Green Energy and Red Tape

COMMENTARY Environment

Green Energy and Red Tape

Sep 29th, 2014 5 min read

Commentary By

Katie Tubb

Policy Analyst

Jack Spencer

Vice President, the Institute for Economic Freedom

Nuclear reactors are designed to withstand severe weather, earthquakes, even airplane crashes. But how much more handling from the federal government they can endure remains to be seen.

Almost since the inception of the American commercial nuclear industry, presidents and politicians have taken a special interest in it. We would all be better off if they wouldn’t. While early intervention may have been justifiable because of national security, that time has long since passed. Now the government just prevents a well-developed, safe, and international industry from becoming competitive.

The current administration has emphasized nuclear energy’s importance, from Energy Secretary Ernest Moniz to advisers to the president (such as the formerly anti-nuclear Carol Browner). The president’s Climate Action Plan will take coal plants off the grid, and the missing megawatts will have to be replaced with another affordable and reliable source of baseload power.

Putting aside the many and fundamental problems with such a goal, nuclear energy provides affordable, reliable, and emission-free power. Accordingly, the Climate Action Plan promises to “expand [efforts] to promote nuclear energy generation” at home and abroad. As Browner has written, “If you agree . . . that global warming is real and must be addressed immediately, then you cannot simply oppose clean, low-carbon energy sources.”

For all the talk, though, the president’s nuclear-power policies are accomplishing the exact opposite of this goal, going well beyond the usual political shenanigans and maneuverings that have always characterized the federal government’s micromanagement of this industry. Many government-induced problems plague the commercial nuclear-power industry, from oppressive export regulations to post-Fukushima standards that might make sense in a Washington office but not on the floor of a power plant. But the biggest problem holding back American nuclear power, in which the Obama administration has been particularly obstructive, is the management of nuclear waste.

The trouble started in 1982 when Congress gave the Department of Energy (DoE) the responsibility to collect and dispose of all the nation’s commercial nuclear waste. Congress subsequently chose to build a national repository by 1998 at Yucca Mountain, in Nevada, pending approval of a license by the Nuclear Regulatory Commission (NRC). Though the scheme was imperfect and fell greatly behind schedule, it at least was a plan.

After many delays, and with the NRC’s evaluation of the site finally well under way, in 2010 President Obama ignored Congress and ordered the Department of Energy to end its Yucca Mountain program. The NRC followed suit. With nearly 70,000 metric tons of used nuclear fuel sitting in temporary storage at nuclear plants and government facilities across the country, waiting to be collected by the DoE, President Obama left America’s commercial nuclear reactors, the Department of Defense, and federal regulators with no waste policy at all, and wasting the more than $15 billion in taxpayer money and electricity users fees already spent for the unfinished Yucca Mountain repository project. That’s not to mention the billions more in federal liability as commercial nuclear companies sue the government for its broken promise to start collecting waste a dozen years earlier. Moreover, until recently, the NRC took a sabbatical from renewing or issuing new operating licenses to nuclear power plants because it could not be confident that waste would be collected by the government.

After a major effort to study the nuclear-waste issue by the president’s Blue Ribbon Commission, and after a series of court cases that stole attention, public resources, and time, at least the federal government is once again slowly moving in the right direction to address Yucca Mountain. But simply finishing the safety review without completing the process that would allow for a permitting decision hardly inspires confidence. Meanwhile, Congress has not yet abandoned plans for the Yucca Mountain repository, which is still required by law and affirmed by the courts.

Some critics, while admitting that government-induced risks and costs have played a role, say that abundant and inexpensive natural gas is the primary reason the expected nuclear renaissance has yet to occur. But this view is forgetful and ignores the potential benefits that would result from better policy.

Natural gas has been cheap before. Indeed, it was very cheap at about the same time the nuclear industry was last declared dead. Then, the world was responding to the nuclear accident at Three Mile Island, which helped send nuclear-plant construction costs sharply upwards. At the same time, the wellhead price for natural gas was $1.18 per thousand cubic feet.

Nevertheless, nuclear power improved its safety procedures and now has the most efficiently operating power plants available. Today reactors routinely exceed a capacity factor of 90 percent, meaning the average plant spends only 10 percent of the year not producing electricity. The numbers show the industry’s progress: In 1979, America had 72 plants online; today there are 100. Meanwhile, the wellhead price for natural gas peaked at $7.97 per thousand cubic feet in 2008 before tumbling down to $2.66 in 2012.

Markets and technology change, but until the federal government gets out of the picture, nuclear power in America will not reach its potential. We need a better policy.

The first and most important step to realizing the true costs and benefits of nuclear power is to resolve the nuclear-waste issue. Until that is done, we are only playing games if we expect to see the nuclear industry to grow and innovate.

Getting the government out of the business of waste management would allow it to focus its attention on what it should be doing — establishing licensing requirements and performing oversight. A system that puts waste producers in control of managing waste would create strong incentives to pursue economical solutions that meet customers’ needs and government safety standards. It would also unlock the door for innovation in nuclear-waste management, not unlike what we see today as local garbage companies find valuable ways to repurpose and store the waste from homes and businesses.

If President Obama really believes that nuclear power is critical to the future of the country, then he needs to leave his current policies behind and work with Congress to do the following:

  • Support NRC’s completion of the Yucca Mountain permit application. The United States needs a geologic repository regardless of how it ultimately manages and disposes of used nuclear fuel. Plus, critical knowledge will be discovered from finishing the Yucca Mountain application review.

  • Institute market-based nuclear-waste management reform. The U.S. needs a market-based nuclear-energy policy. This begins with a nuclear-waste policy that gives utilities and other waste producers the primary responsibility for waste management and a system for financing nuclear-waste disposal that allows waste producers to pay directly for nuclear-waste-related services.

  • Develop a rational, flexible, and predictable regulatory regime. 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.

  • Modernize commercial nuclear export regulations. U.S. nuclear-power companies have a substantial opportunity to compete in the global marketplace. Unfortunately, current export regulations make such activities extremely difficult for American firms.

  • While the desire to help reestablish the United States as a leader in commercial nuclear power is commendable, it is critical that congressional and executive action not do more harm than good. Drawn-out permitting timetables, ill-conceived regulations, and other government-imposed market distortions create so much risk and price inflation that some believe the industry needs subsidies to compete internationally and to offset the negative impacts of these policies.

    Instead, the U.S. government can best ensure the sustainability of a strong U.S. nuclear industry by simply providing a stable regulatory environment, authorizing industry to handle its own spent nuclear fuel, and opening foreign mar­kets. As we have seen in recent years, given the freedom to innovate and compete, the private sector will take action.

     - Katie Tubb is a researcher in the Roe Institute for Economic Policy Studies at The Heritage Foundation.

     - Jack Spencer is the director of the Roe Institute for Economic Policy at The Heritage Foundation.

Originally appeared in National Review Online