[Senate Hearing 109-723]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-723
 
AN OVERVIEW OF THE GLOBAL NUCLEAR ENERGY PARTNERSHIP (GNEP), INCLUDING 
   PROPOSED ADVANCED REACTOR TECHNOLOGIES FOR RECYCLING NUCLEAR WASTE

=======================================================================

                                HEARING

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                            SPECIAL HEARING

                   SEPTEMBER 14, 2006--WASHINGTON, DC

                               __________

         Printed for the use of the Committee on Appropriations


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html



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                               __________

                      COMMITTEE ON APPROPRIATIONS

                  THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska                  ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         PATRICK J. LEAHY, Vermont
CHRISTOPHER S. BOND, Missouri        TOM HARKIN, Iowa
MITCH McCONNELL, Kentucky            BARBARA A. MIKULSKI, Maryland
CONRAD BURNS, Montana                HARRY REID, Nevada
RICHARD C. SHELBY, Alabama           HERB KOHL, Wisconsin
JUDD GREGG, New Hampshire            PATTY MURRAY, Washington
ROBERT F. BENNETT, Utah              BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
MIKE DeWINE, Ohio                    TIM JOHNSON, South Dakota
SAM BROWNBACK, Kansas                MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado
                      Bruce Evans, Staff Director
                  Clayton Heil, Deputy Staff Director
              Terrence E. Sauvain, Minority Staff Director
                                 ------                                

         Subcommittee on Energy and Water, and Related Agencies

                 PETE V. DOMENICI, New Mexico, Chairman
THAD COCHRAN, Mississippi            HARRY REID, Nevada
MITCH McCONNELL, Kentucky            ROBERT C. BYRD, West Virginia
ROBERT F. BENNETT, Utah              PATTY MURRAY, Washington
CONRAD BURNS, Montana                BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
CHRISTOPHER S. BOND, Missouri        TIM JOHNSON, South Dakota
KAY BAILEY HUTCHISON, Texas          MARY L. LANDRIEU, Louisiana
WAYNE ALLARD, Colorado               DANIEL K. INOUYE, Hawaii

                           Professional Staff

                             Scott O'Malia
                             Roger Cockrell
                             Emily Brunini
                        Drew Willison (Minority)
                   Nancy Olkewicz (Minority)

                         Administrative Support


                           C O N T E N T S

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                                                                   Page

Opening Statement of Senator Pete V. Domenici....................     1
Statement of Senator Wayne Allard................................     2
Statement of Dennis Spurgeon, Assistant Secretary for Nuclear 
  Energy, Office of Nuclear Energy, Department of Energy.........     3
    Prepared Statement...........................................     6
GNEP Overview....................................................     6
Future of Nuclear Energy in the United States....................     7
Spent Fuel Recycling.............................................     9
Statement of Dr. Alan Hanson, Executive Vice President, 
  Technology and Used-Fuel Management, AREVA NC, Inc.............    11
    Prepared Statement...........................................    14
The Comparable Costs of Recycling................................    14
The National Benefits of Recycling...............................    15
GNEP Can Be a Successful Public-Private Enterprise...............    16
Industry Can Begin Meeting the Objectives of GNEP................    16
Letter From Dr. Alan Hanson......................................    17
Statement of Matthew Bunn, Harvard University, Belfer Center for 
  Science and International Affairs, John F. Kennedy School of 
  Government, Cambridge, Massachusetts...........................    23
    Prepared Statement...........................................    26
Assessing the Benefits, Costs, and Risks of Near-Term 
  Reprocessing and Alternatives..................................    26
Recycling in Context.............................................    27
Costs and Financing..............................................    27
Proliferation Risks..............................................    28
Safety and Security..............................................    31
Environmental Impact.............................................    31
Sustainability...................................................    31
Uranium Supply...................................................    32
Repository Space Supply..........................................    32
Commercial-scale Demonstrations and the GNEP R&D Program.........    34
Recommendations..................................................    36
Statement of Kelly Fletcher, GE Global Research, Sustainable 
  Energy Advanced Technology Leader..............................    40
    Prepared Statement...........................................    42
Historical Overview..............................................    43
PRISM Technology.................................................    44
PRISM Technology for the Future..................................    48
Advanced Reactors Program........................................    51
Schedule and Cost Impacts to GNEP................................    52
Industry Involvement.............................................    54
Support of Nuclear Power.........................................    55
GNEP Change in Scope.............................................    56
Technical Capability.............................................    57
Estimated Time for Start of Program..............................    58


AN OVERVIEW OF THE GLOBAL NUCLEAR ENERGY PARTNERSHIP (GNEP), INCLUDING 
   PROPOSED ADVANCED REACTOR TECHNOLOGIES FOR RECYCLING NUCLEAR WASTE

                              ----------                              


                      THURSDAY, SEPTEMBER 14, 2006

                           U.S. Senate,    
          Subcommittee on Energy and Water,
                              and Related Agencies,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:30 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Pete V. Domenici (chairman) 
presiding.
    Present: Senators Domenici and Allard.


             opening statement of senator pete v. domenici


    Senator Domenici. This hearing I want to follow up on the 
Department's evolving strategy to address spent nuclear fuel 
and determine the level of coordination between GNEP and the 
Yucca Mountain program. I think you all know that's very 
important.
    One month ago the Department undertook several 
solicitations to begin the site selection process and to 
determine the level of interest in the development--or the 
developing--the consolidation at fuel treatment facility and an 
advanced burner reactor.
    This move to a commercial facility is a major departure 
from the Department's original R&D roadmap in February of this 
year, and has the potential to significantly accelerate the 
development of recycling technology and bring it more in line 
with the plan for Yucca Mountain. Accelerating the process, 
this process, will certainly change the selection of 
technologies and I need to be assured that the Department is 
making a sound decision regarding non-proliferation.
    We also need to be assured that the department has the 
technical capability to fully realize the GNEP goals of closing 
the fuel cycle and significantly reducing the amount of spent 
fuel. I think we need to know more about the integration--
integrating advanced reactors into the process and having a 
frank discussion about the Department's technology capability 
to develop high quality actinide fuel.
    Secretary Spurgeon, I understand the Department received 
over a dozen responses to your recent site selection RFP. That 
is a very encouraging sign and I look forward to learning more 
about this.
    Ladies and gentlemen we are at a crossroads in our national 
energy policy. Building on the success on the Energy Policy Act 
of 2005 we can choose to make the investment and developing 
diversified energy resources or we can choose to maintain the 
status quo. With regard to nuclear power the provisions in the 
EPACT which encourage development of new nuclear plants are 
having a positive effect. Already 12 utilities or consortia are 
preparing at least 19 applications for as many as 30 new 
reactors. In addition, 50 percent of the existing reactor fleet 
will receive 20-year license renewals.
    The existing nuclear fleet provides the cheapest source of 
power--other than hydroelectric--and like hydro does not 
contribute to greenhouse emissions. Therefore it is clear to me 
that one nuclear strategy must not only address new plants, but 
must solve the waste problem as well.
    Let me be clear that I believe it was a mistake to abandon 
the nuclear fuel recycling in 1978 and that clearly our so-
called leadership did not make a bit of difference had others 
decided to develop the process without us. I support GNEP as a 
responsible solution to addressing our spent fuel needs. I also 
believe this strategy must be closely aligned with the 
development of Yucca Mountain in the near term. I would hope 
the Federal Government lives up to its commitment under the 
Nuclear Waste Policy Act and begins to take responsibility for 
waste stored at reactor sites nationwide.
    Today, we hear from four witnesses with vast experience in 
the world of nuclear power to determine if the Department is on 
the right path with GNEP. Witness Dennis Spurgeon, Assistant 
Secretary Office of Nuclear Energy, will update the committee 
on the evolving GNEP strategy and provide feedback on the 
recent site solicitations.
    Dr. Alan Hanson, Executive Vice President for Technology 
and Used Fuel Management, AREVA, will provide perspective on 
the most recent economic analysis of recycling technology and 
the opportunities to deploy commercial spent fuel recycling 
technology.
    And Mr. Matt Bunn of Harvard University will provide 
testimony on the economics of nuclear reprocessing and address 
proliferation concerns.
    Mr. Kelly Fletcher, Global Research and Advanced Technology 
Leader, General Electric will provide testimony on investments 
the Department of Energy has made in advanced reactors and the 
viability of the DOE strategy.
    I appreciate the participation of the witnesses and request 
that you keep your testimony to 5 minutes--perhaps slightly 
more--as your full statement will be included in the record and 
we can spend more time talking together for a more complete 
record.
    Unless one of my colleagues would like to make an opening 
statement, I am going to proceed to the first witnesses.


                   statement of senator wayne allard


    Senator Allard. Mr. Chairman, I'd just like to make just 
some very brief comments.
    Senator Domenici. Please do.
    Senator Allard. First of all, I want to congratulate you on 
a very fine opening statement this morning. I think you and I 
agree on the importance of having a sound energy plan for this 
Nation. I want to applaud you for the leadership in that 
regard. Obviously nuclear energy has to be a vital part of 
that--in my view--and I think you agree with that. And, if we 
are going to have nuclear energy, we have to have a sound 
process where we take the waste and deal with the waste 
problem. So, I want to thank you for holding this important 
hearing.
    As I stated during the hearing earlier this year on the 
global nuclear energy plan, I believe that nuclear energy is 
one of the most promising and under-utilized energy sources 
available to us and I am pleased we are taking another look at 
the administration's GNEP plan and pleased to see that we are 
looking particularly at the waste recycling portion of the 
plan.
    When the United States stopped nuclear reprocessing in the 
1970's, England, France, and Japan, as we all know, kept moving 
forward. They are now operating several successful reprocessing 
facilities. I visited some of these sites in France and England 
where I was able to discuss much of the reprocessing technology 
and to see it in action. It is my understanding that newer 
processes, ones that we would be using are even more advanced, 
and it's my understanding that potentially these processes are 
safe and efficient and ultimately result in a much smaller 
waste stream than the nuclear energy production process. This 
results in lessened storage requirements down the road and 
because much of the spent fuel is recycled, less new fuel must 
be acquired.
    Again, thank you Mr. Chairman for your holding this 
hearing. I look forward to continuing our work on this 
important issue. To the panel I going to have a vote here in 
another committee, so I'm not going to be able to be here for 
your whole testimony, but I'm going to read it and I'm very 
interested in this issue and I look forward to what you have to 
say. I appreciate your being willing to show up here and share 
your thoughts with us this morning. Thank you Mr. Chairman.
    Senator Domenici. Thank you, Senator. Let us proceed. 
Assistant Secretary Spurgeon.

STATEMENT OF DENNIS SPURGEON, ASSISTANT SECRETARY FOR 
            NUCLEAR ENERGY, OFFICE OF NUCLEAR ENERGY, 
            DEPARTMENT OF ENERGY
    Mr. Spurgeon. Chairman Domenici, Senator Allard, it is a 
pleasure to be here today to discuss the future of nuclear 
energy in the United States and the Global Nuclear Energy 
Partnership, or GNEP, through which the Department proposes to 
develop and deploy an integrated recycling capability.
    Mr. Chairman, you have been a strong and appreciated voice 
in calling for a nuclear renaissance in the United States and 
for expanded use of nuclear power across the world. I 
appreciate this committee's long-standing leadership and 
support for the Department's nuclear energy program.
    With 130 nuclear powerplants under construction or planned 
around the world, clearly many countries--including China, 
India, Russia, and others--see the benefits of nuclear energy 
and are moving forward with ambitious nuclear power programs. 
The same can be said for the United States. For the first time 
in decades, U.S. utilities are developing the detailed plans to 
build a new generation of nuclear power plants. At current 
count almost 30 new nuclear powerplants are in the planning 
process for construction beginning over the next decade.
    What is prompting this growth? First, in the United States, 
industry has done the hard work of establishing a solid 
foundation for a new generation of plants. Demand and rising 
costs of energy, particularly volatility of natural gas, along 
with concerns about carbon dioxide emissions has made nuclear 
energy attractive. Partnerships between government and industry 
have successfully worked to address the final financial and 
regulatory impediments that the first purchasers of new nuclear 
plants face.
    During the 5 months that I have been Assistant Secretary, I 
have worked to focus the priorities of my office on what I 
believe to be our most important responsibility--first, serving 
as a catalyst for a new generation of nuclear power plants in 
the United States. That is what we are doing with Nuclear Power 
2010 and implementing the provisions of the Energy Policy Act 
of 2005. Second, we are paving the way for safe and secure 
expansion of nuclear power in other parts of the world. I 
believe this is the compelling challenge of our time and I want 
to work closely with you and the committee as we move forward.
    We are making progress on both fronts. I am confident that 
we will see the first announcement of new United States nuclear 
power plants before President Bush leaves office. But it is 
important for our future that nuclear energy expand in the 
world in a way that is safe and secure, in a way that will 
result in nuclear materials or technologies being used only for 
peaceful purposes--energy and security go hand in hand.
    GNEP addresses two major issues that have limited the use 
of nuclear power in the later half of the 20th century: how to 
responsibly use sensitive nuclear technologies in a way that 
does not threaten global security and how to safely manage high 
level waste. GNEP is complementary to the Department's efforts 
to license and open Yucca Mountain. For the long-term viability 
of our nuclear generating capacity we must proceed with a 
geologic repository. The Department is pursuing initial 
operation of Yucca Mountain as early as 2017 so that we can 
begin to fulfill our obligation to dispose of spent fuel and 
other nuclear wastes from our defense program. Whether we 
recycle or not, we must have Yucca Mountain open as soon as 
possible.
    This is one of the reasons I believe we must develop and 
deploy advanced recycling technologies as soon as possible--
technologies that will enable us to recover the usable material 
contained in spent fuel, and reduce the volume, heat load, and 
toxicity of waste requiring emplacement in the geologic 
repository. In so doing we can extend the capacity of Yucca 
Mountain such that additional repositories may not be needed 
this century.
    We are pursuing development and deployment of integrated 
spent fuel recycling facilities in the United States. These are 
technologies that do not result in separated plutonium stream. 
Specifically, the Department proposes to develop and deploy the 
uranium extraction plus or UREX+ technology or comparable 
variants to separate the useable materials contained in spent 
fuel from the waste products. Based on considerable domestic 
and international experience, we also propose to deploy a fast 
reactor capable of consuming or destroying those usable 
products from the spent fuel while producing electricity.
    Based on the positive international and private sector 
response to GNEP, we believe there are advanced technologies 
available to recycle used nuclear fuel that may be ready for 
deployment in conjunction with those currently under 
development by DOE. For example, portions of the UREX+ 
technology are well understood today, while other portions, 
such as group separation of transuranics from lanthanides, 
require additional research and development. Also, industry may 
have similar advanced technologies that are closer to full-
scale deployment. As such, we want to examine the feasibility 
of proceeding with those portions of the technology that are 
well understood while completing the R&D for the others. These 
two parallel tracks would provide technology development and 
R&D efforts necessary to support full-scale deployment and 
advanced recycling concepts.
    Last month, DOE issued two requests for Expressions of 
Interest from domestic and international industry, seeking to 
investigate the feasibility, interest and capacity of industry 
to deploy an integrated spent fuel recycling capability 
consisting of a Consolidated Fuel Treatment Center and an 
Advanced Burner Reactor. The integrated recycling facilities 
would include process storage of spent fuel prior to its 
recycling. This process storage would be on a scale 
proportionate to the scale of recycling operations.
    We are now in the process of reviewing industry's response 
to last month's request for expressions of interest (EOI). We 
received 18 such responses, representing both U.S. and 
international companies, including several nuclear suppliers. 
Based on our limited review thus far, I can tell you that we 
are very encouraged by the response from industry and we look 
forward to establishing a working relationship with industry in 
fiscal year 2007.
    Pursuant to the report language contained in the fiscal 
year 2006 Energy and Water Development Appropriations 
conference report, we issued a funding opportunities 
announcement seeking grant applications from private and/or 
public entities interested in hosting integrated spent fuel 
recycling facilities. Last week, we received 14 grant 
applications from public and private entities proposing eight 
DOE and six non-DOE sites, representing essentially each 
geographic region of the country. We are very pleased with this 
response. Several of these applications included indications of 
support by State elected officials. We anticipate awarding 
grants later this fall that will provide funds to entities for 
site evaluation studies. The studies will be completed over the 
90 days following the award and will provide input to the 
National Environmental Policy Act documentation to be prepared 
for the integrated spent fuel recycling facilities.
    Senator Domenici. Did that many surprise you?
    Mr. Spurgeon. We were very pleased with that response 
because we made it very clear, Mr. Domenici, that we wanted 
sites proposed by public/private entities that had support for 
their submissions. This represents somewhat of a change from 
how we solicited Expressions of Interest in the past, but we 
were very pleased with that response, sir.
    Senator Domenici. Thank you.


                           PREPARED STATEMENT


    Mr. Spurgeon. Finally, I would note that the technical 
underpinnings of GNEP are found in the work of the Advanced 
Fuel Cycle Initiative Program (AFCI) over the past several 
years. To further advance and guide the GNEP effort, we have 
developed an initial technology development program plan that 
establishes the work to be accomplished, the applied research 
priorities, and the milestones, drawing upon the expertise of 
our national laboratories. This plan will be finalized over the 
next 3 months and execution will extend from the Department 
down to the multi-laboratory teams. This technology plan will 
evolve as industry is integrated into the GNEP program.
    Mr. Chairman, we are making progress and we respectfully 
request support and which we know we have received to date, 
sir, for full funding for GNEP in fiscal year 2007 to continue 
the progress forward. I look forward to answering your 
questions, sir.
    [The statement follows:]

                 Prepared Statement of Dennis Spurgeon

    Chairman Domenici, Senator Reid, and members of the subcommittee, 
it is a pleasure to be here today to discuss the future of nuclear 
energy in the United States. I will discuss the Global Nuclear Energy 
Partnership or GNEP, through which the Department proposes to 
accelerate development and deployment of an integrated recycling 
capability in the United States.
    First, I will provide a brief overview of our GNEP efforts.
    Second, I will discuss the expansion of nuclear power reactors in 
the United States.
    Third, I will discuss the status of our efforts to plan for 
advanced recycling of spent fuel to accommodate the safe expansion of 
nuclear power.

                             GNEP OVERVIEW

    As you know, I have been in the position of Assistant Secretary 
since April. During this time, I have worked to focus the priority of 
Office of Nuclear Energy on what I believe is our most important 
responsibility--serving as a catalyst for a new generation of nuclear 
plants in the United States. We are making progress on this front and 
in the longer term global expansion of nuclear energy through GNEP.
    I am working with industry and the national laboratories to restore 
the United States to a position of international leadership in nuclear 
power to meet the goals of GNEP. Dr. Paul Lisowski is now on-board as 
my Deputy Program Manager of GNEP. Paul assumes this position after 20 
years at Los Alamos National Laboratory, including 10 years as a senior 
manager responsible for the Accelerator Production of Tritium Project 
and operation of the Los Alamos Neutron Science Center. Paul comes to 
this position with significant experience in fuel cycle technologies, 
in particular transmutation. He has a proven track record managing 
highly complex scientific and national security projects and programs 
and I am pleased to have him on our team.
    GNEP is both a major research and technology development 
initiative, and a major international policy partnership initiative. It 
addresses two major issues that have suppressed the use of nuclear 
power in the latter half of the 20th century: how to responsibly use 
sensitive technologies in a way that does not threaten global security, 
and how to safely dispose of nuclear waste. The technology R&D 
addresses primarily the waste issue. International collaboration and 
diplomacy harnesses new technologies and policies to ensure nuclear 
power is used responsibly.
    That is why we have proposed to establish an international 
framework to bring the benefits of nuclear energy to the world safely 
and securely without all countries having to invest in the complete 
fuel cycle--that is, enrichment and reprocessing. We propose to create 
an approach, which provides fuel and reactors that are appropriately 
sized for the grid and the industry needs of the country. Next week, I 
will attend the 50th anniversary of the International Atomic Energy 
Agency General Conference. For the first time in many years, a key 
focus is on how to facilitate the safe and secure expansion of nuclear 
energy. The IAEA has planned a special event to recognize the 50th 
anniversary. The special event will focus on developing an assured fuel 
cycle.
    We also seek to develop international fuel leasing arrangements to 
assure the availability of fuel and international partnerships to 
develop advanced recycling on productive approaches, incentives and 
safeguards. To encourage countries to forgo fuel cycle activities, they 
must be assured of credible international fuel supplies backed by 
designated supplies and governmental entities. These efforts backstop 
the proven performance of a well-functioning international commercial 
fuel sector. In addition, in bringing the benefits of nuclear energy to 
the world, we want to work with other countries to facilitate export of 
reactors sized to the grids and utility needs of those countries. These 
reactors would have adequate safety and safeguards integrated into the 
design.
    As you know, the Department is pursuing development and deployment 
of integrated spent fuel recycling facilities in the United States. 
These are technologies that do not result in a separated plutonium 
stream. Specifically, the Department proposes to develop and deploy the 
uranium extraction plus (UREX+) technology to separate the usable 
materials contained in spent fuel from the waste products. We also 
propose to deploy a fast reactor capable of consuming those usable 
products from the spent fuel while producing electricity.
    Based on international and private sector response to GNEP, we 
believe there may be advanced technologies available to recycle used 
nuclear fuel ready for deployment in conjunction with those currently 
under development by DOE. In light of this information, DOE is 
investigating the feasibility of these advanced recycling technologies 
by proceeding with commercial demonstrations of these technologies. The 
technology, the scale and the pace of the technology demonstrations 
will depend in part on industry's response, including the business 
aspects of how to bring technology to full scale implementation.
    DOE will draw upon the considered review of these technologies in 
the Advanced Fuel Cycle Program (AFCI) program over the past several 
years. Consistent with the fiscal year 2006 Energy and Water 
Development Conference Report H.R. 109-275, we are also exploring 
potential locations in the United States where the integrated spent 
fuel recycle capability and related process storage could be 
successfully sited and demonstrated.
    We have the opportunity now to invest in an advanced fuel cycle 
that can impact waste management in truly significant ways. Limited 
recycle with mixed oxide fuel in thermal reactors or existing light 
water reactors, in our view, does not offer the long-term benefits for 
the geological repository or support the same forward-looking 
advantages for the revival of U.S. nuclear leadership for the 21st 
century.
    The Department respectfully requests Congress' support for full 
funding for GNEP in order to continue the forward progress needed to 
inform a decision by the Secretary of Energy in mid-2008 on whether or 
not to proceed with design, construction and operation of prototype 
spent fuel recycling facilities. If successful, the Department will 
have set a course to re-establish commercial-scale spent fuel recycling 
capability in the United States. This effort will greatly expand the 
supply of affordable, safe, clean nuclear power around the world, while 
enhancing safeguards to prevent misuse of nuclear material and assuring 
the availability of Yucca Mountain for generations to come.

             FUTURE OF NUCLEAR ENERGY IN THE UNITED STATES

    The resurgence of nuclear power is a key component of President 
Bush's Advanced Energy Initiative and a key objective contained in the 
President's National Energy Policy. The reasons for this are clear. As 
we enter a new era in energy supply, our need for energy--even with 
ambitious energy efficiency and conservation measures--will continue to 
grow as our economy grows. Electricity demand is expected to double 
over the next 20 years globally (EIA International Energy Outlook 2006, 
p. 63) and grown by 50 percent in the United States (EIA Annual Energy 
Outlook 2006, Table A-8). While nuclear power is not the only answer, 
there is no plausible solution that doesn't include it.
    Our country benefits greatly from nuclear energy. One hundred and 
three nuclear plants operate today providing one-fifth of the Nation's 
electricity. These plants are emissions-free, operate year-round in all 
weather conditions, and are among the most affordable, reliable, and 
efficient sources of electricity available to Americans. Nuclear, like 
coal, is an important source of baseload power and is the only 
currently available technology capable of delivering large amounts of 
power without producing air emissions. U.S. nuclear power plants 
displace millions of metric tons of carbon emissions each year.
    Over the last 15 years, industry has done an exceptional job 
improving the management and operation of U.S. plants, adding the 
equivalent of 26 \1\ 1,000 megawatt units during this timeframe without 
building a single new plant (EIA Annual Energy Review, 2004). U.S. 
nuclear plants have a solid record of safety, reliability, 
availability, and efficiency. Longer periods between outages, reduction 
in the number of outages needed, power up-rates, use of higher burn-up 
fuels, improved maintenance, and a highly successful re-licensing 
effort extending the operation of these plants another 20 years, have 
collectively improved the economics of nuclear energy. Today, nuclear 
energy is among the cheapest electricity available on the grid, at 1.72 
cents per kilowatt-hour (www.nei.org).
---------------------------------------------------------------------------
    \1\ Increase in nuclear generation between 1990 and 2005 with a 90 
percent capacity factor.
---------------------------------------------------------------------------
    Despite these successes and growing recognition of the benefits and 
need for more nuclear energy, industry has not ordered a new nuclear 
plant since 1973 (an additional plant ordered in 1978 was subsequently 
cancelled). In fact, not much baseload capacity--whether nuclear, 
hydro-electric, or coal--has been ordered since the 1970's, other than 
some coal-fired plants located close to the mouth of the coal mine in 
the western United States. In the 1980's, a large number of commercial 
orders for nuclear plants were cancelled and no new orders were placed. 
This was because of financial and regulatory challenges that 
significantly drove up the capital cost of nuclear plants and delayed 
their startup. In addition, investment premiums were so high that 
capital markets could no longer support nuclear power plant projects.
    Today the conditions are significantly different, with volatile 
natural gas prices, increasing demand for electricity, and concerns 
about clean air, utilities and investors are planning for a new 
generation of nuclear plants in the United States.
    To address regulatory uncertainties that first purchasers of new 
plants face, in 2002, the Department launched the Nuclear Power 2010 
program as a public-private partnership aimed at demonstrating the 
streamlined regulatory processes associated with licensing new plants. 
Under Nuclear Power 2010, the Department is cost-sharing the 
preparation of early site permits, expected to be completed in 2007 and 
early 2008. The Department is also cost-sharing the preparation of a 
total of two combined Construction and Operating Licenses (COLs) for 
two consortia: Dominion Energy, which is examining the North Anna site 
in Virginia and NuStart--a consortium of ten utilities and two 
vendors--which will use DOE funding to move a COL forward on either the 
Bellefonte site in Alabama or the Grand Gulf site in Mississippi. 
Collectively, these two teams represent the operators of two-thirds of 
nuclear plants operating today in the United States.
    Under this program, we are also jointly funding the design 
certification and completion of detailed designs for Westinghouse's 
Advanced Passive Pressurized Water Reactor (AP 1000), General 
Electric's Economic Simplified Boiling Water Reactor (ESBWR), and site-
specific analysis and engineering required to obtain COLs from the NRC. 
The two COL applications are planned for submission to the NRC in late 
2007 and industry is planning for issuance of the NRC licenses by the 
end of 2010.
    With dozens of new nuclear plants under construction, planned or 
under consideration world-wide, many countries around the world are 
clearly moving forward with new nuclear plants (www.world-nuclear.org/
info/reactors.htm). And it is no different here in the United States. 
We are nearing completion of the initial phase of preparations for a 
new generation of nuclear plants. Through the Nuclear Power 2010 
program and incentives contained in the Energy Policy Act of 2005, 
government and industry are working together to effectively address 
regulatory and financial impediments that the first purchasers of new 
plants face.
    As a result, I am confident that we will see the first 
announcements of new U.S. plants before President Bush leaves office. I 
am also confident that we will see construction begin by 2010. Already 
we are seeing indications that new orders are in the planning stages, 
with utilities announcing procurements of long-lead components. Earlier 
last month, the Nuclear Regulatory Commission indicated that it has 
received letters of intent from potential applicants for a total of 19 
site-specific COLS for up to 27 reactors. This progress would not have 
been possible without NP 2010 and incentives like risk insurance, which 
respectively mitigate the financial and regulatory risks facing the 
first few new nuclear power facilities.
    However, for the long-term viability of our nuclear generating 
capacity, we must proceed with a geologic repository. We are pursuing 
initial operation of Yucca Mountain as early as 2017 so that we can 
begin to fulfill our obligation to dispose of the approximate 55,000 
metric tons of spent fuel already generated and approximately 2,000 
metric tons generated annually. Whether we recycle or not, we must have 
Yucca Mountain open as soon as possible. But as you know, the statutory 
capacity of Yucca Mountain will be oversubscribed by 2010 and without 
the prospect of spent fuel recycling, simply maintaining the existing 
generating capacity in the United States will require additional 
repositories.
    This is one of the key reasons why I believe we must accelerate the 
development and deployment of advanced recycling technologies--
technologies that will enable us to reuse our valuable energy resources 
and that extend the capacity of Yucca Mountain for generations to come. 
But it also important for our own future that nuclear energy expands in 
the world in a way that is safe and secure, in a way that will not 
result in nuclear materials or technologies used for non-peaceful 
purposes.

                          SPENT FUEL RECYCLING

    The United States operates a once-through fuel cycle, meaning that 
the fuel is used once and then disposed of without further processing. 
In the 1970's, the United States stopped the old form of reprocessing 
and then committed to not separate plutonium, a nuclear proliferation 
concern. But the rest of the nuclear economies--France, Japan, Great 
Britain, Russia and others engage in recycling, a process in which 
spent fuel is processed and the plutonium and uranium are recovered 
from the spent fuel to be recycled back through reactors. As a result, 
the world today has a buildup of nearly 250 metric tons of separated 
civilian plutonium. The world also has vast amounts of spent fuel and 
we risk the continued spread of separated plutonium via fuel cycle 
separation technologies. Furthermore, recent years have seen the 
unchecked spread of enrichment technology around the world.
    Having ceased reprocessing of spent fuel for several decades, with 
anticipated growth of nuclear energy in the United States and abroad, 
the United States is now considering a new approach that includes 
recycling of spent nuclear fuel using advanced technologies to increase 
proliferation resistance, recovering and reusing portions of spent 
fuel, and reducing the amount of wastes requiring permanent geological 
disposal. Since 2000, Congress has appropriated funds for the AFCI for 
research and development on a number of different recycle concepts.
    Within the AFCI program, we have had considerable success with the 
UREX+ technology, demonstrating the ability at the bench and laboratory 
scales to separate uranium from the spent fuel, at a very high level of 
purification that would allow it to be recycled for re-enrichment, 
stored in an unshielded facility, or simply buried as a low-level 
waste. With UREX+, the long-lived fission products, technetium and 
iodine, could be separated and immobilized for disposal in Yucca 
Mountain. Next, the short-lived fission products cesium and strontium 
are extracted and prepared for decay storage, where they are allowed to 
decay until they meet the requirements for disposal as low-level waste. 
Finally, transuranic elements (plutonium, neptunium, americium and 
curium) are separated from the remaining fission products, fabricated 
into fast reactor transmutation fuel, and consumed or destroyed in a 
fast reactor. After these elements are consumed, only small amounts 
would require emplacement in a geologic repository. This approach is 
anticipated to increase the effective capacity of the geologic 
repository by a factor of 50 to 100.
    Last month, DOE issued two requests for Expressions of Interest 
from domestic and international industry, seeking to investigate the 
interest and capacity of industry to deploy an integrated spent fuel 
recycling capability consisting of two facilities:
  --A Consolidated Fuel Treatment Center, capable of separating the 
        usable components contained in light water spent fuel from the 
        waste products;
  --An Advanced Burner Reactor, capable of consuming those usable 
        products from the spent fuel while generating electricity.
    The Department asked industry to provide input on the scale at 
which the technologies should be proven. Ultimately, as in the initial 
plan reported to the Congress in May, the Department ultimately seeks 
the full commercial-scale operations of these advanced technologies. It 
is premature, however, to say exactly what form or size the recycling 
facility will take until we analyze important feedback recently 
received from industry.
    The integrated recycling facilities would include process storage 
of spent fuel prior to its recycling, on a scale proportionate to the 
scale of recycling operations. A third facility, the Advanced Fuel 
Cycle Facility--would be designed and directed through the Department's 
national laboratories and would be a modern state-of-the-art fuels 
laboratory designed to serve the fuels research needs to support GNEP.
    We have solicited industry expressions of interest in order to 
leverage the experience of existing, proven capabilities of industry 
and fuel cycle nations to develop advanced recycling technologies for 
GNEP. These entities will be critical in helping bring these facilities 
to operation in the United States, while meeting GNEP goals. We are 
also examining the feasibility of incorporating advanced technologies 
that are closer to deployment, in conjunction with those currently 
under development by DOE, to reduce the time and costs for commercial 
deployment.
    We are now in the process of reviewing industry's response to last 
month's request for Expressions of Interest. Based on our limited 
review thus far, I can tell you that industry has responded with 
positively and we look forward to working with industry.
    In addition, last month the Department issued a Financial 
Assistance Funding Opportunities Announcement, seeking applications by 
September 7, 2006, from private and/or public entities interested in 
hosting GNEP facilities. Specifically, the Department will award grants 
later this fall for site evaluation studies. As this committee knows, 
Congress made $20 million available (H.R. 109-474, fiscal year 2006 
Energy and Water Development Appropriations bill), with a maximum of $5 
million available per site. Because we will need process storage for 
fuel to be treated, part of the purpose of this Financial Assistance 
Funding Opportunity Announcement is to understand the ability of and 
interest in proposed sites receiving fuel for process storage. The 
information generated from these site evaluation studies may be used in 
the preparation of National Environmental Policy Act (NEPA) 
documentation that will evaluate potential environmental impacts from 
each proposed GNEP facility.
    The Department is continuing to plan and prepare for the 
development of appropriate NEPA documentation to support activities 
under GNEP. The Department issued an Advance Notice of Intent to 
prepare an environmental impact statement in March 2006 and is 
preparing to issue a Notice of Intent in the fall 2006. The current 
plan is to complete the NEPA process in 2008, assisting in Departmental 
decisions about whether to move forward with integrated recycling 
facilities, and if so, where to locate them.
    The overall GNEP effort involves several program secretarial 
offices, including the National Nuclear Security Administration (NNSA). 
For example, NNSA will provide key assistance in assuring that 
safeguards approaches and technologies are incorporated into the 
facilities early in the planning process. In addition, while DOE 
currently sponsors university research grants through its R&D programs 
via the Nuclear Energy Research Initiative, universities will be 
engaged in GNEP-funded research. Industry will also be engaged as the 
program progresses through the design process.
    Designing, developing and deploying the separations, fuels, and 
reactor technologies requires that DOE carry out a variety of research, 
ranging from technology development for those processes initially 
identified to longer-term research and development on alternatives for 
risk reduction. In addition, the Office of Science held three technical 
workshops in July 2006 on basic science in support of nuclear 
technology. Although not limited solely to GNEP, the results of this 
activity will help guide the long-term R&D agenda for closing the fuel 
cycle. Furthermore, advanced simulation is expected to play an 
important role in the development of this program, as it does today in 
many leading commercial industries. DOE organized a workshop on 
simulation for the nuclear industry at Lawrence Livermore National 
Laboratory which was chaired by Dr. Robert Rosner, Director of Argonne 
National Laboratory and Dr. William Martin from the University of 
Michigan. We also participated in a nuclear physics workshop sponsored 
by the Office of Science.
    Systems analysis also forms an important part of the ongoing GNEP 
effort and will have an increased role during the next 2 years. Through 
systems analysis, we will investigate several key issues, including 
life cycle costs, rate of introduction of fast reactors and separations 
facilities, a detailed study of the technical requirements for GNEP 
facilities and the complete fuel cycle, and how to ensure that they 
relate to the top level goals of the program. The results of these 
analyses are essential to establishing the basis for each key decision 
in the AFCI program and will have a profound effect on GNEP program 
planning.
    In short, there has been considerable progress on the Department's 
fiscal year 2006 efforts on GNEP. The Department has continued applied 
research and technology development efforts in concert with the 
Department's national laboratories. The Department has engaged the 
international community to identify areas of potential cooperation, 
cost-sharing, and support.
    In fiscal year 2007, the Department seeks to continue the research 
and development activities necessary to support GNEP, including issues 
associated with developing transmutation fuel. The Department will also 
continue work on conceptual designs for the Advanced Fuel Cycle 
Facility.

                               CONCLUSION

    In closing, the United States can continue down the same path that 
we have been on for the last 30 years or we can lead to a new, safer, 
and more secure approach to nuclear energy, an approach that brings the 
benefits of nuclear energy to the world while reducing vulnerabilities 
from proliferation and nuclear waste. We are in a much stronger 
position to shape the nuclear future if we are part of it. This is an 
ambitious plan and we are just at the initial stages of planning. I 
look forward to coming before the committee in the future as the GNEP 
program plans take shape.

    Senator Domenici. Thank you very much. Dr. Hanson.

STATEMENT OF DR. ALAN HANSON, EXECUTIVE VICE PRESIDENT, 
            TECHNOLOGY AND USED-FUEL MANAGEMENT, AREVA 
            NC, INC.
    Dr. Hanson. Thank you. Mr. Chairman, Senator Bennett, my 
name is Alan Hanson, I'm Executive Vice President for 
Technology and Used Fuel Management at AREVA, Inc. I appreciate 
this opportunity to testify before you today. I am very pleased 
to join Assistant Secretary of Energy, Dennis Spurgeon on this 
panel, we look forward to working with him to achieve the 
objectives of GNEP.
    AREVA, Inc. is an American Corporation, headquartered in 
Maryland. We are part of a global family of AREVA companies, 
and we are the only company in the world to operate in all 
aspects of the nuclear fuel cycle. Relevant to today's 
testimony is the fact that AREVA operates today, the largest 
and most successful used fuel treatment and recycling plants in 
the world. AREVA has proven expertise in the areas GNEP is 
designed to address. We have today commercially available 
technology that can be implemented in the very near future and 
AREVA is ready to commit its substantial resources to support 
the objectives of GNEP.
    We believe that no time should be wasted since developing a 
comprehensive used fuel management will have the most important 
effect of increasing confidence in nuclear energy, thereby 
paving the way to the nuclear renaissance that Congress enabled 
with passage of Energy Policy Act of 2005.
    Now one of the major obstacles to implementing a used fuel 
management strategy that includes recycling in the United 
States has been the perceived high cost of recycling compared 
to a once-through approach. However, several factors recently 
have led to questions about the appropriateness of the once-
through fuel cycle. In particular, cost estimates in national 
repository to support the once-through policy have 
significantly increased. Additionally, more repository capacity 
is likely to be needed for fuel discharged after 2015. And 
finally, with the long-term increase in new U.S. nuclear power 
generation, now foreseen, even greater volumes of used nuclear 
fuel will need to be disposed.
    These developments have made it increasingly important that 
the United States further investigate recycling as part of a 
comprehensive used fuel management strategy, which must also 
include geologic repositories. In this context, The Boston 
Consulting Group recently completed an independent study for 
AREVA to review the economics of a fuel cycle which includes 
developing a recycling component in the United States, using a 
technology consistent with America's nonproliferation 
objectives. The study addressed the costs of a portfolio waste 
management strategy. A new recycling facility was assumed to be 
operational by 2020. The facility would integrate used fuel 
treatment together with fuel fabrication on a single location 
and would function in combination with the development of the 
geologic repository.
    The facility would utilize an AREVA recycling process 
called COEX, which unlike conventional technologies, never 
separates out pure plutonium. BCG's analysis conclusions found 
that the costs derived from an integrated plant, can be 
significantly lower than previously published findings suggest. 
Previous estimates of the cost of treatment and recycling have 
been based on very sparse publicly available industry data. 
They did not consider the effects of building only specific 
facilities needed or the economies of scale, higher rates of 
utilization, and they also used different assumptions with 
regard to financial calculations. They did not account for the 
full repository optimization potential that recycling strategy 
offers and this is a very important advantage of doing 
recycling.
    Initial repository with today's statutory capacity, for 
instance, can ultimately handle the equivalent of four times 
more used fuel when operated as part of the portfolio strategy 
because efficient modes of recycling significantly compact the 
final waste volumes and minimize the heat and toxicity of 
disposed materials. These are, in fact, some of the goals and 
objectives just outlined by Assistant Secretary Spurgeon.
    The Boston Consulting Group study, which assumed very 
conservative variables, concluded that the total cost of 
recycling in combination with an optimized repository can be 
comparable to the cost of a once-through program. By 
comparable, they meant within perhaps plus or minus 10 percent. 
Additionally, recycling is part of a portfolio strategy, 
presents a number of other significant benefits. For example, 
foregoing the need for additional civilian repository capacity 
until at least 2070. Eliminating earlier the need for 
additional investments in interim storage capacity at our 
operating reactor sites. And by relying on existing strategy 
providing a systematic progressive operational transition to 
the more advanced technology developments that are the ultimate 
objective of the GNEP initiative.
    We believe the GNEP can be a successful public/private 
enterprise. DOE has recently engaged industry in the future 
development of the GNEP initiative, formulating the two-track 
approach and requesting from industry expressions of interest 
as just described. Based on AREVA's own experience, we believe 
that such an industrial and evolutionary approach offers the 
highest probability of success for introducing used fuel 
recycling in the United States.
    AREVA responded positively and with great enthusiasm to 
both DOE requests for expressions of interest. With adequate 
public/private coordination, we forecast that a workable 
business framework can be achieved that will draw less heavily 
from the American taxpayer than is widely predicted while 
simultaneously leveraging significant investment interest from 
interested companies, such as AREVA. Industry can begin meeting 
the objectives of GNEP today. AREVA looks forward to the 
accelerated execution of a GNEP two-track approach.
    We believe there are three compelling policy reasons for 
immediate action. We want a strategy that provides full 
confidence that the by-products resulting from the generation 
of nuclear power can be adequately dealt with for generations 
to come. This will help to ensure that new nuclear power plants 
can begin being built immediately. Beginning implementation of 
recycling in the near term will postpone or eliminate the need 
for siting, funding, and constructing additional geologic 
repositories. And finally, used fuel can be moved away from 
today's power plants early to the process storage part of the 
recycling facility perhaps as early as 2015, thus minimizing 
further Federal liabilities that, approved, would compensate 
utilities for interim storage.
    As an industrial and commercial company, AREVA believes in 
an evolutionary approach to technology development. We have 
used this approach successfully on several occasions during the 
deployment of our treatment plants at La Hague. Making such 
provisions in the initial facility designs provides a high 
degree of flexibility for addition of advanced technologies 
when they become available. AREVA is also working on innovative 
business models that would require very limited direct 
government financial support over the next decade, thus 
allowing resources to be spent on the development of a final 
waste repository and on the R&D needed for advanced 
transmutation fuels. Our proposed evolutionary approach meets 
the fundamental objectives of GNEP to reduce proliferation 
risks through the combination of advanced safeguards techniques 
and technology developments.
    First of all, avoid any separation of pure plutonium at any 
location within the treatment facility. This is one of the 
advantages of the COEX process which we are developing. We can 
limit the concentration of plutonium solution throughout the 
facility to keep the physical protection requirements of that 
facility to a minimum. And there are other features that we 
would design into the plan for advanced measurement techniques 
and defense in depth which are part of the ongoing nuclear 
industry.
    Advanced burner development is also an important component 
of the GNEP initiative. As currently envisioned by DOE, this 
development would keep pace with the operational start of an 
integrated evolutionary recycling plant. However, focusing any 
national recycling strategy solely in conjunction with the ABR 
deployment carries a serious programmatic risk, because a full 
fleet of ABR reactors will likely not be available on the same 
time schedule that the recycling plant can be up and 
operational. Even if the technology program for ABR development 
is accelerated, and we hope that it will be, utilities will 
still require as many as 10 years of proven operational 
experience before considering serious private financing and 
commercial deployment.
    Thus, a more successful recycling strategy should allow for 
the fabrication of both ABR fuel and fuel for today's fleet of 
light water reactors. The latter could be used in the interim 
as the ABRs come online improving the overall economics of the 
GNEP initiative. AREVA has recommended a DOE approach here that 
can demonstrate economic viability in the shortest frame work.
    In conclusion, Mr. Chairman, AREVA believes that recycling 
as a complementary strategy to development of a geologic 
repository can be done economically and that is the best 
comprehensive waste management strategy for dealing with used 
nuclear fuel. AREVA is interested in being a partner with the 
Department of Energy and thereby helping to put the partnership 
into GNEP. We stand ready to support the Department of Energy 
and this subcommittee and the nuclear energy in general in this 
historic initiative.

                           PREPARED STATEMENT

    Mr. Chairman, members of the subcommittee, I thank you, I 
appreciate the opportunity to make this statement and I will be 
pleased to answer questions later this morning. Thank you.
    [The statement follows:]

                 Prepared Statement of Dr. Alan Hanson

    Mr. Chairman and members of the subcommittee, my name is Alan 
Hanson, and I am Executive Vice President, Technology and Used Fuel 
Management, of AREVA NC Inc.
    I appreciate this opportunity to testify before you today on the 
U.S. Department of Energy's Global Nuclear Energy Partnership (GNEP).
    I am very pleased to join Assistant Secretary of Energy Dennis 
Spurgeon on this panel. Assistant Secretary Spurgeon comes to DOE with 
a distinguished industry background, which will help him to take on 
many challenges implementing our Nation's nuclear energy policy. I look 
forward to working with him to achieve the objectives of GNEP.
    AREVA, Inc. is an American corporation headquartered in Maryland 
with 5,000 employees in 40 locations across 20 U.S. States. Last year, 
our U.S. operations generated revenues of $1.8 billion--9 percent of 
which was derived from U.S. exports. We are part of a global family of 
AREVA companies with 59,000 employees worldwide offering proven energy 
solutions for emissions-free power generation and electricity 
transmission and distribution. We are proud to be the leading supplier 
of products and services to the worldwide nuclear industry, and we are 
the only company in the world to operate in all aspects of the nuclear 
fuel cycle.
    AREVA designs, engineers and builds the newest generation of 
commercial nuclear plants and provides reactor services, replacement 
components and fuel to the world's nuclear utilities. We offer our 
expertise to help meet America's environmental management needs and 
have been a longtime partner with DOE on numerous important projects. 
Relevant to today's testimony is the fact that AREVA operates the 
largest and most successful used fuel treatment and recycling plants in 
the world.
    What I hope to accomplish today is to provide a commercial, 
industrial perspective on how we as a Nation might realistically 
achieve the bold objectives of the GNEP program. AREVA applauds the 
GNEP vision for expanding clean nuclear power to meet the ever-
increasing global demand for energy while providing the framework to 
safeguard nuclear technologies and materials. We strongly believe that 
nuclear energy has a critical role to play in the future of our Nation, 
just as we believe that GNEP puts the United States on the right track 
for leadership in the global nuclear industry.
    AREVA has proven expertise in the areas GNEP is designed to 
address. Our accumulated experience makes us uniquely qualified in all 
of the industrial aspects of this initiative. We have today 
commercially-available technology that can be implemented in the very 
near future, and AREVA is ready to commit its substantial resources to 
technically support the objectives of GNEP.
    We believe that no time should be wasted since developing a 
comprehensive used fuel management strategy, one that is complementary 
and beneficial to our Nation's repository program, will have the most 
important effect of increasing confidence in nuclear energy, thereby 
paving the way to the nuclear renaissance that Congress enabled with 
passage of the Energy Policy Act of 2005.

                   THE COMPARABLE COSTS OF RECYCLING

    One of the major obstacles to implementing a used fuel management 
strategy that includes recycling in the United States has been the 
perceived high cost of recycling compared to a once-through approach in 
which used fuel is stored for a period of time and then disposed in a 
geologic repository.
    Over the last decade, however, several factors have led to 
questions about the appropriateness of the once-through fuel cycle as 
an exclusive used fuel management strategy. In particular, cost 
estimates of the national repository to support the once-through policy 
have significantly increased from initial estimates. Additionally, at 
the current rate of used fuel generation, additional repository 
capacity is likely to be needed for fuel discharged after 2015. And 
finally, with a long-term increase in new U.S. nuclear power generation 
now foreseen, even greater volumes of used nuclear fuel will need to be 
disposed.
    The underlying economics of a used fuel management approach that 
includes recycling have thereby shifted, driven also in part by higher 
uranium prices and by a deeper understanding of the long-term behavior 
of recycling byproducts that allows for significant optimization of 
valuable repository space.
    Recycling as a key component of a comprehensive used fuel policy 
has gained recognition through the demonstrated, long-term operational 
effectiveness of treatment and fabrication technologies for more than 
40 years of accumulated industrial experience combined with a higher 
level of confidence based upon economic data from actual operations 
such as AREVA's. These developments have made it increasingly important 
that the United States further investigate recycling as part of a 
comprehensive used fuel management strategy.
    In this context, The Boston Consulting Group (BCG) recently 
completed an independent study commissioned by AREVA to review the 
economics of the back-end of the nuclear fuel cycle and, in particular, 
a fuel cycle which includes developing a recycling component in the 
United States using a technology consistent with America's 
nonproliferation objectives.
    The study addressed the cost of a ``portfolio'' waste management 
strategy. A new recycling facility treating 2,500 metric tons of used 
fuel per year was assumed to be operational by 2020. The facility would 
integrate used fuel treatment together with fuel fabrication on a 
single location and would function in combination with the development 
of a deep geologic repository for high-level waste from recycling and 
untreated legacy used fuel. The facility would utilize an AREVA 
recycling process called COEXTM, which unlike conventional 
technologies never separates out pure plutonium.
    Data from AREVA's global operations, supplemented by site visits 
and additional analyses, were used by The Boston Consulting Group as a 
starting point for an independent, third-party assessment of this 
assumed recycling model. BCG's analysis and conclusions found that the 
unit costs derived from an integrated plant are significantly lower 
than previously published findings suggest.
    While the capital investments and operational expenses of a U.S. 
treatment plant may have been expected to be close to those of AREVA 
reference facilities, a much higher-used fuel throughput can be 
reasonably projected in an American context because of the U.S. 
facility's larger size and a higher rate of utilization, which in turn 
results in economical unit costs. Utilization was assumed to be at 
about 80 percent of nameplate capacity, a technical assumption that can 
be backed by AREVA's own operational experience. Higher utilization in 
the United States is not only possible but desirable because of a 
larger volume of newly discharged fuel and existing inventory.
    Previous estimates of the cost of treatment and recycling have been 
based upon sparse publicly-available industry data. These estimates did 
not consider the effects of building only the specific facilities 
needed or the economies of scale and higher rates of utilization, and 
they also used different assumptions for financial calculations. 
Additionally, previous studies did not account for the full repository 
optimization potential a recycling strategy offers. A national 
repository with today's statutory capacity, for instance, can 
ultimately handle four times more used fuel when operated as part of a 
portfolio program because efficient modes of recycling can 
significantly compact final waste volumes and minimize the heat and 
toxicity of disposed materials.
    The Boston Consulting Group study, which assumed very conservative 
variables such as the price of uranium at $31 per pound and the sum 
cost of a national repository at 2001 DOE estimates, concluded that the 
total cost of recycling used fuel in combination with an optimized 
repository can be comparable to the cost of a once-through program.

                   THE NATIONAL BENEFITS OF RECYCLING

    Additionally, recycling as part of a portfolio strategy was found 
in the BCG study to present a number of significant national benefits. 
Some of those discussed in the report include:
  --Forgoing the need for additional civilian repository capacity, 
        beyond the initial 63,000-metric-ton capacity of the first 
        repository, until at least 2070.
  --Contributing to early reduction of used fuel inventories at reactor 
        sites; in particular, removing newer, hotter fuel for recycling 
        within 4 years of discharge, thus eliminating earlier the need 
        for additional investments in interim storage capacity.
  --Relying on existing technology with appropriate modifications that 
        can in turn provide a systematic, progressive operational 
        transition to more advanced technology developments as they 
        become available.

           GNEP CAN BE A SUCCESSFUL PUBLIC-PRIVATE ENTERPRISE

    DOE has recently engaged industry in the future development of the 
GNEP initiative, formulating a two-track approach under the direction 
of Assistant Secretary Spurgeon and requesting from industry 
Expressions of Interest in a Consolidated Fuel Treatment Center (CFTC) 
and an Advanced Burner Reactor (ABR). In so doing, ``DOE seeks to 
determine the feasibility of accelerating the development and 
deployment of advanced recycling technologies that would enable 
commercial scale demonstrations that meet GNEP objectives.''
    Based on AREVA's own experience, we believe such an industrial and 
evolutionary approach, while factoring for the application of 
incremental innovations, offers the highest probability of success for 
introducing used fuel recycling in the United States.
    In parallel, an extensive R&D program utilizing the wonderful 
capabilities of our national laboratories should continue to be funded 
to further develop advanced separations and reactor technologies.
    Together with a team of other U.S. industry leaders, AREVA 
responded positively and with great enthusiasm to both DOE requests for 
Expressions of Interest. I have no doubt that other capable nuclear 
companies have also made known to DOE their desire to participate in 
the GNEP initiative. With adequate public-private coordination, we 
forecast that a workable business framework can be achieved that will 
draw less heavily from the American taxpayer than is widely predicted 
while simultaneously leveraging significant investment interest from 
interested companies such as AREVA.

           INDUSTRY CAN BEGIN MEETING THE OBJECTIVES OF GNEP

    AREVA looks forward to the accelerated execution of a GNEP two-
track approach. We believe there are three compelling policy reasons 
for immediate action:
  --Need for a comprehensive and effective waste management strategy.--
        We want a strategy that provides full confidence that the 
        byproducts resulting from the generation of nuclear power can 
        be adequately dealt with for generations to come. This will 
        help to ensure that the nuclear renaissance can move forward 
        and that new U.S. power plants can begin being built 
        immediately.
  --Optimization of a national repository.--Today, the first national 
        repository is limited by statute to a maximum capacity of 
        63,000 metric tons of civilian used nuclear fuel. The total 
        volume of used fuel to be generated in the United States by the 
        year 2100 is expected to exceed the statutory capacity 
        significantly, especially under the scenario where there is a 
        nuclear renaissance and new U.S. plants. Beginning 
        implementation of recycling in the near-term, however, will 
        postpone or eliminate the need for siting, funding and 
        constructing additional geologic repositories.
  --Ending of interim storage charges.--Used fuel should be moved away 
        from the reactors as soon as possible. Acting on the two-track 
        framework described above, used fuel could be moved away from 
        today's power plants to a recycling facility perhaps as early 
        as 2015, thus forgoing Federal liabilities that would otherwise 
        be accrued to compensate utilities for interim storage.
    As an industrial and commercial company, AREVA believes in an 
evolutionary approach to technology development. It begins by first 
applying a solid baseline of state-of-the-art, proven technologies, and 
then, but only then, integrating improvements and upgrades of more 
advanced, innovative technologies within a disciplined, continuous 
improvement process. Using this approach, we wish to continue to apply 
industry advancements to the GNEP program as it advances in the years 
ahead.
    AREVA has successfully adopted and used this strategy on several 
occasions during the deployment of its treatment facilities at La 
Hague. The inclusion of additional hot cells in the initial footprint 
of the CFTC, which are intended to be used at a later date to receive 
new technology, is an example of this approach. Making such provisions 
in the initial design provides a high degree of flexibility.
    AREVA is also working on innovative business models that would 
stimulate and effectively leverage private investments. We are 
exploring business model options that require very limited direct 
government financial support over the next decade, thus allowing 
resources to be spent on the development of a final waste repository 
and on R&D for advanced transmutation fuel technologies, which are 
crucial to the overall long-term success of the GNEP initiative. We are 
looking forward to entering into discussions with DOE in the weeks to 
come.
    Our proposed evolutionary approach meets the fundamental objective 
of GNEP to reduce proliferation risk through the combination of 
advanced safeguard techniques and technology improvements. Our phased 
approach will carefully ensure from Day One that the attractiveness 
levels of process materials are kept as low as possible by:
  --Avoiding any separation of pure plutonium at any location within 
        the treatment and recycling facility (which is ensured with the 
        AREVA COEXTM process).
  --Limiting the concentration of plutonium in solution anywhere in the 
        process facility consistent with attractiveness level D or 
        below, thus making the recycling plant a Category II facility 
        with respect to materials control and accountability 
        classification.
  --Implementing advanced nuclear material measurement to enhance the 
        accuracy of material accountability and reporting time; a 
        development program will be undertaken with the relevant DOE 
        national laboratories most specialized in this area, and 
        advanced safeguards will be integrated into the facility design 
        from the start.
  --Implementing the defense-in-depth principle, which involves 
        multiple levels of physical barriers between nuclear materials 
        and the exposed environment.
    Advanced burner reactor development, also an important component of 
the GNEP initiative, is currently envisioned by DOE to keep apace with 
the operational start of an integrated recycling facility so it can 
address the actinide byproducts of evolutionary recycling.
    However, an emerging industry consensus cautions that focusing any 
national recycling strategy solely in conjunction with ABR deployment 
carries a serious programmatic risk because a full ABR fleet likely 
will not be available until some years after a recycling plant is fully 
operational. Even if the technology program for ABR development is 
accelerated, utilities will require as many as 10 years of proven 
operational experience before considering private financing and 
commercial deployment.
    Thus, a more successful recycling strategy should allow for the 
fabrication of both ABR fuel and fuel for today's fleet of light water 
reactors. The latter could be used in the interim as ABRs come on-line, 
improving the overall economies of the GNEP initiative.
    AREVA, with more than 4 decades of sodium-cooled fast reactor 
expertise, is uniquely positioned to support the commercialization of 
ABRs in the United States under the framework of the GNEP initiative. 
AREVA has recommended to DOE an approach that can demonstrate economic 
viability in the shortest practicable timeframe.
    AREVA believes that GNEP has the potential to vault the United 
States into a position of leadership in the global nuclear industry. We 
welcome the two-track approach recently announced by DOE and are eager 
to move forward with it.
    AREVA believes that recycling, as a complementary strategy to the 
development of a geologic repository, can be done economically and that 
this is the best comprehensive waste management strategy for dealing 
with used nuclear fuel.
    AREVA is interested in being a partner with DOE and thereby helping 
to put the ``Partnership'' into GNEP. We stand ready to support DOE and 
the nuclear energy industry in this historic initiative.
    Mr. Chairman and members of the subcommittee, I appreciate having 
this opportunity to join you today. I would be pleased to answer any 
questions you may have at this time.
                                 ______
                                 
                      Letter From Dr. Alan Hanson
Mr. Matthew Bunn,
Harvard University, John F. Kennedy School of Government, Cambridge, 
        MA.
    Dear Mr. Bunn: I wish to follow up on conversations we had over the 
past few months and, in particular, on the testimony you provided at 
the Energy and Water Appropriations Subcommittee, U.S. Senate, on 
September 14, 2006. I would like to take this opportunity to provide an 
initial response to some of the points you raised regarding the BCG 
study, which was commissioned by AREVA.
    In the enclosure to this letter, I made an attempt to respond to 
the key points you raised, with the purpose and the expectation that 
these responses not be a final answer to your concerns, but a point of 
departure for future constructive discussions.
    We, at AREVA, certainly share your point of view that using 
different assumptions could lead to different recycling costs. At the 
same time, you will probably agree that, in the context of a comparison 
between recycling and once-through strategies, adjustments to those 
assumptions can often result in similar cost increases for both 
strategies. The unfortunate truth is that the cost of a used fuel 
repository is speculative at best since one has yet to be built 
anywhere in the world.
    I appreciate your interest and continued willingness to engage in a 
dialogue, and I am looking forward to the opportunity of discussing 
this further.
            Sincerely,
                                        Alan Hanson, Ph.D.,
     Executive Vice President, Technology and Used Fuel Management.

  Enclosure.--Responses to Comments Made With Regards to the BCG Study
    Note that the responses provided in this document have been 
developed by AREVA and have not been reviewed by BCG personnel.

             1. PROJECTED COSTS LOWER THAN HISTORICAL COSTS

    BCG assumes a unit cost of BOTH reprocessing and MOX fabrication of 
$630/kgHM (undiscounted), far lower than current plants have managed to 
achieve for either process. (BCG provides, for example, an interesting 
chart showing that their estimate for reprocessing cost per kilogram is 
roughly one-third the cost actually achieved in France). As they put it 
themselves, one of the ``key differentiating elements'' between their 
study and other studies is ``integrated plant costs significantly lower 
than previously published data.''
    BCG does not ``assume'' a unit cost. The cost for reprocessing and 
MOX fabrication was built up from data provided by AREVA. Figure 17 of 
the report is a graphical representation of the difference between 
their projections and historical information.
    The figure on page 17 does not represent what AREVA has ``managed 
to achieve''--it is rather an overall unit cost analysis based on 
historical costs of construction and operations and current throughput. 
Even with the current plant at La Hague, if AREVA could increase the 
throughput of the plant with new contracted work, the cost of 
reprocessing would already be significantly lower than historical 
numbers shown in this figure.

       2. MOX PLANT AT SAVANNAH RIVER EXPERIENCING COST OVERRUNS

    The current effort to use AREVA technology and plant designs in the 
United States--the construction of a MOX plant at Savannah River--is 
leading to unit costs several times HIGHER than those achieved in 
France. This experience is not mentioned in the BCG report, and no 
argument is offered to why the proposed facility will have a cost 
result that is the opposite of the real experience.
    The MFFF plant at Savannah River was conceived as a non-
proliferation governmental project, the economics of which cannot be 
compared with a commercial fuel recycling project. It is designed for 
limited throughput of excess weapons-grade plutonium, as part of 
weapons disposal. The MFFF plant will process in its projected lifetime 
about as much Plutonium as the plant described in the BCG study will 
process over the course of just 1 year. Nevertheless, the MFFF plant 
will have to incur significant construction costs, not to mention the 
costs for more complex material handling requirements.
    In addition, recent increases in the cost estimates for the MFFF 
plant at Savannah River, were, as much as possible, already factored 
into the design evaluated in the BCG study. At a high level, three 
drivers of higher cost can be identified and addressed:
  --Change in program and scope of work.--The potential for cost 
        overruns due to program and scope of work changes has been 
        considerably reduced in the BCG study by accounting as 
        thoroughly as possible for all aspects linked with the U.S. 
        recycling plant.
  --Schedule slippage.--The ``political'' schedule slippage cost 
        overrun (caused by parallelism requirements with the Russian 
        program) is not applicable to a U.S. recycling plant.
  --Unforeseen contingencies.--These have been accounted for as much as 
        possible in the BCG study by:
    --Using as a basis the real costs incurred for the construction of 
            the reference AREVA facilities (La Hague and Melox), 
            including therefore all the historical contingencies.
    --Adding $2 billion for costs of adaptation to the U.S. context 
            (e.g., regulatory, more stringent design requirements, 
            etc.) and another $2 billion for additional contingencies, 
            representing approximately 25 percent U.S. recycling plant 
            capital costs.
    In general, we recognize that, even considering all contingencies 
and reasons for cost overruns, a large and long project, such as the 
construction of a recycling plant, is not immune to additional cost 
escalation, and we cannot claim that, without any shadow of doubt, the 
cost of the recycling plant will be under $16.2 billion. However, it 
has to be kept in mind that similar conclusions must be drawn for any 
alternative scenario.

3. LARGE PLANT IN THE UNITED STATES WITH SIGNIFICANT ECONOMIES OF SCALE

    BCG envisions a reprocessing and MOX fabrication plant far larger 
than any other such plant that exists in the world, processing 2,500 
tons of spent fuel every year (compared to 800 tons per year in the 
largest single plants that have been built to date).
    The very large quantities of used fuel in the United States warrant 
the construction of a large plant. Neither BCG nor AREVA identified any 
major technical issue with a plant of this size.
    BCG assumes that plant capacity can be scaled up dramatically with 
only a minor increase in capital or operating cost. They note that the 
capital cost of the existing French facilities was $17.8 billion (in 
2005 dollars), but they assume that the capacity can be increased by 
more than 50 percent (assuming, generously, that the two La Hague 
plants should be considered to have a combined capacity of 1,600 tons 
of heavy metal per year) with an additional capital cost of only $1.5 
billion, less than 10 percent of the original capital cost.
    First, it is important to point out that the cost estimates were 
developed in a bottom-up fashion, i.e. a new U.S. plant was priced from 
the ground up. The chart you refer to is an attempt to reconcile costs 
incurred in the European plant with costs of a new plant, with obvious 
approximation and adjustments. For example, while we can estimate the 
cost of a new optimized vitrification process with a large capacity, it 
is difficult to pin down exactly how much of the new estimate is due to 
a larger capacity vs. an improved process.
    Secondly, 2,500 tons/year represents a treatment throughput that 
actually is not far from the throughput of the plant at La Hague. The 
treatment capacity at La Hague is the combination of two operating 
treatment plants (UP3 and UP2-800), both with a ``nominal'' throughput 
of 800 tons/year, and which were combined in 2001 to perform as one 
single operating entity. Each of these units has a technical throughput 
capacity closer to 1,000 tons/year. Indeed, the licensing permits of La 
Hague reference a maximum throughput of 1,000 tons/year per unit, and a 
combined maximum throughput of 1,700 tons/year. Note that La Hague 
sustained throughput close to 1,700 tons/years during several years in 
the late 1990's, when contracted work allowed it.
    Therefore, with the real capacity of La Hague close to 2,000 tHM/
yr, the projected U.S. plant is only 25 percent larger. Also, consider 
that the increase in cost is $1.5 billion, but on a $12.6 billion basis 
(see figure 8 on page 16 in the BCG study), this is a 12 percent 
increase. Therefore, we are talking about a 12 percent increase in cost 
for a 25 percent increase in capacity (or, in BCG terms, a 70 percent 
BCG scale factor), which is in line with typical values one would 
expect from projects like this,\1\ considering that a large percentage 
of the costs during the construction phase of a project like this are 
independent of the capacity of the plant (e.g. licensing costs, siting, 
design and technology development, etc.).
---------------------------------------------------------------------------
    \1\ From BCG's ``Perspectives on Strategy'', 1998. There is a 
formula which is known to approximate scale effect in the process 
industries. ``Capital cost increases by the six-tenths power of the 
increase in capacity.'' This exponential change is equivalent to an 
increase of 52 percent in capital cost to provide a 100 percent 
increase in capacity. The total capital cost became 152 percent instead 
of 100. The total output became 200 instead of 100. The average became 
152/200=76 percent of 100 percent. That is a very common and typical 
experience curve cost decline rate. Average production unit size 
normally increases in proportion to rate of total output or even 
faster. If it does, then capital cost should go down as fast or even 
faster than in proportion to a 76 percent experience curve. Since 
capital tends to displace labor over time, then this scale effect 
becomes increasingly important with growth in volume and experience. 
There are limits on scale due to load factors and logistics provided 
there is a finite total market. But if the total market grows, then 
scale can be expected to grow too. Scale effect applies to all 
operations, not just process plants. Marketing, accounting and all the 
overhead functions have scale effects also. Scale effect alone is 
sufficient to approximate the experience curve effect where growth is 
constant and scale grows with volume. For most products, a 70-80 
percent slope is normal, with the steeper slope for those where the 
maximum value is added and where shared experience with slower growth 
areas is least. However, it is probable that few products decline in 
cost as fast as they could if optimized. It is a known fact that costs 
are more certain to decline if it is generally expected that they 
should and will.
---------------------------------------------------------------------------
      4. NO TECHNICAL PROBLEMS, JUST-IN-TIME USE OF RECYCLED FUEL

    BCG assumes that the plant will always operate at full capacity 
with no technical problems, no contract delays, etc. No reprocessing 
plant or MOX plant in the world has ever done so.
    The throughput of 2,500 tHM is based on 300 days of operations, 
thus allowing for 60 days of annual plant shut-down, which is 
consistent with operating experience at both La Hague and MELOX.
    In addition, in the United States, the large backlog of fuel, in 
conjunction with significant quantities of used fuel generated each 
year (>2,000 tons) will contribute to guaranteeing an adequate feed to 
the plant.
    Once again, we recognize that, even considering previous experience 
and the specific U.S. situation, we cannot claim that, without any 
shadow of doubt, the plant will be operated at 2,500 tHM/yr for 50 
years. However, similar issues will be encountered by any alternative 
scenario.
    BCG assumes that there will never be a lag in fuel fabrication, 
since, to save money, they cut out all funding for having a plutonium 
storage area. In France, by contrast, tens of tons of plutonium have 
built up in storage as a result of lags in the use of this plutonium as 
fuel.
    Having contracts in place for recycled fuel with utilities and 
being able to implement a just-in-time system is important for the 
economic viability of the plant and for non-proliferation and/or 
physical protection issues. Even though just-in-time recycling is 
envisioned as part of the strategy, the cost for a small buffer storage 
facility where Pu/U in liquid form can be stored for a limited amount 
of time was included in the plant. The plutonium storage area was not 
cut out to save money but rather because it was believed to be 
unnecessary and, therefore, undesirable.

         5. DENSIFICATION FACTOR TRANSLATING INTO COST SAVINGS

    BCG also makes dubious assumptions about the disposal and 
management costs of different types of nuclear waste. They argue that 
because of the lower long-term heat generation from reprocessing waste, 
compared to spent fuel, four times as much reprocessing waste could be 
placed in each unit area of the repository, and therefore they assume 
that total per-kilogram disposal costs would be only one-quarter as 
large. As we noted in our 2003 study, however, only a portion of total 
disposal costs are likely to be driven by heat and repository capacity; 
with a four-fold repository expansion, a two-fold reduction in cost per 
kilogram is more appropriate.
    Based on initial analyses, we believe that a repository built for 
high-level waste from recycling (HLW-R) is likely to cost less than a 
repository for used fuel; thus the unit cost of the repository 
decreases at least proportionally to the densification factor (same 
cost divided by larger quantity).
    In your 2003 study, you mention how repository emplacement 
operations and monitoring, waste package fabrication, and 
transportation costs are related to volume, mass, or number of items. 
That implies that, since, in the case of HLW-R, a larger volume of 
waste and a higher number of waste items are emplaced in the same 
repository area, a four-fold repository capacity expansion does not 
translate into a full four-fold unit cost reduction.
    However, we believe that several of those costs are to a large 
extent fixed, i.e. those costs would not change whether the repository 
is built for used fuel or high-level waste from recycling (HLW-R): for 
example, in the case of transportation costs, the construction of the 
Nevada railroad will cost the same whether it is built for HLW-R or 
used fuel, thus shipping four times as much fuel to the repository will 
result in a fourfold reduction in railroad construction ``unit'' costs. 
Similar considerations can be made for large portion of the emplacement 
operations costs, which can be considered fixed.
    We agree that some costs are indeed variable (for example, waste 
package material costs, or, in the same case of the Nevada railroad, 
some of the operations costs) and will decrease less than four-fold in 
unit cost terms in the case of a HLW-R repository. However, those costs 
are not very large and are more than off-set by other additional 
reductions that would occur in the case of a HLW-R repository (e.g. no 
need to build wet lines in the surface facility, no need to use 
dripshields for glass logs, etc.).
    Finally, the additional cost for disposal of ILW and LLW, which you 
refer to in your 2003 study and which amounts to an additional 20 
percent of the repository costs for HLW-R, was taken into account in 
the BCG study as part of the recycling costs. Also, in the BCG study, 
it was conservatively assumed that compacted waste from hulls and end-
fittings would be disposed of in the repository--releasing this 
constraint would result in higher densification factors and additional 
economic benefits that would lower the HLW-R repository costs further.
    In summary, to effectively conclude whether the cost of a HLW-R 
repository is the same or less than one for a used fuel repository, it 
would be necessary to perform some significant re-design, which goes 
beyond the scope of the BCG study. Yet, based on initial analyses, we 
believe that a HLW-R repository is likely to cost the same, or less, 
than a used fuel repository; thus the unit cost of the repository 
decreases proportionally to the densification factor (same cost divided 
by larger quantity).

           6. COST OF DEALING WITH USED MOX SAME AS LEU FUEL

    At the same time as they take a four-fold cost reduction for the 
lower heat generation from reprocessing wastes, they assume that the 
management cost for spent MOX fuel would be the same as for spent LEU 
fuel, despite the far higher heat generation of spent MOX fuel, the 
greater difficulty in reprocessing it, and the much more radioactive 
nature of the fuel that would be manufactured from it. They acknowledge 
that disposing of the MOX spent fuel in the repository would 
effectively eliminate the repository benefit of the entire effort, 
because of the very high heat generation of the MOX; managing the spent 
MOX would require fast reactors and other technologies not included in 
their study.
    This issue is addressed in the BCG study. In particular, Appendix 
A10, pages 75-78, offers a detailed discussion of this issue.
    Moreover, based on operational experience at La Hague, we do not 
believe that reprocessing spent MOX fuel is technically any more 
difficult than reprocessing spent UOX fuel. At AREVA, we have already 
successfully treated several tons of used MOX.

              7. HIGH FINANCING COSTS UNDER PRIVATE MODEL

    BCG also assumes that the plants they envision will be financed 
entirely by the Government, at a 3 percent real rate of return. This 
assumption is crucial to their conclusions, as the costs of such a 
capital-intensive facility would increase dramatically if a higher (and 
more realistic) rate were chosen. As we noted in our 2003 study, if a 
reprocessing plant were built that had the same capital and operating 
costs and nameplate capacity as Britain's Thermal Oxide Reprocessing 
Plant (THORP), whose costs are generally similar to those of the French 
plants at La Hague, which are the basis for the BCG estimates, and the 
plant were financed at such a government rate, it would have a 
reprocessing cost in the range of $1,350 per kilogram of heavy metal in 
spent fuel (kgHM), if it successfully operated at its full nameplate 
capacity throughout its life with no interruptions (a far cry from the 
real experience, but the same assumption used in the BCG study). (By 
contrast, as already noted, BCG assumes $630/kgHM for both reprocessing 
and MOX fabrication combined.) But if the exact same plant were 
financed privately, at the rates EPRI recommends assuming for power 
plants owned by regulated utilities with a guaranteed rate of return 
(and therefore very low risk), the unit cost would be over $2,000/kgHM. 
If financed by a fully private entity with no guaranteed rate of 
return, the cost for the same facility would be over $3,100/kgHM. (That 
is without taking into account the large risk premium the capital 
markets would surely demand for a facility whose fate was so dependent 
on political decisions; all three of the commercial reprocessing plants 
built to date in the United States failed for such reasons.)
    Not having any information on what financing scheme would be used 
to build a recycling plant in the United States, BCG assumed a 3 
percent Government rate to be consistent with the estimates on Yucca 
Mountain. This is also in line with the fact that today transport and 
disposal of used fuel is a government liability.
    Business models were not discussed in the BCG study, which is 
purely an economic assessment. The real effect of a different cost of 
capital would depend very heavily on the specific of the business 
model: what kind of risks can be assumed? What level of private 
involvement do you have: 100 percent or less? What about 
transportation? etc. Without having resolved those issues, no 
assumptions can be made for the cost of a ``private'' plant.
    The entire approach, in short, is only financially feasible if it 
is fully Government-financed. But for the Government to own and operate 
a facility that would not only reprocess spent fuel but manufacture new 
MOX fuel on the scale they envision--providing a significant fraction 
of all fuel for U.S. light-water reactors--would represent an immense 
Government intrusion on the private nuclear fuel industry. The 
implications of such an approach have not been examined. The coal 
industry and the gas industry would surely ask, ``if nuclear can get 
facilities to handle its waste financed at a 3 percent Government rate, 
why can't we get the same thing for our environmental controls or 
carbon sequestration?''
    We acknowledge that there will need to be further studies to 
develop a business model that can address competition issues on the use 
of recycled fuel, although we would like to point out that MOX would 
constitute only about 12 percent of the total U.S. fuel needs and, 
therefore, would not represent ``an immense Government intrusion''.
    The full answer to this question goes beyond the scope of the BCG 
study, since taking the liability of the used nuclear fuel from the 
utilities, regardless of whether the used fuel is directly disposed of, 
or recycled, was a policy decision made by the Government many years 
ago. We are also not qualified to comment on the merits of U.S. 
Government policy decisions on waste treatment in other industries; 
however, we would note that your argument regarding Government 
financing of used fuel disposal is already relevant for the repository 
and obtaining Government rates for a treatment facility would not be 
new.

                          8. LEGAL DISCLAIMER

    The BCG study itself appears to agree that it should not be used as 
the basis for policy-making. After acknowledging that the study was 
initiated and paid for by AREVA, and that BCG made no attempt to verify 
any of the data provided by AREVA, the study warns: ``Any other party 
[than AREVA] using this report for any purpose, or relying on this 
report in any way, does so at their own risk. No representation of 
warranty, expressed or implied, is made in relation to the accuracy or 
completeness of the information presented herein or its suitability for 
any particular purpose''.
    AREVA asked BCG to provide an independent view of the economics of 
used fuel management in the United States, using data from AREVA 
operations as a starting point. It is understandable that BCG wanted to 
clarify that they are not in the business of influencing policy-making 
(BCG will not gain any benefit if the U.S. changes its policy on 
recycling) and they have not audited the data they were provided. In 
that respect, it is very common practice that a management consulting 
firm such as BCG does not take any liability over future uses of the 
report or for information provided by AREVA.
    Most major institutions and corporations adopt a similar legal 
strategy to shield themselves from potential liabilities, including 
Harvard University. Such legal disclaimers should not be interpreted by 
the reader as a lack of faith in the material discussed or presented, 
or the veracity of statements made.
    See for example: http://neurosurgery.mgh.harvard.edu/disclaim.htm; 
http://www.seo.harvard.edu/students/disclaimer.html; http://
www.hcp.med.harvard.edu/statistics/survey-soft/disclaimer.html; http://
www.health.harvard.edu/fhg/diswarr.shtml.

    Senator Domenici. Thank you very much. You certainly 
provide us with bold testimony. Hope we will be as bold as you 
are in your projections and enthusiasm. Assistant Secretary 
Spurgeon, it's kind of contagious. I don't know which rubbed 
off which way, but you both have come to my office and you 
bring more enthusiasm about the possibility of United States 
Government considering a comprehensive solution to our spent 
fuel needs. Your enthusiasm about being able to achieve it is 
rather startling compared to what we have been hearing for so 
long. We might just get it right, let's hope.
    Mr. Bunn, in all of your vast experience in this area, 
you've seen us proceed through and stumble and fail and start 
up again, but I think we are quite serious about moving ahead 
and we need good thinking and good recommendations and we are 
pleased that you are going to share some facts, some concerns 
with us. We welcome you.

STATEMENT OF MATTHEW BUNN, HARVARD UNIVERSITY, BELFER 
            CENTER FOR SCIENCE AND INTERNATIONAL 
            AFFAIRS, JOHN F. KENNEDY SCHOOL OF 
            GOVERNMENT, CAMBRIDGE, MASSACHUSETTS
    Mr. Bunn. Good. Mr. Chairman, it's an honor to be here 
today to talk to you about the Global Nuclear Energy 
Partnership. I would consider myself a friend of nuclear energy 
and I believe that we need to be working hard to fix the 
problems that have limited nuclear energy's growth because we 
may need it to cope with the problem of climate change and I 
support a strong nuclear research and development program and I 
support several of the key elements of GNEP. But I do have a 
little bit different view on recycling.
    I think that gaining the public utility and government 
acceptance needed for a large scale expansion of nuclear energy 
around the world is going to require making nuclear power as 
cheap, as safe, as secure, and as proliferation-resistant as 
possible. And the current GNEP focus of moving rapidly toward 
near-term large-scale reprocessing of spent nuclear fuel is 
likely to take us in the wrong direction on each of those 
counts, and hence, is more likely to undermine the nuclear 
renaissance than to promote it. Moreover I believe that even 
without reprocessing we will be able to provide sufficient 
uranium supplies and sufficient repository space for many 
decades. Let me elaborate on these points and make several 
recommendations.
    First, cost, reprocessing is going to be more expensive 
than direct disposal. In a recent Harvard study we concluded 
that reprocessing would increase the back end costs by roughly 
80 percent, and a wide range of other studies--including 
government studies in both France and Japan--have reached 
similar conclusions. A National Academy of Sciences review of 
separations and transmutation concluded that the excess cost of 
recycling 62,000 tons of commercial spent fuel, ``Is likely to 
be no less than $50 billion and could easily be over a $100 
billion.''
    Now, that is a small amount in per kilowatt hour terms, but 
it's a large absolute number and there's only a few ways it 
could be financed. You could drastically increase the nuclear 
waste fee. You could provide billions of dollars in government 
subsidies over decades, or you could pass numerous regulations 
that would effectively force private industry to pay, to build 
and operate otherwise uneconomic facilities. All of those 
options would make investors, potential investors in new 
nuclear power plants more uncertain about making such 
investments rather than less.
    The recent Boston Consulting Group study, is an interesting 
document, but it makes a number of overoptimistic assumptions. 
It estimates a cost of $630 per kilogram of heavy metal for 
both reprocessing and MOX fabrication combined, which is far 
less than the real French have ever achieved for either 
process. A more detailed critique of the BCG study is provided 
as an appendix to my testimony.
    With respect to proliferation risks, those are also higher 
on the recycling path. The new U.S. message to developing 
countries is essentially: Reprocessing is essential to the 
future of nuclear energy, but we're going to keep that 
technology away from you. I don't think that it's going to help 
achieve President Bush's goal of limiting the spread of 
reprocessing technology. If we move forward with UREX+, rather 
than PUREX, and that technology is spread around the world, 
that would be only modestly better, as a developing country 
with a UREX+ facility and the skilled personnel to operate it 
could readily adapt those things to producing pure plutonium.
    It is very important to move forward with another GNEP 
element and that is giving states around the world reliable 
guarantees of fuel supply and spent fuel management services to 
convince them not to build their own enrichment and 
reprocessing plants. But U.S. reprocessing is not central to 
that vision, particularly, since I believe it is going to 
politically unrealistic to import large quantities of foreign 
power reactor fuel into the United States in any case.
    The Bush administration has recognized that the large 
quantities of separated plutonium building up as a result of 
traditional PUREX process posed, ``A growing proliferation risk 
that simply must be dealt with.'' We should be almost as 
worried about the stocks of mixed plutonium and uranium that 
would result from the COEX process that Dr. Hanson referred to. 
Nuclear weapons could be made directly from the roughly 50/50 
plutonium uranium mix that COEX advocates refer to. 
Alternatively the plutonium could be separated in simple 
gloveboxes and commercially available equipment and chemicals. 
Any state or group able to accomplish the difficult job of 
making an implosion-type bomb from pure plutonium, would likely 
be able to accomplish this simpler job of separating this 
plutonium from uranium. The repeated references to no pure 
plutonium are a talking point, not a serious nonproliferation 
analysis.
    Keeping the minor actinides and possibly some of the 
lanthanides with the plutonium as proposed in UREX+ and its 
variants would make the product more radioactive, but the 
radioactivity would still be far less than international 
standards for self protection. And the process still takes away 
the great mass of the uranium and the majority of the radiation 
from the fission products, making it far less proliferation-
resistant than simply leaving the plutonium in the spent fuel.
    With respect to safety and security, life cycle comparisons 
have not yet been done, but it seems clear that extensive 
chemical processing of intensely radioactive spent fuel 
presents more opportunities for release of radionuclide, either 
by accident or by sabotage than does leaving spent fuel 
untouched in thick metal or concrete casks.
    With respect to environmental impacts, GNEP might reduce 
the long term doses from the repository if all its technical 
goals are achieved, but those doses are already low and the 
benefit of reducing them is therefore modest. With respect to 
the sustainability of nuclear energy, neither uranium nor 
repository space are likely to be in a short supply, as is 
often asserted. As we described in detail in our 2003 study, 
world resources of uranium likely to be recoverable at a cost 
far less than the cost of breeding are sufficient to fuel a 
growing nuclear economy for decades.
    Indeed, in the last decade the Red Book estimates of world 
uranium resources have been increasing far faster than uranium 
has been consumed. Probably the most important argument in 
favor of recycling is repository space issue and the need to 
find a way to get the waste from a growing nuclear energy 
enterprise into Yucca Mountain. But the latest estimates from 
the Electric Power Research Institute indicate that Yucca 
Mountain repository can almost certainly hold over 260,000 tons 
of spent fuel, an amount that would not exist until well into 
the latter half of this century even with rapid nuclear growth. 
Then they will be able to hold 570,000 tons or more.
    Moreover, it seems likely that gaining the public 
acceptance and licensing for huge reprocessing plants and 
scores of fast neutron reactors will be at least as difficult 
as licensing another repository, which might well just be the 
next ridge over at Yucca Mountain.
    We do need a substantial nuclear R&D program, in fact we 
need to substantially increase R&D on a wide range of energy 
technologies. Unfortunately, I am concerned that DOE is 
distorting that program by rushing to build commercial scale 
facilities without having completed either the R&D on relevant 
technologies or the detailed system analysis needed to make 
wise choices. The CFTC envisioned in the request for 
expressions of interest would process as much as 2,000 to 3,000 
tons of spent fuel per year, far larger than any comparable 
facility in the world, and they would also envision a 
commercial scale fast neutron reactor. I think the subcommittee 
should ask several questions about this approach.
    First, wouldn't even the optimistic assumptions of the BCG 
report lead to an estimated cost for just these two facilities 
in the range of $20 billion? Second, wouldn't it be likely that 
the cost of these facilities would grow as the project 
proceeded, mirroring the experience with Hanford vitrification 
project or the Savannah River MOX plant? How does DOE propose 
to finance these costs? From the appropriations, from the 
nuclear waste fund? Is there any previous example in DOE's 
history in which the department has managed to build and 
operate a commercial scale facility of this complexity 
successfully? I believe they have a record unblemished by 
success in this area. What is DOE's past record of success and 
failure in picking winners among the possible technologies for 
commercial deployment? What life cycle analysis of costs, 
safety, security, proliferation resistance, led them to this 
conclusion?
    Senator Domenici. Sir, your time is running out.
    Mr. Bunn. Ok, let me jump ahead to some recommendations. I 
believe we should focus first on interim storage. Whatever 
option we pursue, we are going to need additional storage 
capacity and we're going to need at least some centralized 
interim storage capacity. I believe we need to take a 
deliberate voluntary approach to siting storage facilities. We 
laid out such an approach in a 2001 report.
    Second, we should pursue a broad R&D program on spent fuel 
management that includes both improved approaches to direct 
disposal and improved approaches to recycling and let the best 
process win.
    Third, we need to focus more on building broad political 
sustainability. These processes are going to take decades to 
implement and unless we have bipartisan support the chances of 
failure are high.
    Fourth, we need to move forward expeditiously with the 
Yucca Mountain repository, but taking the time to get the 
analysis right and build as much support as we practically can.
    Fifth, we need to develop and analyze first and build 
later. Today key separations and transmutation technologies are 
in their infancy and key system analyses of costs, safety, 
security, proliferation resistance have not yet been done. We 
should not be building large facilities before those efforts 
have been completed. Large scale reprocessing and transmutation 
facilities should not be built until detailed analysis indicate 
that they offer a combination of cost, safety, security, 
proliferation resistance, and sustainability superior to 
potential alternatives.

                           PREPARED STATEMENT

    As a first step, I recommend that the committee accept the 
House idea calling for an in-depth peer review of the entire 
fuel recycling plan by the National Academies before moving 
forward to build expensive facilities.
    Thanks for your attention. I apologize for going on so 
long, and I look forward to questions.
    [The statement follows:]

                   Prepared Statement of Matthew Bunn

ASSESSING THE BENEFITS, COSTS, AND RISKS OF NEAR-TERM REPROCESSING AND 
                              ALTERNATIVES

    Mr. Chairman and members of the subcommittee, it is an honor to be 
here today to discuss the Global Nuclear Energy Partnership (GNEP).
    I believe that we should be working hard to fix the past problems 
that have limited the growth of nuclear energy, as the world may need a 
greatly expanded global contribution from nuclear energy to cope with 
the problem of climate change. I support a strong nuclear research and 
development program--along with greatly expanded R&D on other energy 
sources and efficiency.
    But gaining the public, utility, and government acceptance needed 
for a large-scale expansion of nuclear energy will not be easy. Such an 
expansion will require making nuclear power as cheap, safe, secure, and 
proliferation-resistant as possible. I believe that while several 
elements of GNEP deserve strong support, the current GNEP focus on 
moving rapidly toward large-scale reprocessing of spent nuclear fuel 
will take us in the wrong direction on each of these counts, and hence 
is likely to do more to undermine the future of nuclear energy than to 
promote it.\1\ Moreover, I believe that reprocessing will not be 
required to provide either sufficient uranium supplies or sufficient 
repository space for many decades to come, if then. I fear that the new 
focus on rushing to construction of commercial-scale facilities is 
precisely the wrong direction, and will distort the R&D effort. I will 
elaborate on each of these points in this testimony.
---------------------------------------------------------------------------
    \1\ For a similar argument that the GNEP approach ``threatens to 
set back the nuclear revival,'' see, for example, Richard Lester, ``New 
Nukes,'' Issues in Science and Technology, Summer 2006, pp. 39-46.
---------------------------------------------------------------------------
    But first, let me emphasize the two key take-away points:
  --(1) We should focus first on safe, secure, and politically 
        sustainable approaches to interim storage of spent fuel. These 
        will be needed no matter what long-term options we choose for 
        spent fuel management; if properly implemented, they will 
        address the immediate needs of the nuclear industry and provide 
        the confidence needed for construction of new reactors.
  --(2) We should take the time needed to make sound and politically 
        sustainable decisions about spent fuel management. There is no 
        need to rush to judgment. Spent fuel can be stored safely and 
        cheaply for decades in dry casks, leaving all options open for 
        the future, and allowing time for the economic, technical, and 
        political issues on all paths to be more fully explored. From 
        Clinch River to Wackersdorf, from Chernobyl to the Hanford 
        tanks, the nuclear age is littered with the costly results of 
        the rushed decisions of the past. Rushing to make decisions 
        before the needed analyses and R&D are completed will leave us 
        with programs that are more costly and less effective than they 
        could otherwise be.

                          RECYCLING IN CONTEXT

    Recycling is not an end in itself, whether for newspapers or for 
spent fuel. Rather, it is a way to conserve scarce resources and reduce 
disposal costs. If all the real costs and externalities are 
appropriately reflected in prices, and recycling costs more than direct 
disposal, that means that recycling is wasting more precious resources 
than it is conserving: the capital and labor invested in recycling, in 
that case, are more precious than the resources conserved by doing so. 
When old computers are discarded, the precious metals in them are often 
recycled, but the silicon in their chips is generally not: silicon is 
plentiful, recovering and recycling it would be expensive, and disposal 
of it is not a major problem. It is worth at least considering whether 
or not the same is true in the case of recycling spent nuclear fuel.
    For spent fuel, neither recycling nor direct disposal should be 
supported as an article of faith. Rather, the choice should be made 
based on careful analyses of which options offer the best combination 
low cost, low proliferation risks, low environmental impact, high 
safety and security, and high sustainability for a growing long-term 
nuclear enterprise. Reprocessing using either traditional PUREX 
technology or the UREX+ co-extraction technologies being considered for 
GNEP is inferior to once-through approaches in most of these respects.

                          COSTS AND FINANCING

    Reprocessing and recycling using either current commercial 
technologies or those proposed for GNEP would substantially increase 
the cost of spent fuel management. In a recent Harvard study, we 
concluded that reprocessing would increase spent fuel management costs 
by roughly 80 percent, compared to once-through approaches, even making 
a number of assumptions that were quite favorable to reprocessing.\2\ A 
wide range of other studies, including government studies in both 
France and Japan, have reached similar conclusions.\3\ The UREX+ 
technology now being pursued adds a number of complex separation steps 
to the traditional PUREX process, and would likely be even more 
expensive.\4\ The capital cost of fast-neutron reactors such as those 
proposed for GNEP has traditionally been significantly higher than that 
of light-water reactors. A National Academy of Sciences review of 
separations and transmutation technologies such as those proposed for 
GNEP concluded that the additional cost of recycling compared to once 
through for 62,000 tons of commercial spent fuel ``is likely to be no 
less than $50 billion and easily could be over $100 billion.'' \5\
---------------------------------------------------------------------------
    \2\ See 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 as of 16 July 
2006 at http://bcsia.ksg.harvard.edu/BCSIA_content/documents/repro-
report.pdf).
    \3\ For quite similar conclusions, see John Deutch and Ernest J. 
Moniz, co-chairs, ``The Future of Nuclear Power: An Interdisciplinary 
MIT Study'' (Cambridge, MA: Massachusetts Institute of Technology, 
2003, available as of 16 July 2006 at http://web.mit.edu/nuclearpower/
). For a study for the French government, see Jean-Michel Charpin, 
Benjamin Dessus, and Rene Pellat, ``Economic Forecast Study of the 
Nuclear Power Option'' (Paris, France: Office of the Prime Minister, 
July 2000, available as of 10 September 2006 at http://fire.pppl.gov/
eu_fr_fission_plan.pdf), Appendix 1. In Japan, the official estimate is 
that reprocessing and recycling will cost more than $100 billion over 
the next several decades, and the utilities have successfully demanded 
that the government impose an additional charge on all electricity 
users to pay the extra costs.
    \4\ Other processes might someday reduce the costs, but this 
remains to be demonstrated, and a number of recent official studies 
have estimated costs for reprocessing and transmutation that are far 
higher than the costs of traditional reprocessing and recycling, not 
lower. See, for example, Organization for Economic Cooperation and 
Development, Nuclear Energy Agency, ``Accelerator-Driven Systems (ADS) 
and Fast Reactors (FR) in Advanced Nuclear Fuel Cycles: A Comparative 
Study'' (Paris, France: NEA, 2002, available as of 16 July 2006 at 
http://www.nea.fr/html/ndd/reports/2002/nea3109-ads.pdf), p. 211 and p. 
216, and U.S. Department of Energy, Office of Nuclear Energy, 
``Generation IV Roadmap: Report of the Fuel Cycle Crosscut Group'' 
(Washington, DC: DOE, 18 March 2001, available as of 16 July 2006 at 
http://www.ne.doe.gov/reports/GenIVRoadmapFCCG.pdf.), p. A2-6 and p. 
A2-8.
    \5\ U.S. National Research Council, Committee on Separations 
Technology and Transmutation Systems, ``Nuclear Wastes: Technologies 
For Separation and Transmutation'' (Washington, DC: National Academy 
Press, 1996), p. 7. Note that these figures are expressed in 1992 
dollars; in 2006 dollars, the range would be $66-$133 billion.
---------------------------------------------------------------------------
    While such a cost would be a modest addition to total per-kilowatt-
hour costs of nuclear electricity generation, the absolute magnitude of 
the amount is large, and there are only a few ways it could be 
financed: either (1) the current 1 mill/kilowatt-hour nuclear waste fee 
would have to be substantially increased; (2) the Federal Government 
would have to provide tens of billions of dollars of subsidies over 
many decades (which might not be sustained), or (3) onerous regulations 
would have to be imposed that would effectively require private 
industry to build and operate uneconomic facilities. All of these 
options would make investors more uncertain, not less, about putting 
their money into new nuclear plants in the United States. Most 
approaches would represent dramatic government intrusions into the 
private nuclear fuel industry, whose implications have not been fully 
examined.
    The recent study by the Boston Consulting Group (BCG), arguing that 
reprocessing would be no more expensive than once-through approaches, 
is grossly overoptimistic and should not be relied on as a basis for 
policy.\6\ The BCG study uses a wide range of unjustified assumptions 
to reach an estimated price for both reprocessing and mixed oxide (MOX) 
fuel fabrication of $630 per kilogram of heavy metal, far less than 
real commercial plants have achieved for either process. Yet the real 
experience of adapting French plutonium technology in the United 
States, the project to build a MOX plant at Savannah River, is leading 
to costs several times higher than those achieved in France, not 
several times lower. A more detailed critique of the BCG study is 
provided as an appendix to this testimony.
---------------------------------------------------------------------------
    \6\ Boston Consulting Group, ``Economic Assessment of Used Nuclear 
Fuel Management in the United States'' (Boston, Mass: BCG, July 2006, 
available as of 11 September 2006 at http://www.bcg.com/publications/
files/2116202EconomicAssessmentReport24Jul0SR.pdf).
---------------------------------------------------------------------------
                          PROLIFERATION RISKS

    In addition to being more costly, the reprocessing proposed as a 
central part of GNEP would raise more proliferation risks than would 
reliance on once-through approaches.
    President Bush, like every President for decades before him, has 
been seeking to limit the spread of enrichment and reprocessing 
technologies.\7\ Since 1976, the U.S. message has been, in effect, 
``reprocessing is unnecessary; we, the country with the world's largest 
nuclear fleet, are not doing it, and you do not need to either.'' While 
it is often said that the rest of the world did not listen to us, no 
countries have built civilian reprocessing plants that were not already 
reprocessing or building such facilities as of 1976, three decades 
ago.\8\ Now, with GNEP, the message is ``reprocessing is essential to 
the future of nuclear energy, but we will keep the technology away from 
all but a few states.'' \9\ This is not likely to be an acceptable and 
sustainable approach for the long haul. In particular, this message is 
likely to make it more difficult, not less, to convince states such as 
Taiwan and South Korea--both of which have had secret nuclear weapons 
programs based on reprocessing in the past, terminated under U.S. 
pressure--not to pursue reprocessing of their own. Having other 
countries pursue UREX+ rather than PUREX would be only a modest 
improvement, as once a country had a team of people with experience in 
chemically processing intensely radioactive spent nuclear fuel and a 
facility for doing so, this expertise and infrastructure could be 
adapted very rapidly to separate pure plutonium for weapons--much as 
countries with enrichment could readily switch from producing low-
enriched uranium to producing highly enriched uranium (HEU) should they 
choose to do so.
---------------------------------------------------------------------------
    \7\ President George W. Bush, ``President Announces New Measures to 
Counter the Threat of WMD: Remarks by the President on Weapons of Mass 
Destruction Proliferation, Fort Lesley J. Mcnair--National Defense 
University'' (Washington, D.C.: The White House, Office of the Press 
Secretary, 2004; available at http://www.whitehouse.gov/news/releases/
2004/02/20040211_094.
html as of 12 April 2005).
    \8\ The major commercial reprocessing facilities in the world are 
in France, the United Kingdom, Russia, and Japan. The first three 
already had reprocessing well underway in 1976, and the Japanese Tokai 
plant was well advanced at that time. China and India both have some 
reprocessing activities, but both had reprocessing technology already 
in 1976. North Korea has established a reprocessing plant since 1976, 
but it is entirely for military purposes, not a commercial plant that 
might be influenced by U.S. policy on commercial reprocessing. Since 
1976, a number of countries that were previously pursuing reprocessing 
(such as Germany and Sweden, among others) have joined the United 
States in abandoning reprocessing in favor of direct disposal. In 
general, the poor economics of reprocessing have driven decisions more 
than U.S. policy.
    \9\ This formulation is adapted from Frank von Hippel, ``GNEP and 
the U.S. Spent Fuel Problem,'' congressional staff briefing, 10 March 
2006.
---------------------------------------------------------------------------
    GNEP advocates argue, to the contrary, that another central element 
of GNEP--the idea of a consortium of fuel cycle states that would 
provide guaranteed fuel supply and spent fuel management to other 
states, perhaps in a ``fuel leasing'' arrangement--would reduce the 
incentives for states to acquire reprocessing facilities (as well as 
enrichment facilities) of their own. This is an important and 
potentially powerful idea, which should be pursued.\10\ Unfortunately, 
the way it has been presented, dividing the world forever into ``fuel 
cycle states'' that would be allowed to have these technologies and 
``recipient states'' that would not, may be raising a danger of causing 
what we are trying to prevent. As I understand it, Argentina and South 
Africa, among others, have already suggested that they may restart 
their enrichment programs in part in order to be considered in the 
favored class of ``fuel cycle states.'' The subcommittee may wish to 
inquire of DOE whether this is correct.
---------------------------------------------------------------------------
    \10\ See, for example, John Deutch et al., ``Making the World Safe 
for Nuclear Energy,'' Survival 46, no. 4 (Winter 2004; available at 
http://www.world-nuclear.org/opinion/survival.pdf as of 7 July 2006); 
Ashton B. Carter and Stephen A. LaMontagne, ``Toolbox: Containing the 
Nuclear Red Zone Threat,'' The American Interest (Spring 2006). 
Unfortunately, the way a few GNEP advocates have presented the idea, 
focusing on a new regime of discrimination and denial in which all but 
a few states would be denied access to enrichment and reprocessing 
technology, is unlikely to make the concept popular among the potential 
recipients of such fuel leases. A substantively similar but more 
appealing approach is to say that, in effect, countries will be offered 
more than they have ever been offered before under Article IV of the 
Nonproliferation Treaty: a guarantee of life-cycle fuel supply and 
spent fuel management for as many reactors as they choose to build, if 
they agree that, at least for an agreed period, they will not pursue 
enrichment and reprocessing facilities of their own.
---------------------------------------------------------------------------
    In any case, U.S. reprocessing is not an essential part of making 
such an offer. A U.S. offer to take in unlimited quantities of foreign 
spent nuclear fuel is simply not politically realistic--even if the 
spent fuel was to be reprocessed after it arrived. (Indeed, few steps 
would be more likely to destroy renewed public support for nuclear 
energy in the United States than proposing to make the United States 
``the world's nuclear dumping ground,'' as anti-nuclear activists have 
put it in the case of Russia.) Realistically, if major states are to 
make such a back-end offer, it will be others who do so--starting, 
perhaps, with Russia, which has already put in place legislation to 
make that possible. Russia currently plans to offer such fuel leases 
and to put imported spent fuel in secure dry storage for decades, 
though at present it does plan to reprocess it eventually.
    A second set of proliferation issues focuses on possible theft or 
diversion of plutonium. While reactor-grade plutonium would not be the 
preferred material for making nuclear bombs, it does not require 
advanced technology to make a bomb from reactor-grade plutonium: any 
state or group that could make a bomb from weapon-grade plutonium could 
make a bomb from reactor-grade plutonium.\11\ Despite the remarkable 
progress of safeguards and security technology over the last few 
decades, processing, fabricating, and transporting tons of weapons-
usable separated plutonium every year--when even a few kilograms is 
enough for a bomb--inevitably raises greater risks than not doing so. 
Indeed, while many of the stocks of civil plutonium that have built up 
are well-guarded, critics have argued that some operations in the 
civilian plutonium industry are potentially vulnerable to nuclear 
theft.\12\
---------------------------------------------------------------------------
    \11\ For an authoritative unclassified discussion, see 
``Nonproliferation and Arms Control Assessment of Weapons-Usable 
Fissile Material Storage and Excess Plutonium Disposition 
Alternatives'', DOE/NN-0007 (Washington DC: U.S. Department of Energy, 
January 1997), pp. 38-39.
    \12\ Ronald E. Timm, ``Security Assessment Report for Plutonium 
Transport in France'' (Paris: Greenpeace International, 2005; available 
at http://greenpeace.datapps.com/stop-plutonium/en/TimmReportV5.pdf as 
of 6 December 2005).
---------------------------------------------------------------------------
    The administration has acknowledged that the huge stockpiles of 
weapons-usable separated civil plutonium built up as a result of 
traditional PUREX reprocessing (now roughly equal to all world military 
plutonium stockpiles combined, remarkably) ``pose a growing 
proliferation risk'' that ``simply must be dealt with.'' \13\
---------------------------------------------------------------------------
    \13\ Samuel Bodman, ``Carnegie Endowment for International Peace 
Moscow Center: Remarks as Prepared for Secretary Bodman'' (Moscow: U.S. 
Department of Energy, 2006; available at http://energy.gov/news/
3348.htm as of 17 March 2006). This characterization seems oddly out of 
tune with the schedule of the administration's proposed solution, 
advanced burner reactors that will not be available in significant 
numbers to address this ``growing'' risk for decades. In a similar 
vein, the British Royal Society, in a 1998 report, warned that even in 
an advanced industrial state like the United Kingdom, the possibility 
that plutonium stocks might be ``accessed for illicit weapons 
production is of extreme concern.'' The Royal Society, ``Management of 
Separated Plutonium'' (London: Royal Society, 1998, available at http:/
/www.royalsoc.ac.uk/displaypagedoc.asp?id=18551 as of 16 July 2006.
---------------------------------------------------------------------------
    If the administration is worried about these stockpiles of 
separated plutonium, they should also worry about the plutonium-uranium 
mixes that would be separated in the COEX process now being considered. 
As U.S. Government examinations of the question have concluded, nuclear 
explosives could still be made directly from the roughly 50/50 
plutonium-uranium mixes that COEX advocates refer to, though the 
quantity of material required for a bomb would be significantly larger. 
Moreover, any state or group with the capability to do the difficult 
job of designing and building an implosion-type bomb from pure 
plutonium would have a good chance of being able to accomplish the 
simpler job of separating pure plutonium from such a plutonium-uranium 
mix. The job could be done in a simple glove-box with commercially 
available equipment and chemicals, using any one of a number of 
straightforward, published processes. For these reasons, under either 
U.S. or international guidelines, such a mixture would still be 
considered Category I material, posing the highest levels of security 
risk and requiring the highest levels of security. When such approaches 
were last seriously considered in the United States three decades ago, 
the Nuclear Regulatory Commission concluded that ``lowering the 
concentration of plutonium through blending [with uranium] should not 
be used as a basis for reducing the level of safeguards protection,'' 
and that the concentration of plutonium in the blend would have to be 
reduced to 10 percent or less--far less than being considered for 
COEX--for the safeguards advantages to be ``significant.'' \14\ The 
repeated statement that these processes will result in ``no pure 
plutonium'' is a talking point, not a serious analysis of proliferation 
and security impacts.
---------------------------------------------------------------------------
    \14\ Office of Nuclear Material Safety and Safeguards, U.S. Nuclear 
Regulatory Commission, ``Safeguarding a Domestic Mixed Oxide Industry 
against a Hypothetical Subnational Threat'', NUREG-0414 (Washington, 
DC: NRC, 1978), pp. 6.8-6.10.
---------------------------------------------------------------------------
    GNEP advocates argue that approaches such as UREX+ would be more 
proliferation-resistant, because the minor actinides (and perhaps a few 
of the lanthanide fission products) would remain with the plutonium, 
making the separated product more radioactive and more problematic to 
steal and process into a bomb.\15\ But the processing proposed in UREX+ 
still takes away the great mass of the uranium and the vast majority of 
the radiation from the fission products, making the process far less 
proliferation-resistant than simply leaving the plutonium in the spent 
fuel. Indeed, the plutonium-bearing materials that would be separated 
in either the UREX+ process or by pyroprocessing would not be remotely 
radioactive enough to meet international standards for being ``self-
protecting'' against possible theft.\16\ Thus, the approach may be 
considered modestly more proliferation-resistant than traditional PUREX 
reprocessing, but it is far less proliferation-resistant than not 
reprocessing at all.
---------------------------------------------------------------------------
    \15\ Of all the various impacts of civilian nuclear energy on 
proliferation, this would only help with respect to the difficulty of 
theft of the separated material and processing it into a bomb: while 
that is not unimportant, many other issues should be considered in 
assessing proliferation resistance of a nuclear energy system, 
particularly as there has never yet been an historical case in which 
the radiation level of the material involved was the key in determining 
the civilian nuclear system's impact on proliferation outcomes. For a 
discussion of broader issues that should be considered in assessing 
proliferation-resistance, and rough measures for assessing them, see 
Matthew Bunn, ``Proliferation-Resistance (and Terror-Resistance) of 
Nuclear Energy Systems'' lecture, Massachusetts Institute of 
Technology, 1 May 2006, available at http://bcsia.ksg.harvard.edu/
BCSIA_content/documents/proliferation_resist_lecture06.pdf as of 12 
September 2006.
    \16\ See Jungmin Kang and Frank von Hippel, ``Limited 
Proliferation-Resistance Benefits From Recycling Unseparated 
Transuranics and Lanthanides From Light-Water Reactor Spent Fuel,'' 
Science and Global Security, Vol. 13, pp. 169-181, 2005, available as 
of 16 July 2006 at http://www.princeton.edu/globsec/publications/pdf/
13_3%20Kang%20vonhippel.pdf
---------------------------------------------------------------------------
    Proponents of reprocessing and recycling often argue that this 
approach will provide a nonproliferation benefit by consuming the 
plutonium in spent fuel, which would otherwise turn geologic 
repositories into potential plutonium mines many hundreds or thousands 
of years in the future. But the proliferation risk posed by spent fuel 
buried in a safeguarded repository is already modest; if the world 
could be brought to a state in which such repositories were the most 
significant remaining proliferation risk, that would be cause for great 
celebration. Moreover, this risk will be occurring a century or more 
from now, and if there is one thing we know about the nuclear world a 
century hence, it is that we know almost nothing about it. We should 
not increase significant proliferation risks in the near term in order 
to reduce already small and highly uncertain proliferation risks in the 
distant future.\17\
---------------------------------------------------------------------------
    \17\ For a discussion, see John P. Holdren, ``Nonproliferation 
Aspects of Geologic Repositories,'' presented at the ``International 
Conference on Geologic Repositories,'' October 31-November 3, 1999, 
Denver, Colorado; available as of 16 July 2006 at http://
bcsia.ksg.harvard.edu/
publication.cfm?program=CORE&ctype=presentation&item_id=1.
---------------------------------------------------------------------------
    With crises brewing over the nuclear programs of North Korea and 
Iran, and a variety of targets for nuclear theft that are more 
vulnerable than most of the proposed recycling operations in GNEP would 
be likely to be (such as HEU-fueled research reactors in many 
countries, for example), the issues raised by GNEP are not among the 
world's highest proliferation risks. But they are real risks 
nonetheless, and running them is entirely unnecessary, given the 
availability of dry cask storage as a secure alternative.

                          SAFETY AND SECURITY

    No complete life-cycle study of the safety and terrorism risks of 
reprocessing and recycling compared to those of direct disposal has yet 
been done by disinterested parties. But it seems clear that extensive 
processing of intensely radioactive spent fuel using volatile chemicals 
presents more opportunities for release of radionuclides--either by 
accident or by sabotage--than does leaving spent fuel untouched in 
thick metal or concrete casks. While the safety record of the best 
reprocessing plants is good, it is worth remembering that until 
Chernobyl, the world's worst nuclear accident had been the explosion at 
the reprocessing plant at Khyshtym (site of what is now the Mayak 
Production Association) in 1957, and significant accidents occurred at 
both Russian and Japanese reprocessing plants as recently as the 
1990's. The British THORP plant is returning to operation after the 
2005 discovery of a massive leak of radioactive acid solution 
containing tens of tons of uranium and some 160 kilograms of plutonium, 
which had gone unnoticed for months (though none of this material ever 
left the plant, and there was no known radioactive release).

                          ENVIRONMENTAL IMPACT

    The question, then, is whether the benefits reprocessing and 
recycling would bring are large enough to justify accepting this 
daunting list of costs and risks.
    One potential benefit of recycling is to reduce the expected doses 
to humans and the environment from a geologic repository. Reprocessing 
and recycling as currently practiced (with only one round of recycling 
the plutonium as uranium-plutonium mixed oxide (MOX) fuel) would not 
reduce such doses substantially.
    Some of the approaches envisioned for the long-term track of GNEP 
call instead for separating all the actinides and irradiating them 
repeatedly in advanced burner reactors, so that all but a small 
percentage of the actinides would be fissioned. Some of the more 
troublesome long-lived fission products might be transmuted as well. If 
developed and implemented successfully, these approaches might provide 
a substantial reduction in projected long-term radiological doses from 
a geologic repository. But the projected long-term radioactive doses 
from a geologic repository are already low; hence the benefit of 
reducing them further is small. While the relevant studies have not yet 
been done, it seems very likely that if reducing environmental risks 
from the repository were the principal goal of recycling, the cost per 
life saved would be in the billions of dollars--and those possibly 
saved lives would be tens of thousands of years in the future. (Most of 
the discussions of these issues focus only on the high-level wastes, 
but the substantial volumes of transuranic and low-level wastes 
generated in the course of reprocessing and of decommissioning the 
relevant facilities must also be considered.)
    Moreover, the near-term environmental impacts of reprocessing and 
recycling (including fabrication, transport, and use of the proposed 
highly radioactive fuels), even when balanced in part by the reduction 
in the amount of uranium mining that would be required, are likely to 
overwhelm the possible long-term environmental benefit of reduced 
exposures from a geologic repository--though no credible study has yet 
been done comparing these risks for the proposed GNEP fuel cycle and 
once-through fuel cycles.

                             SUSTAINABILITY

    Advocates argue that the recycling proposed in GNEP justifies its 
costs and risks because, with a growing nuclear energy enterprise in 
the future, a once-through approach would soon run short of either 
uranium or repository space. But neither uranium nor repository space 
is in as short supply as advocates claim.

                             URANIUM SUPPLY

    As with environmental impact, traditional reprocessing with one 
round of MOX recycling has only very modest benefit in extending 
uranium resources. The amount of energy generated from each ton of 
uranium mined is increased by less than 20 percent.\18\
---------------------------------------------------------------------------
    \18\ John Deutch and Ernest J. Moniz, co-chairs, ``The Future of 
Nuclear Power: An Interdisciplinary MIT Study'' (Cambridge, MA: 
Massachusetts Institute of Technology, 2003, available as of June 9, 
2005 at http://web.mit.edu/nuclearpower/), p. 123. They present this 
result as uranium consumption per kilowatt-hour being 15 percent less 
for the recycling case; equivalently, if uranium consumption is fixed, 
then electricity generation is 18 percent higher for the recycling 
case.
---------------------------------------------------------------------------
    Recycling and breeding in fast neutron reactors, by contrast, could 
potentially extend uranium resources dramatically. But world resources 
of uranium likely to be economically recoverable at prices far below 
the price at which reprocessing and breeding would be economic are 
sufficient to fuel a growing global nuclear enterprise for many 
decades, relying on direct disposal without recycling.\19\ Indeed, in 
the last decade, the ``Red Book'' estimates of world uranium resources 
have been increasing far faster than uranium has been consumed \20\--
and that trend is likely to accelerate substantially now that high 
prices are leading to far larger investments in uranium exploration. 
The more we look, the more uranium we are likely to find.
---------------------------------------------------------------------------
    \19\ For discussion, see ``Appendix B: World Uranium Resources,'' 
in Bunn, Fetter, Holdren, and van der Zwaan, The Economics of 
Reprocessing.
    \20\ In 1997, the estimate for the sum of reasonably assured 
resources (RAR) and inferred resources available at $80/kgU or less was 
3.085 million tons, while in 2005 it was 3.804 million tons, an 
increase of 23 percent in 8 years, despite the very low level of 
investment in uranium exploration until the end of that period. See 
Organization for Economic Cooperation and Development, Nuclear Energy 
Agency, ``Uranium 1997: Resources, Production, and Demand'' (Paris: 
OECD-NEA, 1998), and ``Uranium 2005: Resources, Production, and 
Demand'' (Paris: OECD-NEA, 2006). Indeed, the press release for the 
2005 edition was entitled: ``Uranium: plenty to sustain growth of 
nuclear power.''
---------------------------------------------------------------------------
    The current run-up in uranium prices has nothing to do with a lack 
of resources in the ground, but only with constraints on bringing on 
new production to exploit those resources to meet market demand. At a 
current price of over $100/kgU, producers able to provide supply at 
costs of less than $40/kgU are making immense profits; market players, 
seeing those profits, will attempt to bring additional supply on-line, 
ultimately bringing demand and supply into better balance and driving 
prices down. This will be difficult to do quickly, because of 
regulatory and political constraints in uranium-producing countries. 
But it would be surprising indeed if the price remained far above the 
cost of production for decades.
    Nor does reprocessing serve the goal of energy security, even for 
countries such as Japan, which have very limited domestic energy 
resources. If energy security means anything, it means that a country's 
energy supplies will not be disrupted by events beyond that country's 
control. Yet events completely out of the control of any individual 
country--such as a theft of poorly guarded plutonium on the other side 
of the world--could transform the politics of plutonium overnight and 
make major planned programs virtually impossible to carry out. Japan's 
experience following the scandal over BNFL's falsification of safety 
data on MOX fuel, and following the accidents at Monju and Tokai, all 
of which have delayed Japan's plutonium programs by many years, makes 
this point clear. If anything, plutonium recycling is much more 
vulnerable to external events than reliance on once-through use of 
uranium.

                        REPOSITORY SPACE SUPPLY
 
   Perhaps the most important single argument for GNEP's focus on 
recycling is the belief that there will never be a second nuclear waste 
repository in the United States, so we need to figure out a way to pack 
all the nuclear waste from decades of a growing nuclear energy 
enterprise into the Yucca Mountain repository.\21\
---------------------------------------------------------------------------
    \21\ For a cogent version of this argument for recycling, see Per 
F. Peterson, ``Will the United States Need a Second Repository?'' The 
Bridge, Vol. 33, No. 3, pp. 26-32, Fall 2003.
---------------------------------------------------------------------------
    The size of a repository needed for a given amount of waste is 
determined not by the volume of the waste but by its heat output. If 
the proposed long-term GNEP approach met all of its technical goals for 
removing and transmuting the actinides that generate much of the long-
term heat it could indeed make it possible to dramatically expand the 
capacity of the proposed Yucca Mountain repository.\22\ Few of the 
technical goals required to achieve this objective have yet been 
demonstrated, however.
---------------------------------------------------------------------------
    \22\ Roald A. Wigeland, Theodore H. Bauer, Thomas H. Fanning, and 
Edgar E. Morris, ``Separations and Transmutation Criteria to Improve 
Utilization of a Geologic Repository,'' Nuclear Technology, Vol. 154, 
April 2006, pp. 95-106.
---------------------------------------------------------------------------
    It is important to understand that traditional approaches to 
reprocessing, with one round of MOX recycling, would not have this 
benefit. Because of the build-up of heat-emitting higher actinides when 
plutonium is recycled, the total heat output of the waste per kilowatt-
hour generated may actually be somewhat higher--and therefore the 
needed repositories larger and more expensive--when disposing of HLW 
from reprocessing and spent MOX fuel after one round of recycling than 
it is for direct disposal of LEU spent fuel.\23\ The spent MOX could in 
principle be reprocessed for transmutation in fast reactors, but that 
would require success in developing appropriate transmutation fuels and 
reactors.
---------------------------------------------------------------------------
    \23\ See, for example, Brian G. Chow and Gregory S. Jones, 
``Managing Wastes With and Without Plutonium Separation'', Report P-
8035 (Santa Monica, CA: RAND Corporation, 1999). Some other studies 
suggest a modest benefit (perhaps 10 percent) from one round of 
reprocessing and recycling: the differences depend on detailed 
assumptions about such matters as how long the spent fuel or 
reprocessing wastes would be stored before being emplaced in a 
repository, how long active cooling in the repository is assumed to 
continue, and the like.
---------------------------------------------------------------------------
    In any case, repository space, like uranium, is a more plentiful 
resource than GNEP advocates have argued. Means to increase the 
quantity of spent fuel that can be emplaced in Yucca Mountain while 
remaining within thermal limits are only now being examined seriously, 
and the latest estimates indicate that the Yucca Mountain repository 
can almost certainly hold over 260,000 tons of spent fuel (an amount 
that would not exist until well into the latter half of the century 
even with rapid nuclear growth); it may well be able to hold 570,000 
tons or more.\24\ As researchers at the Electric Power Research 
Institute put it: ``Thus, it is possible for Yucca Mountain to hold not 
only all the waste from the existing U.S. nuclear power plants, but 
also waste produced from a significantly expanded U.S. nuclear power 
plant fleet for at least several decades.'' \25\
---------------------------------------------------------------------------
    \24\ ``Program on Technology Innovation: Room at the Mountain--
Analysis of the Maximum Disposal Capacity for Commercial Spent Nuclear 
Fuel in a Yucca Mountain Repository'' (Palo Alto, Calif: Electric Power 
Research Institute, May 2006, available as of 12 September 2006 at 
http://www.epriweb.com/public/000000000001013523.pdf)
    \25\ ``Program on Technology Innovation: Room at the Mountain''.
---------------------------------------------------------------------------
    Moreover, whatever the merits of the repository-space argument, it 
applies primarily--or possibly only--to the United States. Only the 
United States has chosen a repository site inside a mountain with fixed 
boundaries, whose capacity therefore cannot be increased indefinitely 
by simply digging more tunnels. Most other countries are examining 
sites in huge areas of rock, where the amount of waste from centuries 
of nuclear waste generation could be emplaced at a single site, if 
desired.\26\ For this reason, measuring quantities of spent fuel in 
``Yucca Mountain equivalents'' is highly misleading; if, in fact, a 
second repository is ever needed, it is unlikely that the Nation will 
again make the mistake of choosing one that is not readily expandable.
---------------------------------------------------------------------------
    \26\ Granite formations do often have faulting in some areas that 
could limit the total area that could be used at a particular 
repository site--but sites will presumably be chosen to be far from 
nearby faults, and very large amounts of total material can be emplaced 
at typical sites of this type. Even at Yucca Mountain, there are other 
mountain ridges in the same area that have similar geology, and could 
potentially be defined as part of the ``same'' repository. Ultimately 
the issue is less the technical limits on repository capacity than the 
political limits on how much material can be emplaced at a particular 
location.
---------------------------------------------------------------------------
    This argument for recycling and transmutation is based on the 
questionable assumption that while it would be very difficult to gain 
public acceptance and licensing approval for a second repository, it 
would not be very difficult to gain public and regulatory approval for 
the complex and expensive spent fuel processing and transmutation 
facilities needed to implement this approach--including scores of 
advanced burner reactors. This assumption appears very likely to be 
wrong. Reprocessing of spent fuel has been fiercely opposed by a 
substantial section of the interested public in the United States for 
decades--and the real risks to neighbors from a large above-ground 
reprocessing plant performing daily processing of spent fuel are 
inevitably larger than those from nuclear wastes sitting quietly deep 
underground. Similarly, there seems little doubt that licensing and 
building the new reactor types required would be an enormous 
institutional and political challenge.
    The proposed GNEP approaches are an extremely expensive way to 
solve the problem, if there is one. The recent Harvard study concluded 
that if, as recent international reviews suggest, the more complex 
separations involved in a transmutation approach would be somewhat more 
expensive than traditional reprocessing, and fabrication of the 
intensely radioactive transmutation fuels would be somewhat more 
expensive than traditional MOX fabrication, and if the needed 
transmutation reactors or accelerators would have a capital cost 
roughly $200/kWe higher than that of comparably advanced one-through 
systems (a quite optimistic assumption, given past experience), then 
separations and transmutation for this purpose would not be economic 
until the cost of disposal of spent fuel reached some $3,000 per 
kilogram of heavy metal, many times its current level.\27\
---------------------------------------------------------------------------
    \27\ Bunn, Fetter, Holdren, and van der Zwaan, ``The Economics of 
Reprocessing'', pp. 64-65.
---------------------------------------------------------------------------
    The repository-space argument for recycling is also based on a 
further questionable assumption--that even decades in the future, when 
repository space has become scarce and reactor operators become willing 
to pay a substantial price for it, it will still not be possible to 
ship spent fuel from one country to another for disposal. (This is an 
odd assumption given GNEP's simultaneous emphasis on fuel leasing, 
involving countries shipping back spent fuel to the state that provided 
it.) If, in fact, repository capacity does become scarce in the future, 
reactor operators will likely be willing to pay a price for spent fuel 
disposal well above the cost of providing the service, and it seems 
quite likely that if the potential price gets high enough, the 
opportunity for enormous profit will motivate some country with an 
indefinitely-expandable repository to overcome the political obstacles 
that have blocked international storage and disposal of spent fuel in 
the past, and offer to accept spent fuel from other countries on a 
commercial basis. (It is worth noting that Russia has already passed 
legislation approving such imports of foreign spent fuel, though the 
prospects for implementation of that project remain uncertain.) \28\
---------------------------------------------------------------------------
    \28\ For an extensive discussion of the political history and 
prospects for such concepts, see Chapter 4 of Matthew Bunn et al., 
``Interim Storage of Spent Nuclear Fuel: A Safe, Flexible, and Cost-
Effective Near-Term Approach to Spent Fuel Management'' (Cambridge, 
Mass.: Project on Managing the Atom, Harvard University, and Project on 
Sociotechnics of Nuclear Energy, Tokyo University, 2001; available at 
http://bcsia.ksg.harvard.edu/BCSIA_content/documents/spentfuel.pdf as 
of 18 May 2006).
---------------------------------------------------------------------------
    In short, once-through approaches will likely be able to provide 
sustainable uranium supply and repository space supply for a growing 
nuclear energy enterprise around the world for many decades or more, 
with costs and environmental impacts lower than or comparable to those 
of the proposed GNEP approaches.

        COMMERCIAL-SCALE DEMONSTRATIONS AND THE GNEP R&D PROGRAM

    A substantial R&D program to develop improved approaches to nuclear 
energy is justified. Such a program should include R&D on optimized 
approaches to spent fuel management, including both improved once-
through approaches and recycling approaches. These efforts should be 
based on in-depth life-cycle systems analysis of different potential 
options, both to choose which approaches may be best and to identify 
the most important technical objectives for the R&D effort.
    Unfortunately, however, DOE appears to be shifting its GNEP efforts 
to focus on building commercial-scale facilities, without having 
completed either the R&D on relevant technologies or the detailed 
systems analyses needed to make wise choices. In the request for 
expressions of interest issued in August, DOE envisions building a 
reprocessing and fuel fabrication plant known as the Consolidated Fuel 
Treatment Center (CFTC) with a capacity to process 2,000-3,000 tons of 
spent fuel per year--roughly three times the capacity of the largest 
single plants that currently exist--and an advanced burner reactor 
(ABR) that might have a capacity of 200-800 MWe.\29\ In response to 
questions from industry, DOE indicated that it hoped to begin 
construction of such facilities in 2010, only 4 years from now.\30\ The 
subcommittee, in considering what direction to give DOE on this 
proposed approach and whether to appropriate the many billions of 
dollars that would be required to build these facilities, should ask a 
number of questions:
---------------------------------------------------------------------------
    \29\ U.S. Department of Energy, ``Notice of Request for Expressions 
of Interest in a Consolidated Fuel Treatment Center to Support the 
Global Nuclear Energy Partnership,'' Federal Register, 7 August 2006, 
Vol. 71, No. 151, pp. 44676-44679, and U.S. Department of Energy, 
``Notice of Request for Expressions of Interest in an Advanced Burner 
Reactor to Support the Global Nuclear Energy Partnership,'' Federal 
Register, 7 August 2006, Vol. 71, No. 151, pp. 44673-44676.
    \30\ U.S. Department of Energy, ``Q&As From August 14, 2006 GNEP 
Industry Briefing,'' available as of 12 September 2006 at 
www.gnep.energy.gov/gnepCFTCABREOIBriefingQAs.
html.
---------------------------------------------------------------------------
  --Even under the very optimistic assumptions of the BCG report, would 
        it not be reasonable to estimate that the cost of building the 
        CFTC and the ABR would be in the range of $20 billion? \31\
---------------------------------------------------------------------------
    \31\ The BCG report estimates that a facility of the same scale 
proposed for the CFTC would have an overnight capital cost of over $16 
billion, not counting interest during construction or decommissioning. 
BCG, ``Economic Assessment of Used Nuclear Fuel Management in the 
United States'', p. 16. As described in the appendix to this testimony, 
the BCG figures are unrealistically optimistic. The cost to develop and 
build the ABR would certainly be in the billion-dollar range.
---------------------------------------------------------------------------
  --Is it not likely that cost estimates will grow substantially as the 
        project proceeds, if it does? Can DOE provide any recent 
        example of a DOE project of comparable scale and complexity 
        that did not suffer the kind of cost growth that has afflicted 
        the Hanford vitrification project and the Savannah River MOX 
        plant?
  --How does DOE expect to finance these costs? From appropriations? 
        From the Nuclear Waste Fund? If the latter, would sufficient 
        funds remain for Yucca Mountain?
  --Is there any previous example in DOE's history in which the 
        department successfully built and operated--or financed the 
        construction and operation of--a commercial-scale facility of 
        this complexity?
  --What is DOE's past record of success and failure in picking winners 
        among a range of possible technologies for commercial 
        deployment? Why should we believe that this approach will be 
        suitable in this case?
  --What life-cycle systems analyses of cost, safety, security, 
        sustainability, and proliferation-resistance led DOE to 
        conclude that this proposed approach is preferable to other 
        options? What independent review has there been of these 
        analyses? Can DOE provide those analyses?
  --What life-cycle analyses has DOE performed of management of the 
        low-level and transuranic wastes that will be generated by 
        these facilities, including from their eventual 
        decommissioning? Would any of these wastes have to be disposed 
        of in Yucca Mountain or WIPP? If so, how does this affect 
        estimates of the increase in repository capacity that could be 
        achieved?
  --Does a decision to move immediately toward deployment of 
        commercial-scale facilities mean that promising technologies 
        still requiring significant development cannot be seriously 
        considered for use in these major facilities? What factors led 
        DOE to conclude it was time to choose available technologies 
        and begin building facilities rather than continuing to pursue 
        R&D on a range of potential separations, fabrication, and 
        reactor technologies?
  --What impact will building huge facilities using existing 
        technologies have on R&D on long-term technologies? Is it 
        likely that DOE will receive sufficient funding both to proceed 
        directly to construction of these large facilities and to 
        continue a robust research program on a wide range of 
        technologies? Is it likely that building these large facilities 
        would take money, personnel, and leadership focus away from 
        long-term R&D?
  --What does DOE believe this investment would buy us? How can the 
        technologies to be pursued simultaneously be so mature that we 
        can go straight to construction of commercial-scale facilities 
        and so immature that they require demonstration? Does this 
        proposal amount to spending billions of dollars to build these 
        facilities before completing the R&D that would make it 
        possible to know whether they would ever have the hoped-for 
        repository benefits? If the CFTC is not expected to produce 
        transmutation fuels, and R&D on appropriate separations, 
        fabrication, and reactor technologies for transmutation is 
        still under way, how confident can we be that once built, these 
        facilities will prove to be what is needed for the 
        transmutation mission? What does DOE plan to do if further 
        analysis and R&D leads to the conclusion that these facilities 
        are poorly suited to that mission?
  --What would the proliferation impacts be of building these 
        facilities? What independent review has been done of those 
        impacts?
  --Since processing 2,000-3,000 tons of spent fuel each year would 
        provide some 20-30 tons of plutonium, while the ABR would 
        likely require less than 1 ton per year, what does DOE plan to 
        do with the rest of the product of the CFTC? Given that DOE is 
        planning to spend billions of dollars on disposition of some 50 
        tons of excess plutonium, is there a danger of adding that 
        amount to DOE's stockpile every 2 years?
  --Is it really likely that the complex separations involved in UREX+, 
        which have only been demonstrated on a kilogram scale, could be 
        scaled to processing thousands of tons of spent fuel per year 
        without any intermediate steps? If not, would a facility be 
        built that uses PUREX or COEX? If so, what then happens to the 
        objectives of separating and transmuting all of the actinides, 
        or providing a process with improved proliferation resistance 
        (which the subcommittee has rightly emphasized must be 
        maintained in the development of recycling technologies)?
    As these questions suggest, I believe that what is needed now is 
patient R&D and in-depth systems analysis, rather than a rush to build 
big facilities. As Richard Garwin has put it, by picking winners 
prematurely, the proposed GNEP approach ``would launch us into a costly 
program that would surely cost more to do the job less well than would 
a program at a more measured pace guided by a more open process.''\32\
---------------------------------------------------------------------------
    \32\ Richard L. Garwin, ``R&D Priorities for GNEP,'' testimony to 
the U.S. House of Representatives, Committee on Science, Subcommittee 
on Energy, 6 April 2006.
---------------------------------------------------------------------------
                            RECOMMENDATIONS

    What, then, should we do? I recommend the following steps:
  --(1) Focus First on Interim Storage.--Whatever option we pursue, 
        additional interim storage capacity will be needed. Storing 
        spent fuel in dry casks leaves all options open for the future, 
        as technology develops and political and economic circumstances 
        change. (Indeed, since the Yucca Mountain repository will 
        remain open for a century or more, even direct disposal will 
        leave all options open for a long time to come.) At least some 
        centralized storage capacity is needed to address particular 
        needs; whether nearly all of the spent fuel should be moved to 
        a centralized away-from-reactor site or site depends on a 
        number of factors that require further analysis. Here, too, we 
        should not let frustration with the current state of affairs 
        prevent us from taking the time to get it right: a rushed 
        process for siting and licensing such facilities is a recipe 
        for public opposition and ultimate failure, adding to the long 
        history of failed attempts to site centralized interim storage 
        facilities in the United States. In a 2001 study, we provided a 
        detailed outline of a democratic and voluntary process for 
        siting such facilities, based on approaches that had been 
        applied successfully in siting other hazardous and unwanted 
        facilities, and I would urge that such an approach be followed 
        here.\33\ I am pleased, Mr. Chairman, that you have encouraged 
        the American Physical Society to examine these issues in depth.
---------------------------------------------------------------------------
    \33\ Bunn et al., ``Interim Storage'', pp. 95-116.
---------------------------------------------------------------------------
  --(2) Pursue a broad R&D program to improve spent fuel management.--
        Someday, recycling technologies may be developed which are 
        substantially cheaper and more proliferation-resistant than 
        those now available. R&D should be pursued to explore such 
        possibilities. In parallel, there should also be R&D on 
        improved approaches to direct disposal.\34\ As the technologies 
        develop, we should regularly re-examine which of them appear to 
        offer the best combination of cost, safety, security, 
        proliferation-resistance, and sustainability. At the same time, 
        we should not allow an expansion of nuclear R&D to overwhelm 
        R&D on other promising energy technologies: the United States 
        urgently needs to undertake expanded investments in a wide 
        range of energy R&D.
---------------------------------------------------------------------------
    \34\ For a discussion, see Garwin, ``R&D Priorities for GNEP.'' For 
a discussion of R&D that should be pursued on improved once-through 
options, see Deutch, Moniz, et al., ``The Future of Nuclear Power''.
---------------------------------------------------------------------------
  --(3) Build political sustainability.--As it takes decades to develop 
        and fully implement nuclear technologies, stable government 
        policies are crucial to success. Stable policies require some 
        degree of bipartisan consensus. The current GNEP effort has 
        devoted virtually no noticeable effort to developing such 
        bipartisan support. Without it, the probability of failure is 
        high. In my judgment, approaches based on interim storage, 
        continued R&D on a wide range of options, and continued forward 
        movement toward a permanent repository have far better chances 
        of being politically sustainable than approaches focused on 
        near-term construction of reprocessing plants and fast neutron 
        reactors.
  --(4) Move forward deliberately with the Yucca Mountain repository.--
        Whether we ultimately pursue once-through or recycling options, 
        we will ultimately need a repository. We should move forward 
        with that effort, again taking the time to get the analysis 
        right and to build as much support as we practicably can.
  --(5) Develop and analyze first, build later.--Today, technologies 
        that might someday be able to meet the technical objective of 
        transmuting nearly all of actinides remain in their infancy; 
        some, like UREX+, have been demonstrated only on a kilogram 
        scale, while others, like fabrication of transmutation fuels or 
        construction of fast reactors with very low conversion ratios, 
        we do not yet know are feasible. At the same time, detailed 
        life-cycle systems analyses of the cost, safety, security, 
        proliferation-resistance, and sustainability of the proposed 
        technologies, compared to those of similarly advanced once-
        through systems, have not yet been done. To construct major 
        facilities without first doing these system analyses is like 
        choosing which car to buy without knowing the cost, gas 
        mileage, reliability, or safety performance of any of the 
        models available. GNEP should focus intensely on the kind of 
        systems analysis that can reveal which options have critical 
        flaws and where the greatest opportunities for R&D lie, 
        including accelerating the development of improved systems 
        analysis tools. Large-scale reprocessing and transmutation 
        facilities should not be built until detailed analysis has 
        indicated that they offer a combination of cost, safety, 
        security, proliferation-resistance, and sustainability superior 
        to potential alternatives, including direct disposal. 
        Independent review is an important part of such analyses, and 
        of building bipartisan support. As a first step, I recommend 
        that in conference, the subcommittee accept the House language 
        calling for an in-depth peer review of the entire fuel 
        recycling plan by the National Academies before any expensive 
        facilities are built.
  --(6) Increase the focus on other key elements of GNEP.--As noted 
        earlier, the proposal to offer reliable guarantees of fuel 
        supply and spent fuel management, in order to help convince 
        countries to forego building their own reprocessing and 
        enrichment facilities, is extremely important and should 
        receive even more attention and effort than it has to date. 
        Similarly, the GNEP elements related to developing advanced 
        safeguards technologies and small, rapidly deployable reactors 
        for deployment in developing countries should be pursued more 
        vigorously. Neither received funding in the President's budget 
        request, and I commend the subcommittee for seeking to correct 
        that omission.
  --(7) Redouble key efforts to stem the spread of nuclear weapons 
        materials and technologies. The U.S. Government should 
        significantly increase its efforts to: (a) limit the spread of 
        reprocessing and enrichment technologies, as a critical element 
        of a strengthened nonproliferation effort; (b) ensure that 
        every nuclear warhead and every kilogram of separated plutonium 
        and highly enriched uranium (HEU) worldwide are secure and 
        accounted for, as the most critical step to prevent nuclear 
        terrorism; \35\ (c) work with other countries to put in place 
        strengthened export controls and greatly strengthened 
        intelligence and law enforcement cooperation focused on illicit 
        nuclear trafficking, to smash what remains of the A.Q. Khan 
        network and prevent a recurrence; (d) convince other countries 
        to end the accumulation of plutonium stockpiles, and work to 
        reduce stockpiles of both plutonium and HEU around the world.
---------------------------------------------------------------------------
    \35\ For detailed recommendations, see Matthew Bunn and Anthony 
Wier, ``Securing the Bomb 2006'' (Cambridge, Mass., and Washington, DC: 
Project on Managing the Atom, Harvard University, and Nuclear Threat 
Initiative, July 2006, available as of 16 July 2006 at http://
www.nti.org/securingthebomb).
---------------------------------------------------------------------------
    In short, I recommend that we follow the advice of the bipartisan 
National Commission on Energy Policy, which reflected a broad spectrum 
of opinion on energy matters generally and on nuclear energy in 
particular, and recommended that the United States should:
  --(1) ``continue indefinitely the U.S. moratoria on commercial 
        reprocessing of spent nuclear fuel and construction of 
        commercial breeder reactors'';
  --(2) establish expanded interim spent fuel storage capacities ``as a 
        complement and interim back-up'' to Yucca Mountain;
  --(3) proceed ``with all deliberate speed'' toward licensing and 
        operating a permanent geologic waste repository; and
  --(4) continue research and development on advanced fuel cycle 
        approaches that might improve nuclear waste management and 
        uranium utilization, without the huge disadvantages of 
        traditional approaches to reprocessing.\36\
---------------------------------------------------------------------------
    \36\ National Commission on Energy Policy, ``Ending the Energy 
Stalemate: A Bipartisan Strategy to Meet America's Energy Challenges'' 
(Washington, DC: National Commission on Energy Policy, December 2004, 
available as of June 9, 2005, at http://www.energycommission.org/
ewebeditpro/items/O82F4682.pdf), pp. 60-61.
---------------------------------------------------------------------------
    Similar recommendations have been made in the MIT study on the 
future of nuclear energy,\37\ and in the American Physical Society 
study of nuclear energy and nuclear weapons proliferation.\38\
---------------------------------------------------------------------------
    \37\ Deutch, Moniz, et al., ``The Future of Nuclear Power''.
    \38\ Nuclear Energy Study Group, American Physical Society Panel on 
Public Affairs, ``Nuclear Power and Proliferation Resistance: Securing 
Benefits, Limiting Risk'' (Washington, DC: American Physical Society, 
May 2005, available as of 16 July 2006 at http://www.aps.org/
public_affairs/proliferation-resistance).
---------------------------------------------------------------------------
    The global nuclear energy system would have to grow substantially 
if nuclear energy was to make a substantial contribution to meeting the 
world's 21st century needs for carbon-free energy. Building the support 
from governments, utilities, and publics needed to achieve that kind of 
growth will require making nuclear energy as cheap, as simple, as safe, 
as proliferation-resistant, and as terrorism-proof as possible. 
Reprocessing using any of the technologies likely to be available in 
the near term points in the wrong direction on every count.\39\ Those 
who hope for a bright future for nuclear energy, therefore, should 
oppose near-term reprocessing of spent nuclear fuel.
---------------------------------------------------------------------------
    \39\ For earlier discussions of this point, see, for example, John 
P. Holdren, ``Improving U.S. Energy Security and Reducing Greenhouse-
Gas Emissions: The Role of Nuclear Energy,'' testimony to the 
Subcommittee on Energy and Environment, Committee on Science, U.S. 
House of Representatives, 25 July 2000, available as of 16 July 2006 at 
bcsia.ksg.harvard.edu/
publication.cfm?program=CORE&ctype=testimony&item_id=9; and Matthew 
Bunn, ``Enabling A Significant Future For Nuclear Power: Avoiding 
Catastrophes, Developing New Technologies, Democratizing Decisions--And 
Staying Away From Separated Plutonium,'' in ``Proceedings of Global 
'99: Nuclear Technology--Bridging the Millennia'', Jackson Hole, 
Wyoming, August 30-September 2, 1999 (La Grange Park, Ill.: American 
Nuclear Society, 1999, available as of 16 July 2006 at 
bcsia.ksg.harvard.edu/
publication.cfm?program=CORE&ctype=book&item_id=2).
---------------------------------------------------------------------------
    APPENDIX: BRIEF CRITIQUE OF THE BOSTON CONSULTING GROUP STUDY, 
  ``ECONOMIC ASSESSMENT OF USED NUCLEAR FUEL MANAGEMENT IN THE UNITED 
                                STATES''

    In July 2006, the Boston Consulting Group (BCG) published a report 
which concluded that the costs of reprocessing and recycling spent 
nuclear fuel in the United States would be ``comparable'' to the costs 
of direct disposal of spent nuclear fuel.\40\ This conclusion was in 
stark contrast to those of most other recent studies, which concluded 
that reprocessing and recycling would significantly increase the costs 
of spent fuel management.\41\ The BCG study, however, makes a wide 
range of unjustified assumptions, and its cost estimates should not be 
used as the basis for policy-making. The real cost of reprocessing and 
recycling in the United States would almost certainly turn out to be 
far higher than the costs estimated in the BCG report.
---------------------------------------------------------------------------
    \40\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. vi.
    \41\ See sources cited in the main text, and other sources cited 
therein.
---------------------------------------------------------------------------
    Indeed, the BCG study itself appears to agree that it should not be 
used as the basis for policy-making. After acknowledging that the study 
was initiated and paid for by Areva, the firm that operates France's 
reprocessing plants, and that BCG made no attempt to verify any of the 
data provided by Areva, the study warns: ``Any other party [than Areva] 
using this report for any purpose, or relying on this report in any 
way, does so at their own risk. No representation or warranty, express 
or implied, is made in relation to the accuracy or completeness of the 
information presented herein or its suitability for any particular 
purpose.'' \42\
---------------------------------------------------------------------------
    \42\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. iv.
---------------------------------------------------------------------------
    The BCG conclusions float on a sea of optimistic assumptions:
  --BCG assumes a unit cost for both reprocessing and MOX fabrication 
        of $630/kgHM (undiscounted), far lower than current plants have 
        managed to achieve for either process.\43\ (BCG provides, for 
        example, an interesting chart showing that their estimate for 
        reprocessing cost per kilogram is roughly one-third the cost 
        actually achieved in France.\44\) As they put it themselves, 
        one of the ``key differentiating elements'' between their study 
        and other studies is ``integrated plant costs significantly 
        lower than previously published data.'' \45\
---------------------------------------------------------------------------
    \43\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. 15.
    \44\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. 17.
    \45\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. 14.
---------------------------------------------------------------------------
  --By contrast, the current effort to use Areva technology and plant 
        designs in the United States--the construction of a MOX plant 
        at Savannah River--is leading to unit costs several times 
        higher than those achieved in France.\46\ This experience is 
        not mentioned in the BCG report, and no argument is offered as 
        to why the projected facility will have a cost result that is 
        the opposite of the real experience.
---------------------------------------------------------------------------
    \46\ For a discussion of the remarkable cost growth of the Savannah 
River MOX plant, see, for example, Subcommittee on Strategic Forces, 
Committee on Armed Services, ``Plutonium Disposition and the U.S. Mixed 
Oxide Fuel Facility'', U.S. House of Representatives, 109th Congress, 
2nd Session (26 July 2006; available at http://www.house.gov/hasc/
schedules/as of 10 August 2006). See also U.S. Department of Energy, 
Office of the Inspector General, ``Audit Report: Status of the Mixed 
Oxide Fuel Fabrication Facility'', DOE/IG-0713 (Washington, DC: 2005; 
available at http://www.ig.doe.gov/pdf/ig-0713.pdf as of 26 May 2006).
---------------------------------------------------------------------------
  --They reach these extremely low-unit cost estimates for their 
        projected plant by using a large number of dubious assumptions:
    --They envision a reprocessing and MOX fabrication plant far larger 
            than any other such plant that exists in the world, 
            processing 2,500 tons of spent fuel every year (compared to 
            800 tons per year in the largest single plants that have 
            been built to date).
    --They assume that plant capacity can be scaled up dramatically 
            with only a minor increase in capital or operating cost. 
            They note that the capital cost of the existing French 
            facilities was $17.8 billion (in 2005 dollars), but they 
            assume that the capacity can be increased by more than 50 
            percent (assuming, generously, that the two La Hague plants 
            should be considered to have a combined capacity of 1,600 
            tons of heavy metal per year) with an additional capital 
            cost of only $1.5 billion, less than 10 percent of the 
            original capital cost.\47\
---------------------------------------------------------------------------
    \47\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. 16.
---------------------------------------------------------------------------
    --They assume that the plant will always operate at nearly full 
            capacity with no technical problems and no contract delays. 
            No reprocessing plant or MOX plant in the world has ever 
            done so.
    --Indeed, they apparently assume that there will never be a lag in 
            fuel fabrication, since, to save money, they cut out all 
            funding for having a plutonium storage area.\48\ In France, 
            by contrast, tens of tons of plutonium have built up in 
            storage as a result of lags in the use of this plutonium as 
            fuel.
---------------------------------------------------------------------------
    \48\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. 52.
---------------------------------------------------------------------------
    --With a hugely increased plant capacity compared to existing 
            plants, far higher plant utilization than existing plants, 
            and very small increases in capital and operating costs to 
            achieve these vast increases in throughput, it is not 
            surprising that they find that the cost per kilogram of 
            spent fuel processed would be much lower than the cost in 
            existing plants. This is simply not a realistic estimate, 
            however, of what the real costs would be likely to be if 
            such a plant were built and operated in the United States.
    --Interestingly, the capital cost they acknowledge for the existing 
            French plants is higher than the estimates used in our 2003 
            study;\49\ had they taken this actual experience as the 
            basis for estimating future costs, they would have found 
            reprocessing and MOX prices higher than those used in our 
            study, not lower.
---------------------------------------------------------------------------
    \49\ Based on published data, we envisioned a reprocessing plant 
that cost some $6 billion and a MOX plant with a capital cost of 
roughly $540 million; for two such reprocessing plants and a MOX plant, 
the total capital cost would then be in the range of $12.5 billion. The 
BCG study reports that the real capital cost of the two reprocessing 
plants in France (with official capacities identical to the one we 
considered) and the MOX plant in France (with an official capacity only 
modestly higher than the plant we considered) was in fact $17.8 
billion, a substantially higher figure than those we used. BCG, 
``Economic Assessment of Used Nuclear Fuel Management in the United 
States'', p. 16.
---------------------------------------------------------------------------
    --BCG also makes dubious assumptions about the disposal and 
            management costs of different types of nuclear waste. They 
            argue that because of the lower long-term heat generation 
            from reprocessing waste, compared to spent fuel, four times 
            as much reprocessing waste could be placed in each unit 
            area of the repository, and therefore they assume that 
            total per-kilogram disposal costs would be only one-quarter 
            as large.\50\ As we noted in our 2003 study, however, only 
            a portion of total disposal costs are likely to be driven 
            by heat and repository capacity; with a four-fold 
            repository expansion, a two-fold reduction in cost per 
            kilogram is more appropriate.\51\ At the same time as they 
            take a four-fold cost reduction for the lower heat 
            generation from reprocessing wastes, they assume that the 
            management cost for spent MOX fuel would be the same as for 
            spent LEU fuel, despite the far higher heat generation of 
            spent MOX fuel, the greater difficulty in reprocessing it, 
            and the much more radioactive nature of the fuel that would 
            be manufactured from it.\52\ They acknowledge that 
            disposing of the MOX spent fuel in the repository would 
            effectively eliminate the repository benefit of the entire 
            effort, because of the very high heat generation of the 
            MOX; managing the spent MOX would require fast reactors and 
            other technologies not included in their study.\53\
---------------------------------------------------------------------------
    \50\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. 18.
    \51\ Bunn, Fetter, Holdren, and van der Zwaan, ``The Economics of 
Reprocessing'', pp. 34-45.
    \52\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. 20.
    \53\ BCG, ``Economic Assessment of Used Nuclear Fuel Management in 
the United States'', p. 20.
---------------------------------------------------------------------------
  --In 1996, in the National Academy of Sciences (NAS) review of 
        recycling and transmutation technologies, the NAS committee 
        criticized paper estimates that predicted similarly low costs 
        per kilogram for reprocessing, and concluded that the actual 
        costs of real plants ``provide the most reliable basis for 
        estimating the costs of future plants.'' \54\ BCG appears to 
        have ignored this advice.
---------------------------------------------------------------------------
    \54\ Committee on Separations Technology and Transmutation Systems, 
``Nuclear Wastes: Technologies for Separations and Transmutation'', p. 
421.
---------------------------------------------------------------------------
  GOVERNMENT FINANCING AND THE GOVERNMENT'S ROLE IN THE FUEL INDUSTRY

    BCG also assumes that the plants they envision will be financed 
entirely by the government, at a 3 percent real rate of return. This 
assumption is crucial to their conclusions, as the costs of such a 
capital-intensive facility would increase dramatically if a higher (and 
more realistic) rate were chosen. As we noted in our 2003 study, if a 
reprocessing plant were built that had the same capital and operating 
costs and nameplate capacity as Britain's Thermal Oxide Reprocessing 
Plant (THORP), whose costs are generally similar to those of the French 
plants at La Hague, which are the basis for the BCG estimates, and the 
plant were financed at such a government rate, it would have a 
reprocessing cost in the range of $1,350 per kilogram of heavy metal in 
spent fuel (kgHM), if it successfully operated at its full capacity 
throughout its life with no interruptions (a far cry from the real 
experience, but the same assumption used in the BCG study). (By 
contrast, as already noted, BCG assumes $630/kgHM for both reprocessing 
and MOX fabrication combined.) But if the exact same plant were 
financed privately, at the rates the Electric Power Research Institute 
recommends assuming for power plants owned by regulated utilities with 
a guaranteed rate of return (and therefore very low-risk), the unit 
cost would be over $2,000/kgHM. If financed by a fully private entity 
with no guaranteed rate of return, the cost for the same facility would 
be over $3,100/kgHM.\55\ (That is without taking into account the 
large-risk premium the capital markets would surely demand for a 
facility whose fate was so dependent on political decisions; all three 
of the commercial reprocessing plants built to date in the United 
States failed for such reasons.)
---------------------------------------------------------------------------
    \55\ Bunn, Fetter, Holdren, and van der Zwaan, ``The Economics of 
Reprocessing'', pp. 26-34.
---------------------------------------------------------------------------
    The entire approach, in short, is only financially feasible if it 
is fully government-financed. But for the government to own and operate 
a facility that would not only reprocess spent fuel but manufacture new 
MOX fuel on the scale they envision--providing a significant fraction 
of all the fuel for U.S. light-water reactors--would represent an 
immense government intrusion on the private nuclear fuel industry. The 
implications of such an approach have not been examined. The coal 
industry and the gas industry would surely ask, ``if nuclear can get 
facilities to handle its waste financed at a 3 percent government rate, 
why can't we get the same thing for our environmental controls or 
carbon sequestration?''

                               CONCLUSION

    The real costs achieved at real facilities provide the best guide 
to likely future costs of reprocessing and recycling in the United 
States. These costs are far higher than those assumed in the BCG study 
for an integrated U.S. plant. Policies should not be based on assuming 
that costs comparable to those in the BCG study are likely to be 
achieved in the real world.

    Senator Domenici. Thank you very much. I know that there 
are those at the table who would like to take some time 
disagreeing with you.
    Mr. Bunn. I'm sure that's correct.
    Senator Domenici. I'm hopeful that everybody would 
recognize that there's not been an editing with his views and 
others at the table or in my current years as the chairman, to 
the extent that I've been able to arrive at some conclusions. I 
don't see eye-to-eye with the imminent Dr. Bunn. I think we 
will be right back where we've been and mainly we'll get 
nothing done in this area. Having said that we're going to move 
to Mr. Fletcher and then we're going to go to questions. Please 
proceed.

STATEMENT OF KELLY FLETCHER, GE GLOBAL RESEARCH, 
            SUSTAINABLE ENERGY ADVANCED TECHNOLOGY 
            LEADER
    Mr. Fletcher. Thank you Mr. Chairman. I'll be brief in my 
remarks so we can continue that discussion with Mr. Bunn.
    Chairman Domenici, Mr. Bennett, it is a pleasure to be here 
to discuss General Electric Company's potential contribution to 
the Global Nuclear Energy Partnership, with the Power Reactor 
Innovative Small Module, or PRISM Reactor Technology. In my 
previous role as GE's General Manager of Nuclear Technology, I 
had the opportunity to establish the foundation for utilizing 
this fast reactor technology. My testimony will provide a 
detailed summary of this technology and its potential role in 
meeting the objectives of GNEP.
    GE is especially interested in GNEP because it provides the 
policy framework for solving two of the more serious challenges 
impacting the nuclear industry today: Waste and proliferation. 
The advanced recycling center concept, put forth in our 
response to Department of Energy's requests, proposes our 
integrated solution-based approach.
    Today, I've been asked to focus my remarks on the advanced 
reactor GE has developed, PRISM. In 1984, DOE began the 
Advanced Liquid Metal Reactor Program. GE led seven industry 
partners to refine the conceptual design of the PRISM Reactor. 
The program was funded through 1994. Two products emerged from 
the expenditure of approximately $100 million in funding. The 
PRISM Reactor design, and the proliferation resistant PYRO 
process for spent fuel recycle.
    Following the discontinuation of the program, GE continued 
to develop a more advanced modular fast reactor design called 
SuperPRISM or SPRISM. The SPRISM design improved the commercial 
potential of PRISM through increased power output and reduced 
costs. These improvements enabled an estimated capital cost of 
a SuperPRISM to be $1,335 per kilowatt electric in 1998 
dollars. PRISM is an advanced fast neutron spectrum, reactor 
plant design with passive reactor shut down, passive shut down 
heat removal, and passive reactor cavity cooling. PRISM 
supports a sustainable and flexible fuel cycle to consume 
transuranic elements within the fuel as it generates 
electricity. The essence of the reactor technology is a reactor 
core, housed within a stainless steel vessel. Liquid sodium is 
circulated within the reactor vessel and through the reactor 
core by four electromagnetic pumps suspended from the reactor 
closure. Two intermediate heat exchangers inside the reactor 
vessel remove heat for electrical generation.
    Reports delivered to the government during the advanced 
metal reactor program, by the National Laboratories and the GE-
led team, document this technology. The nuclear regulatory 
commission issued a report, NR-1368, titled, ``A Preapplication 
Safety Evaluation Report for the PRISM Liquid Metal Reactor'', 
dated February 1994, that stated, and I quote, ``The staff with 
the advisory committee on reactor safeguards in agreement 
concludes that no obvious impediments to licensing the PRISM 
design have been identified.''
    GE has the infrastructure and the processes to build the 
PRISM reactor with a ``Made in America'' stamp. PRISM can be 
deployed now on a commercial scale, generating a return on its 
investment by putting electricity on the grid, using GE's 
state-of-the-art management tools. We have proven this in our 
deployment of the advanced boiling water reactor abroad and GE 
hopes to continue this tradition with the deployment of both 
ABWR and ESBWR in the United States in the near term.

                           PREPARED STATEMENT

    Our Nation has already made much of the necessary 
investment in facilities, analysis, research, and 
experimentation on the design and development of fast reactors, 
now called the Advanced Burner Reactor. The National 
Laboratories has amassed extensive documentation and proof of 
the PRISM concept, its safety, and its viability. We should 
take advantage of this wealth of knowledge and expertise and 
move ahead with this available technology to deploy a 
commercial scale advanced burner reactor. If we do so, we 
reduce the need for additional geologic storage capacity. GNEP 
provides a unique opportunity to regain the historical U.S. 
leadership position in nuclear science and technology.
    Thank you for the time before this committee; this 
concludes my formal statement.
    [The statement follows:]

                  Prepared Statement of Kelly Fletcher

    Mr. Chairman, Senator Reid, and members of the committee, it is a 
pleasure to be here today to discuss General Electric Company's 
potential contribution to the Global Nuclear Energy Partnership (GNEP) 
program with the Power Reactor Innovative Small Module or ``PRISM'' 
reactor technology. In my previous role as GE's General Manager of 
Nuclear Technology, I had the opportunity to establish the foundation 
for utilizing this fast reactor technology. My testimony will provide a 
detailed summary of this technology and its potential role in meeting 
the objectives of the GNEP program.
    This is a significant period for our country as we advance into a 
possible nuclear energy renaissance. GE supports the GNEP concept and 
is very interested in working with this committee and the Department of 
Energy to realize the goals of GNEP. In so doing, we can make real and 
significant contributions to U.S. and international energy security 
needs. GE is especially interested in GNEP because it provides the 
policy framework for solving two of the more serious challenges 
impacting the nuclear industry today: waste and proliferation. The 
Advanced Recycling Center concept put forth in our response to the 
Department of Energy's request for Expressions of Interest for the 
Advanced Burner Reactor (ABR) and the Consolidated Fuel Treatment 
Center (CFTC) proposes our solution-based approach.
    The Department of Energy has developed a broad implementation 
strategy for GNEP comprised of seven key elements. GE sees these 
elements grouped into two broad categories: technical and programmatic.
    GNEP Technical Elements:
  --Demonstrate proliferation-resistant recycling;
  --Develop advanced burner reactors;
  --Demonstrate small-scale reactors;
  --Minimize nuclear waste.
    GNEP Programmatic Elements:
  --Expand the use of nuclear power;
  --Develop enhanced nuclear safeguards;
  --Establish reliable fuel services.
    While demonstration of proliferation-resistant fuel recycling is 
the crux of GNEP, we believe the first three technical elements can be 
best accomplished through a partnership between private industry and 
the government. The fourth follows with success in advancing the fuel 
cycle and ABR deployment. Accomplishment of the GNEP technical elements 
will ``pull'' the programmatic elements to success.
    I have been asked to focus my remarks on the advanced reactor GE 
has developed--PRISM. That PRISM technology directly supports two key 
technical elements critical to GNEP success:
  --Demonstrate an advanced burner reactor, and
  --Demonstrate a small-scale reactor.
    The PRISM can provide the energy to generate electricity while 
``burning'' spent fuel from our Nation's 103 operating light water 
reactors (LWR) as well as future LWRs. Because of its relative small 
size and its inherently safe encapsulated design, PRISM can be factory 
built and transported to the site.
    To assist the committee in fully understanding this technology, my 
testimony will cover three areas:
  --A historical overview of the origins of PRISM;
  --The PRISM technology itself, developed with the support of funding 
        provided by the committee; and,
  --A PRISM (or SuperPRISM) deployment roadmap for the committee's 
        consideration.

                          HISTORICAL OVERVIEW

    A preliminary safety information document referencing the PRISM 
design was released by the U.S. Nuclear Regulatory Commission (NRC) in 
February 1994. NUREG-1368 noted that ``. . . the staff, with the 
[Advisory Committee on Reactor Safeguards] in agreement, concludes that 
no obvious impediments to licensing the PRISM ([Advanced Liquid Metal 
Reactor]) design have been identified.''
    In the early 1980's, the Liquid Metal Fast Breeder Reactor program 
focused on deployment of the Clinch River Breeder Reactor (CRBR) in 
Tennessee. The program encountered difficulties because of cost 
escalations and schedule delays. The LMR program faced challenges 
because uranium was not becoming scarce and prohibitively expensive as 
earlier had been predicted.
    While the CRBR project was being debated, a small group at GE's 
Advanced Reactors program pursued a technology other than large loop 
sodium reactors. At the time, the 1,000 MWt CRBR was envisioned as the 
stepping-stone to 3,000 MWt ``commercial'' plants--the scale thought 
necessary to be economically competitive with the large light water 
reactors. GE questioned the economics of large fast reactors, and 
conducted internal work based on alternative small modular reactor. 
This small reactor, with rated power in the range of 400 to 1,000 MWt 
could provide stair step plant power levels by adding reactor modules 
at a site to reach economic and power generation goals. This was the 
genesis of GE's Power Reactor Innovative Small Module--PRISM.
    In August 1981, representatives from the Argonne National 
Laboratory's Special Project Office visited the Advanced Reactor team. 
We explained the idea that our relatively small PRISM reactor vessel 
could be transported to a refueling center about every 18 months. ANL 
explained their in-core refueling machine process for the Experimental 
Breeder Reactor II. It became apparent that rather than moving an 
entire reactor, technology was available to move just the fuel. From 
this synergistic meeting with the national laboratory, the concept of 
PRISM matured.
    When Congress terminated the CRBR project in 1983, DOE began the 
Advanced Liquid Metal Reactor program. The goal of the ALMR program was 
to increase the efficiency of uranium usage by breeding plutonium and 
create the condition wherein transuranic isotopes would never leave the 
site. The ALMR was designed to allow any transuranic isotope to be 
consumed as fuel, and is the forerunner to the GNEP framework we have 
today.
    GE competed for leadership of the ALMR program against another fast 
reactor technology. GE won the competition and joined the ALMR program 
with its two key elements: reactor design and fuel cycle development. 
GE led seven industry partners to refine the conceptual design of the 
PRISM reactor. The national laboratories, led principally by ANL, 
tackled the fuel cycle development and waste characterization with 80 
percent of the ALMR funding.
    The ALMR program was funded from 1984 to 1994. Two products emerged 
from the expenditure of approximately $100 million in government funds: 
the advanced conceptual PRISM reactor design and the highly 
proliferation resistant pyroprocess for spent fuel recycle. At the 
point at which the ALMR program was terminated, the PRISM design was 
less than 5 years from construction contracting. Figure 1 shows the 
typical power plant site design developed as a part of the ALMR 
program. 



    A major outcome from this early work on PRISM, focused on safety 
and economics, was the possibility of deploying a small reactor 
competitive with large light water reactors. The PRISM designers 
evaluated light water reactor systems such as defense in depth, active 
intervention system, and active emergency backups, and developed a 
passive, inherently safe design that did not depend upon control rods 
to SCRAM (immediate shut down of the reactor), back up emergency 
systems, etc.
    The passive safety philosophy developed with PRISM has been 
transferred to advanced light water reactor designs. DOE designates 
these reactor designs as GENERATION III+. At GE, we call ours the 
ESBWR. For example GE's ESBWR relies on gravity for both core and 
containment cooling, therefore providing passive safety.
    Following the discontinuation of DOE's ALMR program, GE continued 
to develop a more advanced modular fast reactor design called 
SuperPRISM, or SPRISM. The thermal rating of each reactor module was 
increased to 1,000 MWt from the PRISM's original 840 MWt. The 
SuperPRISM design sought to further improve upon the commercial 
potential of PRISM with:
  --increased power output;
  --compact reactor building on single seismically isolated base pad;
  --multi-cell containment system; and
  --improved steam cycle efficiency.
    These improvements enabled an estimated capital cost of $1,335/kWe, 
with a busbar cost of 29.0 mills/KWh for the two-power-block plant with 
a net plant output of 1520 MWe (capital cost and busbar cost in 1998 
dollars).
    This history demonstrates that the national laboratories and 
private industry learned a great deal from the Clinch River Breeder 
Reactor project and the follow-on Advanced Liquid Metal Reactor 
project. GE was privileged to lead a very talented industrial team.
    PRISM is an important technology that America has already largely 
developed. I will now describe the details of the technology.

                            PRISM TECHNOLOGY

    PRISM is an advanced fast neutron spectrum reactor plant design 
with passive reactor shutdown, passive shutdown heat removal, and 
passive reactor cavity cooling. PRISM supports a sustainable and 
flexible fuel cycle to consume transuranic elements within the fuel as 
it generates electricity. The essence of the reactor technology is a 
reactor core housed within a 316 stainless steel reactor vessel. Liquid 
sodium is circulated within the reactor vessel and through the reactor 
core by four electromagnetic pumps suspended from the reactor closure 
head. Two intermediate heat exchangers (IHX) inside the reactor vessel 
remove heat for electrical generation.
    The PRISM technology is deployed as a power block with two reactors 
side by side supporting a single steam turbine generator set. The plant 
is divided into two areas: the nuclear island (reactors through steam 
generators) and balance of plant (steam turbine to generate 
electricity). The nuclear island is two reactors in separate 
containments, plus steam generators, and shared services, in a single, 
seismically isolated, partially buried building as depicted in the 
cutaway view of a PRISM nuclear island shown in Figure 2. Each reactor 
heats an intermediate coolant loop, sending heat to a steam generator. 
Steam from the steam generators is combined and sent to the balance of 
plant, where a single turbine generator produces electricity. Figure 3 
shows the overall PRISM power train that converts transuranics into 
electricity.
    I will now provide some additional details of the components that 
make up the power block.



Reactor Core
    GE's extensive fuel cycle evaluations indicate a preference for 
metal fuel. This fuel type best consumes transuranics, recycles spent 
nuclear fuel and destroys weapons grade material. The reactor core, 
however, can use either a metal fuel or an oxide-based fuel without 
changes to the reactor structure or refueling system.
    As noted in the history described above, PRISM core power can range 
from 800 to 1,000 MWt. Metal fuel bundles allow a higher heavy metal 
fraction in the fuel resulting in a lower fissile enrichment and better 
internal transmutation compared to oxide fuel. Thus, the metal fuel 
core could satisfy nuclear goals with fewer fuel assemblies and a more 
compact core. The fission gas plenum is located above the fuel column. 
Upper axial shielding is provided by the long fission gas plenum region 
and the sodium pool above the core. Lower axial shielding is provided 
by long pin end plugs. Reflector assemblies contain pin bundles of 
solid HT9 rods.
Intermediate Heat Transport System (IHTS)
    The IHTS is located within the reactor vessel. The internal 
electromagnetic pumps (EMP)--pumps with no moving parts that move 
conductive fluids by way of a magnetic field--circulate the molten 
sodium through the reactor core and then to the IHTS. Another sodium 
loop, a closed loop system, transports the reactor generated heat to 
the steam generator (SG) system by circulating non-radioactive sodium 
between the Intermediate Heat Exchangers (IHX) and the SG. The hot leg 
sodium is transported in pipes from the two IHXs to a single SG. Two 
high temperature EMPs in the cold legs return the sodium to the IHX 
units at 350 C. The high temperature secondary EMPs are similar to 
the ones used inside the reactor core.
Steam Generator (SG) System
    The steam generator (SG) system is comprised of the startup 
recirculation tank/pump, leak detection subsystem, steam generator 
isolation valves, sodium dump tank, and the steam generator. The SG 
provides a high integrity pressure boundary to assure separation 
between the sodium and water/steam. The SG is a vertically-oriented, 
helical coil, sodium-to-water counter flow shell-and-tube heat 
exchanger. This basic design was developed over 15 years in the ALMR 
program. Further, a 76 MWt prototype SG was fabricated and tested at 
the DOE Energy Technology Engineering Center for 4 years. Based on this 
development work, testing, and GE trade studies, this design was 
selected as the reference design for SPRISM. This SG design also 
provides passive protection from the effects of a significant sodium/
water reaction.
    Functionally the steam generator operates as follows. Water enters 
the steam generator through four non-radial inlet nozzles at the 
bottom. Water is heated as it flows upward through the inlet tubes, 
helical coil tube bundle, and the outlet tubes connecting the tube 
bundle to four outlet nozzles sending steam to the turbine. The helical 
coil design features a longer tube length resulting in fewer tubes. Hot 
sodium enters the steam generator through a single inlet nozzle at the 
top. The sodium is distributed uniformly and flows downward around the 
helical coil bundle at low velocity, which provides a large design 
margin against flow-induced vibrations.
    The system detects any water-to-sodium leaks in the SG and can 
identify the approximate size of the leak. The steam side isolation 
valves and the sodium blowdown tank rapidly separate water/steam and 
sodium--stopping the reaction. Gas backfilling prevents backflow of 
sodium. If this system fails, an innovative design feature using the 
gas space inside the SG and rupture disks provide increased steam 
venting capability to prevent steam from being forced backward into the 
sodium flow.
    This helical coil steam generator design provides high reliability, 
availability, and safety.

Reactor Vessel Auxiliary Cooling System (RVACS)
    The Reactor Vessel Auxiliary Cooling System (RVACS) provides 
ultimate passive cooling for the reactor if all other methods are 
unavailable. It is always ``on'' since it utilizes natural circulation 
of sodium and air, constantly removing a small amount of heat (<0.5 
MWt) from the reactor modules. Radiant heat transfer is employed to 
transfer heat from the reactor vessel, through the containment vessel, 
and then to the naturally circulating air.
    When RVACS is required for decay heat removal, natural circulation 
of primary sodium carries heat from the core to the reactor vessel. As 
the temperature of the reactor sodium and reactor vessel automatically 
rise, the radiant heat transfer across the argon gap to the containment 
vessel increases to accommodate the heat load. With the increase in 
containment vessel temperature, the heat transfer from the containment 
vessel to the atmospheric air surrounding the containment vessel 
increases.
    The inherent safety features are the circulation patterns, which 
follow the basic laws of physics. They are constant, and the natural 
airflow can be easily confirmed, which gives us transparent safety.

Containment
    The containment system envisioned for PRISM would use three 
successive barriers--fuel cladding, primary coolant boundary (reactor 
vessel cutaway view shown in Figure 4), and a containment boundary that 
surrounds the reactor vessel--to provide defense-in-depth from 
postulated releases from the reactor vessel. The containment boundary 
is a steel lined concrete upper structure that encloses the reactor 
module as shown in Figure 2. Controlled venting from the containment 
region above one of the reactors in the power block into a service cell 
(between each reactor of the power block) would relieve the containment 
boundary system pressure. If necessary the service cell can vent into 
the reactor containment boundary of the other unit(s) in the power 
block. This multi-cell approach reduces containment system expense 
while improving safety.
    What is unique about the PRISM reactor is that the reactor vessel 
is positioned below grade in a concrete silo--a fourth containment 
boundary (Figure 2). In the beyond credible event of containment 
breach, the sodium complies with the natural law of gravity and is 
contained in the silo. Its relatively simple construction process also 
reduces cost.
    The PRISM reactor design benefits from testing of prototype steam 
generators and electromagnetic pump at DOE's Energy Technology and 
Engineering Center. The reactor vessel design and material selection 
benefit from the standards and testing conducted during the Clinch 
River Breeder Reactor Program. A Probabilistic Risk Assessment (PRA) 
was completed as part of the design evaluation to ensure its 
reliability and public safety. The PRA meets the NRC safety goals for 
core damage frequency, includes potential design improvements, and 
developed baseline fault models for future use by the NRC.
    This body of component testing, advanced design, and safety 
philosophy mitigates technical risk if PRISM is deployed for GNEP's 
ABR.



                    PRISM TECHNOLOGY FOR THE FUTURE

    We stand today at a major energy policy juncture. As Deputy 
Secretary of Energy Clay Sell stated before the committee in March, 
``[GNEP] is a comprehensive strategy that would lay the foundation for 
expanded use of nuclear energy in the United States and the world by 
demonstrating and deploying new technologies that recycle nuclear fuel, 
significantly reduce waste, and address proliferation concerns.''
    GNEP's underlying principal is that LWR spent nuclear fuel is an 
asset to be managed using fast reactor technology. PRISM technology is 
synergistic in this respect because it consumes transuranics produced 
by our current fleet of LWRs. During that consumption, electricity is 
produced. GE believes PRISM is the fast reactor technology to best 
manage this spent nuclear fuel asset.
    GNEP is about deployment of a nuclear reactor with a different 
coolant. This coolant, sodium, allows different reactor performance 
characteristics, beneficial for the intended mission. At this point, 
the key issues in deployment of this new technology are related to 
design, codes, and standards. If the government chooses to deploy a 
PRISM reactor to achieve the goals of GNEP, the work that remains is 
really about nuts and bolts project engineering and management--the 
technology is ready to be deployed. GE is ready to leverage our 
commercial expertise in reactor plant design and construction to 
support deployment of a PRISM reactor as part of GNEP.
    GE has experience in taking government research results from the 
Nuclear Reactor Testing Station, Idaho--the BORAX reactors--and 
developing and commercializing the Boiling Water Reactor from initial 
reactor tests. This technology commercialization was accomplished with 
public-private partnerships. Today's PRISM technology deployment 
requires the same working partnership. With expanding demand for 
domestically produced non-carbon emitting energy, and the fuel supply--
spent nuclear fuel--tied to government ownership, only a public-private 
partnership can make GNEP happen.
    In 1965 GE started the SEFOR (Southwest Experimental Fast Oxide 
Reactor) project in Arkansas to develop first-hand design, 
construction, and operational experience for a commercial-scale liquid 
metal reactor. A remarkable aspect of SEFOR was that the total 8-year 
program was described in detail in the initial contract and, except for 
minor variations, was carried out exactly as planned. Contrast the 
successful SEFOR project to the Clinch River Breeder Reactor project.
    The success of SEFOR provides an important lesson. At GE we are 
proud of our past contributions to fast reactor development in this 
country. PRISM technology has been extensively researched using both 
Federal and private industry funding. A wealth of documentation and 
expertise is available from the national laboratories and industry. GE 
has the infrastructure and the processes to build the PRISM with a 
``Made in America'' stamp. PRISM can be deployed now on a commercial 
scale--generating revenue by putting electricity on the grid--using 
GE's state-of-the-art management tools. We have proven this in our 
deployment of ABWR abroad, and GE hopes to continue this tradition with 
the deployment of both ABWR and ESBWR in the United States in the near 
term.

Records and Documentation
    ``Prototype Plan'' (GEFR-0933) December 1993--one of many documents 
delivered to the government in the early 1990's--presented what looks 
very similar to the current GNEP ``plan.'' It proposed a system with 
three subsystems--reactor power plant, fuel recycle facilities, and the 
LWR actinide recycle facilities. The estimated cost for the reactor 
subsystem and safety testing was estimated then at $1.6 billion. This 
estimate accounted for the difference between the standard plant and 
the prototype, which must support running the safety tests and fuel 
testing until NRC certification is granted.
    The NRC licensing approach defined in ``Licensing Approach'' (GEFR-
00842, UC-87Ta) presents a process and schedule for achieving standard 
design certification. The ``Certification Test Plan'' (GEFR-0808[DR], 
UC-87Ta) identifies all testing needed for the design certification. 
``1993 Capital and Bus Bar Cost Estimates'' (GEFR-0915, UC-87Ta) 
provides a bottom-up capital cost and bus bar estimate. As part of 
these earlier efforts, GE delivered documents on exactly how to 
fabricate the reactor vessel, test fuel, build steam generators, etc. 
As I stated before, NUREG-1368, Preapplication Safety Evaluation Report 
for the Power Reactor Innovative Small Module (PRISM) Liquid Metal 
Reactor, Final Report, February 1994, stated that, ``. . . the staff, 
with the ACRS in agreement, concludes that no obvious impediments to 
licensing the PRISM (ALMR) design have been identified.''
    The confluence of GE processes and project management with this 
wealth of ALMR documentation (requiring relatively little updating) 
provides significant input for a systematic path forward for GNEP.

Reactor Fuel Qualification
    We recognize the need to perform rigorous qualification of the new 
fuel forms available for PRISM. We recommend establishing a ``Fuel 
Team'' to provide integration between GE and DOE's national 
laboratories to develop technologies to separate and fabricate fast 
reactor transmutation fuel. This team approach will insure qualifying 
transuranic fuel that meets the project schedule, and is both cost-
effective and reliable. In order make a cost-effective and reliable 
driver fuel, GE believes it should be based on the U-Zr or the U-Pu-Zr 
fuel used at EBR-II, because of the considerable operational 
experience.
    The prototype PRISM reactor would incorporate more instrumentation 
than would be employed in subsequent commercial units in order to 
measure fuel temperature and flux in support of the fuel qualification 
program. Both DOE's national laboratories and GE could conduct the fuel 
examinations.
    The PRISM reactor is the best vehicle for fuel qualification since 
it has more in-core positions for fuel testing and operates that fuel 
at prototypical conditions.

Resources Required for Public-Private Partnership
    Two areas deserve consideration by this committee to assure success 
of GNEP:
  --A multi-year funding commitment for reactor construction to 
        mitigate cost risk, consistent with other DOE energy programs.
  --Access by the GNEP prime contractor to information developed by the 
        national laboratories applicable to PRISM. Some examples are:
    --Heat transfer correlations for Reactor Vessel Auxiliary Heat 
            Removal System water simulations tests for confirming the 
            in-reactor sodium flow paths to expedite validation 
            simulations using new CFD codes.
    --Electromagnetic pump electrical insulation material testing data 
            to finalize pump design.
    --Post-test evaluations of the seismic isolation bearings to 
            support the detailed design process for the seismic 
            isolation system.
    --Support to recover the EM pump at the Energy Technology 
            Engineering Center.
  --The total R&D cost for the PRISM development was estimated to be 
        $300 million in 1998. Some examples of this R&D identified in 
        NUREG-1368 are:
    --Seismic Isolation.--The PRISM design uses seismic isolation 
            bearings. The response of buildings with these installed 
            bearings is needed to support ABR seismic code validation. 
            International cooperation with France and Japan, which also 
            have used this seismic isolation design, can provide 
            additional empirical data.
    --Fuel System.--TRU metal-fuel development, supported by in-reactor 
            and ex-reactor experiments.
    --Thermal Hydraulics.--New analytical tools will be developed for 
            core thermal hydraulics.
    --Heat Exchanger.--Evaluation of the Intermediate Heat Exchanger 
            System gimbaled joints.

                                SUMMARY

    Our Nation has already made much of the necessary investment in 
facilities, analysis, study, research and experimentation on the design 
and deployment of fast reactors (now called the Advanced Burner 
Reactor). The national laboratories have amassed extensive 
documentation and proof of the PRISM concept, its safety, and its 
viability. We should take advantage of that wealth of knowledge and 
expertise, and move ahead with this available technology to deploy a 
commercial scale advanced burner reactor, the PRISM. Importantly, in 
contrast to current reactors that require outsourcing of components 
because of their size, the key elements of PRISM small module reactor 
technology--including the reactor vessel, the steam generator and the 
steam turbine--are capable of being fabricated domestically. As the 
last U.S. publicly owned reactor vendor, GE is ready, if tasked by our 
government, to move forward.
    In his testimony before the committee this spring, Deputy Secretary 
Sell succinctly defined our Nation's status on nuclear energy and the 
potential for PRISM technology:

    ``. . . nuclear energy by itself is not a silver bullet for energy 
supply, in the world or for the U.S. and we need all technologies to 
address the anticipated growth in demand for energy. Regardless of the 
steps the U.S. takes, nuclear energy is expected to continue to expand 
around the globe.
    ``We can continue down the same path that we have been on for the 
last thirty years or we can lead a transformation to a new, safer, and 
more secure approach to nuclear energy, an approach that brings the 
benefits of nuclear energy to the world while reducing vulnerabilities 
from proliferation and nuclear waste. We are in a much stronger 
position to shape the nuclear future if we are part of it and hence, 
GNEP. GNEP is a program that looks at the energy challenges of today 
and tomorrow and envisions a safer and more secure future, encouraging 
cooperation between nations to permit peaceful expansion of nuclear 
technology while helping to address the challenges of energy supply, 
proliferation, and global climate change.''

    PRISM is a technology that can close the nuclear fuel cycle using 
the energy contained in our Nation's spent nuclear fuel. PRISM can 
generate stable base load electricity to help meet our growing 
electricity needs and enhance our energy security. As we do so, we 
reduce the need for additional geologic storage capacity. GNEP provides 
a unique opportunity to regain the historical U.S. leadership position 
in nuclear science and technology.
    Thank you. This concludes my formal statement. I would be pleased 
to answer any questions you may have at this time.

    Senator Domenici. Thank you very much.
    Well, I have a series of questions and I'll get them 
started, and where they'll lead, I don't know. I know Assistant 
Secretary Spurgeon and Dr. Hanson would probably like to 
comment on the record; there's some areas where you disagree 
with Mr. Bunn's testimony. Is that a fair estimate of where we 
are? I don't quite know how to get that done in an hour and a 
half and be fair with it, but I'm going to start with a couple.

                       ADVANCED REACTORS PROGRAM

    Advanced reactors--can we talk about that for just a 
minute? In his paper, ``Assessing the Benefits, Costs and Risks 
of Near Term Reprocessing and Alternatives,'' Mr. Bunn states 
that the Department's schedule for design, construction and 
licensing of a prototype advance reactor is, he uses a nice 
word, absurd. Do you agree with Mr. Bunn's characterization of 
the Advanced Reactor Program, and if you do, why? And if you 
don't, why not? Assistant Secretary Spurgeon and then Dr. 
Hanson.
    Mr. Spurgeon. Well, I certainly hope that we have not--nor 
would we at any point in time--propose something that would be 
``absurd'', sir. However, the precise schedule is not laid out 
for the operation of an advanced reactor. We do recognize that 
there is research and development that needs to be done, and 
that is being proposed, especially when it comes to the ability 
of an advanced reactor to burn fuel containing minor actinides. 
That kind of fuel has not been qualified yet, that is the 
subject of our major R&D program that we are proposing to carry 
out.
    However, I think on the worldwide scale, we must look at 
what other countries are doing, and what they have 
accomplished. India is scheduled to put a fairly substantial 
fast reactor online in 2010. France has announced a next 
generation, or a next fast reactor to go online in 2020. We're 
looking at Japan that has one in operation, and another that is 
now shut down, but is planned to go back in operation quite 
shortly, and the United States put a great deal of effort, 
including what was just described here by General Electric, in 
research and development into fast reactor programs. We did--we 
have operated fast reactors in this country--going back to the 
first electricity ever generated in this country, it was 1950 
or 1951 with a fast reactor. EBR-II following that, FFTF 
following that. Clinch River--although it was cancelled--was a 
fairly major program in this country, so we're not starting 
from scratch, nor is this some pipe dream that we're pulling 
out of the air. We recognize there's much work to do to recycle 
actinides. But we do not accept that this is something that 
cannot be done in cooperation with industry and the 
international community.
    Senator Domenici. Dr. Hanson?
    Dr. Hanson. I would certainly concur with Assistant 
Secretary Spurgeon's comment that the development of fast 
reactors and deployment of such a fast reactor or burner is not 
absurd. However, I would note that in his comments, we are 
talking about singular cases, and not a large fleet of such 
reactors. I believe that we can develop a prototype semi-
commercial reactor and deploy it in a reasonable time frame, 
and use that as a test bed to see how well it will work both at 
burning actinides, and at generating electricity, which may 
turn out to be conflicting goals for a single reactor. It 
remains to be seen how well it will do on both functions.
    But if we talk about a commercial group of ABRs in the 
quantities necessary to deal with the output of spent fuel, 
this is going to take decades because our utility community 
does not move overnight to produce dozens of reactors. If we 
look at the nuclear renaissance right now, 2015 is the earliest 
date that we are projecting for the addition of the first new 
reactor and it is a minor variation on our existing light water 
reactor technology.
    So, where I would agree with Mr. Bunn, a fleet of such 
reactors will not be available, I certainly would disagree that 
we should not move forward on it--we certainly should move 
forward to develop that prototype as early as possible, because 
that will lead to the fleet soon, maybe decades later.
    Mr. Bunn. Just to defend myself briefly, I never said that 
building a fast neutron reactor in this country was absurd, 
what I said was the kinds of schedules that DOE laid out, for 
example, in the Q&As at the industry briefing, where they 
envisioned beginning construction in 2010, simply couldn't be 
plausibly achieved. This is a major change in the kind of 
reactor that we're building in this country. There's no one at 
the Nuclear Regulatory Commission that yet has experienced 
licensing a fast reactor, the notion that we're going to have a 
license to begin construction in 2010, I think is not very 
likely, let's put it that way.
    Mr. Spurgeon. I'm not aware that we have said we're going 
to begin construction of a fast reactor in 2010, so----
    Mr. Bunn. Look on your website.
    Senator Domenici. All that comment is about what you can't 
do is built on the premise that you did not make. I assume 
that's what you were saying.

                   SCHEDULE AND COST IMPACTS TO GNEP

    We move ahead now to a couple of subjects--GNEP changes 
impact on schedule and budget--can I talk about that with you 
for a minute?
    Since the introduction of the President's budget which 
unveiled GNEP, the Department's schedule and vision has evolved 
from an R&D-intensive program that included developing and 
engineering a design scale demonstration before moving to a 
commercial scale facility. The Department unveiled its two-
track strategy for GNEP; the first track would be to develop a 
commercial scale spent fuel recycled facility and advanced 
burner reactor.
    The second path would focus on longer-term R&D to support 
transmutation fuel, development for the use in the burner 
reaction. Can you please tell the committee what factors led to 
change in DOE's position to move forward with the immediate 
commercial deployment and was it a change in technology? Go 
ahead.
    Mr. Spurgeon. Mr. Chairman, first, the basic strategy that 
was first implemented is still in place. It was a very R&D-
oriented strategy, we do still need that same R&D. We don't 
have today, nor can we, nor are we in a position to 
commercialize the actinide-bearing fuel recycle that is 
envisioned as part of GNEP.
    And in the original strategy it was always envisioned that 
industry would be involved for the commercialization of this 
technology. What we are really looking at is what is needed 
between the research and development, and the commercial step, 
and can we use--in some cases--existing facilities that exist 
in our national laboratories to do some of the test work, 
leading to the point where we can get to a commercial-scale 
facility.
    What we are asking industry for, and what they are 
beginning to provide by the expressions of interest, is where 
do they think they can help pick us up in that program to get 
us to that commercial stage? So, I don't view this as a change, 
I view this as looking at the relative roles in developing any 
nuclear technology. The government role being the research and 
development on new technology; the industrial role being the 
implementation of that technology, and we're trying to see if 
we can do that in a more cost-effective and schedule-effective 
way.
    Senator Domenici. Dr. Hanson, in his testimony Dr. Bunn 
criticized the economic assumptions of the Boston Consulting 
Group in estimating the cost to build and operate the recycling 
facility.
    He says the cost of the two smaller facilities in France, 
which have 50 percent less capacity, will cost the same as the 
proposed U.S. facility. How do you respond to the criticism 
that he is thus lodging regarding the economic assumptions? And 
Mr. Bunn, do you have anything further to add? First, Dr. 
Hanson.
    Dr. Hanson. Thank you. Let me start by saying that I have a 
good deal of respect for the study that was produced by Harvard 
in 2003, which Matt Bunn was one of the authors. And I suspect 
that if the Boston Consulting Group had been given the exact 
information that was used to produce that report in 2003, they 
might very well have come up with a similar conclusion.
    However, a lot has changed since 2003. More importantly, 
the Boston Consulting Group is the only group which has ever 
been given complete access to the commercial, technical, 
financial and operational data that has been acquired by 
operating the La Hague and Melox facilities. Based on that 
data, they produce a grounds-up estimate of what it would cost, 
in their view, to produce a large recycling plant in the United 
States. They stand by their number, they are perfectly willing 
to defend it, and I must say that this is their study, not 
AREVA's, although we did commission the study, and we 
facilitated it by providing information.
    Now, with the specific criticism with regard to the size of 
the facility, one of the--it is first of all a misconception--
the capacity of the existing La Hague facility is not 1,500. In 
fact, I can't give you a precise number, because a process 
facility like this can be pushed well beyond its design 
capability, what we do know is that the ultimate capacity of 
those two plants together is in the vicinity of 1,500 to 2,000 
metric tons, not 1,500. So this is not a doubling of the 
capacity in the study.
    But very significant is that we are talking in the Boston 
Consulting Group study about building one facility, instead of 
two facilities of half the size. And I can tell you that the 
economies of scale associated from going from two smaller 
plants to a single one far outweigh the cost disadvantages or 
additional costs associated with building a larger facility. 
This is why we built large refineries, why we build large 
chemical plants, why the next generation of light water 
reactors are, in turn, going to be very large. So, that 
criticism is, I think, a little bit misstated.
    Furthermore, there are parts of the facility at La Hague 
which do not need to be scaled at all. A good example is the 
receipt and acceptance pools of the plant, which are so large--
they are larger than is needed to put maybe 4,000 or 5,000 tons 
of fuel through the plant. So, there's a significant fraction 
of the existing facility which does not need to be scaled at 
all, and therefore there are no additional costs associated 
with it.
    Again, I do not want to be in a situation of dueling 
studies, I think the study produced--given the data that they 
had to work with and the time in which it was done--is still a 
credible study. However, I believe that the BCG study, given 
the data that they used and today's environment, is just as 
credible, and probably more so.
    Senator Domenici. Thank you. Thank you very much.
    Mr. Bunn. I think both studies are using essentially the 
same kinds of mathematics, and actually the data we are looking 
at is not that different. I think that the key differences have 
to do with the degree of optimism about the ability to scale up 
very drastically and the scale of the facility for relatively 
modest costs, and the likelihood that you will have the huge 
through put rates and sort of the complete utilization of the 
facility that they assume. They assume, basically, that the 
facility will always be operating at close to capacity 
throughout its life, for birth and MOX fabrication and the 
reprocessing--they're so confident of that they actually take 
out having any plutonium storage area, whereas in France, for 
example, many tens of tons of plutonium have built up in 
storage as a result of lags in fabrication.
    We are left, we believe--as the National Academy of 
Sciences review concluded--that the most reliable predictors of 
the cost of future facilities is, in fact, the experience of 
past facilities, and that's more what we relied on. And, so, I 
think those assumptions about sort of being able to 
continuously operate, never having a contract delay and so on 
and being able to scale up dramatically with relatively modest 
increases in cost are the key differences between the two 
studies, fundamentally.

                          INDUSTRY INVOLVEMENT

    Senator Domenici. Thank you very much. Mr. Secretary, can I 
get back----
    Mr. Spurgeon. Yes, sir.
    Senator Domenici [continuing]. I'll make this point.
    You changed course here in August--can you once again, 
discuss with me and for this record here--what's that all 
about?
    Mr. Spurgeon. I prefer not to say ``change course'', sir.
    Senator Domenici. What do you want to call it?
    Mr. Spurgeon. I prefer to say that we are involving 
industry and their capabilities perhaps earlier than might have 
been the case prior to that point in time, because we believe 
that there are portions of this technology that are ready for 
industry to pursue. And what I was saying before is, there's 
definite role here between what should be done by the 
government and our associated national laboratories and what 
can then be done by industry. But along the way, perhaps some 
of that can go in parallel, where the parts that industry can 
do to get started now, rather than waiting for all of the R&D 
to be complete before they're involved in a major way. And 
that's what we're really trying to do, is to work in parallel--
that's the focus on, if you recall, two tracks. It's getting 
industry started with what they can do now, while we're going 
ahead on the research and development on those areas that we 
don't have ready for----
    Senator Domenici. How will this have an impact on the 
overall schedule--will it?
    Mr. Spurgeon. We hope that it will allow the schedule to be 
done in a more timely--and also, ultimately--a more cost-
effective way. Especially, perhaps in limiting the amount of 
Federal dollars that could be involved.

                        SUPPORT OF NUCLEAR POWER

    Senator Domenici. I'm going to stay with you just for a 
minute longer--I sense in some of that testimony here by Dr. 
Bunn that he isn't living in the same age I am in reference to 
support for nuclear power. He's still talking about things like 
we need support for certain things. Well, I already think the 
Nation is far ahead of that, there is more support for nuclear 
power now than we ever thought. The signal in terms of public 
support is, get on with it. And it's pretty high both for the 
things we're doing, and everything that we can find out from 
the public is that they would prefer that we go with nuclear, 
rather than sit where we have for the last 25 to 30 years.
    In your requests for bids, for what you would put out for 
areas, tell us what kind of responses, generally, and what the 
feeling appears to be of the areas that are submitting 
applications to you?
    Mr. Spurgeon. Well, I think what we're finding is that 
there is a willingness on the part--and this is in several 
regions of the country--to support the idea of locating these 
fuel cycle facilities in their region. And that's very 
positive, because as you know for many technologies, and not 
just nuclear, the idea of ``not in my backyard'' can be very 
strong. But we have found a willingness on the part of people 
to not just say, ``Well, if you force us to, we'll take it. But 
on the contrary, or to the contrary, we would like to have 
it.'' And that, I think, is a positive. And understand, the 
kind of facilities we're talking about--whether it be interim 
process storage, whether it be the recycling facility, whether 
it be the burner reactor--are very clean, very non-emitting 
kind of facilities that can be very good neighbors for these 
communities.
    Senator Domenici. Yes, that's true, but in the past the 
procession of skeptics that proceeded that factual presentation 
to the areas had already poisoned the mind against these 
activities, even if they are clean.
    Mr. Spurgeon. And I think, as you know, in your State we 
have just licensed and now construction has started on a fuel 
cycle facility on the national enrichment facility.
    Senator Domenici. Yes, it occurred in 30 months.
    Mr. Spurgeon. It occurred on time from a licensing 
standpoint, which I think is a good harbinger for our ability 
to effectively license new nuclear facilities in a timely way.
    Senator Domenici. And on the expressions of interest that 
went out, you got many responses saying, ``Come to our area.''
    Mr. Spurgeon. Yes, we did.
    Senator Domenici. And some of those had politicians 
joining, didn't they?
    Mr. Spurgeon. That's correct. That's correct, and I think 
that's very important because where these facilities go, should 
be to areas that want to have them.
    Senator Domenici. Now, I've been sitting here all this time 
and thinking that you would ask me if you wanted to ask 
questions but I didn't do that, and I'm very apologetic.
    Senator Allard. Not at all, Mr. Chairman. I've been 
fascinated by the discussion that you've triggered here. But I 
would like to ask a few questions.
    Senator Domenici. Please do.
    Senator Allard. Good, thank you. And I'll stay out of this 
fight. I'll let the chairman handle that.
    Senator Domenici. There is no fight. We have a majority and 
a minority and this fellow over here whose name begins with a 
B----

                          GNEP CHANGE IN SCOPE

    Senator Bennett. Okay, well my name begins with a B.
    Senator Allard. Secretary, I'm interested in your response 
to Chairman Domenici's comment about a change in direction and 
you say no, you're just trying to get more commercial activity 
involved in this.
    Are there commercial alternatives to the laboratory-based 
recycled processes promoted by the Argonne National, the UREX+ 
and if so, are they as proliferation resistant as the Argonne 
process?
    Mr. Spurgeon. Well, I think that's something that will be 
part of the evaluation--yes, there are other technologies, 
other variants, if you will that have been proposed, but 
obviously a criteria in the end is that it does offer a degree 
of proliferation resistance.
    But if I may say the whole--I don't want to interrupt you, 
sir--non-proliferation is a major reason for GNEP. What we are 
really doing in GNEP is trying to look over the horizon to the 
day when we do have not just 1 or 2 or 10 or 20 new nuclear 
plants, but literally hundreds of new nuclear plants operating 
around the world. And so, how are we going to handle that, what 
kind of a regime do we need in order for that to be done safely 
and effectively? And the base of GNEP is to say what you need 
for new developing countries coming online, and to enable them 
the benefits of nuclear energy, which they have a right to 
have--is that there needs to be a regime where they can have a 
guaranteed fuel supply. This is the fuel leasing idea.
    But what fuel leasing requires is that there be an ability 
to handle that fuel cycle from cradle to grave. You can't just 
say, ``Here's your fresh fuel, and oh, by the way, when the 
spent fuel comes out, we don't know where you're going to send 
it.'' And if the response was simply, ``Well, wait a minute, 
somebody else may take your spent fuel,'' well, that's somewhat 
of a problematic situation, however, maybe there are countries 
that would do that, by that way.
    But, if you have a way of recycling that fuel, removing 
what you would call the long-lived products, long-lived high 
actinide products that caused the problem for ultimate 
emplacement and thereby being able to take that fuel, process 
it and only give them back something that is not so difficult 
to deal with from an ultimate waste disposal standpoint you 
have a way, and that would be in their best interest.
    So, you're not, in effect, forcing something on them, 
you're giving these countries a way to enjoy the benefits of 
nuclear energy without needing, and without requiring countries 
to build a complete fuel cycle. They should not even want the 
kind of fuel cycle facilities that could cause concern from a 
proliferation standpoint.
    May I just say one other thing, we've never had to the best 
of my knowledge, a light water reactor, a commercial reactor--
or a fast reactor, for that matter, a breeder reactor used 
where the fuel from that plant has been used to proliferate 
another country's nuclear weapons capability. It's been done in 
other ways. You don't need a reactor, you don't need a 
commercial reprocessing facility to get a nuclear weapons 
capability. So, let's not throw the baby out with the bath 
water, let's consider what are really proliferation risks, and 
what are not.
    Senator Allard. Thank you, that's a helpful explanation. 
Now, do you prefer government or non-government sites for the 
GNEP missions? Which would you prefer?
    Mr. Spurgeon. We don't have a preference, we're not coming 
into this with a prejudice for one site versus another, sir.

                          TECHNICAL CAPABILITY

    Senator Allard. Okay, now, do you think the technological 
and intellectual capacity exists in the United States to carry 
out the cycle initiatives that you've described here? Or do you 
think we're relying on foreign sources?
    Mr. Spurgeon. I wouldn't say foreign sources, it's kind of 
an international business these days, if you look at the 
ownership of some of our major nuclear companies today. I mean, 
General Electric is really the only one now in the reactor 
business that is totally United States owned. But the gentleman 
to my left is part of a U.S. subsidiary of AREVA that probably 
employs more U.S. citizens than perhaps any other nuclear 
company.
    Senator Allard. The cycle you've described is far more than 
just a reactor, from cradle to grave--to use your phrase--
you're going to have to have a lot of technologies in there, 
and do we have the capacity in the United States to provide all 
of the pieces of that chain?
    Mr. Spurgeon. Sir, I think we have all of the bases, but as 
you know, the nuclear industry in this country over this past--
even for conventional reactors--has atrophied. We have lost 
capability that we need to rebuild. We need to rebuild our 
infrastructure in the United States for nuclear energy and 
that's all part of the process. We need to rebuild our human 
capital to do some of these things because we just haven't 
ordered a new plant in quite some time--the last nuclear plant 
that was ordered that was actually built was 1973. So, it's 
been a long time.

                  ESTIMATED TIME FOR START OF PROGRAM

    Senator Allard. Give me a horse bet guess as to how quickly 
the United States might be able to start recycling fuel, how 
quickly could this program you've described come to pass?
    Mr. Spurgeon. Schedules are always something that, you 
know, when you throw them out and horse bet guesses come back 
to haunt you as you made a firm commitment----
    Senator Allard. That's why I described it as that up front, 
to give you as much out as possible.
    Mr. Spurgeon. Well, we've always said--and this is 
dependent on so many things--but we're looking at the 2020-type 
time frame. That's what we've said maybe is feasible. It can 
certainly be done, depending on the technology you use, et 
cetera--things can be started, perhaps, earlier than that, but 
then when you get to the full-scale actinide recycle, you're 
looking to perhaps a later time.
    When we talk R&D, when you talk the nuclear business, you 
hear people say ``We can afford to wait, you know, we don't 
need it for 20 years, we don't need it for 30 years.'' And 
nuclear R&D and especially when you get to implementation--20 
to 30 years from now is today. You start today for things that 
you want to have online in 2020 and 2030 when they involve 
basic research.
    Senator Allard. Mr. Bunn, do you think he's being too 
optimistic?
    Mr. Bunn. Our main concern is that, although Assistant 
Secretary Spurgeon doesn't see it as a major change that the 
announcements of August suggest that we're moving to building 
potentially very large facilities, the expressions of 
interest--for example, to a 2,000- or 3,000-ton heavy-metal 
per-year reprocessing plant and fuel fabrication plant and that 
that inevitably means, if we're going to be focusing on the 
technologies that are readily available. I don't think there's 
any way that we could build a 2,000-or 3,000-ton heavy-metal 
plant today using your UREX+ technology, it's only been 
demonstrated on a kilogram scale, you would need to have 
intermediate steps. And so you may have to go, if that's the 
direction you want to go, to something like what Dr. Hanson is 
proposing with the COEX process, which is a much more modest 
variant on what has already been deployed at AREVA's 
facilities.
    But I, myself, am quite concerned about the proliferation 
impacts of using the COEX process or the PUREX process, and my 
concern is that the level of effort that's going to be required 
to build these huge facilities will inevitably take money, 
personnel and leadership attention away from the long-term R&D. 
We don't even know yet as Assistant Secretary Sturgeon 
mentioned, whether we can successfully fabricate the 
transmutation fuels to transmute the actinides. If we can't do 
that we're not going to get the kinds of repository benefits 
that we're looking for. So, it seems to me that we ought to 
wait until we know what things are most attractive and that we 
can do those things before we build a big facility and they 
turn out to be not designed the way we would have liked to have 
had them designed if we had done a little bit more R&D before 
we went ahead and worked on building them.
    Senator Allard. Just one last question, do you all agree 
that there is a significant role for commercial enterprise in 
this program, we should no longer depend entirely on the labs 
as the primary source of information?
    Dr. Hanson. If I could start with that, Mr. Bunn, I want to 
say that absolutely, we agree with Assistant Secretary 
Spurgeon's refinement of a strategy in terms of earlier 
incorporation of commercial enterprise. We have a lot of 
experience in these industries, and we know how to get things 
done on budget and on time and so the earlier we believe the 
commercial enterprise can be brought into what would otherwise 
be a long-term research and development program, we think that 
will lead to greater success.
    Relative to the previous conversation around moving forward 
with large-scale untested or unproven processes, I would agree 
with Mr. Bunn that a step-wise approach is much more 
appropriate than picking a technology that may offer some of 
the benefits that we're looking for, but frankly is just an 
interim solution. The COEX process is not the solution that's 
going to get us to the long-term proliferation resistance that 
the country and the globe needs, and embarking on a multi-
billion dollar program to deploy that only to have to deploy 
something that really does meet the requirements of GNEP in the 
future is not the appropriate approach. So in our expressions 
of interest, we talked about a way to roll out a prototype 
process where we can build as we go. We can spend smaller 
amounts of money, learn as we go, utilize all of the experience 
that we've gained in the last 15 years and build out in a 
modular fashion rather than in a large monolithic fashion these 
technologies so that we can gain the experience that we need, 
we can qualify the fuel that needs to be done, but do so with 
equipment and processes which are prototypical of commercial-
scale reactors. We need to get this out of the laboratory, but 
we don't need to build huge monolithic processes.
    Senator Allard. All right, thank you very much, thank you 
Mr. Chairman. I want to be on the record with you as being 
strongly in favor of moving forward in this area, and I want to 
acknowledge your leadership here, because we've had a log-jam 
in the Congress for a long time on this issue and your focus on 
nuclear power and pushing it forward, I think, has broken that 
log-jam, and it's good to get these experts talking about these 
kinds of issues instead of being tied up in a basic ``yes/no'' 
position which we were in for so long. So, I commend you for 
that.
    Senator Domenici. Thank you very much. And let me say, I 
thank you for coming down here when others see no reason to 
come down here and spend some time on what I think is going to 
dawn on everyone around here that it's one of the most 
important things we've got going. When we present it on the 
floor, they're going to ask ``Where did this come from?'' and 
of course it's just like it's been in the past, it's going to 
come out of this committee, because this committee's going to 
spend time on it and then we're going to take it to the floor, 
and we're going to get it done. So, it's very important people 
pay attention to what's going on in here and then spend some 
time. I'm sorry we can't have any more participation from 
Senators, but I think they're getting some of it through their 
staffs----
    Mr. Allard. I thank you for that comment, but I'm now going 
to have to leave.
    Senator Domenici. We're almost finished. I do want to say 
that I have been assuming you were a Ph.D. and that's a 
mistake, and to the extent that I might have abused you by 
calling you ``doctor''----
    Mr. Bunn. Don't worry, I'm not offended. You may have made 
the mistake because you and I have been working together on 
non-proliferation issues for so long, I well remember working 
with you and your staff on Nunn-Lugar-Domenici back in 1996, 
and various initiatives since then.
    Senator Domenici. It seems like forever, doesn't it?
    But we did get some things done.
    Let me say, I appreciate everybody here and I know we have 
a problem and it's what do we do about GNEP, and how do we 
solve nuclear waste storage? And they happen to go together 
now, more than they ever did before and that's pretty obvious 
to me, and I'm going to put them as closely together as I can 
as we move ahead, because we wanted to spend money on GNEP and 
we don't want to spend money on a single purpose when it can 
spent for more purposes, just like a businessman from GE saying 
that's dumb that we focus all of our attention on R&D on one 
thing when it relates to others and we don't bring the others 
along with it in some way or another, that we are wasting a lot 
of time.
    But I also don't think we're going to return--I say this 
openly today--to the era of the 1970's on these issues. That's 
finished. We messed up by waiting around and not doing 
something, and now we're behind. We thought we were doing the 
moral thing and that everybody would follow and not do 
anything, and they did do--they didn't follow our great 
example, they went ahead and developed, and we didn't. And 
we've got to have a solution to waste disposal, we can't sit 
around and say, ``It's just too big.'' It's not too big for 
this country to solve this problem. To say it can't be solved 
is crazy. We have the engineering, the technical, the 
scientific knowledge and we're just going to have to decide 
that we're going to take business and put them in, put them in 
and use them. Before we didn't, but before they weren't in it 
as much either. They want to be in it because they're in it and 
the rest of the world, which is the most interesting. It isn't 
as if they want to get in it to learn, they want to bring their 
knowledge to us--they're bringing their knowledge to us, which 
is the strange thing. It's what you just told using your 
testimony--we didn't come up here with a whole bunch of new 
inventions. And Dr. Hanson, you already know the answers, 
because you did them, right? You came here and told us that we 
already did these things. And, Mr. Secretary, I think I heard 
you say, ``We're going to take and use these things, no matter 
where they came from'', right?
    Mr. Spurgeon. Yes, sir.
    Senator Domenici. And you get on with it.
    Now, I don't have the answer to how we're going to get 
this, get this waste disposal site selected and how we're going 
to get on with finding one and using it, I just know we're 
going to do it. And I know that standing in the way, in a 
sense, is Yucca--it's a solution and then it's also a problem. 
If it weren't there and we started from scratch it might be 
that we'd be ahead of the game. But it's there and so we're 
going to have to figure out a way to use it but it's not going 
to be used as quickly and early as people thought. As a 
repository--it might be used for more research, but we're not 
going to jump on our white horses and put on some radiation 
shields and go down there and put the fuel rods in Yucca--that 
isn't going to happen. It's going to be something else going in 
there. And we've got to get ready to change those, do the 
recycling or whatever, so what we're ready to put in there is 
different. And we are delighted that we've got you, Mr. 
Secretary, committed for short term, new life--it's what you 
took--a short term, new life to get this done, right?
    Mr. Spurgeon. Yes, sir.

                         CONCLUSION OF HEARING

    Senator Domenici. And we want to get it done. Thank you. If 
you have anything to say that you think would indicate to 
Senator Domenici is wacky, you're going to have to say it to a 
closed record.
    Because you're not going to have a record open to say it. 
We're in recess.
    [Whereupon, at 11:12 a.m., Thursday, September 14, the 
hearing was concluded, and the subcommittee was recessed, to 
reconvene subject to the call of the Chair.]

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