Monday, April 27, 2009

A Key Energy Industry Nervously Awaits Its 'Rebirth'

Governor Kaine appears quite we need to start sending him educational materials?

Published: April 27, 2009

One of the biggest question marks in the nation's energy and climate policy is the future of nuclear power. In the past, the United States has made a major commitment to it. The U.S. nuclear power industry is the world's largest. The nation's 104 operating plants produce 20 percent of its electricity, making them, by far, the largest source of electricity that does not result in greenhouse gas emissions.

If a cap and a price are imposed on carbon dioxide emissions, these plants could be among the biggest economic winners in the vast economic shifts that would be created by greenhouse gas regulations.

But the future of the industry may still hang precariously on decisions made by the Obama administration, in which multiple issues remain unsettled. While former President George W. Bush joined the industry's chorus proclaiming that a "nuclear renaissance" is under way, President Obama has approached the issue with his lawyer's penchant for nuance, caution and opacity as he listens to conflicting voices within his administration.

"The president needs to show his cards on nuclear energy," said energy consultant Joseph Stanislaw, a Duke University professor. "He cannot keep this industry, which must make investments with a 50-year or longer horizon, in limbo for much longer."

To be sure, the "limbo" he refers to isn't just a policy matter. The industry faces political, legal and technological issues in the disposal of spent nuclear fuel. The economics of nuclear power, including the future costs of new plants, appear to be the biggest current hurdle.

The most-cited evidence for the "renaissance" is that U.S. energy companies have filed 17 applications with the Nuclear Regulatory Commission (NRC) for 26 new reactor operating licenses. On Friday, the first of these fell by the wayside. A Missouri utility, AmerenUE, said it was suspending plans to build its proposed plant because the state Legislature would not allow it to charge consumers for some of the project's costs before the plant's completion. Without that "financial and regulatory certainty," the company said it couldn't proceed.

On the other hand, the industry's political acceptance has improved since the 1990s, when new power plant construction stopped as if dead. A shift in the policy debate to climate change mitigation has helped the industry make its case. The availability of nuclear power reduces U.S. carbon dioxide emissions by 680 million tons a year, says Paul Genoa, policy director for the Nuclear Energy Institute, which represents the industry. "It's a big number -- roughly equivalent to all the CO2 emissions from our passenger [vehicle] fleet," Genoa says.

An industry with a new, international face

The new face of the U.S. nuclear industry that is emerging will have a number of foreign players eager to stake their claim. Virginia officials rolled out the carpet in October for the French energy company Areva and Northrop Grumman Shipbuilding, which plan to build a $363 million manufacturing plant in Newport News to make nuclear reactor components. More than 500 employees would be at work by 2012, the companies said. "This joint venture project is tremendous news for Virginia," said Gov. Tim Kaine (D), whose state holds large uranium deposits. (emphasis mine...SB)

Today, 40 nuclear plants are under construction in 11 countries, led by China, South Korea, Japan and Russia, according to the World Nuclear Association. "Nuclear energy is going to be used," asserted William Magwood IV, a physicist who directed nuclear programs in the Department of Energy under both former Presidents Clinton and George W. Bush. "People underestimate how quickly this is going to happen." Internationally, more than 100 nuclear reactors are planned and more thans 250 have been proposed.

Climate concerns led Congress to approve $18.5 billion in federal loan guarantees in 2005 to support construction of perhaps a half-dozen new nuclear plants that are meant to demonstrate new, safer and more efficient reactor designs. The guarantees would cover up to 80 percent of project costs. The 2005 Energy Policy Act also provided a limited production tax credit for a few new nuclear facilities. And the Nuclear Regulatory Commission is following a new licensing process designed to speed the review process and prevent recurring environmental challenges.

The first few new plants, aided crucially by the 2005 financial incentives, could be in operation by 2015-17, industry officials say. But the industry's U.S. 'renaissance' could well stop there unless more favorable economic and political conditions appear. "The industry's success in the coming years will turn largely on money, attention to detail, and an ability to earn and retain the trust of all its stakeholders," said Roland Frye Jr., a senior NRC appellate attorney, writing in the Energy Law Journal last year.

Obama's 'agnosticism': maybe, maybe not

Perhaps the most critical issue is whether President Obama will be among those stakeholders. Obama called himself an "agnostic" on the issue during the 2007 presidential primary campaign. "I'm not somebody who says nuclear is off the table no matter what, because there's no perfect energy source," Obama told editors of New Hampshire's Keene Sentinel newspaper.

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