Post: Evolution of Nuclear Energy Policy Under the Obama Administration, Part 2

This post by Jane Nakano at CSIS is a follow-up to Part 1, which was published yesterday on May 22, 2010.

U.S.-Japan Partnership in the Era of Global Nuclear Renaissance

While the U.S. nuclear industry continues to find itself in the uncertain policy environment at home, civilian nuclear power program is taking off around the world. According to the Energy Information Administration, its forecast for nuclear electricity generation in 2025 is 25 percent higher in its 2009 publication than that published 5 years ago. The strong increase is driven primarily by non-OECD (Organization for Economic Cooperation and Development) Asia: 7.8 percent per annum from 2006 to 2030, including projected increases of 8.9 percent per annum in China and 9.9 percent per annum in India. Nuclear energy is receiving greater interest in the Middle East, too. In recent years, in addition to countries with a long history of nuclear energy pursuits like Egypt and Turkey, Bahrain, Jordan, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, and Yemen have indicated their intent to develop nuclear energy. American and Japanese nuclear energy industries are going global, too. In 2006, Toshiba acquired the nuclear business unit of Westinghouse. In 2007, Hitachi and General Electric formed a nuclear business joint venture. Mitsubishi Heavy Industries and Areva of France formed a joint venture company in 2009, as well. The American and Japanese nuclear industries seem remarkably complementary to one another. While Japan has a smaller domestic market with a declining electricity demand due to the aging of its population, the U.S. market is potentially large. The Japanese are relatively inexperienced in expanding business globally. Meanwhile, the U.S. industry has been more successful in entering into the global market. Furthermore, the Japanese have greater technical capability and plant construction experience from the continued growth of a domestic program that the U.S. lacks.  The global nuclear power market is becoming competitive as ever. For example, both GE-Hitachi and Toshiba-Westinghouse competed for providing nuclear plants in the United Arab Emirates in December 2009, but lost out to the Korean Electric Power Company led consortium. Most recently, the contract to build nuclear reactors in Vietnam was purportedly lost to Russia’s Rosatom in February 2010.

No consensus has yet to emerge as to what the U.S.-Japan teams should have done differently to win the UAE and Vietnam contracts. Regardless of the cause, the commercial partnership has arrived at the point where a close examination is warranted for national security as much as for commercial reasons. Nuclear nonproliferation and the development of civilian nuclear power program remain closely intertwined. Therefore, their failure to work together successfully in the nuclear industry would diminish the American and Japanese voices in shaping the course of the nonproliferation debate in this era of global nuclear expansion.

Post: Evolution of Nuclear Energy Policy Under the Obama Administration, Part 1

The following post is by Jane Nakano, a Fellow in the Energy and National Security Program and the Center for Strategic and International Studies (CSIS).

One of the policy issues that has gone through a notable evolution under the administration of President Barack Obama is nuclear energy. Several years since his cautious acknowledgment of nuclear energy during the presidential campaign, the Obama White House has begun rolling out several measures in support of nuclear energy development in recent months. What is the current nuclear energy policy under the Obama administration? Is there a “Nuclear Renaissance” in the United States? What does the Obama nuclear policy mean for Japan?

Candidate Obama and Nuclear Energy—Cautious Acknowledgment

High oil prices in 2007-2008 coincided with the last years of the presidency of George W. Bush. During the months preceding the presidential election, energy security quickly became a major concern of the American public. Particularly, the public increasingly clamored for “energy independence” which would reduce energy prices, release the U.S. from dependency on foreign energy sources, utilize clean energy technologies, and emit fewer climate changing pollutants. Throughout his campaign for the presidency, Senator Obama recognized a role for nuclear power in a society which would strive to reduce dependency on imported oil as well as on highly carbon-emitting sources of energy. Meanwhile, then-candidate Obama’s campaign messages also included the need to address the safety, waste and nonproliferation challenges associated with the development of civilian nuclear power program. Specifically, his campaign commitments included federal efforts to seek a safe, long-term disposal solution for the nation’s nuclear spent fuels. During his campaign in the State of Nevada for the presidential primary, then-presidential hopeful Obama voiced an opposition to pursuing the permanent spent fuel repository at the Yucca Mountain site in Nevada. Because Obama’s candidacy was strongly supported by many progressive grassroots organizations, including environmental groups—which often are anti-nuclear, his opposition to Yucca Mountain came as no surprise. As an energy source that does not depend on imports and is low-carbon emitting, nuclear energy thus became a politically uneasy yet viable policy option for then-candidate Obama in his efforts to craft a set of policies which would advance his energy security and climate change agenda once elected.

U.S. Nuclear Industry in the Limbo
Today, there are 104 operating nuclear reactors at 65 plants in 31 states in the U.S. In 2008, nuclear power provided one fifth of total U.S. electricity and constituted nearly 70 percent of total U.S. non-emitting electricity generation. However, no plant that was ordered after 1973 has been completed. An accident at the Three Mile Island plant in Pennsylvania in 1979—although it did not result in known deaths or illness—stirred public opposition to nuclear power, and essentially halted the development of civilian nuclear power for the three subsequent decades. In contrast to the strongly pro-nuclear presidency of George W. Bush, the inauguration of the Obama administration was received by the U.S. nuclear industry with much anxiety. Throughout much of the first year of the Obama presidency, many in the nuclear industry grew increasingly anxious about what they saw as the lack of support for the construction of new nuclear reactors and feared the reversal on the Bush era pro-nuclear momentum.

Obama White House and Nuclear Energy—Reticent Embrace?

It was at the State of Union, on January 27, 2010, where nuclear energy drew a spotlight. In the context of job creation, President Obama endorsed the continued development of civilian nuclear power, as he stated: “…to create more of these clean energy jobs, we need more production, more efficiency, more incentives. And that means building a new generation of safe, clean nuclear power plants in this country…” In subsequent weeks, the administration  began sending a strong signal in support of nuclear energy. First and foremost, President Obama’s FY2011 budget request included a $54 billion in guaranteed loan volume authority for advanced nuclear power plants—a $36 billion increase from the program under the Bush administration. Moreover, in mid February, the U.S. Department of Energy offered conditional commitments for a total of $8.33 billion in loan guarantees for the construction and operation of two new nuclear reactors in Burke, Georgia. These loan guarantee commitments are the first since the loan guarantee authority was established under the Energy Policy Act of 2005. The Georgia project is the first U.S. nuclear power plant to break ground in nearly four  decades. In announcing the commitments, the White House cited industry projections that the project will create approximately 3,500 onsite construction jobs, and 800 permanent jobs once the reactors come on-line. Meanwhile, President Obama did follow through on his campaign promise to re-examine the nation’s permanent spent fuel repository plan. The Obama administration drastically cut funding for the permanent repository at the Yucca Mountain site in his FY2010 budget request, calling the project “not a workable option.” In the FY2011 budget request, the finding was entirely eliminated. In early March, the U.S. Department of Energy filed a motion with the Nuclear Regulatory Commission, withdrawing the Yucca Mountain license. Moreover, the President has set up a commission to review policies on managing spent nuclear fuel and waste, and announced in late January, members of a commission. Co-chaired by former Rep. Lee Hamilton (D-Ind.) and Brent Scowcroft, the 15-member panel is tasked with providing an interim report within 18 months, and a final report within 24 months.