OctOber 2008
Ater several decades o disappointing growth,nuclear energy seems poised or a comeback.alk o a “nuclear renaissance” includes perhaps adoubling or tripling o nuclear capacity by 2050,spreading nuclear power to new markets in theMiddle East and Southeast Asia, and develop-ing new kinds o reactors and uel-reprocessingtechniques. During the George W. Bush admin-istration, the United States has promoted nuclearenergy both at home and abroad. Programs likethe 2006 Global Nuclear Energy Partnershipand President Bush’s 2007 joint declaration withthen–Russian president Vladimir Putin to acili-tate and support nuclear energy in developingcountries have helped to promote the notion o amajor worldwide nuclear revival.But the reality o nuclear energy’s uture is morecomplicated. Projections or growth assume thatgovernment support will compensate or nuclearpower’s market liabilities and that perennial issuessuch as waste, saety, and prolieration will not beserious hurdles. However, without major changesin government policies and aggressive nancialsupport, nuclear power is actually likely to accountor a
declining
percentage o global electricity gen-eration. For example, the International Energy Agency’s
World Energy Outlook 2007
projects that without policy changes, nuclear power’s share o worldwide electricity generation will drop rom 15percent in 2007 to 9 percent in 2030.Given the seriousness o these uncertainties, asound post-Bush oreign—and domestic—policy
N rnissn:Is I coing? So I?
SharON SquaSSONI
Senior Associate, Carnegie Endowment or International Peace
ENDOWMENT FOR INTERNATIONAL PEACE
C
ARNEGIE
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Expectations or nuclear energy have grown dramatically. More than thirty nations now have plans to build nuclear powerplants or the frst time.
n
A nuclear renaissance, however, is not a oregone conclusion. A major expansion would require signifcant policy and fnancialsupport rom governments.
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Key questions need solid answers beorehand: Can nuclear power help reduce dependence on oreign oil or contribute sig-nifcantly to needed reductions in carbon emissions? Is nuclear power economically competitive? Can saety be assured and isan acceptable solution or nuclear waste at hand? Can nuclear power be expanded in such a way as to adequately control theadded risks o prolieration?
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To minimize some o the risks o nuclear expansion—whether related to economics, saety, security, or prolieration—theUnited States should consider several actions: help strengthen the rules o nuclear commerce and transparency, deemphasizethe element o national prestige with respect to nuclear energy, help other countries undertake clear-eyed assessments o allavailable options or generating electricity, and limit the acquisition o sensitive nuclear technologies like uranium enrichmentand spent-uel reprocessing.
Summar
F O R E I G N P O L I C Y
f o r t h e N e x t P r e s i d e n t
2POLICY BRIEF
on nuclear energy should be based not on hope buton solid answers to six questions:
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Can nuclear power signicantly enhance energy security?
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Can nuclear power contribute signicantly toneeded reductions in carbon emissions?
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Is nuclear power economically competitive?
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Can saety be assured or a greatly expanded num-ber o nuclear reactors and associated acilities?
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Is an acceptable solution or nuclear waste inplace or soon to be available?
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Can nuclear power be expanded in such a way asto adequately control the added risks o pro-lieration?
cn N Powenn eng Si?
Rising prices o oil and natural gas have had a cas-cading eect on countries’ concerns about energy security. Price disputes have resulted in temporary cutos o natural gas supplies in Europe in the pastew years. But most countries will not be able toreduce their dependence on oreign oil by buildingnuclear power plants. Nuclear power—because itcurrently only provides electricity—is inherently limited in its ability to reduce this dependence. Inthe United States, or example, 40 percent o theenergy consumed comes rom oil, yet oil producesonly 1.6 percent o electricity. And even thoughFrance and Japan rely heavily on nuclear energy,they have been unable to reduce their dependenceon oreign oil because o oil’s importance or trans-portation and industry. Worldwide, the picture is similar. Oil accountsor about 7 percent o power generation globally,a share that is expected to decline to 3 percent by 2030. Only in the Middle East, where countriesrely on oil or about 30 percent o their electricity generation, could substitution o nuclear power oroil make a signicant dierence. Until transporta-tion switches to electricity as its uel, nuclear en-ergy largely will not displace oil.Te situation is dierent or natural gas. Although natural gas also has industrial and heat-ing uses, it produces about one-th o electric-ity worldwide. Natural gas is attractive as a way to produce electricity because gas-red generatingplants are very ecient at converting primary en-ergy into electricity and also cheap to build, com-pared with coal- and nuclear-red plants. Nuclearenergy could displace natural gas or electricity production and improve some countries’ stability o energy supply.Ultimately, however, countries may be tradingone orm o energy dependence or another. Giventhe structure o the nuclear industry and uraniumresource distribution, most countries will need toimport uel, technology, and reactor components,as well as uel services. Tis means that ew coun-tries can expect more than
interdependence
, even when it comes to nuclear power.
cn N Pow coni oconoing ci cng?
Nuclear power is not a near-term solution to thechallenge o climate change. Te need to imme-diately and dramatically reduce carbon emissionscalls or approaches that can be implemented morequickly than building nuclear reactors. It also callsor actions that span all energy applications, not just electricity. Improved eciency in residentialand commercial buildings, industry, and transportis the rst choice among all options in virtually all analyses o the problem. Nuclear energy willremain an option among eorts to control climatechange, but given the maximum rate at which new reactors can be built, much new construction willsimply oset the retirement o nuclear reactorsbuilt decades ago.For nuclear energy to make a larger dierencein meeting the challenge o climate change, theindustry would need to add capacity exceeding re-placement levels. According to a 2007 study by theKeystone Center, this would require “the industry to return immediately to the most rapid period o growth experienced in the past (1981–1990) andsustain this rate o growth or 50 years.” Tis wouldmean completing twenty-one to twenty-ve new,large (1,000 megawatts electric) plants each yearthrough 2050. Yet the global nuclear construction industry hasshrunk. In the past twenty years, there have beenewer than ten new reactor construction starts worldwide in any given year. oday there are al-ready bottlenecks in the global supply chain, in-cluding ultra-heavy orgings, large manuactured
Shon Sqssoni
is a seniorassociate in the Nonprolierationprogram at the Carnegie Endow-ment and has been analyzingnonprolieration, arms control,and national security issues ortwo decades. Her research ocuseson nuclear nonprolieration andnational security. Squassoni cameto Carnegie rom the Congres-sional Research Service (CRS).As a specialist in weapons omass destruction prolieration,she provided expert analyses onprolieration trends and expertadvice on policy and legislationto members o Congress. Prior to joining CRS, she served or nineyears in the executive branch,beginning her government careeras a nuclear saeguards expert inthe Arms Control and Disarma-ment Agency. Her last position atthe State Department was direc-tor o Policy Coordination in theNonprolieration Bureau. Squas-soni has contributed to journals,magazines, and books on nuclearprolieration and deense. Hermost recent publications include:“The Iranian Nuclear Program,” achapter in the orthcoming book,
Combating Weapons of MassDestruction: The Future of Inter-national Nonproliferation Policy
(University o Georgia Press,2009) and “Risks and Realities:The ‘New Nuclear Revival,’”
ArmsControl Today,
May 2007.
NUCLEAR RENAISSANCE: IS IT COMING? SHOULD IT?3
components, engineering, crat labor, and skilledconstruction labor. All these constraints have beenexacerbated by the lack o recent experience inbuilding nuclear plants and by aging labor orces.In addition to the major nuclear reactor ven-dors, supporting industries will also either need tobe rebuilt or recertied to nuclear standards. In theUnited States, there has been a signicant declineo supporting industries. In the 1980s, the UnitedStates had 400 nuclear suppliers and 900 holderso N-stamp certicates rom the American Society o Mechanical Engineers. oday, there are just 80suppliers and 200 N-stamp holders. In countriesthat have never had nuclear power plants, qualiedsubcontractors and labor would have to be trainedand certied.
Wi Nw N Pow Pnsb eonoi copii?
Te economic competitiveness o nuclear power is asubject o much debate. Nuclear power plants areexpensive to build but relatively inexpensive tooperate, because their uel costs are low compared with alternatives. For example, the price o naturalgas accounts or 85 percent o the variable cost o akilowatt-hour, whereas nuclear uel accounts or 27percent. Tis means that as the cost o ossil uelsrise, either due to short supply or because carbondioxide emissions may in the uture be regulated,nuclear power will become relatively more competi-tive. Tere is already evidence in the United Statesthat coal plants may become increasingly dicult tobuild because o public awareness o their environ-mental impact. U.S. nuclear industry executiveshave suggested that a carbon-pricing ramework
would be necessary to provide incentives for utilities to
build more than a handul o nuclear power plants. A big uncertainty is the cost o constructingnew nuclear power plants. As a general rule, abouttwo-thirds o a nuclear reactor’s cost stems romconstruction. Factors aecting this cost o con-struction include the creditworthiness o the com-panies involved in building the reactors, the cost o capital (especially debt) over the next decade, therisk o cost escalation due to construction delaysand overruns, the need or additional generatingcapacity in a slowing economy, and the competi-tive advantage o both traditional and emergingpower generation technologies.Because data rom the past unortunately pro-vide little help in assessing uture costs, the realcosts o new nuclear power plants may not beknown or years. In act, Moody’s stated in a spe-cial October 2007 report that “the ultimate costsassociated with building new nuclear generationdo not exist today—and that the current cost es-timates represent best estimates, which are subjectto change.” Figure 1 shows one assessment o how nuclear energy might compare with its alternativesin terms o electricity-generating costs.Te current economic crisis could make nanc-ing nuclear power plants particularly dicult.Financing costs account or between 25 and 80percent o the total cost o construction becausenuclear power plants take much longer to buildthan alternatives (or example, wind plants requireeighteen months to build, combined-cycle gas tur-bines need thirty-six months, and nuclear powerplants take at least sixty months). A global tight-ening o risk management standards in the wakeo the current economic crisis could imperil the
Fig 1
n
copi coss o Gning eii
CCGT = combined cycle gas turbineIGCC = integrated gasifcation combined cycle
NOte:
The “nuclear high” case assumes a high construction cost o $2,500 per kilo-watt, while the low case assumes a cost o $2,000 per kilowatt. Parameters or the lowdiscount rate are ound in table 13.10 o
World Energy Outlook 2006,
but the real ater-tax-weighted average cost o capital is 6.7 percent. The high-discount scenario has a 9.6percent rate, and in that scenario, nuclear costs are higher than all others.Reproduced with permission rom the International Energy Agency.©2006 OECD/International Energy Agency,
World Energy Outlook 2006,
fgure13.7.
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NuclearHighNuclearLowCCGTCoalSteamIGCCWindOnshoreCapitalOperation & MaintenanceFuel
28%–32% capacity factor
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Nuclear Renaissance: Is it Coming? Should It?
Expectations for nuclear energy have grown dramatically. More than thirty nations now have plans to build nuclear power plants for the first time.
A nuclear renaissance, however, is not a foregone conclusion. A major expansion would… (More)
A nuclear renaissance, however, is not a foregone conclusion. A major expansion would… (More)
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