fukushima, the U.S. Nuclear Regulatory Commission, an independent federal agency that licenses nuclear reactors, reviewed the industry's regulatory requirements, operating procedures, emergency response plans, safety design requirements, and spent-fuel management. The NRC will almost certainly implement a number of the resulting recommendations, and the cost of doing business with nuclear energy in the United States will inevitably go up. Those plants that are approaching the end of their initial 40-year license period, and that lack certain modern safety features, will face additional scrutiny in having their licenses extended.

At the same time, new reactors under construction in Finland and France have gone billions of dollars over budget, casting doubt on the affordability of nuclear power plants. Public concern about radioactive waste is also hindering nuclear power, and no country yet has a functioning system for disposing of it. In fact, the U.S. government is paying billions of dollars in damages to utility companies for failing to meet its obligations to remove spent fuel from reactor sites. Some observers are also concerned that the spread of civilian nuclear energy infrastructure could lead to the proliferation of nuclear weapons -- a problem exemplified by Iran's uranium-enrichment program.

If the benefits of nuclear power are to be realized in the United States, each of these hurdles must be overcome. When it comes to safety, the design requirements for nuclear reactors must be reexamined in light of up-to-date analyses of plausible accidents. As for cost, the government and the private sector need to advance new designs that lower the financial risk of constructing nuclear power plants. The country must also replace its broken nuclear waste management system with a more adaptive one that safely disposes of waste and stores it for centuries. Only then can the public's trust be earned.

SAFER AND CHEAPER

The tsunami that hit Japan in March marked the first time that an external event led to a major release of radioactivity from a nuclear power plant. The 14-meter-high wave was more than twice the height that Fukushima was designed to withstand, and it left the flooded plant cut off from external logistical support and from its power supply, which is needed to cool the reactor and pools of spent fuel. Such natural disasters, although infrequent, should have been planned for in the reactor's design: the Pacific Ring of Fire has seen a dozen earthquakes in the 8.5 to 9.5 range in the last hundred years, and Japan has the most recorded tsunamis in the world, with waves sometimes reaching 30 meters high. Just four years ago, the world's largest nuclear generating station, Kashiwazaki-Kariwa, was shut down by an earthquake that shook the plant beyond what it was designed to handle, and three of the seven reactors there remain idle today.

The Fukushima disaster will cause nuclear regulators everywhere to reconsider safety requirements -- in particular, those specifying which accidents plants must be designed to withstand. In the 40 years since the first Fukushima reactor was commissioned, seismology and the science of flood hazards have made tremendous progress, drawing on advances in sensors, modeling, and other new capabilities. This new knowledge needs to be brought to bear not only when designing new power plants but also when revisiting the requirements at older plants, as was happening at Fukushima before the tsunami. Outdated safety requirements should not be kept in place. In the United States, the NRC's review led to a recommendation that nuclear power plant operators reevaluate seismic and flood hazards every ten years and alter the design of the plants and their operating procedures as appropriate. With few exceptions, the needed upgrades are likely to be modest, but such a step would help ensure that the designs of plants reflect up-to-date information.

The NRC also proposed regulations that would require nuclear power stations to have systems in place to allow them to remain safe if cut off from outside power and access for up to three days. It issued other recommendations addressing issues such as the removal of combustible gas and the monitoring of spent-fuel storage pools. These proposals do not mean that the NRC lacks confidence in the safety of U.S. nuclear reactors; their track record of running 90 percent of the time is an indicator of good safety performance and extraordinary when compared with other methods of electricity generation. Nevertheless, the incident at Fukushima clearly calls for additional regulatory requirements, and the NRC's recommendations should be put in place as soon as is feasible.

New regulations will inevitably increase the costs of nuclear power, and nuclear power plants, with a price tag of around $6-$10 billion each, are already much more expensive to build than are plants powered by fossil fuels. Not only are their capital costs inherently high; their longer construction times mean that utility companies accumulate substantial financing charges before they can sell any electricity. In an attempt to realize economies of scale, some utilities have turned to building even larger reactors, building ones that produce as much as 1,600 megawatts, instead of the typical 1,000 megawatts. This pushes up the projects' cost and amplifies the consequences of mistakes during construction.

All this can make nuclear power plants seem like risky investments, which in turn raises investors' demands on return and the cost of borrowing money to finance the projects. Yet nuclear power enjoys low operating costs, which can make it competitive on the basis of the electricity price needed to recover the capital investment over a plant's lifetime. And if governments eventually cap carbon dioxide emissions through either an emissions charge or a regulatory requirement, as they are likely to do in the next decade or so, then nuclear energy will be more attractive relative to fossil fuels.

In the United States, there is still a great deal of uncertainty over the cost of new nuclear power plants. It has been almost 40 years since the last new nuclear power plant was ordered. The Tennessee Valley Authority, a federally owned corporation, is currently finishing construction of the Watts Bar Unit 2 reactor, in eastern Tennessee, which was started long ago, and it has plans to complete another, Bellefonte Unit 1, in Hollywood, Alabama. The first new nuclear plants of next-generation design are likely to be built in Georgia by the Southern Company, pending the NRC's approval. Scheduled for completion in 2016, the proposed project entails two reactors totaling 2,200 megawatts at an estimated cost of $14 billion. It will take advantage of substantial subsidies (loan guarantees, production tax credits, and the reimbursement of costs caused by regulatory delay) that were put forward in the 2005 Energy Policy Act to kick-start the construction of new nuclear plants. Even after Fukushima, Congress and the White House appear to still be committed to this assistance program. The success or failure of these construction projects in avoiding delays and cost overruns will help determine the future of nuclear power in the United States.

A SMALLER SOLUTION

The safety and capital cost challenges involved with traditional nuclear power plants may be considerable, but a new class of reactors in the development stage holds promise for addressing them. These reactors, called small modular reactors (SMRs), produce anywhere from ten to 300 megawatts, rather than the 1,000 megawatts produced by a typical reactor. An entire reactor, or at least most of it, can be built in a factory and shipped to a site for assembly, where several reactors can be installed together to compose a larger nuclear power station. SMRs have attractive safety features, too. Their design often incorporates natural cooling features that can continue to function in the absence of external power, and the underground placement of the reactors and the spent-fuel storage pools is more secure.

Since SMRs are smaller than conventional nuclear plants, the construction costs for individual projects are more manageable, and thus the financing terms may be more favorable. And because they are factory-assembled, the on-site construction time is shorter. The utility company can build up its nuclear power capacity step by step, adding additional reactors as needed, which means that it can generate revenue from electricity sales sooner. This helps not only the plant owner but also customers, who are increasingly being asked to pay higher rates today to fund tomorrow's plants.

The assembly-line-like production of SMRs should lower their cost, too. Rather than chasing elusive economies of scale by building larger projects, SMR vendors can take advantage of the economies of manufacturing: a skilled permanent work force, quality control, and continuous improvement in reactors' design and manufacturing. Even though the intrinsic price per megawatt for SMRs may be higher than that for a large-scale reactor, the final cost per megawatt might be lower thanks to more favorable financing terms and shorter construction times -- a proposition that will have to be tested. The feasibility of SMRs needs to be demonstrated, and the government will almost certainly need to share some of the risk to get this done.

No SMR design has yet been licensed by the NRC. This is a time-consuming process for any new nuclear technology, and it will be especially so for those SMR designs that represent significant departures from the NRC's experience. Only after SMRs are licensed and built will their true cost be clear. The catch, however, is that the economies of manufacturing can be realized and understood only if there is a reliable stream of orders to keep the manufacturing lines busy turning out the same design. In order for that to happen, the U.S. government will have to figure out how to incubate early movers while not locking in one technology prematurely.

With the U.S. federal budget under tremendous pressure, it is hard to imagine taxpayers funding demonstrations of a new nuclear technology. But if the United States takes a hiatus from creating new clean-energy options -- be it SMRs, renewable energy, advanced batteries, or carbon capture and sequestration -- Americans will look back in ten years with regret. There will be fewer economically viable options for meeting the United States' energy and environmental needs, and the country will be less competitive in the global technology market.

WASTE BASKET CASE

If nuclear energy is to enjoy a sustained renaissance, the challenge of managing nuclear waste for thousands of years must be met. Nuclear energy is generated by splitting uranium, leaving behind dangerous radioactive products, such as cesium and strontium, that must be isolated for centuries. The process also produces transuranic elements, such as plutonium, which are heavier than uranium, do not occur in nature, and must be isolated for millennia. There is an alternative to disposing of transuranic elements: they can be separated from the reactor fuel every few years and then recycled into new nuclear reactor fuel as an additional energy source. The downside, however, is that this process is complex and expensive, and it poses a proliferation risk since plutonium can be used in nuclear weapons. The debate over the merits of recycling transuranic elements has yet to be resolved.

What is not disputed is that most nuclear waste needs to be isolated deep underground. The scientific community has supported this method for decades, but finding sites for the needed facilities has proved difficult. In the United States, Congress adopted a prescriptive approach, legislating both a single site, at Yucca Mountain, in Nevada, and a specific schedule for burying spent fuel underground. The massive project was to be paid for by a nuclear waste fund into which nuclear power utilities contribute about $750 million each year. But the strategy backfired, and the program is in a shambles. Nevada pushed back, and the schedule slipped by two decades, which meant that the government had to pay court-ordered damages to the utility companies. In 2009, the Obama administration announced that it was canceling the Yucca Mountain project altogether, leaving no alternative in place for the disposal of radioactive waste from nuclear power plants. The Nuclear Waste Fund has reached $25 billion but has no disposal program to support.

Fukushima awakened the American public and members of Congress to the problem of the accumulation of radioactive spent fuel in cooling pools at reactor sites. The original plan had been to allow the spent fuel to cool for about five years, after which it would be either disposed of underground or partly recycled. Now, the spent nuclear fuel has nowhere to go. Many utilities have moved some of the spent fuel out of the pools and into dry storage facilities built on site, which the NRC has judged safe for a century or so. The dry storage facilities at Fukushima were not compromised by the earthquake and tsunami, a sharp contrast to the problems that arose with the spent-fuel pools when cooling could not be maintained. To deal with the immediate problem of waste building up in reactor pools, Congress should allow the Nuclear Waste Fund to be used for moving the spent fuel accumulating in pools into dry-cask storage units nearby. But such an incremental step should not substitute for a comprehensive approach to waste management.

Instead of being stored near reactors, spent fuel should eventually be kept in dry casks at a small number of consolidated sites set up by the government where the fuel could stay for a century. This approach has several advantages. The additional cooling time would provide the Department of Energy, or some other organization, with more flexibility in designing a geological repository. The government would no longer have to pay utilities for not meeting the mandated schedule, and communities near reactors would be reassured that spent fuel has a place to go. At each site, the aging fuel would be monitored, so that any problems that arose could be addressed. The storage facilities would keep Washington's options open as the debate over whether spent fuel is waste or a resource works itself out. These sites should be paid for by the Nuclear Waste Fund, a change that would require congressional approval.

At the same time, Washington must find an alternative to Yucca Mountain for storing nuclear waste in the long run. As it does so, it must adopt a more adaptive and flexible approach than it did last time, holding early negotiations with local communities, Native American tribes, and states. Sweden upgraded its waste disposal program with just such a consensus-based process, and for a dozen years the U.S. Department of Energy has operated a geological repository for transuranic waste near Carlsbad, New Mexico, with strong community support. The government should also investigate new approaches to disposal. For example, it might make sense to separate out the long-living transuranic elements in nuclear reactor waste, which constitute a nasty but very small package, and dispose of them in a miles-deep borehole, while placing the shorter-living materials in repositories closer to the surface. Given the sustained challenge of waste management, an overhaul to the existing program should include the establishment of a new federally chartered organization that is a step or two removed from the short-term political calculus.

Another break from the past would be to manage civilian nuclear waste separately from military nuclear waste. In 1985, the government elected to comingle defense and civilian waste in a single geological repository. This made sense at the time, since the planners assumed that Yucca Mountain would be available for storing both types. But now, it looks as though it will be many years before a large-scale repository opens. Today, it makes more sense to put plans for storing military waste on a separate, faster track, since that process is less daunting than coming up with a solution to civilian waste. To begin with, there is simply much less military waste, and the volume will hardly grow in the future. Moreover, most of the military waste already has the uranium and plutonium separated out from the spent fuel, since the aim was to produce nuclear weapons material. Thus, what is left is definitely waste, not a resource.

Fast-tracking a defense waste program would allow the federal government to meet its obligations to states that host nuclear weapons facilities, from which it has agreed to remove radioactive waste. It would also make the finances of waste storage much clearer, since the nuclear utility companies pay for their waste management, whereas Congress has to approve payments for defense waste. And assuming a defense waste repository were established first, the experience gained operating it would be highly valuable when it comes time to establish a civilian one.

The United States' dysfunctional nuclear waste management system has an unfortunate international side effect: it limits the options for preventing other countries from using nuclear power infrastructure to produce nuclear weapons. If countries such as Iran are able to enrich uranium to make new reactor fuel and separate out the plutonium to recover its energy value, they then have access to the relevant technology and material for a weapons program. Safeguards agreements with the International Atomic Energy Agency are intended to make sure that civilian programs do not spill over into military ones, but the agency has only a limited ability to address clandestine programs.

Developing enrichment or separation facilities is expensive and unlikely to make economic sense for countries with small nuclear power programs. What these countries care about most is an assured supply of reactor fuel and a way to alleviate the burden of waste management. One promising scheme to keep fissile material out of the hands of would-be proliferators involves returning nuclear waste to the fuel-supplying country (or a third country). In effect, nuclear fuel could be leased to produce electricity. The country supplying the fuel would treat the returned spent fuel as it does its own, disposing of it directly or reprocessing it. In most cases, the amount of additional waste would be small in comparison to what that country is already handling. In return for giving up the possibility of reprocessing fuel and thus separating out weapons-grade material, the country using the fuel would free itself from the challenges of managing nuclear waste.

The United States already runs a similar program on a smaller scale, having provided fuel, often highly enriched uranium, to about 30 countries for small research reactors. But with no functioning commercial waste management system in place, the program cannot be extended to accommodate waste from commercial reactors. Instead, Washington is trying to use diplomacy to impose constraints on a country-by-country basis, in the futile hope that countries will agree to give up enrichment and reprocessing in exchange for nuclear cooperation with the United States. This ad hoc approach might have worked when the United States was the dominant supplier of nuclear technology and fuel, but it no longer is, and other major suppliers, such as France and Russia, appear uninterested in imposing such restrictions on commercial transactions. Putting together a coherent waste management program would give the United States a leg to stand on when it comes to setting up a proliferation-resistant international fuel-cycle program.

NOW OR NEVER

As greenhouse gases accumulate in the atmosphere, finding ways to generate power cleanly, affordably, and reliably is becoming an even more pressing imperative. Nuclear power is not a silver bullet, but it is a partial solution that has proved workable on a large scale. Countries will need to pursue a combination of strategies to cut emissions, including reining in energy demand, replacing coal power plants with cleaner natural gas plants, and investing in new technologies such as renewable energy and carbon capture and sequestration. The government's role should be to help provide the private sector with a well-understood set of options, including nuclear power -- not to prescribe a desired market share for any specific technology.

The United States must take a number of decisions to maintain and advance the option of nuclear energy. The NRC's initial reaction to the safety lessons of Fukushima must be translated into action; the public needs to be convinced that nuclear power is safe. Washington should stick to its plan of offering limited assistance for building several new nuclear reactors in this decade, sharing the lessons learned across the industry. It should step up its support for new technology, such as SMRs and advanced computer-modeling tools. And when it comes to waste management, the government needs to overhaul the current system and get serious about long-term storage. Local concerns about nuclear waste facilities are not going to magically disappear; they need to be addressed with a more adaptive, collaborative, and transparent waste program.

These are not easy steps, and none of them will happen overnight. But each is needed to reduce uncertainty for the public, the energy companies, and investors. A more productive approach to developing nuclear power -- and confronting the mounting risks of climate change -- is long overdue. Further delay will only raise the stakes.

 

 

 

Copyright 2011, Foreign Affairs