[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
ECONOMIC ASPECTS OF
NUCLEAR FUEL REPROCESSING
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
JULY 12, 2005
__________
Serial No. 109-22
__________
Printed for the use of the Committee on Science
Available via the World Wide Web: http://www.house.gov/science
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______
COMMITTEE ON SCIENCE
HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas BART GORDON, Tennessee
LAMAR S. SMITH, Texas JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California LYNN C. WOOLSEY, California
KEN CALVERT, California DARLENE HOOLEY, Oregon
ROSCOE G. BARTLETT, Maryland MARK UDALL, Colorado
VERNON J. EHLERS, Michigan DAVID WU, Oregon
GIL GUTKNECHT, Minnesota MICHAEL M. HONDA, California
FRANK D. LUCAS, Oklahoma BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois LINCOLN DAVIS, Tennessee
WAYNE T. GILCHREST, Maryland RUSS CARNAHAN, Missouri
W. TODD AKIN, Missouri DANIEL LIPINSKI, Illinois
TIMOTHY V. JOHNSON, Illinois SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia BRAD SHERMAN, California
JO BONNER, Alabama BRIAN BAIRD, Washington
TOM FEENEY, Florida JIM MATHESON, Utah
BOB INGLIS, South Carolina JIM COSTA, California
DAVE G. REICHERT, Washington AL GREEN, Texas
MICHAEL E. SODREL, Indiana CHARLIE MELANCON, Louisiana
JOHN J.H. ``JOE'' SCHWARZ, Michigan DENNIS MOORE, Kansas
MICHAEL T. MCCAUL, Texas
VACANCY
VACANCY
------
Subcommittee on Energy
JUDY BIGGERT, Illinois, Chair
RALPH M. HALL, Texas MICHAEL M. HONDA, California
CURT WELDON, Pennsylvania LYNN C. WOOLSEY, California
ROSCOE G. BARTLETT, Maryland LINCOLN DAVIS, Tennessee
VERNON J. EHLERS, Michigan JERRY F. COSTELLO, Illinois
W. TODD AKIN, Missouri EDDIE BERNICE JOHNSON, Texas
JO BONNER, Alabama DANIEL LIPINSKI, Illinois
BOB INGLIS, South Carolina JIM MATHESON, Utah
DAVE G. REICHERT, Washington SHEILA JACKSON LEE, Texas
MICHAEL E. SODREL, Indiana BRAD SHERMAN, California
JOHN J.H. ``JOE'' SCHWARZ, Michigan AL GREEN, Texas
VACANCY
SHERWOOD L. BOEHLERT, New York BART GORDON, Tennessee
KEVIN CARROLL Subcommittee Staff Director
DAHLIA SOKOLOV Republican Professional Staff Member
CHARLES COOKE Democratic Professional Staff Member
COLIN HUBBELL Staff Assistant
MIKE HOLLAND Chairwoman's Designee
C O N T E N T S
July 12, 2005
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Judy Biggert, Chairman, Subcommittee
on Energy, Committee on Science, U.S. House of Representatives. 8
Written Statement............................................ 9
Statement by Representative Michael M. Honda, Ranking Minority
Member, Subcommittee on Energy, Committee on Science, U.S.
House of Representatives....................................... 10
Written Statement............................................ 11
Prepared Statement by Representative Jerry F. Costello, Member,
Subcommittee on Energy, Committee on Science, U.S. House of
Representatives................................................ 12
Prepared Statement by Representative Sheila Jackson Lee, Member,
Subcommittee on Energy, Committee on Science, U.S. House of
Representatives................................................ 13
Witnesses:
Dr. Richard K. Lester, Director, the Industrial Performance
Center; Professor of Nuclear Science and Engineering,
Massachusetts Institute of Technology
Oral Statement............................................... 14
Written Statement............................................ 17
Biography.................................................... 20
Dr. Donald W. Jones, Vice President of Marketing and Senior
Economist at RCF Economic and Financial Consulting, Inc.
Oral Statement............................................... 20
Written Statement............................................ 22
Biography.................................................... 23
Dr. Steve Fetter, Dean, School of Public Policy, University of
Maryland
Oral Statement............................................... 23
Written Statement............................................ 25
Biography.................................................... 28
Financial Disclosure......................................... 29
Mr. Marvin S. Fertel, Senior Vice President and Chief Nuclear
Officer, The Nuclear Energy Institute
Oral Statement............................................... 29
Written Statement............................................ 31
Biography.................................................... 35
Discussion....................................................... 36
Appendix 1: Answers to Post-Hearing Questions
Dr. Richard K. Lester, Director, the Industrial Performance
Center; Professor of Nuclear Science and Engineering,
Massachusetts Institute of Technology.......................... 60
Dr. Donald W. Jones, Vice President of Marketing and Senior
Economist at RCF Economic and Financial Consulting, Inc........ 61
Dr. Steve Fetter, Dean, School of Public Policy, University of
Maryland....................................................... 62
Mr. Marvin S. Fertel, Senior Vice President and Chief Nuclear
Officer, The Nuclear Energy Institute.......................... 63
Appendix 2: Additional Material for the Record
The Economic Future of Nuclear Power, A Study Conducted at the
University of Chicago, August 2004, Executive Summary.......... 66
The Future of Nuclear Power, An Interdisciplinary MIT Study,
Executive Summary.............................................. 104
ECONOMIC ASPECTS OF NUCLEAR FUEL REPROCESSING
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TUESDAY, JULY 12, 2005
House of Representatives,
Subcommittee on Energy,
Committee on Science,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:00 p.m., in
Room 2318 of the Rayburn House Office Building, Hon. Judy
Biggert [Chairwoman of the Subcommittee] presiding.
hearing charter
SUBCOMMITTEE ON ENERGY
COMMITTEE ON SCIENCE
U.S. HOUSE OF REPRESENTATIVES
Economic Aspects of
Nuclear Fuel Reprocessing
tuesday, july 12, 2005
2:00 p.m.-4:00 p.m.
2318 rayburn house office building
1. Purpose
On Tuesday, July 12, the Energy Subcommittee of the House Committee
on Science will hold a hearing to examine whether it would be
economical for the U.S. to reprocess spent nuclear fuel and what the
potential cost implications are for the nuclear power industry and for
the Federal Government. This hearing is a follow-up to the June 16
Energy Subcommittee hearing that examined the status of reprocessing
technologies and the impact reprocessing would have on energy
efficiency, nuclear waste management, and the potential for
proliferation of weapons-grade nuclear materials.
2. Witnesses
Dr. Richard K. Lester is the Director of the Industrial Performance
Center and a Professor of Nuclear Science and Engineering at the
Massachusetts Institute of Technology. He co-authored a 2003 study
entitled The Future of Nuclear Power.
Dr. Donald W. Jones is Vice President of Marketing and Senior Economist
at RCF Economic and Financial Consulting, Inc. in Chicago, Illinois. He
co-directed a 2004 study entitled The Economic Future of Nuclear Power.
Dr. Steve Fetter is the Dean of the School of Public Policy at the
University of Maryland. He co-authored a 2005 paper entitled The
Economics of Reprocessing vs. Direct Disposal of Spent Nuclear Fuel.
Mr. Marvin Fertel is the Senior Vice President and Chief Nuclear
Officer at the Nuclear Energy Institute.
3. Overarching Questions
Under what conditions would reprocessing be
economically competitive, compared to both nuclear power that
does not include fuel reprocessing, and other sources of
electric power? What major assumptions underlie these analyses?
What government subsidies might be necessary to
introduce a more advanced nuclear fuel cycle (that includes
reprocessing, recycling, and transmutation--``burning'' the
most radioactive waste products in an advanced reactor) in the
U.S.?
4. Brief Overview of Nuclear Fuel Reprocessing (from June 16 hearing
charter)
Nuclear reactors generate about 20 percent of the
electricity used in the U.S. No new nuclear plants have been
ordered in the U.S. since 1973, but there is renewed interest
in nuclear energy both because it could reduce U.S. dependence
on foreign oil and because it produces no greenhouse gas
emissions.
One of the barriers to increased use of nuclear
energy is concern about nuclear waste. Every nuclear power
reactor produces approximately 20 tons of highly radioactive
nuclear waste every year. Today, that waste is stored on-site
at the nuclear reactors in water-filled cooling pools or, at
some sites, after sufficient cooling, in dry casks above
ground. About 50,000 metric tons of commercial spent fuel is
being stored at 73 sites in 33 states. A recent report issued
by the National Academy of Sciences concluded that this stored
waste could be vulnerable to terrorist attacks.
Under the current plan for long-term disposal of
nuclear waste, the waste from around the country would be moved
to a permanent repository at Yucca Mountain in Nevada, which is
now scheduled to open around 2012. The Yucca Mountain facility
continues to be a subject of controversy. But even if it opened
and functioned as planned, it would have only enough space to
store the nuclear waste the U.S. is expected to generate by
about 2010.
Consequently, there is growing interest in finding
ways to reduce the quantity of nuclear waste. A number of other
nations, most notably France and Japan, ``reprocess'' their
nuclear waste. Reprocessing involves separating out the various
components of nuclear waste so that a portion of the waste can
be recycled and used again as nuclear fuel (instead of
disposing of all of it). In addition to reducing the quantity
of high-level nuclear waste, reprocessing makes it possible to
use nuclear fuel more efficiently. With reprocessing, the same
amount of nuclear fuel can generate more electricity because
some components of it can be used as fuel more than once.
The greatest drawback of reprocessing is that current
reprocessing technologies produce weapons-grade plutonium
(which is one of the components of the spent fuel). Any
activity that increases the availability of plutonium increases
the risk of nuclear weapons proliferation.
Because of proliferation concerns, the U.S. decided
in the 1970s not to engage in reprocessing. (The policy
decision was reversed the following decade, but the U.S. still
did not move toward reprocessing.) But the Department of Energy
(DOE) has continued to fund research and development (R&D) on
nuclear reprocessing technologies, including new technologies
that their proponents claim would reduce the risk of
proliferation from reprocessing.
The report accompanying H.R. 2419, the Energy and
Water Development Appropriations Act for Fiscal Year 2006,
which the House passed in May, directed DOE to focus research
in its Advanced Fuel Cycle Initiative program on improving
nuclear reprocessing technologies. The report went on to state,
``The Department shall accelerate this research in order to
make a specific technology recommendation, not later than the
end of fiscal year 2007, to the President and Congress on a
particular reprocessing technology that should be implemented
in the United States. In addition, the Department shall prepare
an integrated spent fuel recycling plan for implementation
beginning in fiscal year 2007, including recommendation of an
advanced reprocessing technology and a competitive process to
select one or more sites to develop integrated spent fuel
recycling facilities.''
During floor debate on H.R. 2419, the House defeated
an amendment that would have cut funding for research on
reprocessing. In arguing for the amendment, its sponsor, Mr.
Markey, explicitly raised the risks of weapons proliferation.
Specifically, the amendment would have cut funding for
reprocessing activities and interim storage programs by $15.5
million and shifted the funds to energy efficiency activities,
effectively repudiating the report language. The amendment was
defeated by a vote of 110-312.
But nuclear reprocessing remains controversial, even
within the scientific community. In May 2005, the American
Physical Society (APS) Panel on Public Affairs, issued a
report, Nuclear Power and Proliferation Resistance: Securing
Benefits, Limiting Risk. APS, which is the leading organization
of the Nation's physicists, is on record as strongly supporting
nuclear power. But the APS report takes the opposite tack of
the Appropriations report, stating, ``There is no urgent need
for the U.S. to initiate reprocessing or to develop additional
national repositories. DOE programs should be aligned
accordingly: shift the Advanced Fuel Cycle Initiative R&D away
from an objective of laying the basis for a near-term
reprocessing decision; increase support for proliferation-
resistance R&D and technical support for institutional measures
for the entire fuel cycle.''
Technological as well as policy questions remain
regarding reprocessing. It is not clear whether the new
reprocessing technologies that DOE is funding will be developed
sufficiently by 2007 to allow the U.S. to select a technology
to pursue. There is also debate about the extent to which new
technologies can truly reduce the risks of proliferation.
It is also unclear how selecting a reprocessing
technology might relate to other pending technology decisions
regarding nuclear energy. For example, the U.S. is in the midst
of developing new designs for nuclear reactors under DOE's
Generation IV program. Some of the potential new reactors would
produce types of nuclear waste that could not be reprocessed
using some of the technologies now being developed with DOE
funding.
5. Brief Overview of Economics of Reprocessing
The economics of reprocessing are hard to predict
with any certainty because there are few examples around the
world on which economists might base a generalized model.
Some of the major factors influencing the economic
competitiveness of reprocessing are: the availability and cost
of uranium, costs associated with interim storage and long-term
disposal in a geologic repository, reprocessing plant
construction and operating costs, and costs associated with
transmutation, the process by which certain parts of the spent
fuel are actively reduced in toxicity to address long-term
waste management.
Costs associated with reducing greenhouse gas
emissions from fossil fuel-powered plants could help make
nuclear power, including reprocessing, economically competitive
with other sources of electricity in a free market.
It is not clear who would pay for reprocessing in the
U.S. The options are: the government paying, the utilities
themselves paying (not likely) or consumers paying in the form
of higher electric rates. Passing the cost increases on to the
consumer may not be as simple as it seems in the context of the
current regulatory environment. In States with regulated
utilities, regulators generally insist on using the lowest-cost
source of electricity available and in States with competing
electricity providers, the utilities themselves favor the
lowest-cost solutions for the power they provide. To the extent
that reprocessing raises the cost of nuclear power relative to
other sources, reprocessing would be less attractive in both of
these situations. As a result, utilities have shown little
interest in reprocessing.
Three recent studies have examined the economics of
nuclear power. In a study completed at the Massachusetts
Institute of Technology in 2003, The Future of Nuclear Power,
an interdisciplinary panel, including Professor Richard Lester,
looked at all aspects of nuclear power from waste management to
economics to public perception. In a study requested by the
Department of Energy and conducted at the University of Chicago
in 2004, The Economic Future of Nuclear Power, economist Dr.
Donald Jones and his colleague compared costs of future nuclear
power to other sources, and briefly looked at the incremental
costs of an advanced fuel cycle. In a 2003 study conducted by a
panel including Matthew Bunn (a witness at the June 16 hearing)
and Professor Steve Fetter, The Economics of Reprocessing vs.
Direct Disposal of Spent Nuclear Fuel, the authors took a
detailed look at the costs associated with an advanced fuel
cycle. All three studies seem more or less to agree on cost
estimates: the incremental cost of nuclear electricity to the
consumer, with reprocessing, could be modest--on the order of
1-2 mills/kWh (0.1-0.2 cents per kilowatt-hour); on the other
hand, this increase represents an approximate doubling (at
least) of the costs attributable to spent fuel management,
compared to the current fuel cycle (no reprocessing). Where
they strongly disagree is on how large an impact this
incremental cost will have on the competitiveness of nuclear
power. The University of Chicago authors conclude that the cost
of reprocessing is negligible in the big picture, where capital
costs of new plants dominate all economic analyses. The other
two studies take a more skeptical view--because new nuclear
power would already be facing tough competition in the current
market, any additional cost would further hinder the nuclear
power industry, or become an unacceptable and unnecessary
financial burden on the government.
6. Background
For a detailed background on the advanced fuel cycle (sometimes
referred to as the closed fuel cycle), including reprocessing
technologies, waste management and non-proliferation concerns, please
refer to the charter from our June 16 hearing on Nuclear Fuel
Reprocessing (attached).
Economic Future of Nuclear Power
The single biggest cost associated with nuclear power is the
capital cost, i.e., the upfront money required to build a new plant.
The 100+ nuclear plants now operating in the U.S. were built in a
highly regulated electricity market in which it was a given that the
costs would be passed on to the consumers. As a result, most of the
utilities that own these plants today have long since paid off the
capital costs. With low operations and maintenance costs, existing
plants are competitive with other sources of electric power. Nuclear
power currently supplies 20 percent of U.S. electricity and, for some
States, nuclear power represents more than 50 percent of their
electricity supply. Demand for electricity in the U.S. is growing
rapidly. In order for nuclear power to continue to supply at least 20
percent of U.S. electricity, several new plants will need to be built
in next 5-10 years. The economic future of nuclear power, however,
could depend on the costs of building new plants in either a
deregulated, competitive environment, or a regulated environment that
favors the lowest-cost option. In both of these cases, the capital
costs for new plants are not so easily passed on to the consumers.
In a larger context, concerns about global warming have led to a
different view of the economic competitiveness of new nuclear
generating capacity. Right now, coal is the cheapest source of
electricity, and coal resources are abundant in the U.S. If the
government were to enforce a carbon cap or tax on the utilities, the
price of coal-fired power would go up. Some utilities and DOE are
already investing in technologies to reduce emissions in anticipation
of such a cap. DOE's R&D plan for coal calls for greenhouse gas capture
and disposal to add no more than 10 percent to the cost of coal-fired
power, but it remains unclear to what extent that goal is achievable.
In general, any significant changes in energy demand patterns will
influence the economic attractiveness of nuclear, a source of power
that does not emit greenhouse gases.
Economics of Reprocessing versus Direct Disposal
Spent fuel management is only a small part of the total cost of
nuclear power, but it is the part at issue in the reprocessing debate.
There is general agreement between economic
analyses\1\,\2\,\3\ that, given the market price
of uranium (approximately $60/kg), and international experience with
reprocessing, it remains cheaper to mine and enrich uranium ore than to
reprocess and recycle spent fuel. Other major factors that will
influence the economic balance between reprocessing and direct disposal
include the costs of uranium enrichment, interim storage, long-term
disposal in a geologic repository (including construction costs for the
repository), mixed oxide (MOX) fuel fabrication, construction and
operation of the reprocessing plant itself, construction and operation
of facilities to ``burn'' or transmute the unusable parts of the waste,
and various transportation and security requirements. Good data are
available for the costs of enrichment, interim storage, transportation
and security. All of the other costs have to be estimated, and
estimates vary widely in some cases. There are also (or will also be)
differences, for some steps in the fuel cycle, between the underlying
costs and the market price. Uranium supply and enrichment, for example,
operate in a competitive market environment, keeping the profit margin
fairly predictable. On the other hand, a lack of competition in
reprocessing and MOX fuel fabrication, at least internationally,
results in a more ambiguous relationship between cost and price.
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\1\ Harvard University study, Project on Managing the Atom, The
Economics of Reprocessing vs. Direct Disposal of Spent Nuclear Fuel,
December 2003.
\2\ MIT Nuclear Energy Study, The Future of Nuclear Power, 2003.
\3\ University of Chicago Study, The Economic Future of Nuclear
Power, August 2004.
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Nuclear power in the U.S. has long been subsidized by the Federal
Government. The commercial nuclear industry grew out of multi-billion
dollar government-funded research and development programs on nuclear
weapons. The DOE has ongoing programs of research, development and
demonstration of advanced nuclear technologies in addition to the
Nuclear Power 2010 Program (funded at nearly $50 million in fiscal year
2005) to subsidize the costs of siting and licensing new commercial
reactors this decade. Pending energy legislation in the 109th Congress
authorizes continued tax credits and other incentives for future
nuclear energy. If the market price of reprocessing is higher than
electricity producers are willing or able to bear, and the government
decides that the public benefits exceed the costs, some form of
government funding will be necessary to bring reprocessing into the
nuclear fuel cycle in the U.S.
7. Witness Questions
Dr. Lester:
Under what conditions would nuclear fuel reprocessing
be economically competitive with the open fuel cycle and with
other sources of electric power? What major assumptions
underlie your analysis? What steps might be available to reduce
the costs of reprocessing?
What would it cost to efficiently manage nuclear
waste by further integrating the fuel cycle through development
of a system that includes reprocessing, recycling, and
transmutation (``burning'' the most radioactive waste products
in an advanced reactor)?
What government subsidies might be necessary to
introduce a more advanced nuclear fuel cycle in the U.S.? What
assumptions underlie those estimates?
How would a decision to reprocess affect the economic
future of nuclear power in the U.S.?
Dr. Jones:
Under what conditions would nuclear fuel reprocessing
be economically competitive with the open fuel cycle and with
other sources of electric power? What major assumptions
underlie your analysis?
How will a decision to reprocess affect the economic
future of nuclear power in the U.S.?
Dr. Fetter:
Under what conditions would nuclear fuel reprocessing
be economically competitive with the open fuel cycle and with
other sources of electric power? What major assumptions
underlie your analysis? What steps might be available to reduce
the costs of reprocessing?
What would it cost to efficiently manage nuclear
waste by further integrating the fuel cycle through development
of a system that includes reprocessing, recycling, and
transmutation (``burning'' the most radioactive waste products
in an advanced reactor)?
What government subsidies might be necessary to
introduce a more advanced nuclear fuel cycle in the U.S.? What
assumptions underlie those estimates?
How would a decision to reprocess affect the economic
future of nuclear power in the U.S.?
Mr. Fertel:
Is there a consensus position among the nuclear
plant-owning utilities regarding whether the U.S. should
introduce reprocessing into the nuclear fuel cycle within the
next five or ten years?
What government subsidies might be necessary to
introduce a more advanced nuclear fuel cycle (that includes
reprocessing, recycling, and transmutation--``burning'' the
most radioactive waste products in an advanced reactor) in the
U.S.? What assumptions underlie those estimates?
How would a U.S. move to reprocessing affect
utilities' long-term business planning?
Chairwoman Biggert. The hearing of the Subcommittee on
Energy of the Science Committee will come to order.
Good afternoon to all of you, and I apologize that we had
votes, but I am glad you stayed around.
Welcome to today's hearing on the Economic Aspects of
Nuclear Fuel Reprocessing. As promised, this hearing is a
follow-up to our June 16 Energy Subcommittee hearing that
examined the status of reprocessing technologies and the impact
reprocessing would have on energy efficiency, nuclear waste
management, and the potential for proliferation of weapons-
grade nuclear materials.
Today, we are going to hear from a representative of the
nuclear utility industry and from a number of renowned
economists and scientists on the economics of the nuclear fuel
recycle. In particular, we are going to discuss what additional
costs or savings might result if we switched from an open fuel
cycle to an advanced fuel cycle and how those costs and savings
compare with other sources of energy, especially fossil fuels.
There are many reasons why the United States should embrace
an advanced fuel cycle that uses reprocessing, recycling, and
transmutation, or the burning of the most radioactive parts of
spent fuel, as a way to deal with our nuclear waste problem.
First, if we were to recycle what we call ``nuclear
waste,'' which is actually nuclear fuel, we will increase the
amount of energy obtained from uranium resources by a factor of
10. Second, by the time Yucca Mountain opens, it technically
will be filled to capacity with all of the waste generated up
to 2010, requiring the second repository, or an expanded Yucca
Mountain, for future waste. Third, the advanced fuel cycle
promises to reduce the volume of our high-level nuclear waste,
potentially by a factor of 60. Fourth, it also could reduce the
toxicity the heat and radioactivity of the waste so that it
would only have to be stored for 300 years rather than 10,000.
And last, the advanced fuel cycle could render another Yucca
Mountain unnecessary even if the nuclear power industry grows.
Why didn't I include economics as one of the reasons the
United States should embrace the advanced fuel cycle? Because
as long as uranium is cheap and abundant, mining and enriching
it will continue to cost less than reprocessing and recycling
spent fuel. But let us face it, the Federal Government does a
lot that isn't economical often because doing so is in the best
interest of the Nation for other reasons.
For instance, federal tax credits make renewable energy
economical. As a result of our growing use of wind and solar
power, our energy supplies are more diverse, and our nation is
more energy independent and secure. And the economics could
change. Concerns about global climate change and clean air may,
in the future, make it more expensive to produce electricity
using fossil fuels. If, or when this happens, nuclear energy
becomes much more economical. Current analysis of the
competitiveness of nuclear power doesn't account for the
billions we will have to spend to address greenhouse gas
emissions from fossil fuels and global climate change.
While economies alone should not dictate a decision to
close a fuel cycle, it is still extremely important that we, as
lawmakers, understand the relationship between costs and
benefits in order to make informed decisions about managing the
growing stockpile of spent nuclear fuel. Understanding the
economics of the advanced fuel cycle will allow us to
prioritize research and development to greatly reduce costs and
significantly improve the economic feasibility of closing the
fuel cycle.
Besides, continued R&D costs can be reduced based on
lessons learned from international programs and a well reasoned
integrated plan. In this way, we can help the Department of
Energy, energy producers, and other interested parties develop
the best policies and plans possible to deal with growing
quantities of spent nuclear fuel. Once we understand what the
costs are, a decision will have to be made about who most
appropriately should assume those costs. Under the Nuclear
Waste Policy Act, consumers already pay 1/10 of one cent per
kilowatt-hour for the Federal Government to take possession and
dispose of the Nation's spent nuclear fuel.
Until, or unless, the law changes, the responsibility falls
to us to use this money wisely and to explore ways to reduce
the volume and toxicity of spent nuclear fuel and maximize the
capability of Yucca Mountain. As someone who supports nuclear
power and whose home state derives 50 percent of its
electricity from emissions-free nuclear power, I would hate to
see the industry's future growth constrained when Yucca
Mountain is full and no plan has been developed to manage the
waste from new nuclear power plants.
That is why we are here today to make sure we have the
right plan for managing our growing inventory of spent nuclear
fuel in the most efficient, economical, and environmentally-
sensitive way possible.
I want to thank the witnesses for being here to enlighten
us today, and I look forward to their testimony.
But before we get to that, I will yield to the Ranking
Member, Mr. Honda, for his opening statement.
[The prepared statement of Chairman Biggert follows:]
Prepared Statement of Chairman Judy Biggert
I want to welcome everyone to this hearing on what impact
reprocessing and recycling might have on the economics of the nuclear
fuel cycle should we, as a nation, choose to use these technologies to
better manage our growing inventory of spent nuclear fuel.
This is the Energy Subcommittee's second hearing on the topic of
reprocessing and recycling of nuclear waste. Our first hearing, which
occurred less than a month ago, focused on technology decisions and
proliferation issues. At that hearing, we heard about reprocessing
technologies in various stages of development, and how these advanced
technologies are more proliferation-resistant than the 30-year-old
technologies currently used throughout the world.
Today we are going to hear from a representative of the nuclear
utility industry and from a number of renowned economists and
scientists on the economics of the nuclear fuel cycle. In particular,
we are going to discuss what additional costs or savings might result
if we switch from an open fuel cycle to an advanced fuel cycle, and how
those costs and savings compare with other sources of energy,
especially fossil fuels.
There are many reasons why the United States should embrace an
advanced fuel cycle that uses reprocessing, recycling, and
transmutation--or the burning of the most radioactive parts of spent
fuel--as a way to deal with our nuclear waste problem.
First, if we were to recycle what we call nuclear ``waste,'' which
is actually nuclear ``fuel,'' we could increase the amount of energy
obtained from uranium resources by a factor of 10.
Second, by the time Yucca Mountain opens, it technically will be
filled to capacity with all the waste generated up to 2010, requiring a
second repository or an expanded Yucca Mountain for future waste.
Third, the advanced fuel cycle promises to reduce the volume of our
high-level nuclear waste, potentially by a factor of 60.
Fourth, it also could reduce the toxicity--the heat and the
radioactivity--of the waste so that it would only have to be stored for
300 years, rather than 10,000.
And last, the advanced fuel cycle could render another Yucca
Mountain unnecessary even if the nuclear power industry grows.
Why didn't I include economics as one of the reasons the U.S.
should embrace the advanced fuel cycle? Because as long as uranium is
cheap and abundant, mining and enriching it will continue to cost less
than reprocessing and recycling spent fuel.
But let's face it, the Federal Government does a lot that isn't
economical--often because doing so is in the best interest of the
Nation for other reasons. For instance, federal tax credits make
renewable energy economical. As a result of our growing use of wind and
solar power, our energy supplies are more diverse and our nation is
more energy independent and secure.
And the economics could change. Concerns about global climate
change and clean air may in the future make it more expensive to
produce electricity using fossil fuels. If or when this happens,
nuclear energy becomes much more economical. Current analyses of the
competitiveness of nuclear power don't account for the billions we will
have to spend to address greenhouse gas emissions from fossil fuels and
global climate change.
While economics alone should not dictate a decision to close the
fuel cycle, it is still extremely important that we, as lawmakers,
understand the relationship between costs and benefits in order to make
informed decisions about managing the growing stockpile of spent
nuclear fuel. Understanding the economics of the advanced fuel cycle
will allow us to prioritize research and development to greatly reduce
costs and significantly improve the economic feasibility of closing the
fuel cycle. Besides continued R&D, costs can be reduced based on
lessons learned from international programs and a well-reasoned,
integrated plan. In this way, we can help the Department of Energy,
energy producers, and other interested parties develop the best
policies and plans possible to deal with growing quantities of spent
nuclear fuel.
Once we understand what the costs are, a decision will have to be
made about who most appropriately should assume those costs. Under the
Nuclear Waste Policy Act, consumers already pay one-tenth of one cent
per kilowatt-hour for the Federal Government to take possession and
dispose of the Nation's spent nuclear fuel. Until or unless the law
changes, the responsibility falls to us to use this money wisely, and
to explore ways to reduce the volume and toxicity of spent nuclear fuel
and maximize the capacity of Yucca Mountain.
As someone who supports nuclear power, and whose home state derives
50 percent of its electricity from emissions-free nuclear power, I
would hate to see the industry's future growth constrained when Yucca
Mountain is full and no plan has been developed to manage the waste
from new nuclear power plants.
That's why we are here today--to make sure we have the right plan
for managing our growing inventory of spent nuclear fuel in the most
efficient, economical, and environmentally-sensitive way possible. I
want to thank the witnesses for being here to enlighten us today. I
look forward to their testimony. But before we get to that, I will
yield to the Ranking Member, Mr. Honda, for his opening statement.
Mr. Honda. Thank you, Madame Chair. Thank you for holding
this important hearing today.
The timing of this hearing is critical, because recently
the President has been talking more and more about encouraging
the development of nuclear power for electricity generation.
As I noted at our previous meeting on nuclear fuel
reprocessing, the original ``plan'' for our nation's nuclear
energy program was to recycle the fuel used in the reactors to
reduce the amount of material defined as waste and stretch the
supply of available material needed for fuel.
The plan never took hold due to two principle factors:
concerns about nuclear weapons proliferation and economics.
At our last hearing, we heard about some of the technical
issues surrounding reprocessing and the nonproliferation
implications of reprocessing. Today, I am hoping the witnesses
can help us get a handle on the economic viability of nuclear
waste reprocessing, because if we are going to use the power,
we must deal with the waste.
Up until now, it has not made economic sense to develop a
domestic recycling capacity, partly because of the stagnation
that developed in the U.S. nuclear energy construction program.
Also, the so-called ``megatons to megawatts'' program that
takes Russian weapons-grade uranium and down-blends it to lower
concentrations needed for nuclear power reactors has helped to
keep down the cost of reactor fuel, making reprocessing
uneconomical.
And if the Administration succeeds in increasing the use of
nuclear energy for the production of electricity over the next
several decades, there will be significant consequences in
terms of nuclear fuel demand and nuclear waste disposal.
On the one hand, the new demand for fuel may drive up the
cost of fuel and make the economics of reprocessing as a means
of supplying material for fuel more favorable.
On the other hand, extended operations of existing reactors
and any new reactors that are built will exceed Yucca
Mountain's capacity, leaving limited options for what to do
with the waste.
Building a new repository would face significant siting and
licensing challenges and is unlikely. Absent a new repository,
our options are limited. On-site storage via dry casks is an
option, but one which is inconsistent with the Federal
Government's commitment to take control of the waste.
Reprocessing is another answer, but it may well drive the
cost of nuclear power above that of other fuel sources, making
it economically non-competitive without government subsidies.
It is critical that we determine what the true cost of
dealing with the waste material from nuclear power plants is
going to be before we follow the Administration's plan to rely
more heavily on nuclear power for electricity generation.
And to do that, it is critical that we know how much
reprocessing may cost. We need to understand the cost if we use
today's techniques, as well as how much we will need to spend
on research to develop new techniques, and how much those
techniques will cost.
To pursue the President's desire to expand the use of
nuclear power without having a good idea of how we are going to
deal with the waste and how much dealing with it will cost is
unwise.
I look forward to hearing from the witnesses on what they
believe the true costs of spent nuclear fuel reprocessing are
and whether it will ever be a viable, economical alternative.
Again, thank you, Madame Chairwoman, and I yield back the
balance of my time.
[The prepared statement of Mr. Honda follows:]
Prepared Statement of Representative Michael M. Honda
Madam Chairwoman, thank you for holding this important hearing
today.
The timing of this hearing is critical, because recently the
President has been talking more and more about encouraging the
development of nuclear power for electricity generation.
As I noted at our previous hearing on nuclear fuel reprocessing,
the original ``plan'' for our nation's nuclear energy program was to
recycle the fuel used in the reactors, to reduce the amount of material
defined as waste and stretch the supply of available material needed
for fuel.
The plan never took hold due to two principal factors: concerns
about nuclear weapons proliferation and economics.
At our last hearing, we heard about some of the technical issues
surrounding reprocessing and the nonproliferation implications of
reprocessing. Today, I am hoping that the witnesses can help us get a
handle on the economic viability of nuclear waste reprocessing, because
if we are going to use the power, we must deal with the waste.
Up until now, it has not made economic sense to develop a domestic
recycling capacity, partly because of the stagnation that developed in
the U.S. nuclear energy construction program.
Also, the so-called ``megatons to megawatts'' program that takes
Russian weapons-grade uranium and down-blends it to the lower
concentrations needed for nuclear power reactors has helped to keep
down the cost of reactor fuel, making reprocessing uneconomical.
If the Administration succeeds in increasing the use of nuclear
energy for the production of electricity over the next several decades,
there will be significant consequences in terms of nuclear fuel demand
and nuclear waste disposal.
On the one hand, the new demand for fuel may drive up the cost of
fuel and make the economics of reprocessing as a means of supplying
material for fuel more favorable.
On the other hand, extended operations of existing reactors and any
new reactors that are built will exceed Yucca Mountain's capacity,
leaving limited options for what to do with the waste.
Building a new repository would face significant citing and
licensing challenges and is unlikely. Absent a new repository, our
options are limited--on-site storage via dry casks is an option, but
one which is inconsistent with the Federal Government's commitment to
take control of the waste.
Reprocessing is another answer, but it may well drive the cost of
nuclear power above that of other fuel sources, making it economically
noncompetitive without government subsidies.
It is critical that we determine what the true cost of dealing with
the waste material from nuclear power plants is going to be before we
follow the Administration's plan to rely more heavily on nuclear power
for electricity generation.
And to do that, it is critical that we know how much reprocessing
may cost. We need to understand the cost if we use today's techniques,
as well as how much we will need to spend on research to develop new
techniques and how much those techniques will cost.
To pursue the President's desire to expand the use of nuclear power
without having a good idea of how we are going to deal with the waste
and how much dealing with it will cost is unwise.
I look forward to hearing from the witnesses what they believe the
true costs of spent nuclear fuel reprocessing are and whether it will
ever be a viable, economical alternative.
Thank you again Madam Chairwoman and I yield back the balance of my
time.
Chairwoman Biggert. Thank you very much.
Any additional opening statements submitted by the Members
may be added into the record.
[The prepared statement of Mr. Costello follows:]
Prepared Statement of Representative Jerry F. Costello
Good morning. I want to thank the witnesses for appearing before
our committee to examine the economic aspects of nuclear fuel
reprocessing technologies in the United States. Currently the U.S. does
not reprocess spent fuel from nuclear power reactors and defense
facilities. However, other countries, notably France and Japan, do
reprocess their spent fuel. Generally, reprocessing has been prohibited
because of concerns that the process preferred by the U.S. called
PUREX, would make plutonium available in a form suitable for the
fabrication of weapons by terrorists or countries seeking to become
nuclear powers. Today's oversight hearing will explore the costs of
locating, permitting and building an additional repository site. It
will also discuss the risks and difficulties of pursuing the
reprocessing options.
Within my home State of Illinois, the only nuclear engineering
department is at the University of Illinois. This is particularly
alarming because our state has 11 operating nuclear power reactors,
Argonne National Laboratory, where Dr. Phillip Finck is from, and other
nuclear facilities. Illinois residents have paid more than $2.4 billion
on the federal Nuclear Waste Fund. My state has a large stake in
nuclear power and technology and under-supported programs and
initiatives that could improve upon our nuclear capabilities are quite
troubling.
I am aware that Congress may be called on to consider policy
options on waste reprocessing in the next few years as the
Administration moves to change nuclear waste policies that essentially
have been in place since the Carter Administration. Therefore, I am
pleased we are holding this hearing today to gather information on the
economics of nuclear waste processing.
I welcome our witnesses and look forward to their testimony.
[The prepared statement of Ms. Jackson Lee follows:]
Prepared Statement of Representative Sheila Jackson Lee
Chairwoman Biggert, Ranking Member Honda,
I want to thank you for organizing this very important Energy
Subcommittee hearing on the economic aspects of nuclear fuel
reprocessing. This is not an issue that is embedded in the public
consciousness, but it should be. The issue of nuclear waste and what to
do with it is one that we have grappled with for decades and is a
question that will only gain in importance as time goes on. I welcome
the witnesses to this subcommittee and hope that through their
testimony we get closer to understanding all the complexities of this
issue.
Nuclear energy is very much apart of our national energy policy and
in fact reactors generate about 20 percent of the electricity used in
the U.S. However, with nuclear energy comes the concern about nuclear
waste. The fact is that every nuclear power reactor produces
approximately 20 tons of highly radioactive nuclear waste every year.
Currently there are a few different methods to deal with this waste,
some of it is stored on-site at the nuclear reactors in water-filled
cooling pools, or at some other sites, waste is stored in dry casks
above ground after sufficient cooling. About 50,000 metric tons of
commercial spent fuel is being stored at 73 sites in 33 states.
Unfortunately the issue of nuclear waste is not only a scientific
one, but also a security issue. As a member of the Homeland Security
Committee I know that nuclear materials of any kind represent a threat
to our safety if targeted by terrorists. In addition, the reprocessing
of waste is also a homeland security threat because current
reprocessing technologies produce weapons-grade plutonium. Clearly,
increasing the availability of such dangerous materials only heightens
the risk to our nation.
I hope that through the course of this hearing that we will be able
to move closer to finding a method for nuclear reprocessing that will
not result in weapons-grade plutonium. I applaud the report
accompanying H.R. 2419, the Energy and Water Development Appropriations
Act for Fiscal Year 2006, which the House passed in May, which directed
the DOE to focus research in its Advanced Fuel Cycle Initiative program
on improving nuclear reprocessing technologies. The report stated,
``The Department shall accelerate this research in order to make a
specific technology recommendation, not later than the end of fiscal
year 2007, to the President and Congress on a particular reprocessing
technology that should be implemented in the United States. In
addition, the Department shall prepare an integrated spent fuel
recycling plan for implementation beginning in fiscal year 2007,
including recommendation of an advanced reprocessing technology and a
competitive process to select one or more sites to develop integrated
spent fuel recycling facilities.'' Currently, the situation as it
stands with nuclear waste is much akin to being stuck between a rock
and a hard place. I have full faith in our scientific community to
devise a solution to this vital issue.
Chairwoman Biggert. And at this time, I would like to
introduce all of our witnesses, and thank you for coming before
us this afternoon.
First, we have Dr. Richard K. Lester, who is the Director
of the Industrial Performance Center, and a Professor of
Nuclear Science and Engineering at the Massachusetts Institute
of Technology. He co-authored a 2003 study entitled ``The
Future of Nuclear Power.'' Thank you. Dr. Donald W. Jones is
Vice President of Marketing and Senior Economist at RCF
Economic and Financial Consulting in Chicago, Illinois. He co-
directed a 2004 study entitled ``The Economic Future of Nuclear
Power.'' Welcome to you. And then Dr. Steven Fetter is the Dean
of the School of Public Policy at the University of Maryland.
He co-authored a 2005 paper entitled ``The Economics of
Reprocessing vs. Direct Disposal of Spent Nuclear Fuel.'' And
last, but not least, is Mr. Marvin Fertel, who is the Senior
Vice President and Chief Nuclear Officer at the Nuclear Energy
Institute.
As the witnesses know, spoken testimony will be limited to
five minutes each, after which Members will have five minutes
each to ask questions.
So we will begin with Dr. Lester.
STATEMENT OF DR. RICHARD K. LESTER, DIRECTOR, THE INDUSTRIAL
PERFORMANCE CENTER; PROFESSOR OF NUCLEAR SCIENCE AND
ENGINEERING, MASSACHUSETTS INSTITUTE OF TECHNOLOGY
Dr. Lester. Thank you, Madame Chairman and Members of the
Committee. It is a great honor to be called before you to
discuss the subject of nuclear fuel reprocessing. I would like
to ask your indulgence and request a short delay in submitting
my written testimony. The theft of my computer in the United
Kingdom two days ago, unfortunately, makes this necessary.
Chairwoman Biggert. Yes, we understand that you had a
robbery.
Dr. Lester. Thank you.
Closing the nuclear fuel cycle, that is reprocessing spent
fuel and recycling the recovered plutonium, has long been a
dream of many in the nuclear power industry. Here in the United
States, that dream has been elusive, but lately it has been
rekindled as attention focuses once again on the future role of
nuclear in meeting our nation's energy needs.
I firmly believe that a major expansion of nuclear power
will almost certainly be necessary if our offices, industries,
and homes are to be assured of access to adequate supplies of
energy at reasonable costs and with proper regard for the
environment. However, in my judgment, an attempt to introduce
spent fuel reprocessing here in the United States in the near-
term would not only not help to ensure a greater role for
nuclear power, but would actually make this outcome less
likely.
There is no disagreement that the operations needed to
close the fuel cycle, reprocessing and the fabrication of mixed
oxide fuel, are costly and that their introduction would cause
an increase in the overall cost of nuclear electricity relative
to the once-through cycle with direct disposal of spent fuel.
Opinions differ as to how large the cost penalty would be.
But given that unfavorable economics is one of the main
barriers to new nuclear energy investment, any course of action
that would result in an increase in nuclear-generating costs
should be viewed with caution.
Those advocating near-term reprocessing make three
arguments in response to these concerns.
First, that the closed nuclear fuel cycle is indeed more
costly, but the cost penalty isn't large, and so we shouldn't
worry too much about it.
Second, that although the closed fuel cycle is more
expensive than the open cycle under current economic
conditions, in the future this comparison is likely to be
reversed.
And third, that the economic penalty associated with
reprocessing and recycle is outweighed by the non-economic
benefits that would accrue. In the past, advocates of
reprocessing have emphasized its contributions to extending
fuel supplies and to energy supply security. Today the
principal claim is that reprocessing will facilitate and
simplify the management and disposal of nuclear waste.
These arguments are, on the surface, attractive, but on
closer analysis, none of them is persuasive. I would like
briefly to comment on each point in turn.
First, how large is the cost penalty associated with
reprocessing and recycle likely to be? An exact answer is not
possible, because some of the most important contributing
factors are uncertain.
However, under current economic conditions, and making
generally optimistic assumptions about how much reprocessing
and mixed oxide fabrication services would cost were they to be
available in the United States, I estimate that a U.S. nuclear
power plant opting to use these services would incur a total
nuclear fuel cycle cost of about 1.8 cents per kilowatt hour of
electricity, which is just over three times the total cost of
the once-through fuel cycle used by nuclear plants today. Since
fuel cycle expenses account for about 10 percent of the total
cost of nuclear electricity from unamortized nuclear power
plants, with capital-related costs accounting for most of the
remainder, this would be equivalent to adding about 20 percent
to the total nuclear generation cost.
The impact of reprocessing is often expressed in terms of
the average cost for the entire fleet of nuclear power plants,
with just enough plants using mixed oxide fuel to consume all
of the plutonium recovered by reprocessing the spent fuel from
the rest of the plant population. In that case, and using the
same economic assumptions, the effect of reprocessing and
plutonium recycle would be to increase the fleet average fuel
cycle cost by a little over 0.2 cents per kilowatt hour, or
about 40 percent. The total nuclear electricity cost in that
case would increase by about four percent. However, while fleet
averaging may be appropriate for a centrally-planned nuclear
power industry like that of, say, France, where the enforcement
of cross-subsidy arrangements ensuring uniformity of cost
impacts across the entire industry is perhaps plausible, this
would not be the case in the United States. Here, in the
absence of a federal subsidy, nuclear plant owners opting for
the closed fuel cycle would either have to absorb the entire
cost increase themselves or pass part or all of it on to their
customers. In the competitive wholesale regional power markets
in which many U.S. nuclear power plants today are operating, it
is unlikely that either option would be attractive to plant
owners.
Could today's negative economic prognosis for reprocessing
be reversed in the future? For at least the next few decades,
this seems extremely unlikely. For example, the purchase price
of natural uranium would have to increase to almost $400 per
kilogram for reprocessing to be economic. By comparison, the
average price of uranium delivered to U.S. nuclear power
reactors under long-term contract last year was about $32 per
kilogram. Alternatively, the cost of reprocessing would have to
fall to less than 25 percent of the already optimistic
referenced reprocessing cost I have assumed. In neither of
these scenarios do the necessary price movements fall within
the bounds of the credible.
Indeed, the needed reduction in reprocessing costs would be
particularly implausible given the requirement to select a
specific reprocessing technology for large-scale implementation
as early as 2007, as is called for in recent legislation. This
requirement would effectively force the adoption of the PUREX
technology currently in use in France, the United Kingdom, and
Japan, since no alternative would be available in that time
scale. And there is simply no possibility of achieving a cost
reduction of 75 percent, or anything close to it, for this
relative mature technology. Nor would the adoption of PUREX
technology fundamentally change either the impending problem of
inadequate interim spent fuel storage capacity or the problem
of finding a suitable site for final waste disposal.
Advanced reprocessing technologies, if coupled with
transmutation schemes, could, in principle, improve the
prospects for successful disposal. The goals would be to reduce
the thermal load on the repository, thereby increasing its
storage capacity, and to shorten the time for which the waste
must be isolated from the biosphere. But even in the best case,
these technologies will not be available for large-scale
deployment for at least two or three decades, and perhaps not
on any time scale. Furthermore, they would very likely be more
costly than conventional PUREX reprocessing and MOX recycle
technologies since they would entail more complex separations
processes, more complete recovery of radionuclides, a more
complex fuel fabrication process, and the need to transmute a
broader array of radionuclides than just plutonium.
The MIT Study on the Future of Nuclear Power considered a
range of advanced fuel cycle options from a waste management
perspective and reached the following conclusion: ``We do not
believe that a convincing case can be made on the basis of
waste management considerations alone that the benefits of
advanced, closed fuel cycle schemes would outweigh the
attendant safety, environmental, and security risks and
economic costs.''
The MIT report further concluded that waste management
strategies in the open fuel cycle are available that could
yield long-term risk reduction benefits at least as great as
those claimed for advanced reprocessing and transmutation
schemes and with fewer short-term risks and lower development
and deployment costs.
For all of these--I am sorry.
Chairwoman Biggert. If you could just sum up and we will
get to the rest of it with questions, I am sure.
Dr. Lester. For all of these reasons, as well as others I
have not discussed here, the MIT study concluded that
reprocessing and MOX recycle is not an attractive option for
nuclear energy for at least the next 50 years, even assuming a
major expansion of the nuclear industry, both in the United
States and overseas.
Thank you, Madame Chairman.
[The prepared statement of Dr. Lester follows:]
Prepared Statement of Richard K. Lester
Madam Chairwoman and Members of the Committee:
It is an honor to be called before you to discuss the subject of
nuclear fuel reprocessing--a matter of considerable importance to the
future of nuclear energy, as well as to the effort to prevent the
further spread of nuclear weapons.\1\
---------------------------------------------------------------------------
\1\ A previous hearing of this subcommittee reviewed the security
aspects of reprocessing. In this testimony I focus on the economic
dimension.
---------------------------------------------------------------------------
Closing the nuclear fuel cycle--that is, reprocessing spent nuclear
fuel and recycling the recovered plutonium--has been a dream of many in
the nuclear industry from its earliest days. Here in the U.S. that
dream has long been elusive, but lately it has been rekindled as
attention focuses once more on the future role of the nuclear industry
in meeting our nation's energy needs. I believe that a major expansion
of nuclear power will almost certainly be necessary if our industries,
offices, and homes are to be assured of access to adequate supplies of
energy at reasonable cost and with proper regard for the environment,
especially given the crucial need to curtail carbon dioxide emissions.
However, in my judgment an attempt to introduce spent fuel reprocessing
here in the U.S. in the near-term would not only not help to ensure a
greater role for nuclear power but would actually make this outcome
less likely.
Spent nuclear fuel from commercial light water reactors typically
contains about one percent of plutonium. Recovering this plutonium and
recycling it in so-called MOX or mixed uranium-plutonium oxide fuel
would reduce the requirement for natural uranium ore by about 17
percent and the requirement for uranium enrichment services by a
similar amount. But the operations needed to accomplish this--
reprocessing and the fabrication of mixed-oxide fuel--are costly, and
adopting them would cause an increase in the overall cost of nuclear
electricity relative to the open or once-through fuel cycle with direct
disposal of spent fuel. There is no disagreement about this, although
opinions differ as to how large the cost penalty would be. But given
that unfavorable economics has been one of the main barriers to nuclear
energy investment for decades, and that it remains a major issue today,
any proposed course of action that would result in an increase in
nuclear generating costs should be viewed with caution.
Those who advocate near-term reprocessing make three arguments in
response to these concerns:
First, that the closed fuel cycle is indeed more costly, but
that the cost penalty is not large, and so we should not worry
too much about it.
Second, that although the closed fuel cycle is more expensive
than the open cycle under current economic conditions, in the
future this comparison is likely to be reversed.
Third, that the economic penalty associated with reprocessing
and recycle is outweighed by the non-economic benefits that
would accrue. In the past, advocates of reprocessing have
emphasized its contributions to extending fuel supplies and to
energy supply security. Today the principal claim is that
reprocessing will facilitate and simplify the management and
disposal of nuclear waste.
These arguments are superficially attractive, but on closer
analysis none of them carries real weight. Indeed, the preponderance of
evidence in each case points in the opposite direction, to the need to
avoid the implementation of reprocessing in the near-term. I will
briefly comment on each point in turn.
First, how large is the cost penalty associated with reprocessing
and recycle likely to be? An exact answer is not possible, because some
of the most important contributing factors are uncertain or otherwise
difficult to estimate. The biggest source of uncertainty, with the
largest impact on overall cost, is associated with reprocessing itself.
Other important uncertainties center on the cost of MOX fuel
fabrication, and the cost of disposing of reprocessed high-level waste
relative to the direct disposal of spent fuel.
Under current economic conditions, and making generally optimistic
assumptions about how much reprocessing and MOX fabrication services
would cost were they to be available in the U.S., I estimate that a
U.S. nuclear power plant opting to use these services would incur a
total nuclear fuel cycle cost of about 1.8 cents per kilowatt hour of
electricity. By comparison, the total cost of the once through fuel
cycle is a little under 0.6 cents per kilowatt hour. In other words,
nuclear power plants operating on the closed fuel cycle would
experience a nuclear fuel cycle cost increase of about 300 percent.
Since fuel cycle expenses account for about 10 percent of the total
cost of nuclear electricity from unamortized nuclear power plants
(capital-related costs account for most of the remainder), this would
be equivalent to an increase of about 20 percent in the total nuclear
generation cost.\2\
---------------------------------------------------------------------------
\2\ In this analysis, the cost of reprocessing is assumed to be
$1,000 per kilogram of heavy metal in spent fuel. This is an optimistic
assumption, and is considerably lower than the estimate made by Matthew
Bunn and his colleagues for a new reprocessing plant with the same
technical and cost characteristics as BNFL's Thermal Oxide Reprocessing
Plant (THORP) at Sellafield in the UK. (See Matthew Bunn, Steve Fetter,
John Holdren, and Bob van der Zwaan, ``The Economics of Reprocessing
versus Direct Disposal of Spent Fuel,'' Project on Managing the Atom,
Kennedy School of Government, Harvard University, December 2003.) Any
new reprocessing plant committed for construction for at least the next
decade would necessarily be modeled closely on the PUREX technology
employed at THORP and at the French fuel cycle firm Areva's
reprocessing complex at La Hague. According to the Harvard study, the
cost at such a plant would range from $1,350 to $3,100 per kilogram,
depending on the financing arrangements used. The low end of the range
assumes a government-owned plant, with access to capital at risk-free
interest rates; the upper end would apply to a privately-owned plant
with no guaranteed rate of return on investment. Reports over the last
few years indicate that reprocessing contracts offered by THORP and by
Areva's UP-3 reprocessing plant at La Hague have recently been in the
$600-$900 per kilogram range. But both of these plants have now been
fully amortized, and the offered prices are believed only to cover
operating costs. Earlier contracts at these plants, for which the price
included a capital cost recovery component, were reportedly in the
$1,700-$2,300/kg range (see Bunn et al., op.cit.) Thus the $1,000/kg
cost assumed here is conservative even with respect to past experience.
Moreover, future reprocessing plants would almost certainly be required
to meet more stringent and hence more costly safety and environmental
specifications than the plants at Sellafield and La Hague, including a
zero-emission requirement for gaseous fission products and the need to
harden facilities against the risk of terrorist attack.
---------------------------------------------------------------------------
In this analysis, disposing of reprocessed high-level waste was
assumed to be 25 percent less expensive than disposing of spent fuel
directly. In fact, there can be little confidence today in any estimate
of such cost savings, especially if the need to dispose of non-high-
level waste contaminated with significant quantities of long-lived
transuranic radionuclides generated in reprocessing and MOX fabrication
is also taken into account. But even if the cost of disposing of
reprocessed high-level waste were zero, the basic conclusion that
reprocessing is uneconomic would not change.
The impact of reprocessing is often expressed in terms of the
average cost for the entire fleet of nuclear power plants. The usual
assumption is that the fleet would be configured so as to be in balance
with respect to plutonium flows, with just enough power plants using
MOX fuel to consume all the plutonium recovered by reprocessing the
spent fuel from the rest of the plant population. In that case, and
using the same economic assumptions as before, the effect of
reprocessing and plutonium recycle would be to increase the fleet-
average fuel cycle cost by about 0.23 cents/kilowatt hour, or about 40
percent. The total nuclear electricity cost would increase by about
four percent. However, while fleet-averaging may be appropriate for a
centrally-planned nuclear power industry like that of, say, France,
where the enforcement of cross-subsidy arrangements ensuring uniformity
of cost impacts across the entire industry is perhaps plausible, this
would not be the case in the U.S. Here, in the absence of a direct
federal subsidy, nuclear plant owners opting for the closed fuel cycle
would either have to absorb the entire cost increase themselves or pass
part or all of it on to their customers. In the competitive wholesale
regional power markets in which many U.S. nuclear power plants operate,
it is unlikely that either option would be attractive to plant owners.
Could today's negative economic prognosis for reprocessing be
reversed in the future? For at least the next few decades this seems
extremely unlikely. For example, even with the same optimistic
assumptions for reprocessing and MOX fabrication costs as before, the
purchase price of natural uranium would have to increase to almost
$400/kg for reprocessing to be economic. By comparison, the average
price of uranium delivered to U.S. nuclear power reactors under long-
term contract during 2004 was about $32/kg.\3\ In recent months uranium
prices have moved sharply higher, with long-term contract prices as of
mid-May reportedly exceeding $70/kg. But this is still far below the
break-even price of $400/kg. Alternatively, could reprocessing costs
decline to the point at which MOX fuel would be competitive with low-
enriched uranium fuel? At current uranium prices the cost of
reprocessing would have to fall below about $260/kgHM, a reduction of
about 75 percent relative to the (already optimistic) reference
reprocessing cost assumed here. In neither of these scenarios do the
necessary price movements fall within the bounds of the credible.
---------------------------------------------------------------------------
\3\ Energy Information Administration, ``Uranium Marketing Annual
Report--2004 Edition,'' release date: 29 April 29 2005, at http://
www.eia.doe.gov/cneaf/nuclear/umar/umar.html.
---------------------------------------------------------------------------
Indeed, the needed reduction in reprocessing costs would be
particularly implausible given a requirement to select a specific
reprocessing technology for large-scale implementation as early as
2007, as is called for in recent House legislation. This requirement
would effectively force the adoption of the PUREX technology that is
currently in use in France, the United Kingdom, and Japan, since no
alternative would be available on that time scale. And there is simply
no possibility of achieving a cost reduction of 75 percent--or anything
close to it--for this relatively mature technology.
A similar point can be made about the waste management implications
of reprocessing. The selection of PUREX reprocessing technology would
not fundamentally change either the impending problem of inadequate
interim spent fuel storage capacity or the problem of finding a
suitable site for final waste disposal. The need for additional storage
capacity and for a final repository, whether at Yucca Mountain or
elsewhere, would still remain.
Advanced reprocessing technologies, if coupled with transmutation
schemes, could in principle improve the prospects for successful
disposal. Such schemes would partition plutonium and other long-lived
actinides from the spent fuel--and possibly also certain long-lived
fission products--and transmute them into shorter-lived and more benign
species. The goals would be to reduce the thermal load on the
repository, thereby increasing its storage capacity, and to shorten the
time for which the waste must be isolated from the biosphere. It is
important for research to continue on advanced fuel cycle technologies
potentially capable of achieving these goals. But even in the best case
these technologies are not likely to be available for large-scale
deployment for at least two or three decades. Indeed, there is no
guarantee that the desired performance objectives could be achieved on
any time scale. The eventual economic impact of such schemes cannot now
be predicted with confidence. But the strong likelihood is that they
would be more costly than conventional PUREX reprocessing and MOX
recycle, since they would entail more complex separations processes,
more complete recovery of radionuclides, a more complex fuel
fabrication process, and the need to transmute a broader array of
radionuclides than just the plutonium isotopes.
The MIT Study on the Future of Nuclear Power considered a range of
advanced fuel cycle options from a waste management perspective, and
reached the following conclusion:\4\
---------------------------------------------------------------------------
\4\ MIT Study Group, The Future of Nuclear Power, Massachusetts
Institute of Technology, 2003.
``We do not believe that a convincing case can be made on the
basis of waste management considerations alone that the
benefits of advanced, closed fuel cycle schemes would outweigh
the attendant safety, environmental, and security risks and
---------------------------------------------------------------------------
economic costs.''
The MIT report further concluded that waste management strategies
in the open fuel cycle are available that could yield long-term risk
reduction benefits at least as great as those claimed for advanced
reprocessing and transmutation schemes, and with fewer short-term risks
and lower development and deployment costs. These strategies include
both relatively incremental improvements to the currently preferred
approach of building mined geologic repositories as well as more far-
reaching innovations such as deep borehole disposal.
For all these reasons, as well as others I have not discussed here,
including the adequacy of natural uranium resources and the risks of
nuclear weapons proliferation, the MIT Study concluded that
reprocessing and MOX recycle is not an attractive option for nuclear
energy for at least the next fifty years, even assuming substantial
expansion of the nuclear industry both here in the U.S. and overseas,
and that the open, once-through fuel cycle is the best choice for the
nuclear power sector over that period. The report recommends that:
``For the next decades, government and industry in the U.S.
and elsewhere should give priority to the deployment of the
once-through fuel cycle, rather than the development of more
expensive closed fuel cycle technology involving reprocessing
and new advanced thermal or fast reactor technologies.''
Research on advanced reprocessing, recycling, and transmutation
technologies should certainly continue. A closed fuel cycle will be
necessary if fast-neutron breeder reactors ever become competitive. But
that does not seem likely for the foreseeable future, and for now the
primary goal of fuel cycle research should be to maximize the economic
competitiveness, the proliferation resistance, and the safety both
short- and long-term of the once-through fuel cycle.
What if, in spite of these arguments, Congress still seeks to
intervene to stimulate large scale reprocessing in the near-term?
Because a purely private initiative would be economically unviable,
such an intervention, to be effective, would inevitably require a major
commitment of federal funds.\5\ The need for direct government
involvement would also place heavy demands on the government's nuclear-
skilled human resources, who would necessarily be involved in the
selection of a site, the development of a licensing framework, the
management of contractors, and so on. The resources--both human and
financial--that are potentially available to the government to support
the development of nuclear power are not unlimited. A new federal
reprocessing initiative would therefore risk diverting resources from
other policy initiatives that are likely to make a greater positive
contribution to the future of nuclear power over the next few decades.
---------------------------------------------------------------------------
\5\ A large new reprocessing facility using the same PUREX
technology now in use in France and the UK would cost several billion
dollars to build. The capital cost of the new Japanese PUREX
reprocessing plant at Rokkasho-Mura reportedly exceeds $20 billion.
Biography for Richard K. Lester
Richard Lester is the founding Director of the MIT Industrial
Performance Center and a Professor of Nuclear Science and Engineering
at MIT. His research and teaching focus on industrial innovation and
technology management, with an emphasis on the energy and environmental
industries. He has led several major studies of national and regional
competitiveness and innovation performance commissioned by governments
and industrial groups around the world.
Professor Lester is also internationally known for his research on
the management and control of nuclear technology, and at MIT he
continues to teach and supervise students in the fields of nuclear
waste management and nuclear energy economics and policy.
Professor Lester is a widely published author. His recent books
include Innovation--The Missing Dimension (Harvard University Press,
2004), jointly authored with Michael J. Piore; Making Technology Work:
Applications in Energy and the Environment (Cambridge University Press,
2003), with John M. Deutch; and Global Taiwan (M.E. Sharpe, 2005), co-
edited with Suzanne Berger. Other books include The Productive Edge:
How American Industries Are Pointing the Way to a New Era of Economic
Growth (W.W. Norton, 1998), Made By Hong Kong (Oxford University Press,
1997) with Suzanne Berger, and Made in America (MIT Press, 1989) with
Michael Dertouzos and Robert Solow. (With over 300,000 copies in print
in eight languages, Made in America is the best-selling title in the
history of MIT Press.)
Dr. Lester recently served as a member of the MIT study team that
produced the 2003 report, The Future of Nuclear Power, and is currently
participating in a follow-up MIT study on the global future of coal.
Early in his career, Dr. Lester developed the Nation's first graduate-
level course on nuclear waste management, and he is co-author, with
Mason Willrich, of Radioactive Waste: Management and Regulation (Free
Press, 1978).
Professor Lester obtained his undergraduate degree in chemical
engineering from Imperial College and a doctorate in nuclear
engineering from MIT. He has been a member of the MIT faculty since
1979. He serves as an advisor or consultant to numerous corporations,
governments, foundations and non-profit groups, and lectures frequently
to academic, business and general audiences throughout the world.
Chairwoman Biggert. Thank you very much.
Dr. Jones, you are recognized.
STATEMENT OF DR. DONALD W. JONES, VICE PRESIDENT OF MARKETING
AND SENIOR ECONOMIST AT RCF ECONOMIC AND FINANCIAL CONSULTING,
INC.
Dr. Jones. Good afternoon, Madame Chairman, Ranking Member
Honda, and Members of the Energy Subcommittee of the House
Committee on Science.
I am Dr. Donald W. Jones, Vice President of RCF Economic
and Financial Consulting. Our firm, headquartered in Chicago,
conducts analysis of energy and environmental issues, as well
as other economic topics. Together with Dr. George S. Tolley,
Professor Emeritus of Economics at the University of Chicago, I
co-directed a study conducted at the University of Chicago
entitled ``The Economic Future of Nuclear Power.'' Our study
was published in August 2004 and was funded by the U.S.
Department of Energy. My prepared statement today is based on
the findings of our study. I ask that our study be submitted
for the record.
Chairwoman Biggert. Without objection.
(The information appears in Appendix 2: Additional Material
for the Record, p. 66.)
Dr. Jones. I have been asked by the Subcommittee to focus
on the economics aspects of nuclear fuel reprocessing. In
addition, the Subcommittee identified the following questions
that should be specifically addressed. One, under what
conditions would nuclear fuel reprocessing be economically
competitive with the open fuel cycle and with other sources of
electric power? What major assumptions underlie your analysis?
And two, how would a decision to reprocess affect the economic
future of nuclear power in the United States?
The financial model developed in our study projects that,
in the absence of federal financial policies aimed at the
nuclear industry, for example loan guarantees, accelerated
depreciation, and investment or production tax credits, the
first new nuclear plants coming on line will have a levelized
cost of electricity, or LCOE, which is the price required to
cover operating and capital costs, that ranges from $47 to $71
per megawatt hour. This price range exceeds projections of $33
to $41 for coal-fired plants and $35 to $45 for gas-fired
plants. Our assumptions for new nuclear plants included
accepted ranges of capital costs, $1,200 to $1,800 per kilowatt
overnight costs, with a three percent risk premium on loans and
equity, and seven-year estimated construction time. We found
that capital cost is the single most important factor
determining the economic competitiveness of nuclear power.
After first-of-a-kind engineering costs are paid and the
construction of the first few nuclear plants has been
completed, there is a good prospect that lower LCOEs can be
achieved that would allow nuclear to be directly competitive in
the marketplace, without subsidies. For fossil generation, the
assumptions included conservative, or low, ranges of capital
and fuel costs. Recent increases in coal and gas prices will
raise LCOEs for coal-fired and gas-fired plants. In the long-
term, the competitiveness of new nuclear plants will be
markedly enhanced by policies that required fossil-fired plants
to control greenhouse gas emissions.
Our projected costs for new nuclear plants included nuclear
fuel costs estimated at $4.35 per megawatt hour. This estimate
included the cost of raw uranium ore, its conversion, its
enrichment, and the cost to fabricate the nuclear fuel. An
additional $1 per megawatt hour was included for the nuclear
waste fee. The on-site storage cost was estimated to be about
10 cents per megawatt hour. Thus, the total nuclear fuel cycle
cost, assuming direct disposal, is less than 10 percent of
overall LCOE for the first few nuclear plants. The back-end
costs are estimated to even a smaller percentage, about two
percent of the cost of electricity.
Our study also examined the costs of reprocessing spent
nuclear fuel. We used publicly available estimates: estimates
reported by the Nuclear Energy Agency; work done at Harvard
University, under the auspices of Matthew Bunn et al.,
``Project on Managing the Atom;'' and work done by Simon
Lobdell, ``The Yucca Mountain Repository and the Future of
Reprocessing.'' NEA estimated that reprocessing costs were
about $2.40 per megawatt hour, Bunn et al.'s estimate is about
$1,000 per kilogram of heavy metal, or about $2.65 per megawatt
hour, and Lobdell's estimate is about $2.80 per megawatt hour.
Thus, the average of these estimates is about $2.65 per
megawatt hour, which still represents a small percentage of the
LCOE, a little less than five percent for the first new nuclear
plants. The study did not include the added fabrication costs
with recycling plutonium and uranium, or any net costs beyond
the levelized cost estimates for an advanced reactor to consume
the remaining actinides.
While the first new nuclear plants would not be competitive
with fossil generation without some form of temporary
assistance, reprocessing would have little influence on the
assistance required to make it competitive. If carbon
sequestration were to be required for fossil-fired generation,
even the first new nuclear plants, with reprocessing, would be
competitive.
To summarize, reprocessing would not be an important
economic influence on the competitiveness of new nuclear plants
under current regulatory and fuel-price circumstances. In
addition, as pointed out in our study, there are broad policy
issues that will more likely influence the choice to pursue
reprocessing and more advanced fuel cycles than the economic
factors.
Thank you very much, Madame Chairman and Subcommittee
Members. This concludes my statement, and I would be pleased to
answer any questions you might have.
[The prepared statement of Dr. Jones follows:]
Prepared Statement of Donald W. Jones
Good morning, Madame Chairwoman, Ranking Member Honda, and Members
of the Energy Subcommittee of the House Committee on Science. I am Dr.
Donald W. Jones, Vice President of RCF Economic and Financial
Consulting. Our firm, headquartered in Chicago, conducts analysis of
energy and environmental issues, as well as other economic topics.
Together with Dr. George S. Tolley, Professor Emeritus of Economics at
The University of Chicago, I co-directed a study conducted at The
University of Chicago, entitled ``The Economic Future of Nuclear
Power.'' Our study was published in August 2004, and was funded by the
U.S. Department of Energy. My prepared statement today is based on the
findings of our study. I ask that our study be submitted for the
record.
I have been asked by the Subcommittee to focus on the economic
aspects of nuclear fuel reprocessing. In addition, the Subcommittee
identified the following questions that should be specifically
addressed:
1. Under what conditions would nuclear fuel reprocessing be
economically competitive with the open fuel cycle and with
other sources of electric power? What major assumptions
underlie your analysis?
2. How would a decision to reprocess affect the economic
future of nuclear power in the U.S.?
The financial model developed in our study projects that, in the
absence of federal financial policies aimed at the nuclear industry
(e.g., loan guarantees, accelerated depreciation, and investment or
production tax credits), the first new nuclear plants coming on line
will have a levelized cost of electricity (LCOE, i.e., the price
required to cover operating and capital costs) that ranges from $47 to
$71 per megawatt-hour (MWh). This price range exceeds projections of
$33 to $41 for coal-fired plants and $35 to $45 for gas-fired plants.
Our assumptions for new nuclear plants included accepted ranges of
capital costs ($1,200 to $1,800 per kW overnight costs), with a three
percent risk premium on loans and equity, and seven-year estimated
construction time. We found that capital cost is the single most
important factor determining the economic competitiveness of nuclear
power. After first-of-a-kind engineering costs are paid and
construction of the first few nuclear plants has been completed, there
is a good prospect that lower LCOEs can be achieved that would allow
nuclear to be directly competitive in the marketplace (without
subsidies). For fossil generation, the assumptions included
conservative (low) ranges of capital and fuel costs. Recent increases
in coal and gas prices will raise LCOEs for coal-fired and gas-fired
plants. In the long-term, the competitiveness of new nuclear plants
would be markedly enhanced by policies that required fossil-fired
plants to control greenhouse gas emissions.
Our projected costs for new nuclear plants included nuclear fuel
costs estimated at $4.35 per MWh. This estimate included the cost of
raw uranium ore, its conversion, its enrichment, and the cost to
fabricate the nuclear fuel. An additional $1 per MWh was included for
the nuclear waste fee. The on-site storage cost was estimated to be
about $0.10 per MWh. Thus, the total nuclear fuel cycle cost, assuming
direct disposal, is less than ten percent of overall LCOE for the first
few nuclear plants. The back-end costs are estimated to be even a
smaller percentage, about two percent of the cost of electricity.
Our study also examined the costs of reprocessing spent nuclear
fuel. We used publicly available estimates: estimates reported by
Nuclear Energy Agency; work done at Harvard University, under the
auspices of Mathew Bunn et al., ``Project on Managing the Atom;'' and
work done by Simon Lobdell, ``The Yucca Mountain Repository and the
Future of Reprocessing.'' NEA estimated that reprocessing costs were
about $2.40 per MWh, Bunn et al.'s estimate is about $1,000 per
kilogram of heavy metal or about $2.65 per MWh, and Lobdell's estimate
is about $2.80 per MWh. Thus, the average of these estimates is about
$2.65 per MWh, which still represents a small percentage of the LCOE,
about five percent, for the first new nuclear plants. The study did not
include the added fabrication costs with recycling plutonium and
uranium, or any net costs beyond the levelized cost estimates for an
advanced reactor to consume the remaining actinides.
While the first new nuclear plants would not be competitive with
fossil generation without some form of temporary assistance,
reprocessing would have little influence on the assistance required to
make it competitive. If carbon sequestration were to be required for
fossil-fired generation, even the first new nuclear plants, with
reprocessing, would be competitive.
To summarize, reprocessing would not be an important economic
influence on the competitiveness of new nuclear plants under current
regulatory and fuel-price circumstances. In addition, as pointed out in
our study, there are broad policy issues that will more likely
influence the choice to pursue reprocessing and more advanced fuel
cycles than the economic factors.
Thank you very much Madame Chairwoman and Subcommittee Members.
This concludes my statement, and I would be pleased to answer any
questions you might have.
Biography for Donald W. Jones
Donald Jones is Vice President and Senior Economist at RCF Economic
and Financial Consulting in Chicago. In 2003 and 2004, he co-directed,
with George Tolley of the University of Chicago's Economics Department,
the Chicago study of the future of nuclear power in the United States.
Prior to joining RCF, he has been a research staff member at Oak Ridge
National Laboratory and has served on the faculties of the University
of Chicago, the University of Colorado-Boulder, and the University of
Tennessee. His background in energy includes price impacts of
electricity deregulation, electricity reliability, energy conservation,
renewable energy, environmental aspects of energy supply, strategic
petroleum reserves, the macroeconomic impacts of oil supply
disruptions, international trade in energy technologies, and various
aspects of energy in economic development. He received his Ph.D. from
the University of Chicago in 1974.
Chairwoman Biggert. Thank you very much.
Dr. Fetter, you are recognized.
STATEMENT OF DR. STEVE FETTER, DEAN, SCHOOL OF PUBLIC POLICY,
UNIVERSITY OF MARYLAND
Dr. Fetter. Madame Chairman and Members of the
Subcommittee, it is an honor to be invited here today to
discuss the economics of reprocessing.
In a recent study of this issue with colleagues at Harvard
University, we searched for information on the costs of
reprocessing and other fuel cycle services and examined studies
by the OECD, the governments of France and Japan, the National
Academy of Sciences, MIT Chicago, and others. I draw on these
studies to address the specific questions raised in your letter
to me.
First, under what conditions would reprocessing be
economically competitive? There is widespread agreement that
reprocessing is significantly more expensive than direct
disposal. Official studies in France and Japan agree with this
conclusion. At last year's average uranium prices, reprocessing
would have to cost less than $400 per kilogram of spent fuel to
be competitive with the once-through fuel cycle. For
comparison, we estimate that reprocessing in a new U.S.
facility built and operated by a private entity, similar to
those in the United Kingdom and France, would cost over $2,000
per kilogram, five times more. But even if it only costs $1,000
per kilogram, which might be possible with government
subsidies, the price of uranium would have to rise eight fold,
to about $400 per kilogram, to break even with the once-through
fuel cycle. We believe it is extremely unlikely that uranium
prices will rise to this level in the next 50 years, even if
nuclear power expands dramatically.
The PUREX process that has been in use--the PUREX process
has been in use for more than five decades, and it is unlikely
that dramatic cost reductions could be achieved with this or
similar processes, such as UREX+. In fact, increasingly
stringent environmental and safety regulations will put
countervailing pressures on costs. The experience at the
facility in Japan, which has seen capital cost estimates triple
to $18 billion, should serve as a cautionary tale to any
country contemplating reprocessing.
Pyroprocessing has also received attention, but a 1996
review by the National Academy concluded that it is by no means
certain that pyroprocessing will be more economical than PUREX.
And more recent reviews concluded that it would be
substantially more expensive.
Second, what would it cost to manage nuclear waste through
a system of reprocessing and transmutation? It is important to
note that traditional approaches to reprocessing and recycle,
as practiced in France and planned in Japan, do not have waste
disposal advantages. That is because the required repository
space is determined by the heat output of the wastes, not by
their mass or volume. If just the plutonium recovered during
reprocessing is recycled in existing reactors, the build up of
heat-generating isotopes results in greater overall waste heat
output.
Substantial reductions in repository requirements can be
achieved only if all of the major, long-lived heat generating
radionuclides are separated and transmuted. But a separation
and transmutation system would be far more expensive than
direct disposal.
How much more expensive? The 1996 National Academy report
concluded that the excess cost would be ``no less than $50
billion and easily could be over $100 billion for 62,000 tons
of spent fuel.'' This is in addition to the cost of Yucca
Mountain, which would still be needed for the disposal of high-
level reprocessing waste.
Third, what government subsidies might be necessary?
Because there is no commercial incentive to develop a system
that is more expensive for waste disposal, the U.S. Government
would have to build and operate the required separations and
transmutation facilities or create a legal framework that
required reactor operators to reprocess their spent fuel. Based
on the Academy estimate, which I think is conservative, the
extra cost would be $100 to $200 billion to separate and
transmute all of the spent fuel that has been or will be
discharged by current reactors, assuming they all receive
license extensions. These extra costs could be funded by
tripling or quintupling the nuclear waste fund fee, thereby
passing the extra costs, perhaps $2 to $3 billion per year at
current levels of nuclear generation, along to the rate payer.
Fourth, how would reprocessing affect the economic future
of nuclear power? I think nuclear power will become more
attractive as natural gas prices rise and as we attempt to
reduce carbon dioxide emissions. But nuclear will still have to
compete with alternatives. Traditional reprocessing would add,
perhaps, seven percent to the price of nuclear electricity. A
separation and transmutation system would add still more. This
can only hurt nuclear power in the economic competition with
alternatives and could make the difference between a
revitalized industry and continued stagnation.
Advocates of reprocessing point to the difficulty in
opening Yucca Mountain as a barrier to the expansion of nuclear
power. Reprocessing would not eliminate the need for Yucca
Mountain, but a separation and transmutation system could
delay, or perhaps even eliminate, the need to expand Yucca
Mountain or build a second repository if nuclear expands. But I
believe it would be far more difficult to gain public
acceptance and licensing approval for the large number of
separation and transmutation faculties that would be required
as compared with an expansion of Yucca Mountain. Reprocessing
has been fiercely opposed for decades, and there would be stiff
opposition to having taxpayers, or ratepayers, subsidize this
enterprise at the rate of several billion dollars per year.
Thank you, Madame Chairman.
[The prepared statement of Dr. Fetter follows:]
Prepared Statement of Steve Fetter
Madam Chairwoman and Members of the Committee:
It is an honor to be invited here today to discuss the economic
aspects of nuclear fuel reprocessing. Together with colleagues at
Harvard University, I recently completed an in-depth study of this
issue,\1\ the results of which were published recently in the journal
Nuclear Technology.\2\ In the course of this study we conducted an
exhaustive search for information on historical and projected costs of
reprocessing and other nuclear fuel-cycle services. We also examined
previous studies of fuel-cycle economics by the Nuclear Energy Agency
of the Organization of Economic Cooperation and Development (OECD), the
governments of France and Japan, the U.S. National Academy of Sciences,
the Massachusetts Institute of Technology, and others. Our conclusions
are therefore well-grounded, and we have made our results transparent
by documenting all of our assumptions and methods and by making
spreadsheet versions of our economic models available on the web, so
that anyone can reproduce and check our results. With this background,
let me turn to the specific questions raised in your letter to me.
---------------------------------------------------------------------------
\1\ Matthew Bunn, Steve Fetter, John P. Holdren, and Bob van der
Zwaan, The Economics of Reprocessing vs. Direct Disposal of Spent
Nuclear Fuel (Cambridge, MA: Project on Managing the Atom, Belfer
Center for Science and International Affairs, John F. Kennedy School of
Government, Harvard University, December 2003), available at http://
www.puaf.umd.edu/Fetter/2003-Bunn-repro.pdf.
\2\ Matthew Bunn, Steve Fetter, John P. Holdren, and Bob van der
Zwaan, ``The Economics of Reprocessing versus Direct Disposal of Spent
Nuclear Fuel,'' Nuclear Technology, Vol. 150, pp. 209-230 (June 2005),
available at http://www.puaf.umd.edu/Fetter/2005-NT-repro.pdf.
Under what conditions would reprocessing be economically competitive
---------------------------------------------------------------------------
with the once-through fuel cycle?
In the once-through fuel cycle, spent nuclear fuel discharged from
light-water reactors is placed in a deep geological repository, such as
the one being built at Yucca Mountain in Nevada. The main alternative,
as practiced in France and planned in Japan, is to reprocesses spent
fuel to separate the unburned plutonium and uranium from other
radionuclides. The recovered plutonium is used to produce mixed-oxide
(MOX) fuel for existing light-water reactors, and the high-level
radioactive wastes are vitrified and stored pending disposal in a deep
geologic repository. It is important to note that reprocessing does not
eliminate high-level wastes or negate the need for a repository.
There is widespread agreement, in the United States and abroad,
that reprocessing currently is significantly more expensive than direct
disposal.\3\ This is because reprocessing itself is an expensive
process, and also because the MOX fuel produced using the recovered
plutonium is more expensive, at current uranium prices, than the low-
enriched uranium (LEU) that is normally used to fuel reactors. Last
year, operators of U.S. nuclear reactors on average paid $33 per
kilogram for uranium.\4\ At this uranium price, reprocessing would have
to cost less than $400 per kilogram of spent fuel in order to be
competitive with direct disposal.\5\ For comparison, we estimate that
reprocessing in a new U.S. facility, similar to those in the United
Kingdom and France, would cost over $2,000 per kilogram.\6\ But even if
reprocessing costs could be halved, to $1,000 per kilogram of spent
fuel, the price of uranium would have to rise to nearly $400 per
kilogram in order to break even with the once-through fuel cycle. It is
extremely unlikely that uranium prices will rise to this level in the
next 50 years, even if worldwide use of nuclear power expands
dramatically.
---------------------------------------------------------------------------
\3\ See, for example, J-M. Charpin, B. Dessus, and R. Pellat,
``Economic Forecast Study of the Nuclear Power Option,'' Office of the
Prime Minister, Paris, France (July 2000); ``Interim Report Concerning
the Nuclear Fuel Cycle Policy,'' New Nuclear Policy-planning Council,
Japan Atomic Energy Commission (November 2004), summary available at
http://cnic.jp/english/topics/policy/chokei/longterminterim.html; The
Future of Nuclear Power (MIT, 2003); available at http://web.mit.edu/
nuclearpower.
\4\ Energy Information Administration, Uranium Marketing Annual
Report, 2004 Edition, 29 April 2005; available at http://
www.eia.doe.gov/cneaf/nuclear/umar/umar.html.
\5\ Computed with the spreadsheet available at http://
www.puaf.umd.edu/Fetter/programs/COE-LWR.xls, using reference
assumptions that are favorable to reprocessing, including a 50 percent
reduction in waste-disposal costs.
\6\ Assumes a plant throughput of 800 tons of spent fuel per year
for 30 years; an overnight capital cost of $6 billion, repaid at
interest rates appropriate for a regulated private entity with a
guaranteed rate of return; annual operating costs of $560 million per
year, and standard assumptions about construction time, taxes and
insurance, and contingency, pre-operating, and decommissioning costs.
For a government-financed facility with very low cost of money, the
corresponding cost would be $1,350/kg; for an unregulated private
venture, the cost would be $3,100/kg. See Bunn, et al., ``The Economics
of Reprocessing versus Direct Disposal of Spent Nuclear Fuel,'' p. 213.
---------------------------------------------------------------------------
Substantial reductions in the cost of reprocessing would be needed
even to achieve the $1,000 per kilogram mentioned above. The Plutonium
Redox Extraction (PUREX) process used in existing facilities has been
perfected over more than five decades, and it seems unlikely that
dramatic cost reductions could be achieved using this or similar
aqueous technologies, such as UREX+. Moreover, increasingly stringent
environmental and safety regulations will put countervailing pressures
on costs. The experience at the Rokkasho-Mura reprocessing facility in
Japan, which has seen initial capital cost estimates triple to $18
billion, should serve as a cautionary tale for any country
contemplating going down this road.
A range of alternative chemical separations processes have been
proposed over the years. Recently, attention has focused on
electrometallurgical processing or ``pyroprocessing.'' A 1996 review by
the National Academy of Sciences concluded, however, that ``it is by no
means certain that pyroprocessing will prove more economical'' than
PUREX. Indeed, recent official reviews have concluded that such
techniques are likely to be substantially more expensive than PUREX.\7\
---------------------------------------------------------------------------
\7\ Generation IV Roadmap: Report of the Fuel Cycle Crosscut Group,
U.S. Department of Energy, Office of Nuclear Energy, Washington, DC
(March 2001); ``Accelerator-Driven Systems (ADS) and Fast Reactors (FR)
in Advanced Nuclear Fuel Cycles: A Comparative Study,'' OECD/NEA 03109,
Organization for Economic Cooperation and Development, Nuclear Energy
Agency (2002).
---------------------------------------------------------------------------
It is conceivable, of course, that at some point in the long-term
future research and development could lead to a fundamentally different
approach that might have lower costs. But it does not appear likely
that the cost of reprocessing will be reduced to levels that would be
economically competitive with direct disposal in the foreseeable
future.
What would it cost to manage nuclear waste through a system that
includes reprocessing, recycling, and transmutation?
Traditional approaches to reprocessing and recycle, as practiced in
France and planned in Japan, do not significantly reduce the amount of
repository space required for the disposal of high-level radioactive
wastes. The required repository area is determined by the heat output
of the wastes, not by their mass or volume. If the plutonium recovered
during reprocessing is recycled in existing light-water reactors, the
build-up of heat-generating minor actinides would result in a greater
total heat output from wastes than if the same amount of electricity
was generated using the once-through fuel cycle.
Substantial reductions in repository requirements can be achieved
only if all of the major long-lived heat-generating radionuclides are
separated from the spent fuel and recycled as fuel for fast-neutron
reactors, which can transmute these long-lived radionuclides. This
separation-and-transmutation system would, however, almost certainly be
far more expensive than the direct disposal of spent fuel, per unit of
electricity generated. This is because reprocessing is expensive,
because the costs of fabricating and using the highly radioactive fuel
would be high, and because the fast-neutron reactors required to
transmute the long-lived radionuclides will cost significantly more
than light-water reactors.
How much more expensive? The National Academy of Sciences examined
this question in a 1996 report and concluded that the excess cost for a
separation-and-transmutation system over once-through disposal would be
``no less than $50 billion and easily could be over $100 billion'' for
62,000 tons of spent fuel (the current legislated limit on Yucca
Mountain).\8\ This conclusion remains valid today; there have no
technical breakthroughs or dramatic cost reductions in either
separation or transmutation technologies. Again, the separation-and-
transmutation system would generate high-level wastes requiring
geologic disposal and therefore would not eliminate the need for the
Yucca Mountain repository.
---------------------------------------------------------------------------
\8\ U.S. National Research Council, Committee on Separations
Technology and Transmutation Systems, Nuclear Wastes: Technologies for
Separations and Transmutation, National Academy Press, Washington DC
(1996); executive summary available at http://books.nap.edu/html/
nuclear/summary.html.
What government subsidies might be necessary to introduce a separation-
---------------------------------------------------------------------------
and-transmutation fuel cycle in the United States?
Today, nuclear reactor operators pay a small fee--$1 per megawatt-
hour of electricity produced (about two percent of the wholesale price
of nuclear-generated electricity)--for the geologic disposal of spent
fuel. This fee, which is deposited into the Nuclear Waste Trust Fund,
is considered adequate to pay for the full costs of geologic disposal.
As noted above, a separation-and-transmutation system would be
considerably more expensive than direct disposal. Because there is no
commercial incentive to develop a more expensive system for the
disposal of disposal of wastes, the U.S. Government would, at a
minimum, have to assume the entire costs of research and development,
which would likely total several billion dollars. Given the lack of
market incentives, the U.S. Government might also have to build and
operate the required separations and transmutation facilities. If the
National Academy's estimate is correct, the total extra cost would be
$50 to $100 billion to process the 62,000 tons of fuel planned for
Yucca Mountain. If the licenses of all currently operating reactors are
extended, the amount of spent fuel and the total extra cost would be
about twice as large--$100 to $200 billion--and would be still larger
if new reactors are built. These extra costs could be funded by
tripling or quintupling the nuclear waste fund fee, thereby passing the
extra costs--$1.5 to $3 billion per year at current levels of nuclear
generation--along to the rate payer. Alternatively, Congress could
create a legal framework that would require reactor operators to
reprocess their spent fuel, thereby artificially stimulating a market
for private reprocessing and transmutation facilities. The final result
would be the same, however: nuclear-generated electricity would become
more expensive.
How would a decision to reprocess affect the economic future of nuclear
power?
No nuclear reactors have been ordered in the United States since
1978, and no reactor ordered after 1974 was completed. Although public
concern about reactor accidents had a role in the stagnation of nuclear
power, it was driven primarily by economic considerations: in
particular, the high capital costs and high financial risk of nuclear
power compared to alternative methods of generating electricity or
managing demand for electricity.
Increasing natural gas prices, and especially efforts to mitigate
climate change by reducing emissions of carbon dioxide from the burning
of fossil fuels, will increase the attractiveness of nuclear power. But
nuclear power will still have to compete with other alternatives,
including wind power, biomass, and coal-fired power plants with carbon
sequestration. Traditional reprocessing would likely add three to seven
percent to the wholesale price of nuclear-generated electricity,
depending primarily on the cost of reprocessing;\9\ a full separation-
and-transmutation system would add still more. This can only hurt
nuclear power in the economic competition with alternative methods of
generating electricity, and could make the difference between a
revitalized industry and continued stagnation and decline.
---------------------------------------------------------------------------
\9\ Assuming reprocessing costs of $1,000 to $2,000 per kilogram of
spent fuel, uranium at $50 per kilogram, and other costs that are
generally favorable to reprocessing, the additional cost of
reprocessing and recycle is $1.3 to $3.5 per megawatt-hour; the assumed
wholesale electricity price is $50/MWh for direct disposal.
---------------------------------------------------------------------------
Advocates of reprocessing often point to the difficulty in
licensing Yucca Mountain as a barrier to the expansion of nuclear
power. As noted above, reprocessing would not eliminate the need for
Yucca Mountain. A separation-and-transmutation system could, however,
greatly delay--and might even eliminate--the need to expand the
capacity of Yucca Mountain or to build a second repository. (As a
purely technical matter, it is likely that the Yucca Mountain
repository could be expanded to hold all of the waste that will be
discharged by current reactors, even with license extensions.)
Advocates of a separation-and-transmutation system implicitly assume
that it would be easier to gain public acceptance and licensing
approval for a large number of complex and expensive separation and
transmutation facilities than for an expansion of Yucca Mountain or a
second repository. This assumption is likely wrong. Reprocessing of
spent fuel has been fiercely opposed by a substantial section of the
interested public in the United States for decades, and there would
stiff opposition to having taxpayers or ratepayers subsidize this
enterprise at the rate of several billion dollars per year.
Biography for Steve Fetter
Steve Fetter is Dean of the School of Public Policy at the
University of Maryland, College Park, where he has been a Professor
since 1988. His research interests include nuclear arms control and
nonproliferation, nuclear energy and health effects of radiation, and
climate change and carbon-free energy supply.
Fetter serves on the National Academy of Sciences' Committee on
International Security and Arms Control, the Department of Energy's
Nuclear Energy Research Advisory Committee, the Department of Homeland
Security's WMD Infrastructure Experts Team, the Board of Directors of
the Sustainable Energy Institute and the Arms Control Association, the
Board of Governors of the RAND Graduate School, the Advisory Board of
Human Rights Watch's Arms Division, the University of Chicago's
Advisory Committee on Nuclear Non-Proliferation, and the Board of
Editors of Science and Global Security. He is a fellow of the American
Physical Society, a recipient of its Joseph A. Burton Forum Award, and
a member of its Panel on Public Affairs.
Fetter served as special assistant to the Assistant Secretary of
Defense for International Security Policy (1993-94), and as an American
Institute of Physics fellow (2004) and a Council on Foreign Relations
international affairs fellow (1992) at the State Department. He has
been a visiting fellow at Stanford's Center for International Security
and Cooperation, Harvard's Center for Science and International
Affairs, MIT's Plasma Fusion Center, and Lawrence Livermore National
Laboratory. He has served as Vice Chairman of the Federation of
American Scientists, and as Associate Director of the Joint Global
Change Research Institute.
Fetter received a Ph.D. in energy and resources from the University
of California, Berkeley, in 1985 and a S.B. in physics from MIT in
1981.
His articles have appeared in Science, Nature, Scientific American,
International Security, Science and Global Security, Nuclear
Technology, Bulletin of the Atomic Scientists, and Arms Control Today.
He has contributed chapters to nearly two dozen edited volumes, is
author or co-author of several books and monographs, including Toward a
Comprehensive Test Ban, The Future of U.S. Nuclear Weapons Policy, The
Nuclear Turning Point, Monitoring Nuclear Weapons and Nuclear Explosive
Materials, Effects of Nuclear Earth-Penetrator and Other Weapons, and
Climate Change and the Transformation of World Energy Supply.
Chairwoman Biggert. Thank you very much.
And now, Mr. Fertel, you are recognized for five minutes.
STATEMENT OF MR. MARVIN S. FERTEL, SENIOR VICE PRESIDENT AND
CHIEF NUCLEAR OFFICER, THE NUCLEAR ENERGY INSTITUTE
Mr. Fertel. Thank you. Madame Chairman, Ranking Member
Honda, Members of the Subcommittee, on behalf of the Nuclear
Energy Institute, more than 250 members, I thank you for the
opportunity to testify today on the economic aspects of nuclear
fuel reprocessing. I would also like to thank this subcommittee
for its leadership in addressing other issues important to the
nuclear industry, like support for university programs and
workforce activities. Thank you very much.
With specific regard to reprocessing, I would like to
emphasize the following key points to start.
First, reprocessing could play an important role in the
future of nuclear energy by providing needed nuclear fuel
supplies, but it must be integrated into the overall nuclear
fuel cycle.
Second, current reprocessing technology offers limited
short-term benefits to use nuclear fuel disposal but has the
future potential to provide benefits that will make disposal
more efficient and cost effective. Under all circumstances,
however, we will still need a deep geologic repository to
dispose of the residual waste and Yucca Mountain will still be
necessary.
Third, potentially, reprocessing in the United States and
other reliable nations could further non-proliferation goals,
but the additional costs associated with Federal Government
reprocessing to achieve those goals should not be borne by the
electricity customers.
And fourth, and important to this subcommittee, I think,
the Federal Government should put in place firm, long-range
policies that support reprocessing and pursue the research,
development, and demonstration of new improved proliferation-
resistant reprocessing technologies.
In preparing for this hearing, the Committee asked me to
address three questions. First, is there a consensus position
among the nuclear plant owning utilities regarding whether the
United States should introduce reprocessing into the nuclear
fuel cycle within the next five to 10 years?
Within the U.S. nuclear industry, a dialogue on the
benefits of reprocessing is really just beginning. However,
what seems clear at this time is that the long-term benefits to
fuel supply and waste management of improved recycling
technologies warrants a systematic research and development
program. And that R&D program should certainly be well-
developed and producing results within the next five to 10
years. The actual deployment of new reprocessing facilities in
this country would take more than a decade to license,
construct, and commission after the R&D was completed and then
appropriate technologies were selected.
The decision of when to actually deploy recycling
technology should be based upon a combination of
considerations, including the growth of nuclear energy in this
country, the market economics of the fuel supply system,
government decisions regarding the management and ultimate
disposal of used nuclear fuel, and non-proliferation
strategies, which could involve the taking of used fuel from
outside the United States and/or the provision of mixed oxide
fuel to users outside the United States.
The second question asked by the Committee related to what
government investment might be necessary to introduce a more
advanced nuclear fuel cycle in the United States.
As I mentioned earlier, from a commercial industry
perspective, the dialogue and assessments of reprocessing,
transmutation, and the use of fast reactors is at an early
stage, and we have not performed any economic evaluations of
the alternatives and have just begun to study the experience of
other countries, like, France, England, and Japan.
However, in the countries that have reprocessing, the
decision was based on government policy. And the resources
committed to develop, deploy, and operate the technology were
all government funded. Assuming similar policy decisions in the
United States and the actual deployment of new recycling
technology, the need for federal investment, if any, would be
determined by the difference between the cost of producing
reactor fuel versus the market price for fuel at that time.
While no others are willing to provide the Committee with such
estimates, the industry has not performed the evaluations
necessary to provide such estimates with any degree of
confidence.
The last question asked was how would the United States
move to reprocessing impact utilities' long-term business
planning.
First, it is important to recognize that decision on
reprocessing impact more than the long-term business planning
for utilities. Such decisions would have direct and potentially
profound, though not necessarily negative, impacts on the fuel
supply sector, including uranium producers, converters,
enrichers, and fabricators. For both utilities and fuel
suppliers, certainty in government policy, certainty in
performance of the technology and in its deployment and
economics will be the factors that would impact long-term
business planning the most.
As currently demonstrated by Duke Power, the use of mixed
oxide fuel is clearly an acceptable fuel supply option,
therefore, accommodating fuel produced after reprocessing is
neither a major technical nor regulatory issue that couldn't be
accommodated into long-term planning. The greater planning
challenges relate to consistent, long-term, stable government
policy, high reliability of performance of stability--of
facilities and stability in the price of that fuel produced.
In closing, President Bush's energy plan in 2001 called for
development of, and I will quote, ``reprocessing and fuel
treatment technologies that are cleaner, more efficient, less
waste intensive, and more proliferation-resistant.'' The
nuclear energy industry supports that goal. Now 40 years later
and with the growing recognition of the need for more nuclear
plants in this country and worldwide, it is even more
imperative that our nation move forward to complete the
research on reprocessing technology and to define the
government policies affecting the use of that technology.
We look forward to working with the Committee, others in
Congress, and the Administration towards achieving those goals.
Thank you for the opportunity to appear here today, and I
would be pleased to answer any questions you may have.
[The prepared statement of Mr. Fertel follows:]
Prepared Statement of Marvin S. Fertel
The Nuclear Energy Institute (NEI) appreciates the opportunity to
provide this testimony for the record on reprocessing used fuel from
commercial nuclear power plants. The nuclear energy industry recognizes
that safe, secure and efficient management of the Nation's used nuclear
fuel is critical to ensuring nuclear energy's future contribution to
our nation's energy supply.
NEI is responsible for developing policy for the U.S. nuclear
energy industry. Our organization's 250 member companies represent a
broad spectrum of interests, including every U.S. energy company that
operates a nuclear power plant. NEI's membership also includes nuclear
fuel cycle companies, suppliers, engineering and consulting firms,
national research laboratories, manufacturers of radiopharmaceuticals,
universities, labor unions and law firms.
America's nuclear power plants are the most efficient and reliable
in the world. Nuclear energy is the largest source of emission-free
electricity in the United States and our nation's second largest source
of electricity after coal. Nuclear power plants in 31 states provide
electricity for one of every five U.S. homes and businesses. More than
eight out of 10 Americans believe nuclear energy should play an
important role in the country's energy future.\1\
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\1\ Bisconti Research Inc./NOP World, May 2005, Survey of 1,000
U.S. adults with a margin of errors at +/- three percentage points.
Question: ``How important do you think nuclear energy will be in
meeting this nation's electricity in the years ahead? Do you think
nuclear energy will be very important, somewhat important, not too
important, or not important at all?'' Responses: 83 percent important,
13 percent not important, four percent don't know.
---------------------------------------------------------------------------
Given these facts and the strategic importance of nuclear energy to
our nation's energy security and economic growth, NEI encourages
Congress to maintain policies that ensure continued operation of our
nation's nuclear plants, and to provide the impetus required to expand
emission-free nuclear energy as a vital part of our nation's diverse
energy mix.
This testimony makes four important points:
Reprocessing could play an important role in the
future of nuclear energy by providing needed nuclear fuel
supplies, but it must be part of an economic nuclear fuel
cycle;
Current reprocessing technology offers limited
assistance to used nuclear fuel disposal, but has the future
potential to provide benefits that will make disposal more
efficient and cost effective;
Potentially, reprocessing in the United States and
other reliable nations could further non-proliferation goals,
but the additional costs associated with reprocessing to
achieve these goals should not be borne by the electricity
consumer; and
The Federal Government should put in place firm,
long-range policies that support reprocessing and pursue the
research, development and demonstration of new, improved,
proliferation-resistant reprocessing technologies.
INDUSTRY CONSENSUS
The fuel used by nuclear power plants in the United States comes
from newly mined uranium or uranium that has been derived from nuclear
weapons from the former Soviet Union and blended down to a much lower
enrichment level that is appropriate for commercial reactors. The cost
of nuclear fuel is an important component and it accounts for 25
percent of the production cost of electricity from nuclear plants.
Uranium must be processed through milling, conversion, enrichment, and
fabrication to be made into nuclear fuel usable in power reactors.
The safe and efficient management of used nuclear fuel rods is a
critical component of the nuclear energy industry's exemplary record of
safety and environmental stewardship. The Federal Government is
developing a specially designed, underground repository at Yucca
Mountain, Nev., to manage used fuel from our nation's commercial
reactors and defense sites. The Yucca Mountain program has made
significant progress over the past few years and is expected to move
into the licensing phase in the near future.
The consensus in the nuclear energy industry is that nuclear fuel
costs should be kept as low as possible, consistent with the need for a
competitive long-term fuel supply. Doing so may require reprocessing
nuclear fuel to provide fuel supplies well into the future, but that
period is difficult to predict. There are numerous unknown factors,
such as future demand and cost of uranium, the cost of reprocessing and
the reprocessing technology to be used.
The re-emergence of nuclear energy in the United States, together
with rapidly expanding nuclear energy sectors in nations such as China
and India, will place additional pressure on uranium supplies and
increase uranium prices still further. This could increase the
attractiveness of reprocessing, but would do so only at prices that are
well above today's market. Reprocessing also would increase access to
fuel supplies by making recycled fuel available and thereby reduce the
volume of uranium imported by the United States.
In a ``closed'' fuel cycle, fuel from reprocessing would be another
avenue of supply for the nuclear fuel market. Utilities would evaluate
supplies from reprocessed fuel and the use of mixed-oxide fuel in the
same way they consider the variety of suppliers of new fuel today.
These factors include cost, reliability and diversity of supply;
quality of fuel; and the effect of the fuel on reactor core design.
Long-term business planning would be affected in terms of supplier and
fuel design, but only if the overall costs are equal to or lower than
fuel from current suppliers.
Developing new reprocessing technologies for used nuclear fuel in
the United States also offers the long-term potential for aiding used
nuclear fuel disposal and furthering global non-proliferation goals. At
the moment, the United States does not have the policies, the
technologies nor the infrastructure in place to support reprocessing.
In 2001, President Bush's energy plan called for development of ``.
. .reprocessing and fuel treatment technologies that are cleaner, more
efficient, less waste intensive and more proliferation resistant.'' \2\
The nuclear energy industry supports this goal. U.S. leadership in
nuclear energy research and development is vital to our national
interests and will result in a safer world by safeguarding nuclear
weapons material and technologies.
---------------------------------------------------------------------------
\2\ ``National Energy Policy--Report of the National Energy Policy
Development Group,'' May 2001.
---------------------------------------------------------------------------
REPROCESSING IS A WORTHY FUTURE GOAL, BUT HAS CHALLENGES TO OVERCOME
Of the 33 nations that use nuclear power, 12 reprocess used nuclear
fuel for a variety of reasons. France, Japan and the United Kingdom use
Purex technology for their reprocessing programs, which recycle used
reactor fuel safely and securely. Japan will continue to use
reprocessing facilities in France and Britain until its Rokkasho
Reprocessing Plant opens in the near future at a reported cost of $18
billion. It is worth noting that all these facilities were paid for
through some form of government funding.
Future reprocessing of used nuclear fuel is a worthy goal, but it
must overcome several challenges before it can be used in the United
States. Currently, the cost of nuclear fuel from reprocessing is more
expensive than new production of fuel. Any reprocessing also requires
massive and expensive facilities, similar to large chemical plants,
that the public or private sector must develop and license with the
U.S. Nuclear Regulatory Commission. In the end, the use of reprocessing
would not lessen the need for a national repository, but it would
reduce the volume of material to be managed at the facility. Other
byproducts, radioactive and non-radioactive, from the reprocessing
plant also must be managed. In addition, reprocessing poses security
considerations that governments worldwide must address.
Current reprocessing technology makes it possible to recycle and
reuse uranium and plutonium from commercial nuclear fuel. This is done
by separating radioactive waste from uranium and plutonium that still
contain energy. The reusable fuel can be returned to reactors, but only
after significant additional processing and fuel fabrication in
specially designed and licensed facilities. In addition, the same long-
lived radioactive waste products remain and ultimately require
disposal. With current technology, the recycled material has a limited
life time and will eventually require disposal. Countries that
currently reprocess nuclear fuel also are working to develop geologic
repositories.
Until the mid-1970s, the U.S. Government encouraged reprocessing
using the Purex process, which chemically separates plutonium from
uranium in the fuel rods. This process was first used to produce
plutonium for the nuclear weapons program. Later, commercial
reprocessing facilities were established in Barnwell, S.C.; Morris,
Ill.; and West Valley, N.Y. President Gerald Ford suggested suspending
the use of reprocessing in 1976 in view of nonproliferation concerns
relating to plutonium. President Jimmy Carter acted on the ban the
following year. President Ronald Reagan lifted the ban on reprocessing
in the 1980s, but economic factors prevented any new investment in the
technology. The ban was reinstated under President Bill Clinton and
remains in effect today.
Early commercial reprocessing ventures in the United States were
not successful. The West Valley facility operated for a short period of
time in the late 1960s and early 1970s, then was shut down because of
rising costs and regulatory uncertainties. It took a federal program
and funding to clean up the facility. The Morris facility never
operated because of technical difficulties and serves today as a used
nuclear fuel storage facility. The Barnwell facility was not completed
because of rising costs, falling uranium demand in that era and
regulatory uncertainty.
The difficulties encountered by these early efforts need to be
addressed in any reprocessing program going forward. Foremost among
these is the need for a firm, unchanging national policy that supports
development of reprocessing and a set of regulatory standards and
implementing guidelines tailored to reprocessing plants.
REPROCESSING CAN REDUCE WASTE VOLUME, BUT YUCCA MOUNTAIN IS STILL
NEEDED
No technology can destroy radioactivity from used nuclear fuel and
other high-level radioactive wastes, nor is there a proven means to
shorten the time that the material is radioactive. Reprocessing can
only separate the various radionuclides and change their chemical and
physical form. Scientists are studying technologies, such as
accelerator- and reactor-based transmutation, that may eventually
reduce the radioactivity in used nuclear fuel. However, none of these
could eliminate radioactivity altogether. Any program involving
reprocessing, transmutation or related technologies must be undertaken
in conjunction with a federal repository.
Disposal capacity for used nuclear fuel should not be a deterrent
to future expansion of nuclear energy. Depending on future industry
expansion, additional used nuclear fuel disposal capacity will be
needed, but it is impossible at this time to know when and how much
capacity will be needed. Federal policies must consider all
contingencies and remain flexible.
The Nuclear Waste Policy Act limits Yucca Mountain's capacity to
70,000 metric tons (MT) of used nuclear fuel or the high-level
radioactive waste derived from 70,000 MT of used nuclear fuel. Current
plans call for 63,000 MT of commercial used fuel and 7,000 MT of
defense used nuclear fuel or the high-level waste derived from used
fuel. The Department of Energy estimates that there will be at least
70,000 MT at various sites throughout the United States when the Yucca
Mountain repository opens.
Congress established the capacity limitation on Yucca Mountain
artificially, not by technical analysis. If the capacity of Yucca
Mountain were to be increased to its technical limit, it still might
not be enough to preclude the need for a second repository given the
expected expansion of nuclear energy. However, reprocessing could
reduce the volume of waste and possibly make additional repositories
unnecessary.
In addition, current reprocessing of used fuel from commercial
nuclear power plants could reduce the number of used fuel containers
needed to store, transport and dispose used nuclear fuel, which would
lower the cost of DOE's waste management program. This needs to be
explored further as a possible benefit from reprocessing.
REPROCESSING MUST OVERCOME COST, BUT NOT AT THE EXPENSE OF NUCLEAR
ENERGY
The debate over reprocessing of used nuclear fuel in the United
States is longstanding. Reprocessed fuel is more expensive than new
uranium oxide fuel. In addition, reprocessing requires new capital-
intensive facilities and other infrastructure that must be licensed by
the Nuclear Regulatory Commission.
The use of reprocessing would require significant investment. New
fuel fabrication and enrichment facilities also will be needed. Federal
agencies, such as the Nuclear Regulatory Commission, must license and
provide independent government oversight of these new facilities. All
of this will take many years to accomplish.
If the Federal Government determines that used nuclear fuel should
be reprocessed, nuclear energy consumers should not bear the additional
costs of reprocessing. Unlike other energy sources, the nuclear power
sector covers the costs of its ``externalities,'' including nuclear
power plant decommissioning and used nuclear fuel disposal. Under the
Nuclear Waste Policy Act, the Federal Government collects fees (one-
tenth of a cent per kilowatt-hour from consumers of electricity
generated at nuclear power plants) that are intended to pay for Yucca
Mountain and associated programs. No other energy source covers its
waste management costs in this manner. Assessing an additional fee for
reprocessing would unnecessarily raise the cost of nuclear-generated
electricity and create an inequitable situation that would harm the
competitiveness of the U.S. energy sector.
NON-PROLIFERATION GOALS CAN BE ADVANCED BY REPROCESSING DEVELOPMENT IN
THE UNITED STATES
Non-proliferation is the other principle challenge facing
reprocessing, because current reprocessing technology yields separated
plutonium. In sophisticated hands and with the right expertise and
facilities, plutonium recovered from commercial reactor fuel can be
made into a crude nuclear weapon. Opposition to the reprocessing
initiatives in North Korea is based on concerns over the production of
plutonium for nuclear weapons. However, after being used in mixed oxide
reactor fuel (MOX), plutonium is less suitable for weapons
applications. The United States recently began testing weapons-grade
plutonium fabricated into MOX fuel as a means of eliminating plutonium.
The United States should pursue proliferation-resistant
reprocessing technologies. By developing reprocessing in the United
States and other reliable nations, we can better assure a fuel supply
for the global nuclear energy sector and limit the risks associated
with reprocessing.
DOE is investigating several new technologies as part of its
Advanced Fuel Cycle Initiative. These include the Urex process, which
recovers the uranium for disposal as low-level radioactive waste.
Another technology now undergoing research is pyroprocessing, which
retains the uranium and plutonium for use in a fast reactor.
The industry fully supports the development of advanced fuel cycles
to improve the efficiency of nuclear power facilities. Further research
in reprocessing and other technologies could yield important benefits.
It is important that the government begin laying the foundation now for
future nuclear fuel supply and waste treatment processes, as these take
many years to develop and implement. However, DOE and other federal
agencies should carry out this research in addition to existing waste
management programs.
CONCLUSIONS AND RECOMMENDATIONS
Reprocessing used nuclear fuel has the potential to provide
numerous benefits, but also poses multiple challenges. The implications
of resuming reprocessing the United States must be fully understood
before embarking on any large-scale initiative. The industry fully
supports the Administration's goal of developing nuclear fuel that is
yet safer, more efficient and more proliferation-resistant. The Federal
Government is well-served by the development of fuel technologies that
support these objectives, including technologies pursued as part of the
Advanced Fuel Cycle Initiative. However, the government must develop
these technologies parallel with the development of Yucca Mountain and
in a manner that will make the Yucca Mountain repository more
efficient. Reprocessing could help avoid or delay the need for a second
repository.
Development of these technologies in the United States and other
reliable nations will make the world safer. However, despite its
advantages, reprocessing has several key challenges that must be
overcome, including cost and non-proliferation issues. Even with
significant increases in uranium prices and the rising costs of on-site
fuel storage, reprocessed fuel is still more expensive than nuclear
fuel from current sources. Reprocessing will require investment in new
infrastructure, but this investment should not be borne by a tax on
consumers of nuclear energy. Consideration of reprocessing technologies
also must take into account the proliferation risks of separated
plutonium.
Congress must ensure that federal agencies are conducting research
and development programs in areas such as reprocessing that help
prepare for our nation's energy future. The government must do all it
can to ensure that Americans continue to have access to affordable and
environmentally friendly sources of electricity. Nuclear energy plays
an important role in providing this power reliably, efficiently and
without producing greenhouse gases.
Biography for Marvin S. Fertel
Marvin S. Fertel is Senior Vice President and Chief Nuclear Officer
at the Nuclear Energy Institute (NEI), the industry organization
responsible for establishing unified nuclear industry policy on matters
affecting the nuclear energy industry.
He has 35 years of experience consulting to electric utilities on
issues related to designing, siting, licensing and management of both
fossil and nuclear plants.
He has worked in executive positions with organizations such as
Ebasco, Management Analysis Company, and Tenera. In November 1990 he
joined the U.S. Council for Energy Awareness as Vice President,
Technical Programs. With the formation of NEI in 1994, he became NEI's
Vice President of Nuclear Economics and Fuel Supply. He assumed his
current position as head of the Nuclear Generation Division at NEI in
March 2003.
Currently, Mr. Fertel is responsible for leading NEI's programs
related to ensuring an effective and safety-focused regulatory process.
He is responsible for directing industry-wide efforts to ensure
adequate security is provided at nuclear power plants and for
addressing generic technical issues related to commercial nuclear
facilities. The Nuclear Generation Division is responsible for NEI's
activities related to improving the economic performance at existing
facilities through industry-wide benchmarking activities; the promotion
of policies to achieve a long-term reliable and economic supply of
nuclear fuel; and for policy initiative and industry programmatic
activities that support the development of new commercial nuclear
projects. Mr. Fertel is also responsible for overseeing NEI's
activities related to the management of used nuclear fuel and other
waste products, including achieving success in the U.S. Government's
program for the storage and ultimate disposal of used nuclear fuel.
Mr. Fertel holds a Bachelor of Science degree in civil engineering
from Northeastern University, Boston; a Master of Science in Civil
Engineering from the Polytechnic Institute of Technology, New York; and
has participated in the doctorate of public administration program at
New York University.
Discussion
Chairwoman Biggert. Thank you very much, Mr. Fertel.
We will now start our questioning, and I will yield myself
five minutes.
Dr. Lester, 50 years is a long time. If I had to be able to
know whether you were correct in saying we should postpone any
reprocessing for 50 years, I won't be around to know if you
were correct or not, which would be very disappointing. Fifty
years ago, a gallon of gasoline cost less than a dime, and so I
wonder, does your analysis assume that there are no changes in
the market for electricity in the next 50 years, like the
impact of global warming and the effect on the price of
electricity produced from fossil fuels?
Dr. Lester. Madame Chairman, our analysis did try to
address a series of changes that may take place over that time
frame that you mentioned. One of the big questions, obviously,
over that time frame, is what is likely to happen to the demand
for uranium, and how is that affected by the future expansion
of nuclear power. On that issue, we assumed a three-fold
increase, approximately, in the installed capacity of nuclear
power plants, both in the United States and globally. And even
on that basis, and of course what we are talking about is
something like a 300 gigawatt, or 300 large nuclear power
plants, operating by mid-century. Even on that basis, our
conclusion was that the demand for uranium would not drive the
price of uranium to the level at which the introduction of
reprocessing and mixed oxides recycle could be or would be
economically warranted.
Chairwoman Biggert. But--and this would be for Dr. Jones,
too. Is the potential cost of carbon capture and disposal for
fossil-generated electricity comparable on a per-kilowatt-hour
basis with the waste disposal costs of nuclear energy?
Dr. Lester. Well, we certainly--we did make, or have tried
to make, a consistent comparison of fossil and nuclear costs,
in particular coal-fired generation with nuclear costs. And we
estimated that with plausible, although optimistic, reductions
in nuclear power plant capital costs, combined with the
introduction of some form of penalty or tax on carbon
emissions----
Chairwoman Biggert. But was that taken into account? And
what we are hearing now is, you know, the impact of the climate
change and how we are going to have to deal a lot more with
those fossil fuels and the increase in the pollution in our air
quality. And that takes into account that we will probably be
doing more in that area?
Dr. Lester. Yes.
Chairwoman Biggert. Do more regulation or restrictions on--
--
Dr. Lester. I think we would anticipate that, yes.
Dr. Jones. Madame Chairman?
Chairwoman Biggert. Yes, Dr. Jones?
Dr. Jones. We estimated the cost of coal-fired generation
with carbon sequestration would rise to the range of $83 to $91
per megawatt hour from the level of $33 to $41, and gas-fired
generation costs to rise to $58 to $68 range from current $35
to $45.
Chairwoman Biggert. Okay. Is--what about the market price
for electricity? Would that include climate change and carbon
taxes?
Dr. Jones. Only if those things are priced, and the
government is in a position to price that.
Chairwoman Biggert. Okay. Then, Dr. Fetter, what would the
economic cost of delaying a decision on selection of a
reprocessing technology--what would be the economic cost of
delaying that decision?
Dr. Fetter. I don't think there would be any economic cost
at all of a delay to reprocess--a delay in the decision to
reprocess.
Chairwoman Biggert. Is there a particular threshold, for
example, at the point where a second disposal site would be
necessary? Would that change the cost?
Dr. Fetter. It--based on the cost of Yucca Mountain, which
is funded by a small fee added to the price of nuclear
electricity, nuclear-generated electricity, I would think that
one could easily expand the Yucca Mountain site, up to doubling
its capacity, or open a new facility for about the same fee,
for about the $1 per megawatt hour.
Chairwoman Biggert. Of course, we haven't even been able to
get this one open yet, so that is a small problem.
But thank you. My time has expired.
Mr. Honda.
Mr. Honda. The cost of reprocessing has been something that
has been a reminder of whether it is going to be economical or
not, and I have heard some comments about the economy--the
economics of it would have to be plausible. I guess I have been
hearing that the extent of two or three or four decades out.
Was that correct information that I heard? Did I hear it
correctly?
Dr. Lester. I think my comment was that over the next two
or three or four decades, it would be hard to imagine that it
would be economic.
Mr. Honda. And could you help me to understand why that
would be? Is it a lack of our funding more research and
development or what are the dynamics in that?
Dr. Lester. The question of whether it is economical or not
hinges on, obviously, the cost that one would have to pay to do
it, on the one side----
Mr. Honda. Yeah.
Dr. Lester.--and on the other side, the amount of money
that one would save by not having to buy as much uranium, not
having to buy as much uranium-enrichment services, and
potentially also having to pay less to dispose of the
reprocessed high-level waste that one would be producing
instead of disposing directly of the spent fuel. So the issue
of whether it is economical or not depends on balancing those
extra costs with the savings, and it is on that basis that I
concluded that over the next three or four decades, even with
real investment in reprocessing research and development, which
I do certainly support, it would be very unlikely to see a
situation in which the costs would be outweighed by those
economic benefits.
Mr. Honda. And that is taken in the context of the nuclear
power arena. If you look at that in the context of other fuels,
increasing fuels in other areas, is there impact there? I mean,
the reason why the Administration is looking at reprocessing
and building more plants, I suspect, is because it is an
opportune time to do that, given the picture of the cost of
petroleum, the cost of crude oil and things like that. What are
the dynamics there?
Dr. Lester. Well, as you know, the electricity industry in
this country is becoming more and more competitive, at least in
some parts of the country. And therefore, the situation of
nuclear power in those markets depends upon its ability to
compete on a price basis with the alternatives. At present, its
ability to compete with coal, which is the main alternative
today to nuclear for baseload generation, its ability to
compete is, at best, marginal. And therefore, any action that
we take that would result in an increase in the generation cost
of nuclear electricity would make it less able to compete. And
so I think we need to be very careful before advocating a
course of action that would result in a significant increase in
the nuclear generation cost. Now it is likely, if we do
introduce a cap-and-trade scheme for dealing with carbon
emissions or a tax or whatever we may choose to do as a nation,
it is likely that the cost of coal-fired generation will
increase over time. But still, the ability of nuclear to
compete and to penetrate these competitive markets will depend
on our success in keeping the costs down. And so again, we need
to be cautious about advocating a course of action that would
result in an increase in those costs.
Mr. Fertel. Mr. Honda, maybe I could add a slightly
different perspective and then build upon what Dr. Lester has
said.
Putting aside the economics for just a minute, though that
is the purpose of this hearing, there is a practicality of
implementing reprocessing effectively in our country within the
next five or 10 years, and that is what we are looking at. The
current reprocessing technology, as I think everybody else on
the panel has eluded to, while it works, it doesn't do all of
the things you would like. It doesn't dramatically help us on
the waste side, because it doesn't take the fission products
out. It doesn't do transmutation, which gets rid of the long-
lived radioisotopes that cause you a problem in the repository.
It does reduce the volume, but it doesn't necessarily change
the size of my repository. And in fact, the repository right
now, which has a 70,000 Congressionally-mandated limit, not
physical limit, that is a Congressional limit that Congress can
deal with, basically says it is limited by the spent fuel that
we generate. Even if we changed the nature of that fuel to be
reprocessing, we would still be limited unless you change the
law.
So we need to go to the next evolution of technology, which
I think you heard about at the previous meeting. That is going
to take some time. And one thing this committee can do is hold
our government, our Administration accountable to get something
done. Madame Chairman spoke about Yucca Mountain not moving
along. We don't move along in R&D all that fast either, let
alone something like a big project. So getting the R&D done is
one thing, and that is why we are thinking that is a five-year
to 10-year project to get to technologies you want to deploy,
putting aside economics.
At that point, and assuming the economics even make sense,
and they may make sense for looking at it, it is at least a
decade to deploy facilities. These are very, very large complex
chemical and laser facilities, if you go to transmutation. They
will require significant licensing and construction and
commissioning. And so you are into--I hate to say it this way.
You are into, almost, a couple of decades to honestly deploy
the facilities that you want, assuming they are economic,
assuming they really are the things you want to do.
On the economics, the reason we haven't given you numbers
is we are--we don't believe we are smart enough to tell you
what the markets look like in 20 years. Madame Chairman asked a
good question about sequestration. I just saw a study that said
that that could be about exactly what Dr. Lester said, it was
about 1.7 cents per kilowatt-hour. What is probably not in the
best interest of our consumers, whether they are a residence or
they are commercial or they are industrial customers, is to
just raise the price of electricity everywhere. Okay.
Electricity is the lifeblood of our economy and our quality of
life. And what you would like to do is not raise it, if you
don't have to, or temper it somehow. Conservation can do that.
Efficiency can do that. But you have to generate electricity.
One of the attributes of nuclear energy that the financial
community and big customers like is we have very good price
stability, and we have very low marginal costs. Our capital
costs are our big thing. Our marginal costs are low. So we
would look to try and keep marginal costs lower to keep the
average electricity prices down. That doesn't mean you
shouldn't be reprocessing. It just means you have got to go
about it smarter. And I think we are not at a point of knowing
how to do that quite yet, even though everybody may have
numbers and thoughts. And you shouldn't wait 50 years. You
should begin to develop the technology and make decisions over
the next 10 to 20 years on its use.
Mr. Honda. Thank you.
And thank you, Madame Chair. And my time is up, but I
appreciated your comment, Mr. Fertel, and I was trying to also
get out of the discussion not only the economics, because it
doesn't seem smart just to be talking about that if we have a
larger picture that we have to deal with in the future, too.
And what is the cost? What--you know, what other costs do we
pay if we don't pay attention to the other kinds of things?
So thank you very much.
Chairwoman Biggert. And the gentleman yields back.
The gentleman from Michigan, Dr. Ehlers.
Mr. Ehlers. Thank you, Madame Chair.
Before I ask a question, I would just comment.
Mr. Fertel, you asked for some less uncertainty in the
behavior of the Congress, if I understood you correctly. That
is a lot to ask for.
Mr. Fertel. Well, the Administration, too.
Mr. Ehlers. You would include that, too. The Congress and
the Administration are certainly less predictable than nuclear
reactors. The reason is simple. I can write the equations
covered in the nuclear reactor. I can't write any equations
predicting what Congress will do. If I did, I could certainly
make more money than I am now.
The question I have for all of you is what do you believe
are the biggest unknowns? I am surprised at the disagreement
here about the cost. What do you think are the biggest unknowns
and any cost predictions for the advanced fuel cycle or for
reprocessing in general? What--why is it so uncertain that you
can't agree? What is going on here?
We will start with Dr. Lester.
Dr. Lester. Actually, I am not sure that the level of
disagreement between us is that great. I think there are some
disagreements about how to interpret those numbers, but the
actual numbers, if I understood what my colleagues said, are
not that far apart.
If we take reprocessing, which is the--probably the biggest
area of cost uncertainty of all of the elements that go into
figuring out the overall economics of the fuel cycle or closed
fuel cycle, I think what we have heard this afternoon is that
optimistically--a relatively optimistic estimate of
reprocessing costs is about $1,000 a kilogram.
The consequence of that cost for the consumer, in terms of
the amount that would be paid by the consumer of electricity,
depends on whether you do the calculation in terms of the
average over all of the nuclear power plants in the country or
whether you assign the cost of reprocessing and also the
fabrication of the mixed oxide fuel only to the power plants
that are actually availing themselves of those services. And
depending on how that calculation is done, if you take the
averaging approach, the calculation would lead you to conclude
that the impact on the consumer would be about an extra 2/10 of
one cent per kilowatt-hour. If, on the other hand, you ascribe
all of these costs only to the reactors that are availing
themselves of these services, the impact on the consumer would
probably be a little over one cent, perhaps 1.2 cents per
kilowatt hour.
So I think, perhaps, the difference that you--we have been
hearing has to do with how to apply these basic cost numbers
for reprocessing.
Mr. Ehlers. Thank you.
Dr. Jones, it seemed to me you were a little more
optimistic about the costs, or did I misunderstand you?
Dr. Jones. No, you didn't misunderstand me.
We are all using the same cost numbers. And when we examine
the generating cost of a single plant, using those same
numbers, reprocessing that adds $2.65 per megawatt hour, it is
going to add about 4.3 percent to the generation cost of that
plant that uses that fuel. That was our conclusion.
Mr. Ehlers. Okay. Dr. Fetter, you seemed to have assigned
fairly high costs to this. What is your comment?
Dr. Fetter. Well, I think the reason there is so much
uncertainty is, at least partly, for traditional reprocessing,
there has been no open market either for the reprocessing
services or for the MOX fuel fabrication. The contracts--the
prices paid have been confidential and proprietary information.
So mostly one has to work backwards to figure out how much it
costs.
But for separation and transmutation, the uncertainties are
even greater, because those separation processes have not even
been done yet and would almost certainly be more complicated
and more expensive. The fuel fabrication would almost certainly
be more expensive than MOX. And finally, the transmutation
facilities, if they are fast reactors or accelerators, would
almost certainly be more expensive, but exactly how much more
expensive than light water reactors is hard to say. But the
experience around the world with fast reactors has not been
encouraging.
So I think one can say fairly confidently that it would be
more expensive than the once-through fuel cycle, but it is hard
to say just how much more expensive.
Mr. Ehlers. And Mr. Fertel, you were smart enough not to
give any numbers.
Mr. Fertel. Well, actually, I would agree. Your question
was what are the biggest unknowns, and I think Steve hit on, in
my mind, what the biggest unknowns are. It is the performance
of the facilities. We have not operated accelerators for
transmutation on any large scale. We haven't done the
separation. We do know how to do PUREX, but we don't know how
to do a lot of the advanced reprocessing technologies yet. And
to be honest, that is why our position is: what we need to do
is go with a meaningful R&D program and figure out what makes
sense. And then it does take government policy decision. And my
illusion to certainty is if you look at our nation and the
whole concept of reprocessing, it was the way we started. It
was stopped during the Ford-Carter Administration. It was
restarted during the Reagan Administration. It was stopped
during the Clinton Administration. The Bush Administration
would restart it. It is very hard on the business side for
people to make decisions. And it is not just decisions of the
reactor owners on where they buy their fuel or what they do, it
is decisions on the fuel suppliers to invest in properties and
their facilities. So there has to be some stability. And it is
government policy in those areas, sir, that plays a key role.
But I would agree with where Steve was. It is operation of
facilities that cause us the most concern right now to make
sure they are going to work. Then you can do the numbers. Then
you can get better numbers.
Mr. Ehlers. Okay. For--just to--it sounds to me like the
only way to resolve this is to--that the government has to make
a policy decision as to whether or not reprocessing is or is
not a good thing to do, as compared to trying to deal with the
carbon problem in some other way. And once you--once that
decision is made, we have to stick by it, and we have to--our
citizens have to pay the costs or--in order to receive the
benefits.
I would like to have your reaction to that, but my time is
expired, so I won't.
Chairwoman Biggert. Thank you.
Well, perhaps we will have time for that later.
The gentlelady from Texas, Ms. Johnson, is recognized for
five minutes.
Ms. Johnson. Thank you very much.
Let me thank the panel. It has been informative to listen
to you.
I live in two places. I am more here than I am some other
place. And one place that I live does have nuclear--have a
nuclear plant. It costs me five times more for the electricity
where I spend less time, than what it costs up here. How long
does it take to pay for those? Any estimate? It has been over
20 years that we have been paying. Anybody willing to comment?
Mr. Fertel. Well, the only comment--I am not sure where in
Texas you live.
Ms. Johnson. Dallas.
Mr. Fertel. Dallas? Okay. So you get your power from
Comanche Peak.
Ms. Johnson. Yes.
Mr. Fertel. Comanche Peak was an extremely expensive plant
due to delays and other things that it ran into. And as I am
sure you know, the way the market works in Texas, or worked in
Texas, the rates were set by the Public Utility Commission, not
by the market itself. So basically, they have set rates and
they work it off. Other parts of the country it is much better.
I hate to say that, but----
Ms. Johnson. I think you are right.
Mr. Fertel. And clearly, the intent for anybody looking to
build plants going forward is to make sure the plants not only
come in at a competitive capital price, but they get built on
schedule and on time, because the markets won't take them
otherwise. So I hate to say it this way, but I think that, in
the future, this won't be a problem, but I am not sure how to
solve your problem right now.
Ms. Johnson. Well, I know how to solve it, I just don't
know whether I have the wherewithal to get enough people to go
down to the Public Utility Commission and complain.
I am concerned about the reprocessing. I think I heard two
different versions. Some said--I think one said they didn't
think it was safe or practical, and someone else said they
thought it was okay. Now what--am I hearing wrong?
Dr. Lester. I think that there were different--I think you
heard different things about the economic consequences of
reprocessing. I am not sure that--certainly I didn't address
the issue of the safety of reprocessing. I think that is an
important consideration and an important issue, but it was not
the subject of my testimony.
Ms. Johnson. Okay. Did anyone mention safety?
Mr. Fertel. In my comment, I quoted the President's
statement that he was looking to get new, safer technology--
new, safer, and more proliferation-resistant, but there is no
reason reprocessing can't be done safely, the same way you can
operate reactors safely. You need to pay attention and do it
right.
Ms. Johnson. What would be the effect on the environment to
reprocess? Would it be any different?
Dr. Lester. Well, I think that there are two parts to the
answer to that question. One has to do with the operational
safety of the plant itself. The other has to do with the
relative ease or relative difficulty of handling the wastes
that are produced by the plant relative to what you would have
to deal with if you didn't do reprocessing at all, which is
spent fuel. When it comes to the operational safety issues, the
fact of the matter is that if we have reprocessing plants, they
will present safety challenges, just like any large industrial
facility would present, in this case, of course, greatly
complicated by the fact that one would have very large
inventories of radionuclides in the plant, and one would have
to be concerned about occupational safety, environmental
health, and so on. The record that we have to look at on the
basis of reprocessing plants that have operated in France and
in the United Kingdom, Japan also, is it has to be said
somewhat mixed. The performance of the French reprocessing
plants has been, from a safety point of view, environmental
point of view, very strong. The performance of the plant in the
United Kingdom and the performance of a smaller plant in Japan
has been, over the years, somewhat mixed. I think the lesson
there is that we have to work very hard to ensure that these
big reprocessing plants perform safely, and from an
environmental point of view, benignly.
The other part of the question has to do with the waste
management implications of reprocessing. And there, I think
what we have heard is that for advanced reprocessing schemes,
there is at least the potential to reduce the long-term risk
from the high-level waste that we produce relative to the
disposal of spent fuel, which is what we would have to deal
with if we didn't reprocess.
Ms. Johnson. Thank you very much. My time is up. Thank you.
Chairwoman Biggert. The gentlelady's time has expired.
Dr. Bartlett, you are recognized for five minutes.
Mr. Bartlett. Thank you very much.
With some obvious limitations, energy is fungible. It is
unlikely, then, that one source of energy can be enormously
increased in costs while other sources of energy remain at a
low cost. Looking ahead two, three, or four decades, what kind
of assumptions are you--were you making about what oil would
cost?
Dr. Jones. Oil, in fact, doesn't have that much to do with
electricity generation. We looked more at the future of gas
prices and coal prices, and of course, uranium prices. With
the--when we were doing our study, it was the summer of the big
gas price spike. We did not assume that that price would stay
up at that level for the next 40 years. We assumed it would
come back down, according to the EIA forecasts.
Mr. Bartlett. Yeah. I would caution that I would not be
overly optimistic about judging what is going to happen in the
future by the Energy Information Agency prognostications.
There is a big article in the New York Times today on oil
and several statements in there of some significance to the
problem that you all are addressing. They said that the oil
production has probably plateaued, that there are an increasing
number of authorities who believe that the world's demand for
oil is going to exceed the world's ability to produce oil. Oil
today is over $60 a barrel. The Chairman of our Transportation
Committee says it will be $80 a barrel by the end of the year.
Goldman Sachs says it will go to $105 a barrel. I don't
remember, they had a time period on that. I would suggest,
gentlemen, that in four decades from now the availability of
oil will be markedly less than it is now and the price through
the ceiling.
Do you know the name M. King Hubbard? His prediction that
the United States would peak in oil production in 1970 was
correct. We did. It has been downhill ever since. He predicted
the world would peak in oil production about now. Considering
he was exactly right about the United States, is there any
reason to believe that we shouldn't have had some concern that
he might be right about the world?
Dr. Lester. I certainly would agree with the general gist
of your comments that we are facing a long-term imbalance
between supply and demand of oil. I think, to some degree, that
imbalance, which with all of its profound consequences for our
society, can be separated from the question of nuclear
technology, because, at least to a first order, nuclear
technology competes in the electricity market, oil is largely
absent from the electricity market. Now at some level, in some
parts of the economy, of course, these two things coincide.
Mr. Bartlett. But if oil sort of got very expensive and
gasoline was $8 or $10 a gallon, don't you think there would be
some incentive to maybe go to some electric use in
transportation? And don't you think that these uses of energy
will change so that the costs will not be all that much
different for any one source of energy? Isn't energy reasonably
fungible? We are now running cars on gasoline. Couldn't we run
them on electricity?
Dr. Lester. I think we certainly could. Indeed, as you
know, some vehicles already are using electricity. So yes, it
is certainly correct to say that the influence of very high oil
prices may be to increase the demand for electricity in parts
of the economy.
Dr. Fetter. Could I just also comment that there is an
interesting connection between M. King Hubbard and the
economics of reprocessing? One of the disciples of Hubbard is
Kenneth Deffeyes at Princeton University who wrote a book
called ``Hubbard's Peak'' and a recent book, ``Beyond Oil.'' It
was actually the work of Deffeyes on the availability of
uranium resources at various prices that we used in our study
to determine what the likely uranium price would be as nuclear
power grew over the next 50 to 100 years. And based on that
work, which is based on data collected by the Department of
Energy, it appears that there is plenty of inexpensive--
relatively inexpensive uranium available at a price less than
$130 per kilogram to fuel a greatly expanded nuclear power
industry through at least the next 50 years.
Mr. Bartlett. Thank you, Madame Chairman.
Chairwoman Biggert. Thank you.
The gentleman from Texas, Mr. Green.
Mr. Green. Thank you, Madame Chair, and thank you, Mr.
Ranking Member.
And thank you, friends, for visiting with us today.
This is not the best picture that we are having painted for
us, and it does cause a great amount of consternation. So I
would ask each of you, how do you recommend we proceed? Let me
just start with Mr. Lester. How do you recommend that we
proceed? Should we proceed with the building and storage,
assuming that certain things will happen with storage or that
we will find a--some new technology for reprocessing? Or should
we stagnate and wait? How do you recommend we proceed?
Dr. Lester. I think that we--it is of great importance to
our country that we prepare the ground, so to speak, for a
major expansion in nuclear power generation, because I don't
see any way that we can address the problem of carbon emissions
without doing that. And so the question really is what is the
best thing that we could do or what are the best things that we
could do to prepare the ground for a major expansion of nuclear
power.
Our assessment of the technological choices leads us to the
conclusion, when I say ``our,'' I am referring to the MIT study
that I was a participant in, leads us to the conclusion that
our government and our industry should give priority to the
deployment of the once-through nuclear fuel cycle involving
direct disposal of spent fuel rather than the development of
more expensive, closed-fuel cycle technology involving
reprocessing and new advanced thermal or fast reactor
technologies for at least the next few decades. We are not able
to see beyond that. I think there is some skepticism that we
can even see that far ahead, but to our--to the best of our
ability, we do believe that the best way to ensure a major--not
ensure, but make at least possible a major expansion of the
nuclear power industry in this country would be for government
and industry to focus on making the open, once-through fuel
cycle as competitive as possible.
Mr. Green. Let me hear, if I may, from Dr. Jones.
Dr. Jones. Our study's conclusion was very limited on
reprocessing. It was simply that it didn't seem to be an
important economic consideration in the generation cost of
electricity. That frees up other motivations for considering
reprocessing.
Mr. Green. So your recommendation is that we do what?
Dr. Jones. I would be going outside what we actually
studied to make any specific recommendations on reprocessing or
not, what type of reprocessing to pursue, but if there are
other motivations for considering reprocessing, you should not
stumble over the extra cost of it on generation cost of
electricity.
Mr. Green. All right. Let us move to our next panelist, Mr.
Fetter.
Dr. Fetter. Yes, I would recommend that there be no near-
term decision to reprocess spent fuel and that for the near-
term we proceed with the once-through fuel cycle. I do support
research, just research, not research and development, on
advanced fuel cycle technologies with a view to making them
cheaper, but more particularly with a view to making advanced
fuel cycles more proliferation-resistant, not more resistant to
proliferation than PUREX, but more proliferation-resistant than
the once-through fuel cycle, because I think if any expansion--
well, I think any expansion of nuclear power in the United
States, or in the world, should not increase the potential for
the spread of nuclear weapons. I think that is the overriding
consideration beyond waste or economics.
Mr. Green. The final panelist, please, Mr. Fertel, is it?
Mr. Fertel. Yes, thank you.
Congressman Green, I think that it--my suggestion would be,
first of all, move forward on implementing the current
obligation the government has with Yucca Mountain. Okay. You
need to take the used fuel from the sites and move it to Nevada
and move forward on doing what we need to there.
Second, I think that I would go further than Steve. I think
that we should go forward and develop a road map or a project
plan for both the research and development for reprocessing,
and I am thinking beyond just reprocessing. I think you need to
look at separation and transmutation so you can make conscious
decisions. I think, Congressman, you don't have to make the
commitment yet, but I think you do need to think about the
policies the government should have as part of the road map so
that somewhere by the end of this decade our government is in a
position of knowing what technologies they think they would
like to pursue and whether they end up being commercialized or
not is still an open question, and also what policies you need
to put in place. And I think that doing that, you are still
accepting--you are not going to be deployed and implementing
them before 2025. I mean, you are not--you know, you could
start today, and you will not get facilities of the magnitude
we are talking about in commercial commissioned operation for
20 years.
Mr. Green. Thank you, Madame Chair. I yield back the
balance of my time.
Chairwoman Biggert. Thank you.
I think that there is a clause in the appropriation bill,
which--in the energy and water, which requests that they make--
a decision be made by 2007 and what process to pursue, so I
think that this is something that is upon us.
Mr. Reichert from Washington, you are recognized for five
minutes.
Mr. Reichert. Thank you, Madame Chair.
I just want to make sure I understand. I come from a law
enforcement background, so this is all new and exciting stuff.
Nuclear fuel reprocessing, so we have stopped and started
the process several times. We must complete, at least research,
maybe development, according to some on the panel, and that is
a five- to 10-year process. So far, am I on track? And then if
we deploy, it is at least another decade after that? The people
that I talk to--and I know you have probably had similar
conversations, and I know Members of the Committee have--we
just want cheap power, efficient power, environmentally-
friendly, and safe. So that is your assignment. No heavy burden
there at all.
Just a real simple question. What is the biggest
reservation that each of you have about the possible U.S.
transition to nuclear spent fuel reprocessing? The biggest
reservation? The single most--the biggest reservation that you
have.
Dr. Fetter. Could I jump in?
Mr. Reichert. Sure.
Dr. Fetter. It is the example that it would send to other
countries. As you know, it has been the policy of the United
States to oppose the spread of reprocessing technologies,
because of concerns about the use or misuse of that technology
to separate plutonium for nuclear weapons. And it is also the--
has been the position of this Administration to oppose the
spread of reprocessing technologies. And I think it would be
difficult if the United States decided to reprocess for its own
waste disposal management concerns to maintain what would
essentially be a double standard: to say, ``Well, we can do it
and certain other responsible countries, like Japan and France,
can do it, but no other country, or no countries of concern can
do it.'' So that would be my primary concern with the decision
to move to reprocessing.
Dr. Lester. May I comment?
Mr. Reichert. Yes.
Dr. Lester. My major concerns are that it is going to be
costly, that it may not lead to the benefits on the waste
management and disposal from--that are claimed for it, and as
Steve has indicated, that it will complicate our efforts to
prevent other countries from exploiting plutonium for malign
uses.
Mr. Reichert. Others on the panel?
Mr. Fertel. Yes. Let me take a slightly different view. My
major concern is we will debate it for decades and never do it
while everybody else does their thing. This is what we did in
the '70s. Steve is expressing the belief that we had in the
'70s, and I am as committed as he is to making sure other
people don't get nuclear weapons and bad people don't get
nuclear material. But there is a leadership role the United
States needs to play. I think we made a strategic mistake when
we stopped research in the '70s. We didn't have to deploy, but
we could have done research to have better, safer, more
proliferation-resistant technology, and what we did was we
said, ``If we don't do it, no one else will,'' and everybody
else that wanted to went and did it. And I think the President
has said what Steve said, that he doesn't want other countries
doing it, but he has also said that the way he will get them
not to do things, like build enrichment facilities, is by
providing them fuel. Well, if they want to use MOX fuel and we
have no capability of providing MOX fuel, we can't provide MOX
fuel. So I think that you can look at this as either you are
setting an example that is bad or you can look at it that you
are setting an example that is good. And I think that what we
will do is we will debate this for years and go nowhere with it
if we are not careful, and that would be my biggest concern.
Mr. Reichert. Thank you. And you have said that the French,
British, and Japanese, if I understood correctly again, pay for
their systems--the government pays for their systems. Do you
think the costs are comparable, as we look at those systems
here in the United States? Could we learn something from those
three countries as far as cost goes?
Dr. Lester. We--I am sorry. We do learn a number of things.
One of the striking things about that experience is that the
Japanese, who are the most recent--which is the most recent
country to move towards reprocessing, using more or less the
same technology that the French and the British have used, have
completed a reprocessing plant that is--estimates vary, but
almost certainly at least three times more expensive than the
plants that were built some years earlier in France and the
United Kingdom. So that enormous cost range is one of the
things that makes this discussion so complicated or so
difficult, because we have this vast range of costs, with the
Japanese plant approaching $20 billion, or perhaps even more,
in capital costs for a plant that, you know, from a distance,
looks rather like the French plant and the British plant.
Mr. Reichert. Thank you, Madame Chair.
Chairwoman Biggert. Thank you.
The gentleman from Utah, Mr. Matheson.
Mr. Matheson. Thank you, Madame Chairwoman.
I have got four points to do in five minutes, so I will try
to move quickly.
Just one quick comment. Mr. Fertel, I think you are right
on in talking about we need to emphasize moving ahead with R&D.
And for this subcommittee, that is the relevant role we can
play, and so I appreciate those comments.
Secondly, Dr. Jones, did you say your levelized costs were
over a 40-year period?
Dr. Jones. Yes.
Mr. Matheson. I just--I would agree with Dr. Bartlett in
saying that the Energy Information Administration data is
probably not reliable, and while if the most relevant cost
comparison is going to be reprocessing through--compared to the
once-through fuel cycle, if we have a levelized cost of natural
gas plants for capital and operating costs that you got over 40
years, I sure hope you are right, but I would bet you are not.
I bet it is going to be more expensive, and I just--look, we
all have trouble--I mean, it is a--when you are projecting the
future, nobody knows what is going to happen, but I think gas
prices are going to jump up a lot more than this reflection of
this levelized cost.
Two quick questions, though, I want to ask.
Dr. Fetter, in your testimony, you talked about the concern
of if we do a separation and transmutation system that there is
going to be a real problem in terms of public acceptance about
locating these facilities compared to a repository. And I just
was curious if you are aware that the Federal Government right
now is moving ahead with not just looking at Yucca Mountain. In
fact, the Federal Government is looking at licensing privately-
owned, above-ground facilities to store high-level nuclear
waste. And as--coming from a state where they are doing that, I
can tell you public acceptance isn't very big on this idea. So
I know this was a discussion of economics and--but since you
raised this issue in your testimony, I guess, did you consider
the notion of comparing separation and transmutation system
locations compared to doing various locations of above-ground,
high-level nuclear waste?
Dr. Fetter. Well, in fact, I do think that the above-ground
storage of high-level waste--of spent fuel is an excellent
option for the next 50 to 100 years. In fact, I think the
Nuclear Regulatory Commission recently said this was a safe and
effective--and it is also a relatively inexpensive option that
would last up to 100 years. And it is done at several locations
already----
Mr. Matheson. Sure.
Dr. Fetter.--around the United States with dry cask
storage.
Mr. Matheson. I guess this is not the forum to do it, but
the fact that they didn't consider a terrorist risk and it is
in the flight plan to a test and training range where F-16s
crash, I am not so sure that putting it into Tooele County,
Utah is the right place to be doing an above-ground storage
facility.
Let me move on now to Dr. Lester. You cite, in your
testimony, MIT's Future of Nuclear Power report, and it
mentions some alternatives to a mined geologic repository. You
mentioned the term ``nuclear boreholes.'' Could you explain to
us what they are and what the pros and cons might be of
disposing of nuclear waste in this manner?
Dr. Lester. Yes. The proposal here is instead of
constructing mined structures a few hundred meters below the
Earth's surface, we would, instead, drill several kilometers
below the surface and essentially stack canisters of waste, one
on top of the other, for, perhaps, one or two kilometers of the
hole depth and then backfill the upper two to three kilometers,
whatever it is, with sealing material. The advantage of going
to that depth is that at that depth, you--it is not--the kind
of near-surface processes that we have to worry about when we
build repositories, in particular the movement of ground water,
is simply not a factor. So one avoids the--at least some of the
complexities, by no means all, but some of the complexities
that are associated with the attempt, for example, to license
the Yucca Mountain facility. And after looking at this option,
we do believe that the deep borehole strategy does have some
attractive features that would warrant a serious research
effort to try to answer some of the key questions about it.
Mr. Matheson. I guess you were anticipating my next
question, which is what are the next steps. How much is known
about this now or what--if we were doing--if we were to pursue
this alternative in whatever form, what would--what are the
next steps we need to be taking?
Dr. Lester. Well, clearly, the deeper you go into the
Earth's crust, the less you know. And so there are important
research issues that have to be dealt with about the
characteristics of the crust at that depth as well as
engineering issues that involve, you know, what would be
involved in then placing a canister at a depth of three or four
kilometers. What would happen if it hung up in the hole, and
would it be possible to retrieve it? There are a series of
questions. Our estimate is that a five- to 10-year research
program would be effective at relatively modest cost, I should
say, in answering at least a number of those questions.
Mr. Matheson. And is any of that research going on now, to
your knowledge?
Dr. Lester. No, essentially not. Nothing of that kind is
going on at the moment.
Mr. Matheson. Okay. Thank you.
Dr. Lester. At least in the United States.
Mr. Matheson. Thank you, Madame Chairwoman.
Chairwoman Biggert. Thank you.
Dr. Schwarz from Michigan is recognized for five minutes.
Mr. Schwarz. Just to kind of--to clear that up a little
bit, this is the second hearing that we have had on what to do
with spent nuclear fuel and nuclear reprocessing, which I am
sure someone has mentioned today. A friend of mine said it took
30 million years to get all of that carbon into the ground and
it has only taken 300 years to get it out, so we, indeed, have
a problem as to what we are going to use for fuel to, probably
more than anything else, produce electricity. Is the changeover
in the next 50 to 75 years to nuclear power inevitable,
question number one? Question number two, and then just put on
your Buck Rogers hats for a minute, as we move away from
carbon-based fuels, is there any other fuel out there that can
be harvested or produced in adequate volume to be an
alternative to nuclear fuel? And my third question is, if, in
fact, there is a mass transition to nuclear fuel, which I
believe, in fact, there will be and to nuclear-produced
electricity, is there an adequate uranium supply worldwide, as
far as we know, to do precisely that and to keep producing
electricity from nuclear processes over the next century or
two? Anybody that wants to pick that up and run with it, go
ahead.
Dr. Fetter. Well, I don't think that a transition to
nuclear is necessary an inevitable. Nuclear is certainly one
of, I count, five main carbon-free energy sources.
Mr. Schwarz. Please elucidate on the other four.
Dr. Fetter. Well, there are enormous resources of fossil
fuels, unconventional fossil fuels and coal, which could be
used in an environmentally-responsible manner with carbon
sequestration. There is also solar, which is quite expensive
now. Photovoltaics are very expensive, but could become much
cheaper in the future. Biomass fuels could be used on a large
scale. And then finally wind power, which is already
economically competitive in some areas of the country.
Mr. Schwarz. Well, let me interrupt you for just a second.
We are told by people who profess to be experts that neither
solar power nor wind power could, in any way, produce enough
energy to really be effective in our world.
Dr. Fetter. Well, certainly solar power could produce far
more than enough energy to supply the world economy. The main
question is the cost, right now, the cost, in particular, of
photovoltaics. And there is also the issue of the cost of
energy storage in the case of solar, because the sun only
shines during the daytime, so one would have to find a way to--
--
Mr. Schwarz. In Michigan, sometimes not even in the
daytime.
Dr. Fetter. Now with regard to uranium supply, this is
something that I and my colleagues have looked fairly closely
at, and we are convinced that there is plenty of relatively
inexpensive uranium to fuel a major expansion of the nuclear
industry worldwide for at least the next 50 years based on a
once-through fuel cycle. So there is no need, on this time
scale, I think, to go to a reprocessing and recycle option.
Mr. Schwarz. Anyone else who wants to pick that one up,
please go ahead.
Dr. Lester. Very briefly, I think we are going to need all
of these things, and I see no possibility that we will be able
to achieve our goals for restricting carbon emissions globally
without a major expansion of nuclear power. We will need solar.
We will need wind. We will need more efficient energy use. We
will need carbon sequestration with coal. We will need all of
those things, but I see no possibility, based on my assessment
of supply and demand and global climate change issues, I see no
possibility that we will be able to get by without a major
expansion of nuclear power over the next 50 to 75 years. Beyond
that time, I don't know. But over that kind of period, that is
to say between now and the end of this century, I see no
possibility of managing this problem of climate change without
a major expansion of nuclear power.
Mr. Fertel. Congressman Schwarz, I would agree with what my
two colleagues said, and the only thing I would add is that we
see hydrogen as becoming a player, and we actually see nuclear
as a player in producing hydrogen, not necessarily through
electrolysis, but through chemical processes at high
temperatures.
The other thing, on the adequacy of uranium supply, there
are a lot of projections on the adequacy of the uranium supply.
Uranium prices are up 150 percent in the last year because of
questions about uranium availability, and that is today. So
there is uranium out there, but that doesn't mean you shouldn't
be looking at smarter recycling techniques. And I think that
that is important to do, not just from fuel supply, but from
the way that the gentleman started, which is fundamentally from
a waste management perspective. You can't keep building large
repositories worldwide. And yes, you can store it above ground,
but ultimately our responsibility to the people living today,
our children, and our grandchildren is to dispose of it. And we
ought to deal with it. Okay. We are smart enough to deal with
it. We ought to get on with it and deal with it. And that would
seem to be the thing that responsibly this country, again,
could provide leadership on.
Congresswoman Biggert, you mentioned what Chairman Hobson
put in the energy and water appropriations bill, and we
certainly respect Chairman Hobson's desire to get it done by
2007. We only wish we could. What we would like to do is take
his leadership and leverage off of that and say that if we can
move forward with the government, the DOE looking at a road map
or whatever that can move the R&D down the road quicker, that
would be very good. I still think deployment is a long way off,
just practically.
Mr. Schwarz. Thank you, gentlemen.
Thank you, Madame Chair.
Chairwoman Biggert. Thank you.
And certainly, Chairman Hobson is the appropriator, but we
are the authorizing committee, and so this is something that we
need to address and I, for one, you know, would want to push
that.
The gentlelady from Texas, Ms. Jackson Lee, for five
minutes.
Ms. Jackson Lee. I thank the Chairwoman very much and the
Ranking Member for the opportunity for such an important
hearing.
And I would ask unanimous consent that my opening statement
be allowed to be submitted into the record in its entirety.
Chairwoman Biggert. Without objection.
Ms. Jackson Lee. I think that there is a large question on
the idea of nuclear energy and nuclear waste. I have, for a
long period of time, challenged Yucca Mountain as to whether or
not that is the best approach. My concern, of course, is that
anything that is geographically or population-wise
geographically bare, meaning that it is an open, unused area,
with the growing population that we have in the United States,
one can never tell, as populations grow and expand, what may be
an unpopulated area today may be a populated area tomorrow.
With that in mind, this whole question of reprocessing
poses a great deal of interest, particularly if it has some
economic benefit to it and as much if it has some ability to be
secure, because one of the concerns those of us who serve on
the Homeland Security Committee, and we have a Subcommittee
dealing with the issue of nuclear materials, is the question of
security, certainly in the backdrop of the recent tragic
incident in London, England.
Dr. Fetter, I would like to query you on if you would point
to the viability of reprocessing from the points that I have
just made. One, we can never guarantee areas that may remain
unpopulated. I am sure that the fans of the Yucca Mountain
process, of course, will argue of its deep embeddedness and
that it does not pose a threat, but you might want to comment
on that, not on the Yucca Mountain per se, but the fact is that
wherever you put nuclear waste, there may be the possibility of
it being near population sites. But I think I am interested in
this whole question of the processing being secure, the
processing being a ready technology that is comparable and
ready to move on now, and the kind of expertise that would be
needed to engage in reprocessing in a massive scale. And I
thank the witnesses for their testimony.
Dr. Fetter. Well, I think it is important to note that
reprocessing does not eliminate the waste, and it doesn't
remove the need for a deep geologic repository. Even with a
complete separations and transmutation system, there would
still be the need for a deep geologic repository, like the one
at Yucca Mountain. And while I am not an expert on geologic
disposal, I know there have been many studies by the National
Academy of Sciences on the safety of Yucca Mountain, which have
concluded that one can adequately protect public health and
safety through the geologic disposal of waste at Yucca
Mountain.
The issue of security is one that I do worry about. Even in
the United States, I worry about the security of--the security
implications of reprocessing and, in particular, the transport
and use of mixed oxide fuel around the United States, because
that material, if it were stolen and diverted, could be used to
build nuclear weapons. And as I have also said, I worry
particularly about the security implications of a move by the
United States toward reprocessing and the example that it would
set for other countries.
Ms. Jackson Lee. Did you answer the question about
expertise in the reprocessing area, the amount of trained
personnel that you need to train more personnel, the process
that would be needed?
Dr. Fetter. Well, one would need a fairly extensive
research program to develop the--these technologies more fully,
and in the process of conducting that research and development,
one would naturally, I think, develop the necessary expertise
that would be needed to do this well. I think that can be done
with the existing university infrastructure that we have in the
United States.
Ms. Jackson Lee. Anyone else want to comment quickly on the
training aspect over the expertise needed in the reprocessing?
Dr. Lester. Well, if I may just add a word about that. I--
because a purely private initiative in reprocessing would be
unviable economically, it would necessitate a federal
intervention, which would involve a commitment of funds,
obviously, but perhaps equally importantly would place heavy
demands on the government's own nuclear-trained human
resources, who would necessarily have to be involved in the
selection of sites and the development of a licensing framework
and the management of contractors and so on. And the resources,
both human and financial, that are potentially available to the
Federal Government to support the development of nuclear power,
are not unlimited, and therefore, a new initiative in
reprocessing could risk diverting resources from other policy
initiatives that might make a greater positive contribution to
the future of nuclear power over the next few decades.
Mr. Fertel. Again, a slightly--twist on what Dr. Fetter
just said.
The government is spending resources right now looking at
advanced fuel cycle initiatives, which include looking at
transmutation and reprocessing. What, again, this committee can
do is help make sure that they are using their resources most
effectively in doing that as opposed to piece meal in different
laboratories and different parts of the bureaucracy. So there
are resources currently being committed. Your question is a
very good one, and I think Richard's answer is a good one, but
there are bodies and minds working this right now. And what
could be looked at is: are they working it as smart and as
efficiently as they can be and in as an integrative way as
possible?
Ms. Jackson Lee. I appreciate that answer.
Madame Chairperson, I thank you. I think the two prior
speakers gave me the gist, which is if we take a lot of dollars
and take away from another effort, we have a problem, but we
already have dollars, and if we organize them better, we might
be able to move forward on what may be important research.
I thank the Chairwoman, and I yield back my time.
Chairwoman Biggert. Thank you very much.
I think if we can--briefly, if there are other people that
have what--further questions, and I do, or maybe it is going to
turn out to be more of a statement, but I recognize myself for
five minutes.
And I would agree with Mr. Fertel when he talked about how
we tried to set an example 30 years ago that really nobody paid
attention to it and the nuclear non-proliferation, and we,
obviously, thought we were being the leaders and shut down
everything, and everybody else went ahead. And what has--but
the research has not died on this, and it never did. I was over
in France to look at the research over there, and all they did
is talk about how they had gotten their research from Argonne
in Illinois, and that is--they were using that process that was
developed 20 to 30 years ago. And they are still using an old
process. But since I have been in Congress and I have worked on
this committee, Argonne has been working on the reprocessing
starting with the electrometallurgical process and then into
the pyroprocessing, which was the--looking at the EBR to the
breeder reactor and that--and then going further to the spent
fuel pyroprocessing and transmutation. So it is not as if there
has been a void here in looking at reprocessing at all, and I
think that is very important, because this is--this committee
looks at basic science, looks at the research, basic research
and development, and this, I think, is another area that we
cannot just look to industry and say, ``Well, you go out and do
it,'' because it is a very expensive process. But in the long
run, to me, reprocessing goes along with the advanced fuel
cycle and the closed--and we are--we haven't built a reactor in
how many years, 30 years, and it is going to take a while to do
that. So why can't we do the whole thing at once and have
something that is going to last, that is going to cut out the
fuel? And we heard in testimony the last time that if we had
reprocessing--take all of the materials that we have now, that
we would never have to build another Yucca Mountain. We would
be able to use one that--for hopefully centuries, that would be
the place to put the spent fuel that would remain--it would
not--and it would only last 300 years and et cetera.
So anyway, that is my soapbox. But do you think, and I
will--and I come back to this again. I think it is the way that
we started. Do you think with what we are developing and the
time that it is going to take us to do the whole process, that
we will be able to do that in less than 50 years and yet we
will be able to do all of this?
So I am going to start with Mr. Fertel. Start the other way
this time.
Mr. Fertel. Yeah, I actually think that you could be
deploying by 2025, if that is what the government decided was
the right thing to do. I think that what you need to get there,
but--is a conscious plan going forward, which is technology and
policy, because if it doesn't include the policy decisions, you
are going to have a problem on what happens on the buying side,
on the implementation side. I don't think there is any question
about the growth of nuclear energy in the world and in our
country as an integral part of what is going to help satisfy
both energy and environmental needs, and therefore, whether we
have a uranium problem or not, we are going to have to do
something smarter with the used nuclear fuel, and doing it
smarter with--and I am totally cognizant of what Steve said
about the examples we set and from a non-proliferation
standpoint, making sure that we are not creating problems,
particularly in the world we live in today.
Chairwoman Biggert. Well, I think we heard that at our last
hearing that really the new process would really reduce,
reduce, reduce the nuclear proliferation problem.
Mr. Fertel. Done right and done with the right leadership.
Chairwoman Biggert. Dr. Fetter.
Dr. Fetter. Well, as I said, I do--even though I don't
support any near-term reprocessing, I do support research on
advanced reprocessing and recycle technologies, ones that would
be, hopefully, cheaper, but most importantly, would be more
proliferation-resistant. It is my understanding that the
proposals that have been currently put forward, though, are not
more proliferation resistant. For example, the UREX+ process,
which was part of the program, I think, Bill Magwood would
testify that that, in fact, was not more proliferation-
resistant than the PUREX--or didn't--maybe he didn't testify.
Perhaps he stated that this was not more proliferation-
resistant. So I think that in future research, much attention
and perhaps real team effort should be devoted to ensuring that
any new process that is developed is more proliferation-
resistant.
Chairwoman Biggert. I think what he said was that there
is--that it hasn't been--any large reprocessing that has not
been done yet, but it is--the research is there. Now it just
needs the application.
Dr. Jones.
Dr. Jones. The reprocessing technology alternatives were
really outside the scope of our study, so I didn't----
Chairwoman Biggert. Thank you.
Dr. Lester.
Dr. Lester. Well, Madame Chair, your question is
essentially, I think, how long will it take. And the answer is
it depends on what you want. If you want a PUREX-type of modest
modification to a PUREX-type reprocessing----
Chairwoman Biggert. No, I think we are talking about the
reprocessing that has transmutation that is not nuclear--or
there will not be nuclear proliferation.
Dr. Lester. If you want that, and if you want, moreover, a
configuration, a scheme, that would remove all of the
troublesome radionuclides from the waste, the long-lived ones,
and moreover, figure out how to fabricate them into appropriate
targets and then transmute them so that there is very little
left, if you want to achieve all of that and have a
proliferation-resistant scheme, I think this is not going to
take one decade. I am not even sure it is going to take less
than two decades. I think we are talking about a long-term
program for which I certainly believe that we should be doing
serious, careful, long-term research. But I don't think this is
something that would be available to us by, for example, the
year 2020.
Chairwoman Biggert. Thank you.
Thank you.
Mr. Honda, do you have any questions? Okay. Thank you.
Dr. Ehlers is recognized.
Mr. Ehlers. Just a few, Madame Chair.
First of all, one thing that we haven't mentioned at all,
which I think is a very important part of the current energy
needs, is to improve our efficiency of energy use. That is the
single biggest, cheapest thing we can do immediately to solve
our short-term energy problem. And I realize it is a one-term
bump, but it is something that, once established, will pay off
tremendously over many years.
Secondly, I wanted to support my colleague from Maryland,
Dr. Bartlett's comments about fossil fuel, although there is--
appears to be ample coal at the moment. Certainly, there are
some environmental side effects, and we need a lot of work on
trying to resolve that problem if we are going to use it. Oil
is not a factor, as you said, simply because the costs are
going to escalate. I think--and I believe the same thing is
true of natural gas. I--we have--I firmly believe natural gas
is too valuable to burn. It is an incredibly good feed stock
for the petrochemical industry, and we are basically, because
of its good environmental effects now, we are burning it to
produce electrical energy when there are other alternatives
available.
I would also disagree with the comments about
photovoltaics, and I would refer you to an article in the APS,
American Physical Society, newsletter not too long ago, a very
good review of photovoltaic technology and much more optimistic
than you testified about. It doesn't solve the storage problem,
of course, but I have a friend who has built a house in
northern Michigan, which is certainly not a warm and friendly
climate, and he is five miles from the nearest power line, and
it is totally solar-powered. They have never had a problem of
any sort with it, in spite of our miserable weather, both
cloudy and cold.
The proliferation issue I don't think is an issue anymore
as it relates to the fuel cycle. I think the greatest risk
right now is the plutonium floating around in the former Soviet
Union and--which is not being properly accounted for and cared
for. We also have a number of other nations producing
plutonium, and I think that genie is out of the bottle. There
are a lot of good reasons not to create more. I understand
that. But it is not a stopper, in my mind.
And finally, just a little pet peeve of mine, which I
developed years ago as a county commissioner and Chairman of
the Board of Public Works. I proposed we rename our county
landfill, which was called the ``Kent County Waste Disposal
System,'' and rename it as the ``Kent County Waste Storage
System.'' Just because you put it in our ground doesn't mean it
is gone. It is still there. You have not disposed of it. It is
stored there, and as our county commission found out when it
began leaking into rivers and ponds, and we had to spend
millions of dollars in remediation. The same is true of nuclear
waste. You are not disposing of it. The question is how can we
most carefully and properly store it, and particularly, how can
we most economically retrieve the materials and correct the
problem when problems will occur, because they will occur. And
I think the emphasis on disposal at Yucca Mountain is a major
part of the problem. And recording a 10,000-year guarantee is a
major part of the problem. Monitored retrievable storage, I
believe, is safer and likely to be less expensive and certainly
more acceptable politically. And I think if we had gone that
route, I believe we would have Yucca Mountain operating at this
point.
With that, I yield back.
Chairwoman Biggert. Thank you.
Dr. Bartlett, the gentleman from Maryland.
Mr. Bartlett. Thank you very much.
Dr. Ehlers mentioned coal. We have about 250 years of coal
reserves in our country at current use rates. But yet, to ramp
up the use of coal, as we certainly will, as other energy
sources become less available, if the--you increase only two
percent exponentially, that now shrinks to about 85 years. And
when you recognize that for many purposes, you are going to
have to transform the coal into a gas or a liquid, now you have
shrunk to about 50 years. So there is about 50 years of coal
left with a two-percent growth, exponential growth, if you are
transforming it to a form where you can put it in your car or
do other things with it.
One of you mentioned that there were five sources, four in
addition to nuclear energy. The other alternatives are going to
require very large investments of time and energy, and we are
running out of both of those.
I would just like to comment very briefly on two of them
you mentioned.
One was unconventional fossil fuels. The Tar Sands of
Canada, I am going up there this summer to look at those, I
believe, they are now producing oil out of those at about $30 a
barrel, and with oil today more than $60 a barrel, gee, that
sounds good. And there is lots of oil there, and so we will
just harvest that. But I am also told that there is a net
energy deficit in doing that. They are getting the oil out of
the ground by drilling two wells, ultimately--they are
horizontally. In the upper well, they put a lot of steam, hot
water, which they generate with gas, and that they, in fact--
and then it softens the oil and it can flow down and be picked
up by the second well, which is drilled under that, that they
are, in fact, using more energy from the gas that they are
getting out of the oil. Now if that is true, this is not a
solution to our energy problem. As long as gas is cheap and it
is there and you can put oil in a pipeline and move it here,
that may be justified, but I would really like to second what
Dr. Ehlers said. Gas is, in fact, too good to burn. As a matter
of fact, nearly half the energy in producing a bushel of corn
is represented by the gas that is used to make nitrogen
fertilizer. Very few people recognize that.
The other potential source is biomass. Until we learned how
to do no-till farming, we were losing the battle with
maintaining our topsoils. They are now all down in the
Mississippi Delta from the central part of our country. Now we
are barely able to maintain our topsoils, and that is
permitting much of this, what you call biomass to go back to
become humus. If you take that away, then the soils become, in
effect, a soup when it is wet and a brick when it is dry, so
you make brick. You take soil that has no humus in it, it is
called clay, and you put it in an oven and bake it, and that is
a brick.
So although we can certainly get some energy out of
biomass, I would caution that our ability to do that is very
limited compared to the amount of energy that we get from
fossil fuels that we have got to replace.
Just one little illustration of the enormous energy density
in fossil fuels. One barrel of oil, the refined product of
which gasoline you can now buy at the pump, 42 gallons, roughly
$100 will buy that for you at the pump, right. That will buy
you the work output of 12 people working full-time for you one
year.
To give you another perspective of the enormous energy
density in fossil fuels, if you go out this weekend and work
very hard in physical labor all day long, I will get more
mechanical work out of an electric motor with less than 25
cents worth of electricity. Your worth for manual labor, less
than 25 cents a day. And that is the challenge we have in
transitioning from these fossil fuels to these alternatives.
Enormous energy density.
We have 5,000 years of recorded history. We are not a bit
over 100 years into the age of oil. In another 100 years, we
will be out of the age of oil. If not massive nuclear, what
then? I am glad that you were--you are a great audience. Most
of the audiences, less than two percent of the people know
anything about M. King Hubbard and ``Hubbard's Peak,'' and all
of you seem to know about that. Congratulations.
Madame Chairman, thank you very much for hosting this
meeting, because it gives us an opportunity to look at the
overall energy problem we face. And again, I would counsel that
I wouldn't bet the ranch on the prognostications of the Energy
Information Agency.
Chairwoman Biggert. Okay. Thank you. The gentleman yields
back.
Before we close the hearing, I would like to recognize Bill
Carney, a former Science Committee Member, is sitting in the
back of the room. Do you want to raise your hand? Welcome. I am
glad you came back to see how we are doing.
I want to thank our panelists for testifying before this
subcommittee today. It has really been enlightening, and thank
you for spending the time with us and really helping us in our
policy deliberations. We really appreciate all that you have
had to say.
And if there is no objection, the record will remain open
for additional statements from Members and for answers to any
follow-up questions the Subcommittee may ask the panelists.
Without objection, so ordered.
This hearing is now adjourned.
[Whereupon, at 4:15 p.m., the Subcommittee was adjourned.]
Appendix 1:
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Answers to Post-Hearing Questions
Responses by Richard K. Lester, Director, the Industrial Performance
Center; Professor of Nuclear Science and Engineering,
Massachusetts Institute of Technology
Questions submitted by Chairman Judy Biggert
Q1. What steps are available to reduce the costs associated with an
advanced fuel cycle? Specifically, which steps or technologies have
fixed costs that can't be reduced and which steps or technologies might
see significant cost reductions with further research and development?
A1. Every stage in the nuclear fuel cycle has the potential for cost
reduction through the implementation of new technologies as well as the
exploitation of insights from accumulated operating experience. This is
true of the front-end stages, including uranium resource exploration
and production and uranium enrichment, as well as back-end stages such
as interim spent fuel storage, reprocessing, and waste disposal.
Uncertainties in cost are greatest at those stages of the fuel cycle
where there is a lack of significant-scale practical operating
experience, including actinide partitioning and transmutation schemes.
Research and development can play an important role in reducing these
uncertainties, as well as, potentially, reducing costs. Most current
research, development, and analysis on back-end fuel cycle stages is
focused on providing information about the operation of a single
process, set up in one way. While these activities produce knowledge,
they do not allow for transferring information to new, related
situations and thus provide no foundation for the accumulation of
information about how variations in the operation of plants and other
parts of the fuel cycle affect costs, safety, waste and proliferation
resistant characteristics. A modeling, analysis, and simulation program
is needed that will permit evaluations of how changes in one feature of
a design for the sake of, say, safety may affect other aspects of the
design, the overall performance of the system, and the cost of
operation. Laboratory-scale research on new separations methods with
the goal of developing technologies that are less costly and more
proliferation resistant is also important. However, expensive projects
for development and demonstration of advanced back-end fuel cycle
technologies carried out too far in advance of any credible deployment
opportunity and without benefit of the technical basis provided by
analysis and research can be counterproductive for cost reduction
efforts.
Answers to Post-Hearing Questions
Responses by Donald W. Jones, Vice President of Marketing and Senior
Economist at RCF Economic and Financial Consulting, Inc.
Q1. Dr. Lester, in his testimony, makes the point that fleet-wide
averaging of costs isn't possible in the U.S. industry as it is in
France, for example. Do you agree? In the complicated situation here in
the U.S., with some States regulated, others deregulated, and all
setting their own policies, how easy or difficult is it to pass the
costs of reprocessing on to the consumer in the form of higher rates?
A1. Electricity pricing is much more complex in the United States than
in France. Deregulation has separated generators from retail
distribution, where consumer pricing occurs. Some generators may have
customers in both regulated and deregulated markets, and the
constraints on retail pricing in regulated markets may affect wholesale
pricing to those markets in ways that are not applicable in sales to
retailers in deregulated markets.
However, the estimates of the additional cost of reprocessing
indicate that those costs are so small that consumers simply will not
notice them. This result in no way depends on a utility being able to
spread reprocessing costs across all of its generation facilities,
conventional as well as nuclear. The full fuel cycle cost of new
nuclear plants, without reprocessing, our study calculated to be about
1/2 cent per kilowatt hour. Publicly available estimates from the
Harvard study, the Nuclear Energy Agency, and a report by Simon Lobdell
suggest that reprocessing would increase the full fuel cycle cost to
about six-tenths of a cent per kilowatt hour. Adding this cost to a
generation cost of 6.2 cents per kilowatt hour, which is a wholesale
price that excludes any transmission and distribution costs which final
consumers face, I believe would not have an appreciable effect on
consumers.
The United States currently does not have commercial reprocessing
infrastructure, and the cost calculations presented above do not take
into consideration any broader costs required to bring such an
infrastructure into existence.
Answers to Post-Hearing Questions
Responses by Steve Fetter, Dean, School of Public Policy, University of
Maryland
Questions submitted by Chairman Judy Biggert
Q1. Why do you think the cost estimates for the Japanese Rokkasho
plant tripled from the original estimates? What economic lessons can we
learn from their experience?
A1. In the late 1980s, when the construction plan for the Rokkasho
reprocessing plant was approved, the estimated construction cost was
about $7 billion and estimated operating date was December 1997.
Because the design was based on the French UP3 plant, which was built
at a cost of about $5 billion, this initial estimate seemed reasonable.
It now appears that the plant will not begin commercial operation
before 2007, and that the total construction cost will be over $21
billion. A full explanation for the tripling in cost would require a
detailed investigation. The plant operator, Japan Nuclear Fuels, Ltd.
(JNFL), has cited construction delays resulting from a series of design
changes to comply with increased seismic and other safety requirements.
Others have suggested poor project management by JNFL and a lack of
competition among plant contractors and vendors as major reasons for
the dramatic cost escalation.
One lesson that could be learned from the Japanese experience is
that a lack of domestic experience with the construction and operation
of commercial reprocessing plants can lead to substantial cost
overruns. The only commercial reprocessing facility to operate in the
United States, at West Valley, New York, closed in 1972 after a few
years of troubled operation. (The site is still the location of an
ongoing, multi-billion dollar, government-funded radioactive waste
cleanup project.) The lack of domestic experience, combined with a
relative lack of competition among the few foreign firms with the
necessary experience, are bound to drive up costs for a new U.S.
reprocessing facility substantially above initial estimates.
Q2. You say that increasing natural gas prices and that costs of
carbon dioxide emission reductions will make nuclear more competitive,
but that it will still have to compete with wind, biomass and coal-
fired plants with sequestration. Biomass and sequestration in
particular are not mature technologies with known costs and will
require government research subsidies to become so. In terms of
incremental cost per kilowatt-hour, how might those subsidies compare
to the subsidies we are talking about for reprocessing?
A2. Government funding for research and development for new
technologies cannot be directly compared to subsidies for the operation
of existing types of facilities. Government funding to develop new
technologies is required when the financial risks are too great and the
time scales too long to allow private firms to recover their
investments in research and development in a timely manner. The
development of light-water nuclear reactor technology is one example
from the past; the development of advanced technologies for biomass,
solar photovoltaics, and carbon sequestration are current examples. If
basic research yields a new, economically competitive method of energy
production, private firms can adopt and deploy the technology with no
ongoing subsidy. If the technology is successful, the initial federal
investment in research and development can be a very small compared to
the ultimate benefits to the U.S. economy.
The management of spent nuclear fuel is fundamentally different.
Utilities currently are expected to pay the full cost of the geological
disposal of spent fuel in the Yucca Mountain repository. Reprocessing
using current technologies will double or triple total spent-fuel
management costs, while having no waste-disposal advantages and
increasing risks of nuclear theft and proliferation. New approaches to
reprocessing, which promise to decrease requirements for geological
repository space, are certain to be even more expensive and to be less
proliferation-resistant as direct geological disposal. Even if demand
for nuclear power increases rapidly, reprocessing would require an
ongoing subsidy for the next 50 to 100 years.
Answers to Post-Hearing Questions
Responses by Marvin S. Fertel, Senior Vice President and Chief Nuclear
Officer, The Nuclear Energy Institute
Question submitted by Chairman Judy Biggert
Q1. In your testimony, you state more than once that the consumers of
nuclear energy should not bear the additional costs of reprocessing. If
we make a transition to reprocessing, how should the costs be covered?
A1. Electricity consumers should only be charged for the reasonable
costs of services that benefit them directly as part of the cost of
electricity. The Nuclear Waste Fee ($0.001 per kWhr) is such a cost
appropriately charged to electricity consumers. There is no evidence
that the costs of used nuclear fuel disposal by the Federal Government
under the Nuclear Waste Policy Act should lead to an increase in the
Fee. If reprocessing is carried out to serve a national objective, but
would raise the cost to electricity consumers beyond what consumers
would pay without reprocessing, then the costs should fairly be borne
by the Federal Government on behalf of the Nation.
There are three reasons that the Nation might re-engage in
reprocessing: fuel supply, waste disposal, and non-proliferation. To
the extent that the cost of reprocessing raises the cost of either
nuclear fuel supply or used fuel disposal beyond the cost without
reprocessing, the additional cost should rightfully be borne by the
Federal Government, because the only reason to carry out reprocessing
would be for some broader, national benefit. Non-proliferation is
clearly a broader, national benefit and any costs of reprocessing
associated with non-proliferation should rightfully be borne by the
Federal Government.
Appendix 2:
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Additional Material for the Record