[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

                              ----------                              


                         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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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




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