With Senate committees now considering versions of the expensive climate-change bill narrowly approved by the House of Representatives, it’s time for the country to take a fresh look at nuclear power, which already generates 20% of our electricity.
The Senate Environment and Public Works Committee and the Finance Committee failed to finish drafting a climate change bill before the August recess. Floor debate and a vote will come after Labor Day, to be followed later in the autumn by House-Senate conference. Whatever the Senate finally does, the process will be contentious and protracted.
Senator Judd Gregg (R-N.H.) told me in a telephone conversation that the Senate Republican Conference recommends a national strategy to build 100 nuclear power plants by 2030, in addition to the 104 that are now in operation. “This will clean up the air,” he said, “and reduce reliance on foreign oil. This is a much more constructive approach than the climate change bill,” which would create limits on carbon dioxide emissions and a system for trading permits to emit them.
Senator Gregg has the right idea—even though it is practically impossible to build 100 nuclear power plants in 20 years, and America does not even need that much added capacity. Further, nuclear power plants will not significantly reduce our “reliance on foreign oil,” because virtually no oil (less than 2%) is used to generate electricity in America. This is a common misconception, constantly propagated by both politicians and news commentators, both left and right, based on a fantasy that we use electric cars.
The House bill, if enacted, would raise $847 billion over 10 years while adding $821 billion to federal spending. It is effectively a tax increase with large, negative economic implications. That huge sum would not pay for the additional electric power a growing economy must have. It would be the added cost of curbing climate-warming emissions and of developing energy from renewable fuels, such as wind and solar power, with no credible evidence that these sources of energy will ever be economic.
Nuclear power has its problems, including delays in licensing and substantial up-front costs, but it can generate additional power for economic growth at a cost lower than that of the cap-and-trade bill.
A nuclear strategy would avoid the experimental and bureaucratic mechanisms for awarding emissions permits to power plants and other polluters and for monitoring compliance and trading, as well as compulsory efficiency standards for automobiles and household appliances and mandatory use of uneconomic renewable fuels, such as wind, solar, and biomass.
If we’re going to wave goodbye to the invisible hand [of the market] by spending hundreds of billions of taxpayer dollars on wind and solar power, and on giving motorists tax-funded incentives to drive electric cars, then it’s reasonable to ask whether subsidies for nuclear power might be less costly and achieve the same environmental results.
The answer is probably yes. The House’s planned expenditure of $800 billion could fund 100 nuclear power plants with proven technology and no greenhouse gas emissions. This could be faster and less expensive than new emissions allowances, carbon sequestration, and wind, solar, and biofuel technology.
Despite generating 20% of America’s electricity and its role in the U.S. commercial power grid since 1957, nuclear power is not without problems. Energy is inexpensive to generate once a plant is built, but plant construction requires a capital outlay of $6,000 to $8,000 per kilowatt of plant capacity, or $6 to $8 billion for a 1,000-megawatt nuclear plant. Since projects take five years to complete, a substantial portion of the funding is interest. Hence, some government subsidies or loan guarantees may be necessary just to fund the project.
Four companies planning nuclear reactors—UniStar Nuclear Energy, NRG Energy, Scana Corporation, and Southern Company—are among those reportedly under consideration for a share of $18.5 billion in federal funding. Due to financial considerations, another company, Exelon, announced that it is shelving its plans for a new power plant in Texas, and in April AmerenUE abandoned a planned plant in Missouri.
As well as difficulties in funding, delays can be caused by local site-permitting issues. Some communities may welcome the “green” jobs and additional tax revenue provided by a new nuclear power plant, but some will resist. Approval by the Nuclear Regulatory Commission can be made faster than in the past with standardized designs and congressional support.
The issue most familiar to Americans, disposal of spent uranium fuel rods, has generated headlines as Congress has argued about where to store the radioactive waste. How to transport it there safely also is an issue. The prior selection of Yucca Mountain in Nevada has stalled, since President Obama has not allocated any funding for the facility in the 2010 budget.
In this, the United States can learn from France, which generates over 80% of domestic electricity production from atomic energy and prides itself on being in the forefront of the global environmental movement. It reprocesses the spent rods at the power plants and does not have one giant, national storage facility. Local storage and reprocessing avoid transporting nuclear waste across the country.
It’s not clear that government funding of energy and environmental projects is necessary. But if that’s how Congress wants to spend tax dollars, Americans should press for further development of clean nuclear power.
—Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. A version of this article appeared in RealClearMarkets.com on July 2, 2009.