In This Issue
Summer Issue of The Bridge on Energy, the Environment, and Climate Change
July 3, 2015 Volume 45 Issue 2

Requirements for the Success of Civilian Nuclear Power in the United States

Monday, July 6, 2015

Author: Brittany L. Guyer and Michael W. Golay

As the harmful environmental effects of burning fossil fuels are increasingly recognized around the world, the carbon-free energy generated by nuclear power plants could support increased use of nuclear power. But the progress of the civilian nuclear power enterprise in the United States is at a crossroads: Without a change in policies and public opinion, existing plants may be shut down sooner than later, and it is not clear that new ones will be constructed. Nuclear power could thus become less available as an option for climate change response—and the United States less of a factor in guiding it.

Background

Climate change requires a technological response, and nuclear power could be an important element of that response. However, current conditions in the United States may inhibit an American contribution and diminish US influence on efforts to address the problem.

If the United States is to reap the benefits of nuclear energy, it will be necessary to create the conditions under which it can flourish. Current conditions are so ill suited to its success that its failure in the marketplace is likely. Whether this will occur is fundamentally a socially determined result. Yet the question of what institutional conditions would be most effective in preventing failure has not been seriously considered, despite abundant evidence that current arrangements are not working: only a few new units have been ordered since 1974, and almost all construction projects have been plagued by costly delays.

The typically weak financial conditions of US utilities and the politically controversial status of nuclear power offer some explanation; but these factors would remain even if the use of nuclear power were to become popular. Without substantial improvement in the stability of future nuclear projects in the United States, the likelihood of their success will remain dim and the country will be sharply limited in its ability to achieve successful domestic energy solutions and to provide needed international leadership in mitigating the consequences of climate change.

Besides reducing both dependence on fossil fuels and their associated climate impacts, there are other potential gains from US progress in the development and use of nuclear power. The United States can be an international leader in nuclear operational and safety practices and in climate change policy. And it can play a key role in the development of strategies to curtail the proliferation of nuclear weapons, a major concern associated with increased nuclear energy use. Such strategies are essential, as other nations will likely develop and use nuclear energy regardless of US energy choices.

The United States is thus faced with an important question: Should it expand the use of nuclear power? If so, the American way of implementing nuclear power projects must change: specifically, a larger, but not exclusive, governmental role is required.

Early US Nuclear Development:
Favorable Conditions

From its conception to its growth to industrial scale, US civilian nuclear power was marked by substantial federal involvement and subsidy. This made sense because the roots of the technology were in secret government work, introduction in 1950s of the “peaceful atom” was a federal priority, and the government believed in the potential of nuclear technology to provide great economic benefits (Kinter 1959). Federal involvement also resonated with the popular attitudes of the time (trust in the beneficence of the US government) and provided the stable environment required for the initial development of civilian nuclear power technology.

The combination of government involvement and vigorous economic growth sparked utility interest in nuclear power based on light water reactors (LWRs; Perry et al. 1977). Implementation of regional power pools and emerging environmental concerns about air quality also made nuclear power an attractive option for utilities. These features, in conjunction with the stable economic climate of the late 1960s–1970s, provided the impetus for construction of 253 nuclear power plants (although over 120 were ultimately cancelled; Gore 2009, p. 159).

Political, Economic, and Social Changes

The favorable political and economic conditions for the initiation of the large nuclear projects did not last. In 1974, driven by an unjustified concern about impending uranium shortages, the federal government withdrew its support and promotion of LWR technologies in favor of developing breeder reactor technologies.

At the same time, based upon the apparent success of the early nuclear power plants, the Atomic Energy Commission announced that the LWR technology had reached sufficient maturity and was believed to be adequately complemented by private industrial infrastructure such that it no longer required federal support. In retrospect, this proved to be a serious error, reflecting an overestimation of the strengths of private markets and an underestimation of the difficulties that have characterized most of the history of nuclear power. Too much faith was placed in the ability of private industry alone to make nuclear power more attractive than its fossil fuel alternatives. Instead, the government’s withdrawal resulted in an enduring primary national reliance on fossil fuels for electricity generation.

Also in the early 1970s the social and economic stresses of the Vietnam War led to a departure from prevailing social attitudes and an unstable, hostile environment for nuclear projects. As the war became increasingly unpopular, protests against government projects became an attractive tactic for attacking the legitimacy of the government and its policies generally. Some portions of American society remain critical of things nuclear, including nuclear power.

Once the initial enthusiasm had passed, subsequent windows for nuclear power construction projects that seemed to be sensible pursuits were typically too short for utilities to complete the projects successfully.

Unfortunately, there was no significant action at the government level to bolster the project economics or provide political insulation (as is common in France, for example) so as to ensure the expansion of nuclear power. In fact, the destabilizing political and economic environments for nuclear power plant projects were not even well recognized as a problem. Thus, the political will for action to remedy the failures of nuclear power and to support its future progress did not jell, even as project cancellations became common.

Current Challenges to the Development of
US Nuclear Energy

Critical Instabilities in Costs and Decision Making

The primary barrier to new nuclear power plant construction in the United States is uncertainty about the capital cost of the project (Davis 2012). Figure 1 illustrates the large variation of construction costs for nuclear power plants in the United States in the late 1960s and 1970s. In 2014 dollars, overnight construction costs for dozens of projects begun in 1967–1978 ranged from $1,000 to more than $9,000 per kWe for basically the same power plants (EIA 1986).

Figure 1

The principal contributor to the uncertain outcomes of such construction projects has been the instabilities of the decision-making environments for these projects, especially in the construction phase, which largely determines the cost of the resulting energy. These instabilities arise from the high sensitivity of the project schedule—and thus costs—to unanticipated changes, which may come from sources such as the safety regulatory system (via new requirements or licensing disputes), but more often from procedural delays (especially as a result of political opposition), from design and construction errors, and from interruptions in project funding. Nuclear power plant construction projects are particularly susceptible to these instabilities because of their large financial vulnerabilities and long time-scales—typically 90–130 months for completion (EIA 1986, p. 19). 

Instabilities have been observed both at the level of the utility companies in charge of nuclear projects and in the federal government, which is in charge of setting policies related to them. The instabilities combine to create an unpredictable, largely socially determined overhead cost that is unique in degree to US nuclear power plant projects.

Construction Delays

An important cause of the unpredicted negative outcomes for civilian nuclear power plant construction projects in the late 1970s and 1980s was unanticipated increases in lead time (Lester 1978). Figure 2 illustrates estimated and actual lead times for nuclear power plants operable by the end of 1986.

Figure 2

As new technical problems arose, reflecting the immaturity of the technology, they caused project schedule delays and a cascade of economic stresses. Inaccuracies in lead time estimation also meant that utilities had to purchase replacement power when they were unable to meet their electrical demands because of the lack of expected nuclear power. This not only further increased the cost of the construction project but also ultimately dampened utility interest in nuclear plants and made fossil-fueled plants more attractive as they required less construction lead time.

Public Opposition

The US Nuclear Regulatory Commission (USNRC) inadvertently became a source of instability when it allowed individuals to raise technical challenges in regulatory licensing hearings (Graham 1985). Although the challenges very rarely resulted in license modifications or safety improvements, the processes of resolving them caused costly schedule delays—and became an effective tactic of project opponents seeking to render a project terminally expensive. Growing public concern for the safety of nuclear power production, partially incited by its political opponents, thus ultimately slowed many construction projects. This tactic, expressed more at the policy level, continues, resulting in a steady accretion of costs that has effectively excluded nuclear power from the marketplace.

The Way Forward for US Nuclear Energy

Notwithstanding the many difficult circumstances that have faced the US civilian nuclear power industry, the operational success of the technology has solidified its position in the electric generation portfolio, as was clear in the US response to the recent unfortunate events at Fukushima. Even though a catastrophic accident had occurred, high-ranking government officials maintained their support for the technology, as did the majority of the general public (Newport 2012).

However, the US political system is open to small but determined groups who can use it to paralyze projects and to thwart the will of the majority. So a favorable mass opinion does not ensure project success. What is needed is governmental support (both regulatory and financial) to provide the stability needed to complete these major projects; management of public participation; technological development, in order to expand the capacity and scale of nuclear power; and policies that limit international nuclear proliferation. These four factors are described in the following sections.

Government Support

If civilian nuclear power is to be successful in the United States, it will require the establishment of a decision-making environment that greatly increases confidence in the successful outcomes of these projects. It is no coincidence that nuclear power has been most successful in France and in Japan (at least until the 2011 Fukushima event), where direct democratic participation concerning project implementation has been limited; financial security has been established, partly through governmental financial support; and the government’s role in the economy is much greater than in the United States.

In France the electric utility that owns all of the 59 nuclear power plants in the country is 85 percent owned by the national government (EDF 2013). Thus, the French nuclear power program is inherently a government program. In Japan the reactors are owned by nine private utilities, but the government has encouraged and supported the growth of this sector as a strategic project in which the companies act in effect as national agents (EIA 2014). Even with this structure, the Fukushima incident showed that a wealthy investor–owned company—much larger than those of the United States—can be overwhelmed by a catastrophic nuclear accident. The owner of the affected plants was effectively destroyed financially, and the government became their de facto owner by default.

We argue that the future successful use of nuclear power in the United States will require much greater active governmental involvement and support than has been seen since 1974, when the US nuclear power enterprise was effectively turned over to the private sector. Since then the combination of the high potential costs of nuclear projects, their socially volatile nature in the American context, and the financial weakness of the private firms involved has shown that nuclear power in the United States is unsuited to the private sector.

Although traditionally the US government has not been heavily involved in stimulating specific industries, it has created the stability required for success when a project is deemed to be of great national strategic need. The prospect of climate change could easily play this role for nuclear power in the future.

In the late 1960s–1970s, for an illustration of how swift and resolute the response of the political system can be when urgently challenged, the US government adopted stabilizing measures in the wake of a political battle in both the judicial system and Congress over the legalities of the construction of the Trans-Alaska oil pipeline. When the 1973 oil embargo occurred, Congress took quick action to eliminate all barriers (including satisfaction of National Environmental Policy Act requirements) to construction of the project and created financial incentives to address what was thought to be an imminent need for increased domestic oil resources. The swift government action created the stability required for the completion of the pipeline.

If the political will existed to support a more active role for the US government in promoting nuclear power, a government-owned company might be established to accomplish this objective. Although it is not a commonly used strategy, there is precedent for such an approach as exemplified by the creation in 1933 of the Tennessee Valley Authority (which currently operates six nuclear power plants, among others) and in 1937 the Bonneville Power Authority. Because the federal government would assume ultimate responsibility in the event of a nuclear catastrophe (as the government did in Japan and as would be the case in the United States under the terms of the Price-Anderson Act1), a government-owned company would provide the means for a nuclear power plant operator to take responsibility for significant liabilities after a serious nuclear accident—and it could provide a reflection of the social will concerning nuclear energy, as the creation of such an entity could be realized only through congressional support.

Better-Managed Public Participation

Limiting the access of politically motivated participants to the regulatory review process can allow for more stability without impairing safety, and in recent years public access to regulation has in fact been steadily reduced to increase the efficacy and predictability of the process. Completely eliminating public access would go against the uniquely American approach to nuclear safety regulation, but carefully limiting it can reduce opportunities for political guerrilla warfare in the regulatory process.

The case for the reduction of public involvement is strengthened when one realizes that citizen participation in licensing has done little for safety but has occurred at enormous cost (as explained above). Most other nations, such as France, Sweden, and the United Kingdom, have demonstrated that effective nuclear safety regulation does not require direct public participation. In fact, no other country regulates in the American way. It may thus be reasonable to suppose that the US nuclear safety regulator could successfully carry out its expert responsibilities with reduced or minimal public participation.

Technological Development

If nuclear energy were to become an important part of a climate change mitigation response program, it would be necessary to develop the technology in terms of both the needed scale and products provided. To ensure a carbon-free world, substitutes will be needed for electricity, heat, and fossil fuel. Of the current technologies capable of supporting such substitutions, only hydroelectricity and nuclear energy are available at the scale required, but they produce only electricity. If they are to be effective fossil fuel replacements, they need to be capable of producing more than electricity and on a much greater scale. This eventuality implies the creation of a very different energy economy, relying on a mix of renewable, geothermal, and nuclear technologies.

Protection from Nuclear Proliferation

The challenge of ensuring control of weapons proliferation needs to be resolved satisfactorily. By actively pursuing an expansion of nuclear power, the United States could take a leading role in the development
of a stronger international nuclear control regime, which is recognized as a necessary means to limit proliferation risk but has received too little support from the world’s leaders.

For commercial nuclear power to be both successful and safe worldwide in the long term, the United States and other leading nations must support more robust international controls against nuclear proliferation. Weak safeguards may prevent nations from achieving the climate change benefits that nuclear power can provide and are therefore just as important as a favorable political and economic environment for commercial nuclear power.

Conclusion

If concerns about climate change and energy independence grow significantly in the future, it is plausible that nuclear power will attain in the United States the level of public support that it has experienced in other countries, such as France, Japan (before Fukushima), and more recently China. But a supportive public attitude alone will not be enough to support the increased use of nuclear power in the United States.

The use of nuclear power to respond to climate change will require substantial institutional and organizational changes, such as market interventions, and governmental activism, both organizationally and financially. Market stability must be created for the technology in order for it to prosper in the US economy. If society accepts a greater role for the government in the expansion of nuclear power generation, it may also support the government in creating the environment necessary for success in this national energy strategy. How this situation evolves will be very important in determining the ability of the United States to provide world leadership concerning both expected climate change and nuclear proliferation.

References

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EIA [US Energy Information Administration]. 1986. An Analysis of Nuclear Power Plant Construction Costs. Technical Report DOE/EIA-0485. Washington. Available at www.osti.gov/scitech/servlets/purl/6071600.

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Newport F. 2012. Americans still favor nuclear power a year after Fukushima. Princeton, NJ: Gallup. Available at www.gallup.com/poll/153452/americans-favor-nuclear-power- year-fukushima.aspx.

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FOOTNOTES

1 From the website of the Nuclear Energy Institute (www.nei.org): “Congress passed the Price-Anderson legislation in 1957 as an amendment to the Atomic Energy Act to ensure that substantial funds will be available to compensate the public in the event of a nuclear accident. Through this program, the nuclear energy industry maintains $13.6 billion in liability coverage.”

About the Author:Brittany L. Guyer is an independent consultant and, until recently, was a postdoctoral associate working with Michael W. Golay, a professor in the Department of Nuclear Science and Engineering at the Massachusetts Institute of Technology.