[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
NUCLEAR POWER IN A WARMING WORLD: SOLUTION OR ILLUSION?
=======================================================================
HEARING
before the
SELECT COMMITTEE ON
ENERGY INDEPENDENCE
AND GLOBAL WARMING
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MARCH 12, 2008
__________
Serial No. 110-28
Printed for the use of the Select Committee on
Energy Independence and Global Warming
globalwarming.house.gov
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SELECT COMMITTEE ON ENERGY INDEPENDENCE
AND GLOBAL WARMING
EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon F. JAMES SENSENBRENNER, Jr.,
JAY INSLEE, Washington Wisconsin
JOHN B. LARSON, Connecticut Ranking Member
HILDA L. SOLIS, California JOHN B. SHADEGG, Arizona
STEPHANIE HERSETH SANDLIN, GREG WALDEN, Oregon
South Dakota CANDICE S. MILLER, Michigan
EMANUEL CLEAVER, Missouri JOHN SULLIVAN, Oklahoma
JOHN J. HALL, New York MARSHA BLACKBURN, Tennessee
JERRY McNERNEY, California
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Professional Staff
David Moulton, Staff Director
Aliya Brodsky, Chief Clerk
Thomas Weimer, Minority Staff Director
C O N T E N T S
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Page
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 1
Prepared statement........................................... 3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress
from the State of Wisconsin, opening statement................. 5
Hon. Emanuel Cleaver II, a Representative in Congress from the
State of Missouri, opening statement........................... 6
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 8
Hon. Jerry McNerney, a Representative in Congress from the State
of California, opening statement............................... 8
Witnesses
Mr. Alex Flint, Senior Vice President of Government Affairs,
Nuclear Energy Institute....................................... 9
Written Statement............................................ 12
Ms. Sharon Squassoni, Senior Associate, Nonproliferation Program,
Carnegie Endowment............................................. 17
Written Statement and prepared mapping material.............. 20
Answers to submitted questions............................... 94
Mr. David Lochbaum, Director, Nuclear Safety Project, Union of
Concerned Scientists........................................... 38
Written Statement............................................ 41
Mr. Amory Lovins, Chairman and Chief Scientist, Rocky Mountain
Institute...................................................... 63
Written Statement............................................ 65
Submitted Material
Article by Roger H. Bezdek and Robert M. Wendling on ``Real
Numbers: The U.S. Energy Subsidy Scorecard'' in Issues in
Science and Technology, National Academies of Science, Spring
2006........................................................... 101
Hon. Joe Barton letter from Congressional Budget Office on 27
July 2005...................................................... 105
Article by Amory B. Lovins on Nuclear Power: economic and
climate-protection potential, Rocky Mountain Institute on 6
January 2006................................................... 109
Article by Amory B. Lovins and Imran Sheikh, ``Forget Nuclear''
for Rocky Mountain Institute prepublication draft 11 March 2008 136
Article by Amory B. Lovins on Mighty Mice for Nuclear Engineering
International, December 2005................................... 146
NUCLEAR POWER IN A WARMING WORLD: SOLUTION OR ILLUSION?
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WEDNESDAY, MARCH 12, 2008
House of Representatives,
Select Committee on Energy Independence
and Global Warming,
Washington, DC.
The committee met, pursuant to call, at 9:05 a.m. in Room
311, Cannon House Office Building, Hon. Edward J. Markey
[chairman of the committee] presiding.
Present: Representatives Markey, Herseth Sandlin, Cleaver,
Hall, McNerney, Sensenbrenner, and Blackburn.
Staff present: Jonathan Phillips.
The Chairman. Good morning. This is a hearing conducted by
the Select Committee on Energy Independence and Global Warming.
We welcome you this morning to this very, very important
hearing.
The hearing is now called to order.
Decades ago, Americans from Wall Street to Main Street
rejected nuclear power. After years of construction delays,
reactor shutdowns and massive cost overruns, the private sector
abandoned nuclear energy. Americans nervous about the health
and safety of their families and communities had few objections
to seeing the nuclear construction age grind to a halt.
However, the growing threat of global warming has thrust
nuclear power back into the debate. With the health of our
planet on the line, some believe that all options, even those
set aside long ago, merit our support. I called this hearing
today to take a deeper look at whether continuing taxpayer
support of nuclear power gets us closer to achieving our energy
and climate goals or whether it is holding us back.
All of the available evidence suggests the prospective
costs, risks and uncertainties facing the nuclear industry are
higher today than they have ever been. The domestic
manufacturing and human resource capacity of nuclear power has
dwindled. Nuclear construction worldwide has slowed to a crawl.
And the nuclear projects currently under construction are
plagued by the same delays and cost overruns that have always
riddled the industry.
In addition to these profound, direct problems, the
collateral-damage issues--uranium mining impacts, long-term
waste storage, nuclear weapons proliferation, targets for
terrorism--are even greater.
The last new nuclear plant opened in 1996 in Tennessee
after 22 years of construction and at a cost of $7 billion. Are
delays like this acceptable in any other industry?
Florida Power & Light recently announced its plans for two
new reactors at its Turkey Point facility, which it projects
will cost from $12 billion to $24 billion. Could the most
ambitious solar- or wind-generating station succeed if its cost
projections included uncertainties of $12 billion?
Another electric utility, Progress Energy, announced
yesterday that it plans to build two reactors at an estimated
price of $17 billion, passing on an additional cost to
customers of about $9 per month per household. Customers would
begin paying this surcharge beginning in 2009, 7 years before
the project would produce a single kilowatt of electricity. Can
the wind industry ask for and expect to receive a 7-year cash
advance from future customers?
At the Select Committee hearing last week, we witnessed the
power of free markets rising to meet our energy and climate
challenges. Private capital markets are moving billions of
dollars into clean, renewable energy technologies, in the
process creating new jobs and driving economic growth. As proof
that this green revolution is taking hold, the wind industry
installed over 5,200 megawatts of new generating capacity in
the United States last year, about 30 percent of all new
capacity installed in the United States.
Worldwide, the story is the same. The 20,000 megawatts of
wind energy capacity built in 2007 was more than 10 times that
of nuclear. Between now and 2016, the year in which we are
likely to see the first new nuclear plant come on line in the
United States, the world is projected to add 361,000 megawatts
of wind. That means, in the next 10 years, as much wind-
generating capacity will be installed as the total amount of
nuclear capacity built worldwide over the previous half-
century.
The job of Congress is not to fix problems by creating new
ones or, in this case, recreating them. The innovative spirit
of the American entrepreneur is forging a path forward. It is
clean, it is scalable, it is distributed, it is safe, and its
price is falling. These are claims that nuclear power cannot
make.
Taxpayer support for the nuclear industry over the past 50
years has been massive. From 1950 through 2000, the nuclear
energy industry received $145 billion in Federal subsidies in
constant 1999 dollars, or over 96 percent of the total
subsidies allocated to wind, solar and nuclear energy.
The American public and financial investors are responsible
for putting nuclear power on mothballs. Congress must think
long and hard about the wisdom of reversing that decision.
Let's trust and encourage the ingenuity of the American people
to solve the energy and climate challenge. The nuclear industry
is not going to be the economic driver of the 21st century, but
there is abundant evidence that renewable energy will.
That completes the opening statement of the Chair.
I now turn to recognize the ranking member of the
committee, the gentleman from Wisconsin, Mr. Sensenbrenner.
[The prepared statement of Mr. Markey follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Sensenbrenner. Thank you very much, Mr. Chairman.
Today, I will talk about the merits of nuclear energy,
which is a technology that stands to produce real results in
reducing greenhouse gasses.
But, first, let me be clear. I understand that nuclear
technology has drawbacks too, as do renewable resources and
fossil fuels. While some here today will try to sell the merits
of one technology over another, I will not do that, because, in
the end, Members of Congress are setting policy, not selling
energy. It is the utilities and the energy producers who will
sell energy and electricity in the marketplace. I believe it
should be the marketplace, not regulators and policymakers,
which ultimately decides what sources of energy are the most
realistic for the future. It is not Congress's job to pick
winners and losers, but I worry that many on this panel aim to
do just that.
Nuclear power is efficient and cost-effective and, I
believe, in many places, the right answer for our electricity
needs, but it is not the right answer for all places.
Nuclear power is an especially useful solution for reducing
greenhouse gas emissions. Mr. Alex Flint, the senior vice
president of the Nuclear Energy Institute, will testify today
that the 439 nuclear power plants worldwide help avoid 2.6
billion tons of CO2 each year. That is more than
three times the amount of carbon dioxide produced by all the
cars in the United States in 2005. I welcome Mr. Flint's
testimony and look forward to learning more about the potential
that nuclear power offers the world.
Nuclear power is such a powerful greenhouse gas-reducing
technology that the Nobel Peace Prize-winning U.N.
International Panel on Climate Change cited nuclear power as
one of the key technologies for addressing global warming in
the future.
As I stated at our hearing last week, renewable energy has
its own set of benefits and drawbacks and is not technically
feasible for all areas of the country. But renewable energy
should be an increasing part of our energy future, just like
nuclear power, energy efficiency and fossil fuels. The world's
energy future needs require us to maintain a diverse portfolio
of energy technologies.
While some today will highlight the drawbacks of nuclear
power, they do so without fully acknowledging the drawbacks of
other technologies they support. For instance, a recent story
in The Washington Post reported on the industrial pollution
left behind by Chinese solar energy panel producers. And the
New York Times reported this week that a biodiesel plant in
Alabama is producing pollution as a byproduct and dumping it
into a local river. Kermit the frog was right: It is not easy
being green.
As I have said many times, the advancement of technology
must be a part of any energy security or global warming policy.
Nuclear power should be a key part of the diverse array of
technologies needed for the future. Plus, nuclear power's
potential for reducing greenhouse gasses can't be ignored by
anyone who thinks this is a pressing priority for the world. If
we are searching for realistic solutions, nuclear power can't
be ignored but must be approached with a healthy skepticism to
see whether that is the right thing to do at the right time, at
the right place.
I have to apologize to our witnesses because, at 10
o'clock, I have to go to the Science Committee, where Bill
Gates is testifying. And I do want to tell him that if he wants
more high-tech visas, he had better get realistic on how to get
that through the Congress.
So I thank the Chairman and yield back the balance of my
time.
The Chairman. Great. The gentleman's time has expired.
The Chair recognizes the gentleman from Missouri, Mr.
Cleaver.
Mr. Cleaver. Thank you, Mr. Chairman and Mr. Sensenbrenner.
There can be no doubt, or at least there is no doubt in my
mind, that our planet is in crisis. And our constant, growing
need for energy has inspired this potentially perilous
situation.
However, emerging industries, such as solar and wind
energy, can aid our country and others in accessing enough
energy without causing potentially dangerous effects on the
environment and public health.
Nuclear energy currently produces 19 percent of our
Nation's electricity from 104 nuclear reactors, one of which is
in my home State, not very far from my hometown, Kansas City.
Nuclear power has the ability to produce domestic energy
without greenhouse gasses as a byproduct. However, if we can
recall the disaster of Chernobyl and the reactor accident at
Three Mile Island, we know all too well that there are
potentially harmful risks and unintended consequences.
A large nuclear reactor produces around 25 to 30 tons of
spent fuel annually. However, the proposed Yucca Mountain waste
site, about 90 miles from Las Vegas, would only have the
capacity to hold waste produced through the year 2010. Thus,
this would only be a temporary solution, but it is a major
risk.
Before we invest in the new production of nuclear power, we
need to thoroughly examine all of the threats to public safety
and the environment that it presents. We must remember that the
welfare of our communities is our highest priority. We must
also consider and make decisions on which energy sources will
work best for our future.
I look forward to hearing the views of our witnesses this
morning, as we discuss this and other ways that we can deal
with this source of energy without Federal subsidies at a level
that will break the bank.
I would like to thank the panel in advance for your insight
and for joining us here today. Thank you very kindly.
I yield back the balance of my time.
[The prepared statement of Mr. Cleaver follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Great. The gentleman's time has expired.
The Chair recognizes the gentlelady from Tennessee, Mrs.
Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman. I thank you for
the hearing.
And I want to welcome all of our guests.
As we know, nuclear power is a vital component to meet
future energy needs and help America maintain its competitive
edge. It is the most stable, least expensive and cleanest form
of electric power generation available today. It is an
emissions-free, domestic energy source with enough fuel stocks
to last for centuries.
Nuclear energy will also be a key asset to the electric
power infrastructure as the public embraces the use of electric
vehicles for transportation needs and if Congress enacts a
greenhouse gas reduction scheme.
Some critics maintain that nuclear energy is either too
costly or that it has too poor a track record. In the past,
that could have been true. But nuclear power plant construction
once experienced delays and cost overruns due to licensing
problems, poor project management and economic chaos of the
1970s, but Congress mitigated some of these factors in the
Energy Policy Act of 2005, and the Nuclear Regulatory
Commission took steps last year to drastically restructure the
licensing process to ensure all major issues are settled before
a company starts building a nuclear power plant and puts those
billions of dollars at risk.
Further, over time and experience, the nuclear industry has
vastly reduced past problems by implementing measures to manage
and to contain risk, to financing and completing capital
projects. And now, with modular construction, standard designs
and integrated engineering and construction schedules, nuclear
power plants can be built both on time and on target.
Mr. Chairman, the key to achieving American energy
independence is maintaining a diversity of power generation. We
cannot rely solely on a few favored energy sources. Gas, coal,
renewable energy and nuclear power all should play a part in
the infrastructure.
I yield back the balance of my time.
The Chairman. That is great. The gentlelady's time has
expired.
The Chair recognizes the gentleman from California, Mr.
McNerney.
Mr. McNerney. Thank you. I would like to thank the ranking
member and the Chairman for holding this timely and important
hearing.
My interest today is to get a deeper understanding of the
merits and the demerits of nuclear energy. I have three main
concerns: the economics, the safety, and nuclear proliferation.
Safety, I believe, is an engineering issue, which reflects
back on the economics. Proliferation is a political and
engineering issue. So, ultimately, what I want to understand
today is the economics, and so I am looking forward to your
testimony. If you can elevate that to where it can be
understood, I will very much appreciate your hearing today.
Thank you very much. I yield back the balance of my time.
The Chairman. Great. The gentleman's time has expired.
All time for statements by the members has expired, so we
will turn to recognize our witnesses.
We are going to begin with Mr. Alex Flint. He is our
opening speaker. He joins us from the Nuclear Energy Institute
where he is the senior vice president of government affairs. He
is also very familiar with these issues from his time as staff
director of the Senate Committee on Energy and Natural
Resources.
We look forward to your testimony, Mr. Flint. Whenever you
are ready, please begin.
STATEMENTS OF MR. ALEX FLINT, SENIOR VICE PRESIDENT OF
GOVERNMENT AFFAIRS, NUCLEAR ENERGY INSTITUTE; MS. SHARON
SQUASSONI, SENIOR ASSOCIATE, NONPROLIFERATION PROGRAM, CARNEGIE
ENDOWMENT; MR. DAVID LOCHBAUM, DIRECTOR, NUCLEAR SAFETY
PROJECT, UNION OF CONCERNED SCIENTISTS; MR. AMORY LOVINS,
CHAIRMAN AND CHIEF SCIENTIST, ROCKY MOUNTAIN INSTITUTE
STATEMENT OF ALEX FLINT
Mr. Flint. Chairman Markey, Ranking Member Sensenbrenner,
members of the committee, thank you for the opportunity to
appear before you today. I have a written statement that I ask
be included in the record.
The Chairman. Without objection, it will be included in the
record.
Mr. Flint. Mr. Chairman, in preparation for this morning's
hearing, I scanned through your book, ``Nuclear Peril.'' It has
been a long time since I read it. I was struck by how very
different the U.S. nuclear industry is today from when you
wrote your book in 1982.
It also reinforced for me the years and now decades in
which you have been concerned about nuclear energy and weapons.
It is with sincere appreciation of that concern that I thank
you for taking the time to consider the attributes of nuclear
energy, which make it so interesting and compelling as we
decide how to address the challenge of climate change.
Because of rapid population and economic growth, EIA
forecasts global electricity demand to nearly double between
2004 and 2030. It is extraordinarily challenging to imagine
credible scenarios by which the world can double electricity
production in the coming decades and concurrently reduce
greenhouse gas emissions. To do so will take the successful
implementation of a wide range of solutions, as Professors
Pacala and Socolow made clear in their wedge analysis. To do so
will require the widespread use of renewables, conservation,
efficiency, carbon sequestration and nuclear energy.
That conclusion is shared by leaders and governments around
the world. My written statement includes quotes and references
in that regard from individuals and groups, including Yvo de
Boer, the Fourth Assessment Report of the IPCC, the World
Energy Council, the World Business Council for Sustainable
Development, Dr. Jeffrey Sachs, and the Progressive Policy
Institute.
The willingness of individuals and organizations that would
not otherwise be so inclined to consider and now support the
deployment of new nuclear power plants is due, in part, to the
need to identify all credible ways to reduce greenhouse gas
emissions. However, this reconsideration also is made possible
by the extraordinarily safe and efficient operation of the
existing nuclear fleet.
In 2007, the 104 reactors in the U.S. nuclear fleet
operated at 92 percent of capacity. That was accomplished
because of high management standards, a focus on reliability
and safety, and fewer and shorter outages. It enabled nuclear
power plants, which are 12 percent of installed U.S. generation
capacity, to produce nearly 20 percent of the electricity
generated in the United States last year.
Concurrently, production costs continued to fall last year
to 1.68 cents per kilowatt hour, a record low and the 7th
straight year that nuclear plants have had the lowest
production cost of any major source of electricity.
Nuclear power plants generate over 70 percent of all
carbon-free electricity in the United States, and prevented 681
million metric tons of carbon dioxide emissions in 2006. For
perspective, the volume of greenhouse gas emissions prevented
at the Nation's 104 nuclear power plants is equivalent to
taking 96 percent of all passenger cars off the roads.
Our nuclear power plants are also extraordinarily safe
places to work. In 2006, our lost time accident rate was 0.12
accidents per 200,000 worker hours. That is significantly safer
than the 3.5 accidents per 200,000 worker hours in the
manufacturing sector. It is even safer to work at a nuclear
power plant than it is to work at a bank.
At a global level, 439 nuclear power plants produce 16
percent of the world's electricity while avoiding the emission
of 2.6 billion metric tons of CO2 each year. And a
new build renaissance is under way. There are 34 nuclear units
under construction worldwide, including seven in Russia, six in
India and five in China. In the United States, we have one, the
5-year, $2.5 billion completion of TVA's Watts Bar 2.
In the United States, 17 companies or groups of companies
are preparing license applications for as many as 31 new
reactors. Five complete or partial applications for COLs were
filed with the NRC in 2007, and another 11 to 15 are expected
this year. As a result, the industry expects four to eight new
U.S. plants in operation by 2016 or so, depending on a variety
of factors that are provided in my written statement. A second
wave could be well under construction as the first wave reaches
commercial operation.
Every source of electricity has benefits and challenges.
Capital costs for new nuclear plants are significant. However,
when both operating and capital costs are considered, nuclear
power will be competitive with other new sources of
electricity.
Chairman Markey, you mentioned the Florida Power & Light
Company petition for determination of need. One of the things
in that petition was FP&L's finding that the addition of new
nuclear capacity is economically superior versus the
corresponding addition of new gas-fired combined cycle units
required to provide the same power output.
At the peak of construction, a nuclear plant will employ
2,300 skilled workers. Upon completion, approximately 700
workers will be required to operate and maintain the plant.
Those workers receive excellent benefits and earn pay that is,
on average, 40 percent higher than wages earned by workers
doing similar work in nonnuclear facilities.
The industry also is working with organized labor to
develop training and other programs to provide the cadre of
highly skilled workers that our future requires. NEI supports
the application of Federal prevailing wage requirements,
contained in the Davis-Besse Act of 1931, to loan guarantees
authorized by title 17 of the Energy Policy Act of 2005.
In addition, NEI is working aggressively to revitalize the
United States' nuclear manufacturing infrastructure. The global
nuclear renaissance will require additional capacity for a
range of products, from very small components to ultra-heavy
steel forgings and castings.
Even as we work to build the next fleet of advanced
reactors for electricity production, we also are developing
reactors that will provide energy security and environmental
benefits well beyond the traditional electric sector. One
promising next-generation technology is the high-temperature
gas reactor. Its unique design is well-suited to meet a wide
variety of future needs, such as the production of hydrogen,
drinking water, industrial process heat, and to generate
electricity appropriate for the distribution systems in
developing countries.
In closing, nuclear energy is the single largest source of
non-carbon-emitting generation. It is a proven technology,
operated at high standards, by an experienced industry that is
committed to safety. It is the only energy option available
today that can provide large-scale electricity, 24/7, at a
competitive cost, without emitting greenhouse gasses.
Mr. Chairman, that concludes my statement. I would be glad
to take any questions.
[The prepared statement of Mr. Flint follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Flint, very much.
Our second witness is Ms. Sharon Squassoni, who has been
analyzing arms control and nonproliferation issues for 20
years. She is a senior associate in the nonproliferation
program at the Carnegie Endowment for International Peace. She
has also served in the Nonproliferation and Political Military
Bureaus in the State Department.
We welcome you. Whenever you are ready, please begin.
STATEMENT OF SHARON SQUASSONI
Ms. Squassoni. Good morning. Thank you, Chairman Markey and
Ranking Member Sensenbrenner and other members of the
committee, for inviting me to provide comments on the topic of
nuclear energy expansion and its contribution to mitigating
global climate change.
Chairman Markey, I would like to request permission to
submit longer testimony for the record, and I will summarize my
remarks here.
The Chairman. Without objection, so ordered.
Ms. Squassoni. Thank you.
In addition, I would like to present a few graphics on
nuclear expansion, which I understand is unorthodox, but, in
this case, a picture may be worth a thousand words.
Recent nuclear enthusiasm stems from several expectations:
that it can help beat global climate change, meet rapidly
increasing demand for electricity, combat rising costs for oil
and gas, and provide energy security. The gap between
expectations and reality, however, is significant. This
morning, I will focus on what it will really take for nuclear
energy to make a difference in terms of global climate change
and why this is unlikely to happen.
As you can see on the first slide, global nuclear reactor
capacity now stands at 373 gigawatts electric, or about 439
reactors. By 2030, under what I call a ``realistic growth
scenario,'' which is based on U.S. Energy Information
Administration figures, that capacity could grow about 20
percent. Yet, since electricity demand is expected to almost
double in that time, nuclear energy is unlikely to keep its
market share, which could drop from the current 16 percent to
10 percent of worldwide electricity generation.
In the U.S. alone, according to nuclear industry estimates,
a stable market share for nuclear energy would require the U.S.
to build 50 nuclear reactors by 2025. At the same time, the
U.S. would also be building 261 coal-fired plants, 279 natural-
gas-fired plants and 73 renewables projects. This is based on,
I believe, Booz Allen Hamilton information.
States' plans for nuclear energy, however, may be anything
but realistic. What you are looking at now are these red dots,
which are 2030 plans, the announced intentions of States for
nuclear energy.
In my second scenario, what I call the ``wildly
optimistic'' one, the total reactor capacity would reach about
700 gigawatts by 2030. This is not a projection but, rather,
takes at face value what States have announced they will do.
More than 20 nations have announced intentions to install
nuclear capacity that do not now have nuclear power plants.
More than half of these are in the Middle East.
The final scenario depicts what an expansion to 1,500
gigawatts might look like based roughly on the high-end
projections for 2050 done by MIT in its 2003 study entitled,
``The Future of Nuclear Power.'' I call this the ``climate
change scenario.'' It is a little bit more than a Pacala-
Socolow wedge, which is defined as the level of growth needed
to reduce carbon emissions by more than 1 billion tons per year
by 2050, which equals about 1,070 gigawatts, but it is less
than the Stern report on climate change estimates that nuclear
energy could reduce carbon emissions between 2 billion and 6
billion tons per year. The Stern numbers were literally off the
map, so I did not include them here.
For 1,500 gigawatt capacity, MIT estimated that 54
countries, which is an additional 23 compared to today, would
have commercial nuclear power programs. This essentially means
a fivefold increase in the number of reactors worldwide and an
annual build rate of 35 reactors per year.
If we go to the next slide, you can see what this looks
like. This is 2030 and, again, 2050. These are all new nuclear
power states.
Then, if you go to the next slide, you will see a closer
look. The darker the color, the firmer the plans are. When I
say ``announced intentions,'' some of these plants will never
come to fruition.
These expansion scenarios have implications for both the
front and back ends of the fuel cycle. As the next graph shows,
building one nuclear wedge would require tripling uranium
enrichment capacity. So that is the first green bar that you
see. The orange is today's enrichment capacity, about 50
million separative work units. In the first green one, there is
the climate change scenario. As you see, it gets much larger if
you go to the Stern numbers.
New states could find it economically feasible to develop
their own enrichment. If we go to the next slide, you will see
that is current enrichment capacity. Keep going; these are 2030
plans. Then beyond climate change, you see that a lot more
states could potentially be enriching. These are also a little
bit lower than the MIT numbers, which estimated, I guess, that
18 countries would have enough reactor capacity to merit
enrichment.
It is unlikely that these expansion rates will be achieved,
however. The U.S. has just a fraction of the nuclear
infrastructure it had decades ago, 2 decades ago, and other
countries have not fared much better. In the last 20 years,
there have been fewer than 10 new construction starts in any
given year. Industrial bottlenecks are significant now,
particularly in forging reactor-pressure vessels and steam
generators.
The sole company with ultra-large forging capacity, Japan
Steelworks, has a 2-year waiting list. When it completes its
expansion in 2010, it will only produce enough forging sets for
eight reactors per year. The capabilities of alternative
suppliers, such as China, are unknown.
Other constraints include labor shortages, not just in
engineers but also craft and construction labor, and long lead
times for components and materials. Financing is another huge
topic, worthy of a separate hearing. And the cost of inputs has
risen significantly in recent years.
Finally, the proliferation risks of nuclear expansion are
not limited just to a three-, four- or fivefold increase in the
number of reactors. Some states may move forward anyway,
propelled by unrealistic expectations, and could acquire
uranium enrichment and plutonium separation capabilities. Such
national fuel production capabilities could introduce even
greater uncertainty about proliferation intentions in regions
like the Middle East because of the latent nuclear weapons
capability of such plants. Efforts to address both supply and
demand for such sensitive capabilities need to be redoubled.
The current policy debate paints nuclear energy clean and
green; advocates nuclear energy for all, even though some
states with nuclear reactors could pose significant safety and
proliferation concerns; and suggests that nuclear energy is a
path to energy security.
At the same time, U.S. officials insist that some states
forgo developing indigenous nuclear capabilities. This confused
message obscures important policy considerations. If nuclear
energy----
The Chairman. Could you try to summarize, please?
Ms. Squassoni. Last sentence.
If nuclear energy can't really make a difference in terms
of global climate change, are the huge costs and risks worth
it?
Thank you.
[The prepared statement of Ms. Squassoni follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you so much.
Our next witness is Mr. David Lochbaum. He is the director
of the Nuclear Safety Project for the Union of Concerned
Scientists, where he leads the efforts to ensure the safety of
nuclear power in the United States. Mr. Lochbaum has more than
17 years of experience in commercial nuclear power plant
startup, testing, operations, licensing, software development,
training, and design engineering.
We welcome you, sir. Whenever you are ready, please begin.
STATEMENT OF DAVID LOCHBAUM
Mr. Lochbaum. Thank you, Mr. Chairman and members of the
committee. I appreciate this opportunity to present our views.
I have submitted a written statement that I request be
entered into the record.
The Chairman. Without objection, so ordered.
Mr. Lochbaum. 253 nuclear power reactors have been ordered
in the United States. 28 percent were cancelled before
construction even began. Another 20 percent were cancelled
after construction began. So about half of the reactors ordered
never generated a single watt of electricity.
But what about the other half? 11 percent of the reactors
ordered shut down prematurely due to unfavorable economics. 14
percent of the reactors ordered are operating today but have
had to shut down for at least a year to restore safety levels.
Only 27 percent of the reactors ordered are operating today
without having experienced a year-plus safety restoration
outage.
The NRC anticipates 33 nuclear reactor applications in the
near term. Running the calendar forward 55 years could yield
the following retrospective: 33 nuclear reactors ordered, nine
reactors cancelled before construction began, seven reactors
cancelled after construction began, four reactors shut down due
to economics, four reactors operating despite 1-or-more-year-
plus outages, nine reactors operating without a year-plus
outage.
Does past performance predict the future? Yes, when the
underlying causes and behavior patterns are firmly in place, as
if set in concrete.
Nearly 30 years ago, during the 97th Congress, the House
held a hearing on construction problems caused by poor quality
control. Chairman Udall posed four questions: How did these
quality assurance failings occur? Why did the failings go
undetected so long by the owners and the NRC? What is being
done to minimize the likelihood of future failings? How can we
be sure that completed plants have been constructed in
accordance with NRC's regulations?
The answer to the first question is mismanagement by plant
owners, a recurring theme in nuclear power plant problems since
that hearing. Mismanagement shut down all of TVA's nuclear
plants in the 1980s, it shut down eight reactors for over a
year in the late 1990s, shut down Davis-Besse for over 2 years
earlier in this decade, and caused the current problems at the
Palo Verde plant in Arizona.
The answer to question two is mismanagement by the plant
owners, coupled by ineffective oversight by the NRC. The
companion theme in nuclear plant problems since that hearing
has been ineffective oversight by the NRC. The GAO reported in
1997, quote, ``NRC is not effectively overseeing the plants
that have problems. NRC enforcement actions are too late to be
effective,'' end quote. Seven years later, almost to the day,
GAO updated its conclusion: Quote, ``NRC should have but did
not identify or prevent the vessel head corrosion at Davis-
Besse because both its inspections at the plant and its
assessments of the operator's performance yielded inaccurate
and incomplete information on plant safety conditions,'' end
quote.
The names and the dates change, but the underlying pattern
of mismanagement, coupled with ineffective NRC oversight,
remains the same.
The answer to question three is that quality assurance
failings during nuclear plant construction were minimized when
we stopped constructing nuclear power plants. The problem was
never solved; it just became moot.
The answer to question four is that no such assurance
exists. In 2000, the NRC reported hundreds of design errors at
operating plants--prima facie evidence that the completed
reactors did not meet NRC's regulations. 70 percent of those
design errors dated back to original construction that were not
detected.
More recently, there are signs that the nuclear industry
cannot even renovate its existing plants. Consider the two
reactors at Quad Cities, licensed in 1972. 29 years later, the
NRC approved increasing its power level by 20 percent. Within 3
weeks, the unit 2 reactor was shut down due to repair leaks
caused by vibrations from the hot-air steam flows. During
restart, vibrations broke a drain line off a steam pipe. Weeks
later, the reactor had to be shut down again when vibrations
damaged the steam dryer. The owner reported, quote, ``The root
cause of the steam dryer failure was determined to be a lack of
industry experience and knowledge of flow-induced vibration
dryer failures,'' end quote.
If the nuclear industry is inexperienced and knowledge-
challenged about their old reactors, how can they have
sufficient knowledge and experience to tinker with new ones?
The Energy Bill of 2005 contains billions of dollars of
subsidies to jumpstart a moribund nuclear industry to help
address global warming. Nuclear power plant owners are
protected when their mismanagement causes a reactor under
construction to be cancelled, a reactor under construction to
take longer and cost more, or an operating reactor to melt
down. But how are Americans protected from global warming when
their mismanagement causes nuclear power plant ``solutions'' to
come up empty? Clearly, Americans deserve protection against
the nuclear industry defaulting on its global warming pledges,
especially since so many of our tax dollars are subsidizing
those pledges.
The best protection would be a zealously aggressive
regulator enforcing safety regulations. The NRC is not that
regulator.
The NRC needs to take three steps toward becoming that
regulator: institute safety culture surveys of its workforce
every 2 years and make the results available; fill senior
manager vacancies from a pool that includes external
candidates; institute a rotation plan in which middle-level
managers are rotated to other Federal agencies and middle
managers from those agencies come to work at the NRC.
If the NRC is not reformed, nuclear power will be more of
an illusion than a solution to global warming.
Thank you.
[The prepared statement of Mr. Lochbaum follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Lochbaum, very much.
Our final witness is Mr. Amory Lovins, who is chairman and
chief scientist of the Rocky Mountain Institute and chairman
emeritus of Fiberforge, Incorporated. Mr. Lovins has published
29 books and hundreds of papers, and advises governments and
major firms worldwide on advanced energy and resource
efficiency.
We are honored to have you with us here today, Mr. Lovins.
Whenever you are ready, please begin.
STATEMENT OF AMORY LOVINS
Mr. Lovins. Thank you, Mr. Chairman and distinguished
committee members. I appreciate this opportunity to share with
the committee some recent analysis of whether we need nuclear
power, especially to protect the climate.
And I request that my written submission be included in the
record.
The Chairman. Without objection, so ordered.
Mr. Lovins. Thank you.
I will summarize why nuclear power is not needed for any
civilian purpose, how and why it is being dramatically
outcompeted in the global marketplace by no-carbon and low-
carbon electrical resources that deliver far more climate
solution per dollar far faster, and why nuclear expansion would
inhibit climate protection, energy security and reliably
powering prosperity. Even if nuclear power could attract
private risk capital, it could not in principle deliver its
claimed climate and security benefits, but because it is
uneconomic and unnecessary, we need not inquire into its other
attributes.
Far from undergoing a renaissance, nuclear power is
conspicuously failing in the marketplace for the same forgotten
reason it failed previously: It costs too much, and it bears
too much financial risk to attract private risk capital,
despite Federal subsidies now approaching or exceeding its
total cost.
What is beating nuclear power at other central thermal
plants? Micropower--that is, cogeneration plus distributed
renewables--now produces a sixth of the world's total
electricity, more than nuclear, at least a third of the world's
new electricity, and from a sixth to over half of all
electricity in a dozen industrial countries. The U.S. lags,
with about 4 percent. Negawatts, electricity saved by using it
more efficiently or timely, are about as big worldwide as
micropower and cost even less.
In 2006, nuclear power added less capacity than
photovoltaics added, one-tenth what wind power added, and 30 to
41 times less than micropower added. Its output growth was one-
sixth of micropower's.
Distributed renewables won $56 billion of private risk
capital. Nuclear, as usual, got zero. Only central planners buy
it. China's distributed renewable capacity reached seven times
its nuclear capacity and is growing seven times faster.
Micropower has such huge potential that just the full
economic use of electric efficiency, zero-carbon waste-heat
cogeneration and wind power, with no other renewables, could
provide roughly 13 to 15 times nuclear power's current share of
U.S. electric generation without significant land use,
reliability or other constraints, at much lower cost and with
millions of good new jobs.
Distributed generators are generally more dependable than
centralized ones because their many small units will not all
fail at once and can bypass the grid where nearly all power
failures originate. Variable renewable resources--sun and
wind--even in large amounts, need less backup than we have
already bought and built to manage the intermittence of big
thermal plants, especially nuclear plants, many of which can
fail simultaneously, unpredictably and for long periods.
The Nuclear Energy Institute says 78 percent of the new
coal plants announced in the past couple of years got
cancelled. I expect announced nuclear projects to do worse
because they cost more. They have attracted no private risk
capital, despite U.S. taxpayer subsidies that can now total
about $13 billion per new nuclear plant, roughly its entire
cost, which exceeds the market cap of any U.S. utility, save
one.
The smart money, led by Warren Buffet, is now heading for
the exit, spooked by steeply rising nuclear costs,
disappointments in the flagship Finnish project, competition by
ever-cheaper micropower negawatts, and the credit crunch. The
U.S. can have only about as many new nuclear plants as
taxpayers are forced to buy. Heroic efforts at near or over 100
percent subsidization will continue to elicit the same response
as defibrillating a corpse: It will jump, but it won't revive.
That is good for climate protection, because nuclear power
is so expensive that it buys roughly one and a half to 11 or
more times less carbon reduction per dollar than competing no-
carbon technologies or even fossil fuel cogeneration in
factories and buildings.
As the graph in my prefiled testimony's Annex E explains--
or as the graphs explain, I should say--nuclear plants cost so
much more than competing climate solutions that spending a
dollar on nuclear, instead of on efficient end use, worsens
global warming more than spending the same dollar on new coal
power. It is, therefore, time to get on with judicious
investments that yield the most energy services and the most
climate protection per dollar and per year.
The straightest path to American energy security and to a
richer, fairer, cooler and safer world is to let all ways to
save or produce energy compete fairly at honest prices,
regardless of their type, technology, size, location and
ownership. That is pretty much the opposite of the Federal
energy policy we have.
Thank you, sir.
[The prepared statement of Mr. Lovins follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chairman. I thank you very much, Mr. Lovins.
The Chair will now recognize for a round of questions the
gentleman from Missouri, Mr. Cleaver.
Mr. Cleaver. Thank you, Mr. Chairman.
Again, I thank all of you.
The issue of safety is extremely important in my community.
We are not far from one of the nuclear facilities, one of the
104, in our community. We are clearly aware of the two
significant accidents that have happened in the nuclear
facilities.
This would go to any of you. If you were giving information
to the 1.7 million people in our metropolitan area, what would
you say that you believe would assure them of the safety of
such a facility?
Mr. Flint. If I can take that question, Congressman, I
would tell you that the track record of the U.S. nuclear power
plants is that they are exceptionally safe and that the safety
is improving, and that the metrics by which the NRC tracks
that--and there are a variety of metrics, be they from the
Bureau of Labor Statistics, worker injury statistics that were
in my statement, or be they the NRC's metrics where they track
unplanned shutdowns and other issues--are all trending very
positively.
And so those plants are absolutely safe. They are safe from
a perspective of their physical operations, from the way in
which the professional staff operates those plants and from the
security. In every manner, those plants are currently very
safe.
Mr. Cleaver. Yes, I mean, I listened in your statement, and
I appreciate the information you provided with regard to the
safety, you know, that it is as safe as working in a bank. But,
you know, airplane travel is far, far safer than driving an
automobile. The issue, though, is that there is a possibility
of surviving an automobile accident. Surviving an airplane
accident is dramatically lower. And so, you know, people are
thinking one event at a nuclear facility, a major event, could
be just devastating. And so people are afraid all over the
country, which is part of the reason.
Part of the reason, of course, is the cost, the Federal
subsidy, which is something we would be concerned about. But
also, I am not sure that there are a lot of electeds around the
country who are willing to stand up and say to a community,
``We are going to build a new facility.'' I mean, you can say
that electeds do not have courage or whatever, but the truth of
the matter is people are afraid.
Mr. Flint. Congressman, we deal with that issue frequently.
It is a question of helping people understand real versus
perceived risks.
I will tell you that, currently, some of the greatest
support new nuclear power plants have for construction in this
country comes from the elected officials whose districts
include those plants and whose communities include those
plants. Frankly, our polling shows that people who live nearby
nuclear power plants, who are familiar with them, who know
people who work at the plants so that they have those personal
relationships and where they can talk to people, their
neighbors, actually are some of the strongest supporters of
nuclear power.
So I agree with you, we have a perception problem. When we
are given the opportunity and we sit down with people over a
period of time and they grow to trust us and they grow to trust
the people who work at and who operate those plants, those
perceptions change over time.
Mr. Cleaver. That may happen. But the other issue that we
all would have to deal with, as it relates to a community, is
that the waste is primarily unconverted uranium. When you say
``unconverted uranium'' in the climate today, there is then
going to be the discussion about, you know, what if this is
somehow used or falls in the hands of those who would want to
harm people in this country?
And where do we store the waste? What area in the country
is open and joyful about receiving the waste?
Mr. Flint. Congressman, you, having a nuclear power plant
near your district, are well aware of the political
difficulties associated with storing used fuel on site.
Ideally, the Nuclear Waste Policy Act, which requires the
DOE to pick up used fuel beginning in 1998, over a decade ago,
would be operative. Unfortunately, it is not. As a result, we
store used fuel on site, be it in pools or dry casks. We do it
very safely. That fuel is handled in a way in which it is
protective of the health and environment. It is secure.
Mr. Cleaver. But we can't continue to do that at each site.
Mr. Flint. Sir, you are absolutely correct. And the
Government's failure to move used fuel is extremely
frustrating, particularly to politicians to whom utilities have
made promises that used fuel will be moved.
However, in the absence of DOE meeting its obligations, the
utilities are responding very constructively to dealing with
the used fuel on site, and it is currently stored safely and
securely. It is not an ideal situation, but I can assure you it
is very protective of health and safety.
Mr. Cleaver. Thank you, Mr. Flint.
Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
The Chair recognizes the gentlelady from South Dakota, Ms.
Herseth Sandlin.
Or I could ask questions and come back to the gentlelady?
Great. Thank you.
The Chair will recognize himself for a round of questions.
Mr. Lovins, you heard the argument made by Mr. Flint from
the Nuclear Energy Institute. This is a stark difference of
opinion in terms of the economics of nuclear in our country. He
is contending that nuclear is on the rebound, it has had a
revival, it is about to produce perhaps four to eight completed
nuclear power plants by the year 2016, and that the prospects
beyond that are very rosy, indeed.
How do you analyze the prospects as you have just heard Mr.
Flint present them to the committee here today?
Mr. Lovins. I am very puzzled. The motto in our shop is,
``In God we trust; all others bring data,'' so I look at the
numbers. I do not see any private investment in new nuclear
plants. It has never been bid into a competitive market. It has
never been bought in what is normally--in the current
generation, of what is normally considered a free-market
transaction anywhere in the world. And the competitors that the
nuclear industry dismisses as uneconomic, impractical and
trivial are producing more electricity today than nuclear is,
growing tens of times faster, and it has tens of times
nuclear's market share.
So I fear the nuclear industry lives in a sort of ``Alice
in Wonderland'' world in which nuclear merits every kind of
subsidy and support because it is supposedly indispensable,
while it actually has only about a 2 percent market share in
the world's new electric capacity, and its competitors--
micropower and negawatts--are beating all central plants.
The Chairman. Now, again, when you say ``negawatts,'' what
do you mean by--you mean N-E-G, negative watts?
Mr. Lovins. Correct.
The Chairman. What do you mean by that?
Mr. Lovins. And ``N'' for ``Nellie.''
Negawatts are saved electricity, saved through either
efficient end use or a demand response. And although they are
not nearly as well measured as megawatts, they do appear to be
having about the same annual capacity effect in the world,
maybe even bigger, as micropower has.
The Chairman. I want to go over to Mr. Flint and have him
respond to what you are saying. I think I hear you saying that
there is no private-sector investment in nuclear power, that
there is no market right now for private money to be placed
into the nuclear power market. Is that correct?
Mr. Lovins. Yes, sir, despite Federal subsidies now
approaching or exceeding new nuclear plants' U.S. cost.
Now, I find this really remarkable because, normally, if
you lay out that lavish a trough, some pigs will arrive. But I
do not see them arriving, because the private capital market
believes, in my view, that the reward is not greater than the
financial cost of risk.
The Chairman. Let me go over to Mr. Flint then.
How do you respond to what Mr. Lovins just said? He says
there is no private capital going into nuclear power.
Mr. Flint. Well, Mr. Chairman, I appreciate the opportunity
to address the issue.
I am confronted with a situation in which many people have
proposed that nuclear power receives a variety of different
levels of subsidies. I have tried on occasion to duplicate the
math, and I can't make some of those numbers work.
And so I went off and I looked at two different sources.
And, if you like, I can make these available for the record. I
have the June 2006 issue of Science and Technology, which is
the publication of the National Academies. There is an article
in there entitled ``Real Numbers: The U.S. Energy Subsidy
Scorecard,'' by Mr. Bezdek and Mr. Wendling of the Management
Information Services. And they compare the subsidization rates
of all energy technologies in the United States.
And let me read one of their conclusions: ``Considerable
disparity exists between the level of incentives received by
different energy sources and their current contribution to the
U.S. energy mix. Although oil has received roughly its
proportionate share of energy subsidies, nuclear energy,
natural gas and coal may have been undersubsidized. And
renewable energy, especially solar, may have received a
disproportionately large share of Federal energy incentives.''
Now, that is sort of an aggregate assessment. There are two
issues--and Mr. Lochbaum mentioned them in his statement--with
which I am particularly familiar, so I would like to focus on
those two things.
The Energy Policy Act of 2005 reauthorized Price Anderson
in title 6. In title 17, it had a loan guarantee program for
innovative technologies. Frequently, Price Anderson and the
loan guarantee title are considered significant subsidies for
the nuclear energy industry.
So I brought with me CBO's score of the Conference Report
on the 2006 Energy Policy Act. CBO, of course, keeps track of
how much legislation costs. Title 6, which includes Price
Anderson reauthorization, is not even on the detail table
attached to that score because it does not score.
Title 17, for loan guarantees, does warrant a notation in
the score. In particular, CBO estimated that it would score
$100 million in outlays, and outlays only, in 2006. From that
point on, there is a set of zeros that reach out to the end of
the chart, because CBO estimates that the loan guarantee
program's cost will be fully paid by the recipients of the
loans.
So I have to base my analysis on something, and, in this
case, I base it on CBO's assessment. I think----
The Chairman. Are there loan guarantees in that bill for
solar and wind?
Mr. Flint. Yes, sir. Title 17 applies to--and I actually
have it with me, but it will take a minute to dig out--
``Innovative Technologies that Reduce or Sequester Greenhouse
Gas Emissions,'' I believe is the title. It is not nuclear-
specific. So it is any technology that meets those
requirements.
I think part of the reason we get into these discussions
about the subsidization rates for nuclear in particular is
because people like Mr. Lovins and I can disagree on some of
the fundamental issues, like what is the score of the loan
guarantee title and what is the score of Price Anderson. When I
turn to independent analyses, I run into things like this
article and issues in Science and Technology that indicate that
nuclear power is subsidized at a rate less than other
technologies.
The Chairman. Let me go back over to you then, Mr. Lovins.
You have heard this contention.
Mr. Lovins. Yes.
The Chairman. Can you provide further analysis?
Mr. Lovins. Well, I did not hear an answer to your
question, Mr. Chairman. What I did hear was some selective
quotation.
I, actually, have also relied on the CBO findings that
there is a well-above-50-percent default risk on nuclear loan
guarantees. My understanding is that the $18.5 billion latest
nuclear loan guarantee allocation occurs in a committee
conference report, not in the actual legislative language, so
that it evades CBO scoring.
However, I thought your question was about the absence of
private capital investment, and I believe that is correct. This
is simply not an attractive option. Again, I would contrast it
with just distributed renewables, let alone cogeneration,
having received $56 billion of worldwide private risk capital
in 2006 alone. If you add cogen, the total would be well over
$100 billion, compared to zero for nuclear. And that trend
continues.
I was also very puzzled by Mr. Flint's remarks about
nuclear's being competitive with other sources of electricity.
The average 1999 through 2006 wind power price in the United
States was 3.5 U.S. cents per kilowatt hour net of production
tax credit, which has a levelized value of about .9 cents. This
is all in 2006 levelized dollars.
And even if you firm the wind power and even if you count
the uptick in price to 4.9 average cents in 2006, because
largely of a shortage of turbines because of the booming
market, it is still hard to get much over a nickel a kilowatt
hour. That is approximately a third of any plausible nuclear
busbar cost on the margin.
Mr. Flint. Mr. Chairman, may I?
The Chairman. Please.
Mr. Flint. This is a continuing dialogue, clearly. He cited
a CBO analysis that showed a 50 percent default rate on a loan
guarantee program for nuclear power. There was such a CBO
analysis. It was for a loan guarantee program that was
considered in the Energy Policy Act of 2003 on the floor of the
U.S. Senate. That provision did not pass the Senate. It has not
become law. The operative document is the CBO analysis of the
2005 energy policy, a conference report which is the law. As
you can imagine, it frustrates me significantly to have to be
able to track every CBO analysis of nuclear-related provisions
regardless of whether they became law or not. In this case I
can tell you that the operative analysis shows that the loan
guarantee title does not score.
The Chairman. And the reason it does not score, why is
that, Mr. Flint? How can there be a $40 billion loan guarantee
program and have it not score and yet have the same agency,
just a couple of years before, project that there would be a 50
percent default rate? That doesn't make any sense. How can you
respect an agency that projects a 50 percent default rate, says
there is $40 billion at risk, and then scores for all of the
subsequent years the risk to taxpayers as zero? That makes no
sense.
Mr. Flint. Actually, Mr. Chairman, when you read the two
provisions and you realize that CBO was scoring two different
proposed laws, it does make a lot of sense. The provisions were
written very differently. The 2005 provision is written in
accordance with the Federal Credit Reform Act which requires
that the cost of the loan guarantees be paid in advance so that
any cost that will be associated with those loans have to be
paid by the project sponsors. They will write a check to the
Federal Government to cover the total cost of the loan
guarantee. As a result, because they are being paid in advance
for the cost of the loans, the loan guarantee program in Title
17 does not score. I mean, I would request that I be able to
submit this.
The Chairman. And we would welcome that for the record.
[The information follows:]
* * * * COMMITTEE INSERT * * * *
The Chairman. Mr. Lovins, do you have any comment on this?
This a very perplexing concept here that all of this taxpayer
money can be at risk, and yet it is not scored in any way in
terms of an obligation the taxpayers have assumed.
Mr. Lovins. Mr. Chairman, in principle the project sponsors
are supposed to put up what amounts to an insurance premium
against default. My understanding is that it is up to the
Department of Energy to determine what is an adequate premium,
and that the industry expects that this Department of Energy
will set a very low premium because otherwise the conditions
would be unacceptable to the industry. I don't think any
fundamental risk conditions have changed except that probably
the risk has increased.
And in a longer paper that I will submit for the record,
you will find a remarkable history in which the Department of
Energy initially proposed relatively responsible rules for its
very generous loan guarantees under the 2005 act, but then
progressively relaxed the rules under intense pressure from the
nuclear and financial industries so that the loan guarantees
are now strippable. They are 100 percent of 80 percent debt
financing.
The sponsor is supposed to put up what DOE considers,
without any criteria, to be a significant equity stake. But the
sponsors don't seem to be willing to do that, so I assume DOE's
judgment of what is a significant equity stake will be
appropriately relaxed. And DOE even put in language in its
final decision saying that it may even choose to subordinate
Federal debt to private debt. So the financial industry got
everything it wanted and yet is still unwilling to invest.
The Chairman. My time has expired. The Chair recognizes the
gentlelady from South Dakota, Ms. Herseth Sandlin.
Ms. Herseth Sandlin. Thank you, Mr. Chairman, and thank you
for having this hearing. I find the discussion very
interesting, and in some ways similar to an issue that I have
worked very hard on in the Congress. And that is the issue of
biofuels development. And I am not comparing nuclear energy to
biofuels, but the debate here in trying to get the facts right
and the ongoing discussion about whether or not there is
information based on either older technologies or information
that has been around since the 1970s that really has evolved in
a way that we have to address this in light of new
technologies, in light of other new developments and in light
of priorities that have changed from a policy perspective on
what is the greater risk that we face, either within the
country for national security purposes or worldwide as it
relates to climate change.
And so I am very interested, as I think the Chairman is,
and others will be, to continue--whether we get some of the
information that is being cited here on both sides of the
argument--to try to figure out what the facts are today and
some of the arguments and the reputations of those arguments.
But I am interested a little bit in terms of this
discussion of sort of the private capital investment, whether
there is an absence of it, what the reasons may be for that.
And a lot of what we have done in the Select Committee is taken
testimony in other hearings as it relates to the experience of
Europe with its cap-and-trade system.
And so I would be interested in hearing from any of our
witnesses today about what you know of the experience in Europe
as it relates to nuclear energy development prior to and since
they adopted a cap-and-trade system, and whether or not that
has affected private capital investment and the levels of that
investment in European countries that are looking at--that
either had historically nuclear energy in their portfolio or
looking at that as a possibility as it relates to the
requirements of their cap-and-trade system.
Mr. Lovins. Perhaps I could take that because I am very
active in Europe. There have been no such nuclear purchases in
Europe. The one that I expect Mr. Flint would tell you about,
although he might find other aspects of it embarrassing, is the
Finish project which was bought by the Finish equivalence of
TVA. That is, it is a nonprofit customer-based consortium. It
has long-term power purchase contracts passed through to
customers. And it got a lot of very well below-free-market
financing from German and French parastatals, which appears to
many of us to be illegal, but the Commission hasn't yet said
so. The plant after 28 months of construction was 24 months
behind schedule and roughly $2 billion over budget, which was
not what was supposed to be demonstrated. So this has spooked a
lot of folks who were thinking otherwise.
Now, the British Government has lately reversed its
previous white paper and proposed to build replacements for its
aging and retiring nuclear reactors and believes this can be
done in the private market without subsidy. No other country
has achieved that, so many of us will be interested to see how
it can be pulled off. The main method of doing it so far
appears to be that the government, like the French Government,
has announced a willingness to intervene in carbon markets to
raise carbon prices high enough for nuclear to compete. I don't
think this will work, however, because higher carbon prices
will equally advantage efficiency renewables and largely
advantage co-gen as well. In other words, the competitors will
do about as well as nuclear will out of higher carbon prices.
The other British intervention proposed is basically to
continue policies that discriminate against things like wind
power of which they have an immense resource. They don't call
it that. They say they are favoring wind power, but that has
not so far been the practical effect.
I think the most interesting case to watch will be France.
They get 78 percent of their electricity from nuclear and it is
widely considered the world leader in that regard. What is not
often said is the program was so costly that it required costly
taxpayer bailouts of both the largely state-owned national
utility and the nuclear construction firm. So France today is
using about a tenth less fossil fuel than in 1973, which isn't
a big difference. It has a large and sometimes unsellable
nuclear surplus. And to try to sell the surplus it has
intensively promoted electric heating, which a quarter of
French houses have but it is very expensive. And they are
having to restart some inefficient old oil-fired plants to cope
with the winter peak load that their electric heating promotion
created, so it has made quite a mess of the electricity system.
And having been engaged in the policy discussions in France
from the beginning when the Cabinet was split down the middle,
I can tell you that France is very rich in renewable energy, is
starting to figure that out and, as in most of Europe, there is
serious policy discussion going on that is shifting very
rapidly toward renewables. You will find this in the latest
European Union climate policy which is very strong on
efficiency and renewables and not on nuclear.
Ms. Herseth Sandlin. Mr. Flint.
Mr. Flint. Congresswoman, if I might, before you arrived I
told the Chairman that I was struck by the changes in the
nuclear industry since 1982 when he wrote a book about nuclear
power and nuclear weapons, and I think some of those changes
are important to keep in mind. Clearly, there have been nuclear
power plants that have had a multitude of problems with cost
overruns and design changes and many of them eventually not
being completed and operating.
We have learned a great deal from that experience. And the
way in which we hope to build nuclear power plants in the
United States now is dramatically different than we did prior
to that time. From 1960 through the 1970s and the early 1980s
the U.S. nuclear industry rapidly advanced in this country. We
scaled up the size of reactors from several hundred megawatts
to over a thousand megawatts. Designs were evolving, plants
went under construction without completed designs, we had
problems with engineering and construction contracts, we built
them in an era in which interest rates went to 18 percent as
the economy slowed in the late 1970s and many utilities decided
they didn't need the electricity, so they stretched out the
plants of their own design. Or their own business needs caused
them to stretch out the plants, the capital costs went up. We
had a variety of issues that we have learned from.
Now as we look around the world and we see 34 nuclear
reactors under construction, we do have problems with cost and
schedule in Finland, but we have learned a great deal from
reactors under construction in China and Japan. The new EPR
that is under construction in France is not having the same
issues that we had with plants under construction in Finland.
We hope to bring to the United States some of the best
regulatory financial as well as design characteristics of
plants being built around the world.
We have a different licensing process in the United States,
this one-step licensing process. We have modularized
construction techniques that we intend to use. My expectation
is that you are going to see nuclear power plants built here
much more cautiously on the one hand by the utilities doing
their analysis in advance, and on the other hand incorporating
best-in-class capabilities from reactors around the world. This
may be one place where it is an advantage that the United
States is not the world leader.
The Chairman. The gentlelady's time has expired, but we
will go to another round as well if you would like.
The Chair will recognize himself again. Again, I want to go
back to this $40 billion loan guarantee program and it not
being scored. And it is my understanding that the reason that
CBO didn't score it is that it was put into report language
rather than into the actual appropriations language itself. And
by circumventing that analysis, it is able to create a false
impression that it doesn't really cost any money or put the
American taxpayer at risk if there is a default. And I think
that very devious technique is something that gives a
misimpression to the American people about the risk in the same
way that subprime loans, in the way in which they were scored,
gave a very grave misimpression to the American public as to
the amount of risk that was being run.
Mr. Flint.
Mr. Flint. Mr. Chairman, let me make sure I am very precise
about what I say. The 2005 Energy Policy Act, which includes
the authority for Title 17 loan guarantees, did not score. And
that is the CBO document that I was referring to. You are now
referring to the 2008 Energy and Water appropriations bill.
That bill includes two provisions. It includes bill language
authorizing the loan guarantee program to go forward. In fact,
that language has no cap on the volume of loans that may be
issued. That language does not score comparable to the 2005
Energy Policy Act, because it uses the authorities in the 2005
Energy Policy Act. An unlimited loan volume does not score.
The Chairman. But again, Mr. Flint, that is ridiculous.
Mr. Flint. Mr. Chairman----
The Chairman. No, that is an absurd conclusion. That is the
same thing that the banking regulators were doing in not
properly weighing the risk of subprime loans. And the more you
had, of course, and the more diversified the risk was, the
lower the risk was to the American consumer; when in fact, it
was only increasing it by breaking it up into these little sub-
bits. So, again, this is just phony accounting.
In looking at the whole history of nuclear power, Mr.
Lochbaum went through the history of cancellations. We have got
this Florida case where Florida Power & Light has two nuclear
reactors that are now going to cost up to $24 billion. And,
again, all of this is part of an illusion that is sought to be
created by the nuclear industry and abetted by those at CBO, I
guess, or the crafty legislators who are able to avoid having
it counted as any potential risk for the American taxpayer.
But the reality is that looking at the past, looking at
what is happening in Finland right now, looking at what is
happening to Florida Power & Light, which is seeing an
explosion in the risk to its ratepayers, and, if it qualifies
for loan guarantees, there is a real mess on the hands of the
American taxpayer.
Mr. Lovins, let me go back to you.
Mr. Lovins. It seems to me the fundamental point here is
not whether CBO was prevented from scoring by the way the
legislation was enacted, but why should a mature industry that
claims to be robustly competitive require loan guarantees or
any other subsidies. And of course we have competing experts
here. I happen to think since my institute did the first real
scoring of Federal energy subsidies back in the 1980s that Doug
Koplow has emerged as the most careful independent student of
this subject, and I think his numbers are careful and
transparent. And I would prefer them to the ones Mr. Flint
cited.
But it seems to me however big the subsidies are, they
shouldn't be needed. And I find it very telling that the
leading financial houses make quite clear they are not willing
to assume the risks that they wish to impose on the public, and
neither are the utilities. It is also clear that in the roughly
half of the United States where investors bear their own risks
and have no rate barriers to impose them on because those
States have restructured their electric systems, nuclear plants
are especially unlikely to be built. But what we are going to
see, I think, in places that do have the traditional rate-of-
return regulation is considerable sticker shock.
If you take a nuclear capital cost pretty near the low end
of Moody's range, that would correspond to a busbar levelized
cost of about $0.16 a kilowatt hour in year 2007 dollars. But
that means the first-year revenue requirements is about a $0.26
a kilowatt hour rate and that rate shock I think will
reverberate considerably.
The Chairman. Well, if the taxpayer has to pick up the tab,
of course it will.
Mr. Flint, in your testimony you said you expect between
four and eight new reactors to be in operation in the U.S. by
2016, with the possibility of a second wave of additional
reactors, as long as the first wave is on schedule and on
budget.
Last week the EIA projected that by 2030 the United States
would add 16.4 gigawatts of new nuclear generation capacity,
which translates into roughly 15 or 16 new reactors. But
according to Ms. Squassoni's testimony, the nuclear industry
would have to build 50 new nuclear reactors in the United
States by the year 2025 just to maintain its current share of
the U.S. electricity market.
Do you agree with EIA's projection that even with the
current financial incentives in place, the nuclear industry is
going to dramatically lose, not gain, in its share of the U.S.
electricity market in the next couple of decades?
Mr. Flint. Mr. Chairman, my statement has a number of
issues that are going to consider whether or not the second
wave of new nuclear power plants gets built. And I am trying to
turn to that section right now. They have to do with a variety
of issues that utilities will face. What is the cost of
competing technologies, what are the costs associated with
carbon, what is the economic growth, what are the electricity
demands in their region of the country, what are the costs of
nuclear built power plants as they get built? There are many
variables thereafter that significantly influence what happens
with that second wave. We are quite confident of this initial
estimate of four to eight plants in the 2016 time frame. The
issues beyond 2015, for me to make a particularly accurate
prediction, there are simply too many business----
The Chairman. I appreciate that, but I think it is
important for us because we are talking about climate change.
That is our objective here. Are you confident that the 42 to 46
reactors needed to maintain the share of the market which the
nuclear industry has today, can be built in the United States
by 2025?
Mr. Flint. Maybe I can answer the question more broadly. We
are well aware of the challenges that are presented by the
wedge analysis and whether or not nuclear can respond globally
and build the number of plants necessary. Back-of-the-envelope
calculations, you are talking 200 gigawatts of new electric
generation in a decade in order to support the rates of growth
that you see in the Socolow analysis. That did occur in the
1980s. We saw that sort of growth worldwide. Now, today we do
not have the manufacturing infrastructure, we do not have
enough skilled labor to be able to do that. The market has
contracted in the following decade.
The Chairman. So is it fair to say, then, that the nuclear
power industry, given the financial uncertainties, is not going
to be able to grow in a manner that would be needed for it to
accomplish the sort of expanded vision by Socolow?
Mr. Flint. No, sir.
The Chairman. No matter how much U.S. Federal Government
subsidies are there for the industry?
Mr. Flint. No, sir, it wouldn't. What you could say is the
marketplace has responded by contracting capability in that
regard.
The Chairman. No, what I am saying to you is--and I just
need you to deal with the numbers--you need 42 to 46 new
nuclear power plants by 2025 to maintain your current share of
the electricity market. You are projecting 4 to 8 by 2016. Are
you saying that somewhere between 40 and 45 new nuclear power
plants are going to be built from 2016 to 2025; is that what
you are saying?
Mr. Flint. Mr. Chairman, there are a number of variables
that will affect how----
The Chairman. I understand that. We know that we are going
to have approximately 365,000 megawatts of wind by then, over
100,000 megawatts of wind in the United States by 2016. We are
here talking about between four and eight nuclear power plants
by 2016. So as we are making our plans here to solve the global
warming problem, we want to hear from you that you are
confident and your industry is confident that it can build 45
nuclear power plants by the year 2025.
Mr. Flint. Mr. Chairman, there are analyses done by very
reputable organizations such as the Electric Power Research
Institute that predict construction in excess of that much
nuclear capacity in the United States. The EPRI PRISM analysis
predicts 64 gigawatts of new power by 2036. We are in the
process of----
The Chairman. Again, even by 2036 that would only keep you
at where you are today, at 19 percent in terms of a total
percentage of the marketplace. Is there any reason to believe
that you are going to actually see an increase, an increase in
the percentage of electricity that is generated by nuclear
power by 2016, by 2025, by 2035?
Mr. Flint. If you let me give you a complete sentence as an
answer.
The Chairman. Okay, please.
Mr. Flint. We are doing a very--as we call it, a cold-
blooded analysis so that we are neither overly optimistic nor
overly pessimistic about exactly what rates of new nuclear
industry can support. We are in the process of developing new
manufacturing capability, of building training centers for the
skilled workforce. We are working with State legislators on a--
--
The Chairman. That is not an answer. We can see where wind
is going, we can see where solar is going. We have blinders on
when it comes to the nuclear industry, even with these massive
multibillion-dollar subsidies. So that is the real problem that
we have right now, Mr. Flint. We are trying to predict a future
looking at the reality of the marketplace, which is a renewable
and a negawatt, an efficiency marketplace. And you want us to
basically continue to go back to the American taxpayer to get
loan guarantees for an industry that the industry itself can't
garner investment from the private sector.
Let me just stop there for a second. I want to give the
gentlelady from South Dakota another round.
Ms. Herseth Sandlin. Well, I appreciate that. I know we've
got a pending vote, so I will just reserve my right to submit
questions in writing for the panelists to pursue some of what
both Mr. Flint and Mr. Lovins were responding to in my previous
questions as it relates to the ability to meet some of these
projections; what the renewables are, but what the projected
demands are, to be able to determine whether or not as we
develop the renewables either here, as some of the European
countries are developing their renewables further and the tax
incentives and government policies that go along to
facilitating that, just whether or not that is going to be
sufficient to meet all the projections and demands.
So I appreciate the opportunity for another round, but I
think I will reserve the right to submit them in writing.
The Chairman. I thank the gentlelady. And the Chair will
recognize himself once again.
Again, I have to go back, Mr. Flint, to your testimony
where you say that the potential contribution nuclear power can
make to reducing projected greenhouse gas emissions in the
electricity sector in coming decades is ``extraordinary.'' That
is the word you use.
Mr. Flint. Yes.
The Chairman. And yet you then turn and say that you are
doing a cold-blooded analysis of whether or not that is
possible. So there is kind of a public representation that the
opportunities are extraordinary, but when you are asked a
specific question about a quantity of electricity that the
industry is willing to represent that it will build, we don't
hear that number. All we hear is between four and eight, which
is a pretty wide variation between now and 2016. And beyond
that we don't hear any specific numbers.
Whereas the renewable electricity industry, the energy
efficiency sector, can give us quantifiable amounts of
electricity produced or saved that we can rely upon going
forward in our fight against climate change. And that is the
dilemma that we have with the nuclear industry right now.
Mr. Flint. Mr. Chairman, I can understand your frustration.
But recognize that we are trying to ensure that we meet the
expectations that are established. I will give you some
specifics. I have 17 utility companies that have announced
plans to build 31 new nuclear reactors. That is significant.
Those companies are spending real money in pursuit of those
license applications.
To give you a back-of-the-envelope estimate, a license
application process at the NRC costs about $100 million. Recall
the nuclear industry, we pay not only our own costs of
submitting a license application, we also pay 90 percent of
NRC's annual budget. We pay them. And the NRC budget for 2009
is a little over $1 billion. So utility companies are now
spending very real money in the development of these nuclear
reactors.
I can't tell you exactly what year certain reactors will
come on line. Largely it is dependent upon whether electricity
growth in certain regions is at 7 percent or 4 percent or
whether it goes to 0 percent. But I can tell you that
independent analyses, like the EPRI analysis, anticipate 64
gigawatts of new generation by 2036. That is an extraordinary
contribution to greenhouse gas emission avoidance.
The Chairman. Let me go to you, Ms. Squassoni. At this
point many people think that there is a small probability that
the Yucca Mountain site to store all the nuclear waste in the
United States will ever be opened. Have you looked at the
question of how many Yucca Mountains we would need to store the
waste that all of these new hypothetical reactors will
generate?
Ms. Squassoni. Thank you. Yes, I have, although people more
expert than I say it is a little misleading to use that as a
figure, because the limits for Yucca have been legislated at 75
metric tons and there is a big debate about whether it could
hold more. In part, the calculation of the kinds of spent fuel
that will be generated depends on what you think that future
nuclear fuel cycle will look like: Is it just lightwater
reactors or are you going to reprocess? Will we have fast
breeder reactors?
And so I will rely on some other people's data--if I can
see this here. A scenario of 700 gigawatts would require,
according to the NRDC, 14 Yuccas. That is at the 70,000-metric
ton limit. If you go to a one nuclear wedge, you would require
one Yucca every 3.5 years or 20 Yuccas. And if you go to the
MIT 2050 scenario, you would require about 30 Yucca Mountains.
The Chairman. Let me ask you this, Ms. Squassoni. Do you
think that the nuclear industry can ramp-up the way it did in
the 1970s and 1980s? Is that possible in this new era as Mr.
Flint talks about a nuclear renaissance? Can we expect to see
dozens of new nuclear power plants come on line over a 20-year
period?
Ms. Squassoni. Well, I think there are a lot of factors, as
Alex Flint has mentioned. I think you have to keep in mind that
in the 1970s and 1980s, the period of greatest growth, we had a
large nuclear infrastructure. We don't have that anymore,
particularly in--I forget the figures--just in terms of the
supporting industries.
For example in the 1980s, the U.S. had 400 nuclear
suppliers and 900 holders of N-stamp certificates. That is,
nuclear qualified. Now we only have 80 suppliers and 200 N-
stamp holders, so we have a much much smaller percentage.
The Chairman. Let me ask, in your testimony you cite some
of the industry bottlenecks that pose a challenge to the
nuclear industry, such as the fact that there is only one
company in the world that can make the specialized metal
forgings needed to build new reactors. That company has a 2-
year long wait list, and, even when it scales up, will still
only be able to produce material sufficient for eight reactors
a year.
But you also cite the MIT nuclear study which says that for
nuclear energy to play its projected climate role that there
would have to be a fivefold increase in the number of reactors
worldwide and an annual build rate of 35 per year. How can this
and other projections for a significant expansion of nuclear
energy be reconciled? What would it take, for example, to bring
the global specialized metal forging capacity up to 35 reactors
per year?
Ms. Squassoni. I think there is a gap between the
expectations and what can be accomplished in the next 10 years.
Obviously, countries can develop specialized forging
capabilities over time. I would say that the information
provided to me by Japan Steel Works--I asked, Well, why does
everyone come to you? And they said, Well, because we have 30
years of experience, including Russian companies and entities.
The Chairman. So what would it take to just double the
capacity, Ms. Squassoni?
Ms. Squassoni. Well, you have to keep in mind that JSW I
think provides about 30--or not 100 percent of the forgings. It
depends on what reactors will be built. But it is significantly
greater than----
The Chairman. In order to not even do 35 power plants per
year, let us just say 17 power plants per year across the
world, what would it take to double that capacity? What kind of
investment is necessary in order to provide the materials?
Ms. Squassoni. I would have to get back to you on that.
The Chairman. If you would do that for the record, I would
very much appreciate it.
[The information follows:]
* * * * COMMITTEE INSERT * * * *
The Chairman. Let me go over to you, then, Mr. Lochbaum.
You haven't had a chance to comment on what you have been
hearing. Can you take any one of these points and comment upon
it?
Mr. Lochbaum. I joined the nuclear industry in 1979 after
the Three Mile accident, so I have an alibi for that. But that
was during the expansion, the great expansion of nuclear power
in the United States. And looking back on that, we ramped-up
too quickly. For example, the Nuclear Regulatory Commission
didn't have enough staff to do the reviews of the reactors in
the pipeline. They had interns, summer interns that were
reviewing the safety applications that resulted in problems
like the Connecticut Yankee final safety analysis report having
the Millstone final safety analysis report incorporated,
without catching the fact that it was a totally different
reactor.
I worked at Grand Gulf. I recall your comments around the
time of Grand Gulf's licensing, calling it Grand Goof. I worked
at Grand Gulf. We messed that up very badly. The original
license for Grand Gulf was for another plant. We didn't catch
that. We submitted it to the Nuclear Regulatory Commission and
they didn't catch it. So the problems with ramping-up haven't
been dealt with.
I noticed your comments in September of last year about the
Nuclear Regulatory Commission's plans to meet the 24-month
review time for new reactors. The NRC plans to do that by
farming out the work to private industry. That is totally
unacceptable. That shows that the NRC is focused on schedule.
Not on quality. It hasn't learned a lesson of the past. It
seems like it is destined to repeat that mistake rather than
avoid it. So I don't see any optimism at all for believing that
the future will be any different than the past, except for the
fact that we have fewer excuses for repeating that mistake,
since we know about them now.
The Chairman. My time has expired. The Chair recognizes the
gentleman from New York State, Mr. Hall.
Mr. Hall. Thank you, Mr. Chairman. I am sorry, due to the
vote to adjourn, I was unable to hear your oral testimony, but
I did have a chance to review it. And let me just state, first
of all, as one who represents the 19th District in New York
where we currently have the second and third units at Indian
Point awaiting relicensing proceedings with the NRC at a time
that they are leaking strontium and tritium from the spent-fuel
cooling ponds into the groundwater and into the Hudson River,
and when there have been a series of unscheduled outages caused
by anything from an exploding transformer to river debris
washing up into the water intake and clogging it, and the folks
in Rockland County who do emergency management finding out
about that transformer fire in particular by seeing a puff of
smoke across the river, rather than by getting a call as the
procedure is supposed to be. There are many people in my
district who are nervous in particular about this plant.
So to me there are a couple of issues. One regarding
whether we should be investing our short precious resources in
nuclear as opposed to renewables, which I think, given the same
massive--and depending on whose numbers you look at, it is
easily over $100 billion from the birth of the industry, some
would say $145 billion, $150 billion and all kinds of
subsidies--and insurance by the taxpayer. The only industry to
my knowledge that has been unable to get insurance against a
catastrophic accident, and therefore the utilities required
that the government provide taxpayer-backed insurance. And the
average taxpayer didn't even know this.
So there is a question overall in terms of whether nuclear
power, commercial nuclear power can stand on its own two feet
if it had to compete on a level playing field against various
other sources.
But then there arises the question of whether one should
relicense a plant in the area that probably shouldn't have been
built in the first place. And certainly I don't think a utility
today would apply to build a new nuclear plant in Westchester
County, in an area where 8 percent of the population lives
within a 15-mile radius of the plant. You look at where
applications are going. They are generally going for more
remote locations, for good reason.
We also know that Mohammed Atta flew over the New York area
several times on commercial flights, checking out targets. And
one of his notes that was found in his possessions after 9/11
included a comment about a nuclear plant that was presumed to
have been Indian Point that he flew over as a potential target.
At any rate I would just like to ask all of you, I guess
one question to start with, and I may be out of time by then,
thanks to my talking so much, but I asked our first panel last
year when the Chairman called a security panel with Jim
Woolsey, our former CIA chief, and Steven Haas from the Council
on Foreign Relations, and Admiral McGinn and folks who were
involved in the security end of this.
If we ramp-up the kind of increase in nuclear power across
the world--and I know that there are companies. In fact, this
President has authorized sales of, for instance to India, of
nuclear technology and materials and even waived, if I remember
correctly, certain provisions of the Nonproliferation Treaty to
be able to do so.
What I asked that panel a year ago I ask you again: When we
are increasing the transit by ship and by rail and by truck of
many thousands of shipments all over the world, including in
this country, of enriched fuel on its way to a plant and of
spent fuel on its way to a repository, whether such a
repository actually exists for a long-term basis or if it is a
temporary one, are we not making eventually the explosion of a
dirty bomb virtually a certainty?
Feel free to go first.
Mr. Flint. Congressman, it is important to recognize there
have been 24,000 international shipments, or around the world
they are having 24,000 shipments of nuclear material to date.
Those shipments are handled safely and securely and will
continue to be done in such a manner.
Mr. Hall. Thank you.
Ms. Squassoni. I think both Reuters and Nucleonics Week
have reported recently that States are getting jittery about
these kinds of transfers, mostly even in just the fresh fuel. I
think if you see the kind of expansion for the global climate
change levels, you are talking about a lot of nuclear material
in transit, much more than we have seen now. And so I think
that does--I don't know if it makes it a certainty, but I think
it does increase the risk. Thank you.
Mr. Lovins. I don't think one needs to imagine airplane
crash scenarios, which I wrote about in a Pentagon study in
1981, to be concerned about particularly nearsighted nuclear
plants with their gigacurie inventories being a terrorist
target. Most of the existing plants can be caused to melt down
by interventions that would take readily available devices that
can generally be operated from outside the site boundary and
would cause the safety systems to fail.
Mr. Hall. Thank you. My time has expired. And I just wanted
to comment, if I may, Mr. Chairman, that the 20-some-thousand
shipments of nuclear material around the world, I presume a
good number of them were before the rise of Islamic terror,
terrorists and groups that we have seen in the last several
years. And I also assume that that number would have to be
drastically increased in order to reach the level of total
nuclear output worldwide that is being considered.
So with that, I thank the Chairman and yield back.
The Chairman. I thank the gentleman, and the Chair will
recognize himself for another round of questions.
Let me go back to you again Mr. Lovins, then I can go back
to Mr. Flint. And I want to focus on this Florida Power & Light
decision to build two reactors that could cost upwards of $24
billion. Why would Florida Power & Light, Mr. Lovins, want to
build two reactors that couldn't possibly generate any more
than perhaps 2,500 megawatts and be willing to run the risk of
having it cost them $24 billion? What is in the mind of Florida
Power & Light or any utility that moves in that direction?
Mr. Lovins. Having worked in the utility industry for
several decades, I must say that what must be in their minds is
a rare phenomenon and typically does not survive encounters
with the capital market.
The longer paper I will submit for the record is replete
with statements by the bond rating agencies and others in the
industry, and indeed by utility executives very knowledgeable
in this field, that they would not contemplate such an
investment or they think it is unlikely or imprudent. So I must
presume that whoever made that statement must not know very
much about cost-effective alternatives.
I think we are likely to have 100 gigawatts of wind power
installed in this country before we have our first gigawatt of
new nuclear, if ever.
It was interesting thinking about the four to eight plants
Mr. Flint mentioned when the NRC expects 33 applications. Now,
perhaps there is a difference between a plant and a unit, but
it sounds kind of like the funnel that Mr. Lochbaum talked
about, going from announcements to actualities.
The Nuclear Energy Institute has noted the cancellation
already of about three-quarters of the announced coal plants. I
expect somewhere between that and all of the nuclear
announcements will lead to nothing. And the global nuclear
industry projects that in the 5 years 2006 through 2010, it is
going to build about 17 gigawatts of capacity of which, by the
way, most all or more than all is expected to be offset by
retirements meanwhile, which we haven't discussed here. But
basically the bulk of the fleet is old. The average age is 24
years. And it will gradually go away.
Now, compare 17 gigawatts over 5 years with the current
construction rate just of Micro-Power let alone negawatts.
Micro-Power today is adding 17 gigawatts about every 15 weeks.
The Chairman. Why don't you redefine for the audience what
Micro-Power is?
Mr. Lovins. Micro-Power is cogeneration plus renewables
minus big hydro. Well, Micro-Power is adding 17 gigawatts about
every 15 weeks. In other words, times faster than the nuclear
industry has projected. Gross additions, not net of
retirements. I don't know what part of that number anyone who
takes the market seriously doesn't understand.
The Chairman. Thank you. Let me go back to you again, Mr.
Flint. It seems like an astounding amount of money, $24 billion
for two reactors, given the fact that, as Mr. Lovins says,
there is likely to be 100,000 megawatts of wind by 2016 across
the country. So Florida Power & Light, it is known as a company
that believes in wind power, solar power, other renewables in
other parts of the country. But here it is willing to risk
ratepayer, and I guess taxpayer, dollars up to the tune of $24
billion. It just doesn't seem economical. It seems to be
completely out of sync with what is going on in the whole rest
of the national and international marketplace.
Mr. Flint. Well, Mr. Chairman, the reality is it is not out
of sync, you are absolutely right. Florida Power & Light I
believe is the largest wind utility in the United States, very
familiar with the economics of wind going forward. But let me
read you a little bit more from their determination of need
petition. It said that the company, quote, has conducted an
extensive review of information currently available within the
industry on the expected cost of new generation nuclear units.
Quote, the addition of new nuclear capacity is economically
superior versus the corresponding addition of new gas-fired
combined cycle units required to provide the same power output,
yielding large direct economic benefits to customers. Based on
all the information available today it is clearly desirable to
take the steps and make the expenditures necessary to retain
the option of new nuclear capacity coming on line in 2018, end
quote.
Mr. Chairman, the reality is that we are seeing significant
increases in the cost of all types of baseload generation. What
we say is that nuclear power will be competitive. We have costs
that are rising as concrete and steel and labor costs rise, but
those are the same pressures that coal and gas-fired plants are
being subject to. The cost of natural gas is going up and one
can only speculate as to the future of coal in whatever the
regulatory environment will be.
The Chairman. Go back to Mr. Lovins. You just heard the
Florida Power & Light justification for two nuclear power
plants costing $24 billion. What is your comment?
Mr. Lovins. Or more precisely, for retaining the option
value, which is very different from actually ordering a plant
and putting cash on the barrel head to pay for it.
I would differ in several respects with Mr. Flint's
remarks. The Cambridge Energy Research Associates construction
industry--or excuse me, construction cost index for U.S. power
plants in the 3 years ending third quarter 2007 for North
America showed a 2.31 times year 2000 cost for all main types
of power plants, but 1.79 times for non-nuclear types; that is,
nuclear suffering uniquely rapid cost escalation. This shows up
very clearly not just in the nuclear numbers from the Keystone
study last June, which were so devastating that the industry,
and specifically NEI, misrepresents the results or ignores
them, but also in actual comparisons.
And I think Mr. Flint is incorrect to say that the right
comparison--or to imply the right comparison is with other
baseload central thermal plants, coal or gas. Those are not the
real competitors. It is all central plants that are getting
absolutely walloped in the marketplace by Micro-Power and
negawatts. And the very competitors that the nuclear industry
refuses to accept as important are eating its lunch.
The Chairman. Thank you.
Let me go to you, Ms. Squassoni. And let us talk about the
nuclear power plants that are being proposed for Egypt, for
other countries around the world that could pose
nonproliferation threats to our country and to the rest of the
world.
Give us a little bit of detail as you are looking at what
is now projected in terms of plutonium, uranium, nuclear
materials, spreading to country after country, especially in
the Middle East.
Ms. Squassoni. I think you have to start with the context
that over 27 countries have announced intentions to install
nuclear capacity. And because they don't have nuclear power
plants now, they lack the infrastructure, not just--I mean
regulatory, legal----
The Chairman. So which countries frighten you the most from
a nonproliferation perspective Ms. Squassoni?
Ms. Squassoni. Yemen.
The Chairman. Keep going.
Ms. Squassoni. I have to get out my map here. I think part
of the proliferation concern, it is not just--you know,
nonproliferation advocates tend to be painted as non-nuclear.
It is not a question of non-nuclear. But when you have what
nuclear power plants will do in these countries, it will give
them expertise, it will give them a scientific and
technological basis. And in the current state of the
nonproliferation regime where we have been completely
unsuccessful in discouraging other countries from developing
enrichment or reprocessing plants, these countries will then
have a further excuse, if you will, for developing the entire
fuel cycle.
Now, is that cost effective? No. But that doesn't happen to
be stopping Iran, for one.
The Chairman. So the risk we run, obviously, is that if
nuclear becomes this global solution and they are constructed
in Yemen, in Egypt, in Saudi Arabia, in other countries----
Ms. Squassoni. United Arab Emirates. I mean I don't want to
paint the--it is not that these individual countries in the
Middle East themselves might pose a problem, but they are
certainly looking at their options as the probability that Iran
can't be discouraged from its nuclear program. They are
certainly looking at their options and thinking, well, we will
develop our own nuclear infrastructure to keep our options
open.
The Chairman. And that is the problem that I think I hear
out of this testimony today. That Mr. Flint is not willing to
project that by 2025 the nuclear industry can meet a production
level that is perhaps upwards of 45 new nuclear power plants
and keep it at the same level in the United States of its
percentage of electricity generation as it has today. And to
meet the problem globally we have to watch nuclear power plants
be built in countries that don't have regulatory systems or
security systems in place that would give people confidence
that the price we are paying in increased climate protection is
not completely counteracted by a collapse of our nuclear global
nonproliferation regime. And that is a real price that I think
the whole world has to understand.
Let me turn and recognize again the gentleman from New
York, Mr. Hall.
Mr. Hall. Thank you Mr. Chairman. I just have a couple of
quick questions before I have to go vote.
Mr. Flint, I just wanted to refer to a comment that Admiral
McGinn made in his testimony before this committee that the
experience of the Navy with naval reactors has been very, very
positive, unquote. And this is often brought up as a point that
safety can be achieved to a much higher degree. And I think
that as we all know, the Navy is not a for-profit business.
They have sailors down in the submarine close to the reactor,
and it is in their interest, and they spare no expense and cut
no corners.
And if it were decided by--I mean, this is a societal
decision I think we are talking about. We need to as a country
decide what mix of different sources of power we are going to
use. But in order to gain the degree of confidence of safety
that would generate broad public support, do you personally or
do you think the industry would take kindly to the idea of
being nationalized as opposed to being a for-profit bunch of
utilities that operate in different plants?
Mr. Flint. Congressman, if I may, I would like to answer
that in part and take part of that as a question for the
record. First, the U.S. utility industry is not interested in
being nationalized. The reason I would like to take part of
that as a question for the record is that Admiral Skip Bowman
who previously ran the nuclear reactor program is now the
president and CEO of the Nuclear Energy Institute and he might
like the opportunity to address that question directly,
particularly the issues associated with naval reactors and its
application to the civilian sector.
And so if I may take that part as a question for the
record, I would be delighted to get back to you.
Mr. Hall. Thank you.
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* * * * COMMITTEE INSERT * * * *
Mr. Hall. And just one more for you, Mr. Flint. A couple of
times in your testimony you reference clean--the benefits of
clean energy from nuclear power. I am just curious why you
would describe as clean a technology which produces cancer-
producing radioactive isotopes that remain radioactive for
hundreds of thousands of years.
When we look back at King Tut 7,000 years ago, or whenever
that was, it is pretty hard to imagine that we will actually be
able to isolate the longer-lived radioactive products of the
fission process for the length of time that they need to be
isolated and protect people that need to be shielded from them.
I mean there have been books written about this that
speculate about a nuclear priesthood that will design some kind
of symbolism or language that can be read by future
civilizations and might come across our repository so that they
know not to go in there and get too close to it.
I mean, that is the level of--now, also we don't have a
control planet, by the way. The fact that I have in my own
family and friends half a dozen people who are either just
recently deceased of cancer or fighting off some kind of
cancer. Who happen to live in the immediate area of Indian
Point, for instance, is something that we will never know if
there is a connection because there is also PCBs and pesticides
and all these other things in this one environment, this whole
Earth that we have.
There is no control planet, and then a planet that we can
see what the effects would be. But I contend that it is not
clean and it is actually fraudulent advertising to say that it
is. Your response?
Mr. Flint. Congressman, the issue of what to say with
somebody who lives near a power plant and gets cancer is always
very difficult when you are sitting directly with somebody, as
you do with your constituents from time to time. In different
settings, though, it is appropriate to recall that 40 percent
of the population will get cancer during its lifetime from
other causes, okay. The issue really is, does nuclear power
result in any incremental increase in cancer?
And let us look at radiation for just a moment. Currently
we anticipate that a new disposal standard for Yucca Mountain
will be issued that will contemplate a million-year disposal
requirement for Yucca Mountain. We estimate that DOE will come
up with models that will show at what rate radionuclides from
Yucca Mountain might migrate through the environment and be
released out to the environment and might get close enough to
the surface to be brought up in plants and water and other
things like that.
Mr. Hall. Excuse me, my time has expired, so I just wanted
to ask you--I gather that all these great lengths that you are
going to to try to keep it isolated would imply that in fact
the waste is not clean?
Mr. Flint. Congressman, I would imply that the doses of
radiation that people receive from the civilian nuclear
industry in this country are minuscule compared to background
and other sources of radiation. The net benefit is the issue at
hand. So, for example, when somebody goes in for an MRI and
receives a fair amount of radiation, the amount of radiation
they receive from a nuclear power plant is inconsequential in
comparison, and the benefits of the clean electricity generated
from that nuclear power plant are tremendous.
The Chairman. I hate to say this, the gentleman's time has
expired. We have a very important roll call on the House floor.
We have been constantly interrupted. I missed one or two, so I
could keep the hearing going. I am going to ask each one of you
to give us 30 seconds, what you want us to remember about the
nuclear power industry as we are going forward. Begin with you,
Mr. Flint.
Mr. Flint. Mr. Chairman, climate change is one of the great
challenges facing this country. I see no scenario by which we
can possibly achieve reductions in greenhouse gas emissions
while we meet the electricity demands of our country, estimated
to grow at 30 percent between now and 2030, without a
significant increase in the amount of nuclear power that we
have. The industry is preparing to respond to that, and we will
be able to respond to that challenge.
The Chairman. Thank you. Ms. Squassoni.
Ms. Squassoni. Thank you. The kinds of nuclear expansion
that would be needed to affect global climate change are huge
and unrealistic and incredibly costly, and moreover they carry
with them proliferation risk that I don't think the United
States and the international community yet have begun to really
combat.
The Chairman. Thank you. Mr. Lochbaum.
Mr. Lochbaum. We have 104 nuclear power reactors in the
United States today. We may build some in the future, we may
not. We don't know. But we are going to have nuclear power in
our future for a few decades. The best protection the American
public has against that risk is an effective nuclear regulator.
We don't have that today. We need that as soon as we can get
it.
The Chairman. Thank you. Mr. Lovins.
Mr. Lovins. Nuclear power is continuing to drive an
incurable attack of market forces just by heroic efforts to
revive it with subsidies. But even though it is being massively
outcompeted by larger, faster, cheaper options, Micro-Power
negawatts, it has claimed to produce climate benefits. That
claim is simply false. Because nuclear is so expensive that if
the same money were spent instead on Micro-Power negawatts, we
would get 1\1/2\ to 11 times more carbon saving per dollar, and
we would get it sooner.
The Chairman. Thank you, Mr. Lovins.
We thank each of you. I think this was a very important
panel for us to have. There are still questions I think that
the Members of the committee who could not attend would like to
pose to you in writing. We would appreciate written responses
in a timely fashion.
With that and the thanks of the committee, this hearing is
adjourned.
[Whereupon, at 11:05 a.m., the committee was adjourned.]
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