Don’t Invest in Nuclear: Create a Better System
Nicolas Loris /
Despite President Obama’s rhetoric as being a pro-nuclear, all-of-the-above energy President, his Administration has done nothing to move nuclear energy policy forward in the United States. Yet, there is plenty the government can and should be doing.
Yes, Secretary of Energy Ernest Moniz announced that he would soon finish $8.3 billion in loan guarantees for two new reactors in Georgia. But Southern Company, the chief financier of the plants, said it is going to proceed with building the reactors without the taxpayer-funded handout that artificially lowered both the financial and private investor risk of the project.
And the only other new nuclear plants in the United States are moving forward without loan guarantees. In fact, the president of South Carolina Electric and Gas, the company behind the two new South Carolina reactors, declared that it was easier to obtain financing in the commercial market, saying, “Getting a government loan guarantee requires extensive financial disclosures to the federal government, and paying fees. I’m not sure why I’d want to.”
With a focus on subsidizing a handful of new reactors, the Administration has failed to introduce policies to reform the two biggest obstacles that could truly unleash the potential of commercial nuclear power: addressing nuclear waste management and creating a flexible and predictable regulatory path for new nuclear technologies.
Under the current system of nuclear waste management, the government is supposed to collect a flat fee to ultimately dispose of the industry’s used nuclear fuel. The feds set a deadline to start receiving the used fuel by 1998, but here we are 16 years later, and the only thing the feds have collected is money. The results of the feds missing their deadline have been lawsuits (paid by the taxpayers) and a mess of a system.
A new used fuel program should transfer responsibility for waste management and disposal to waste producers and replace the flat-fee structure with a market-based pricing mechanism for waste management services. Doing so would promote competition and innovation as the industry is given the proper incentive structure to seek economical options for waste management and companies compete for that business.
Congress and the Administration should also fix the broken system on the front end of nuclear by creating a flexible, technologically neutral regulatory structure. Innovators are developing promising new reactor technologies that have several potential advantages. They’re smaller, so while they’ll power fewer homes, they’ll have less upfront capital costs. They can be built in remote locations, and some of them can be buried underground. Others have little to no waste.
The problem is the current regulations only permit one kind of technology—the large light water reactors we’ve used for the past 50 years.
The nation needs a regulator that can issue permits for new plants on a predictable basis at a reasonable cost and is capable of regulating multiple types of reactors and other industrial facilities such as used fuel treatment plants.
Granting loan guarantees and other taxpayer-backed subsidies to a select number of companies is not a strategy for vibrant competition. Fixing nuclear waste management and creating a system that allows for new technologies could allow for a true nuclear renaissance that both parties and the general public want to see.
This post originally appeared on National Journal’s Energy Insiders Blog.