The Nuclear Waste Policy Act of 1982 attempted to establish a
comprehensive disposal strategy for high-level nuclear waste. This
strategy has failed. The government has spent billions of
dollars without opening a repository, has yet to receive any waste,
and is amassing billions of dollars of liability. Furthermore, the
strategy has removed any incentive to find more workable
alternatives. For those that actually produce waste and would
benefit most from its efficient disposal, this strategy has
created a disincentive for developing sustainable,
market-based waste-management strategies.
The strategy codified in the Nuclear Waste Policy Act seemed
straightforward and economically sound when it was developed in the
early 1980s. It charged the federal government with disposing
of used nuclear fuel and created a structure through which users of
nuclear energy would pay a set fee for the service--a fee that has
never been adjusted, even for inflation. These payments would go to
the Nuclear Waste Fund, which the federal government could access
through congressional appropriations to pay for disposal
The federal government has accumulated approximately $27
billion (fees plus interest) in the Nuclear Waste Fund and has
spent about $8 billion to prepare the repository for operations,
leaving a balance of around $19 billion. Utility payments into the
fund total about $750 million annually. Yet the repository has
never opened, despite the expenditure of billions of dollars.
The taxpayers have fared no better. The Nuclear Waste Policy Act
set January 31, 1998, as the deadline for the federal government to
begin receiving used fuel. The government's refusal to take
possession of the used fuel has made both the federal government
and the taxpayers liable to the nuclear power plant operators for
an increasingly enormous amount that is projected to reach $7
billion by 2017.
The federal government's inability to fulfill its legal
obligations under the 1982 act has often been cited as a
significant obstacle to building additional nuclear power plants.
Given nuclear power's potential to help solve many of the
nation's energy problems, now is the time to break the impasse
over managing the nation's used nuclear fuel.
The Current Irrational System
The United States has 58,000 tons of high-level nuclear waste
stored at more than 100 sites in 39 states, and its 104
commercial nuclear reactors produce approximately 2,000 tons of
used fuel every year. The Yucca Mountain repository's capacity
is statutorily limited to 70,000 tons of waste (not to mention the
problems associated with even opening the repository). Of this,
63,000 tons will be allocated to commercial waste, and 7,000 tons
will be allocated to the Department of Energy (DOE).
These are arbitrary limitations that Congress set without regard
to Yucca's actual capacity. As currently defined by the
Nuclear Waste Policy Act, Yucca would reach capacity in about three
years unless the law is changed. Thus, even if Yucca becomes
operational, it will not be a permanent solution, and the nation
would soon be back at the drawing board.
The repository's actual capacity, however, is much larger than
the current limit. Congress should repeal the 70,000-ton limitation
immediately and instead let technology, science, and physical
capacity determine the limit. Recent studies have found that
the Yucca repository could safely hold 120,000 tons of waste.
According to the DOE, that should be enough to hold all of the used
fuel produced by currently operating reactors. Some believe the
capacity is even greater.
Yet even with an expanded capacity of 120,000 tons, Yucca
Mountain could hold only a few more years of America's nuclear
waste if the U.S. significantly increases its nuclear power
production. According to one analysis, America's current
operating reactors would generate enough used fuel to fill a
70,000-ton Yucca right away and a 120,000-ton Yucca over their
lifetime. If nuclear power production increased by 1.8 percent
annually after 2010, a 120,000-ton Yucca would be full by 2030. At
that growth rate, without recycling any used fuel, the U.S. would
need nine Yucca Mountains by the turn of the century.
Given the difficulty of opening one repository, relying on
future repositories would be extremely risky. With the right mix of
technologies such as storage and recycling, Yucca could last almost
Using Resources More Wisely by
The current U.S. policy is to dispose of all used fuel by moving
it directly from the reactors into Yucca Mountain for permanent
storage without any additional processing. This is a monumental
waste of resources. To generate power, reactor fuel must contain 3
percent to 5 percent enriched fissionable uranium (uranium-235).
Once the enriched uranium falls below that level, the fuel
must be replaced. Yet this "used" fuel generally retains about 95
percent of its fissionable uranium, and that uranium, along
with other byproducts in the used fuel, can be recovered and
recycled. Regrettably, the current system's structure provides no
incentive for the private sector to pursue this option.
Many technologies exist to recover and recycle different parts
of the used fuel. The French have been the most successful in
commercializing such a process. They remove the uranium and
plutonium and fabricate new fuel. Using this method, America's
58,000 tons of used fuel contain roughly enough energy to power
every household in America for 12 years.
Other technologies show even more promise. Indeed, most of them,
including the process used in France, were developed originally in
the United States. Some recycling technologies would leave almost
no waste at all and would lead to the recovery of an almost
endless source of fuel, but none of these processes has been
commercialized successfully in the United States, and this
will take time. Until the future of nuclear power in the U.S.
becomes clearer, it will be impossible to know which technologies
will be most appropriate to pursue in this market.
Ultimately, the private sector should make these decisions.
Valuing used fuel against the costs of permanent burial is a
calculation best done by companies that provide
Overhauling Used-Fuel Management in
The success of a sustained rebirth of nuclear energy in the U.S.
depends largely on disposing of nuclear waste safely. New nuclear
plants could last as long as 80 years, but to reap the benefits of
such an investment, a plant must be able to operate during
that time. Having a practical pathway for waste disposal is one way
to ensure long-term plant operations. Establishing such a
pathway would also mitigate much of the risk associated with
nuclear power, but as long as the federal government is responsible
for disposing of waste, it is the only entity with any incentive to
introduce these technologies and practices.
The problem is that the federal government has never been able
to fulfill its current waste disposal obligations, much less
introduce new and innovative methods of waste management.
Although the Department of Energy under its current leadership has
opened the door to reform, that leadership will soon be replaced
when the new President appoints his own team. Administrations come
and go, but inflexible rules and bureaucracies that oversee waste
management seem to endure forever, making it impossible for the
government to respond effectively to a rapidly changing
industry. When it does attempt to respond, it often acts in ways
that make no business sense and are inconsistent with the actual
state of the industry.
Many of these efforts culminate in large government
programs. While some of these programs have some near-term benefit
insofar as they demonstrate political support for nuclear power,
encourage private and public research and development, and
develop the nuclear industry, they inevitably do more harm than
good. They are run inefficiently, are often never completed, cost
the taxpayers billions of dollars, and are often not economically
rational. Furthermore, they often forgo long-term planning, and
this leads to unsustainable programs that ultimately set
industry back by providing fodder for anti-nuclear critics and
discouraging progress in the private sector.
A New Approach
Introducing market forces into the process and empowering the
private sector to manage nuclear waste can solve the problem, but
this will require major reform. The federal government will need to
step aside and allow the private sector to assume the
responsibility for managing used fuel, and the private sector
should welcome that responsibility.
The primary goal of any strategy for used-fuel management should
be to provide a disposition pathway for all of America's nuclear
waste. The basic problem with the current system is that every
nuclear power plant needs a place to put its waste, and Yucca
Mountain is simply not big enough to hold it all under the current
used-fuel management regime.
In other words, permanent geologic storage capacity is a finite
resource on which the industry depends. If used-fuel management
were a market-based system, this storage capacity would carry a
very high value. A new system should price geologic storage as a
finite resource and fold any costs into a fee for emplacing nuclear
waste in Yucca Mountain.
Repealing the Mil. The key to this new approach will be
to transform how waste management is financed. Once
market-based pricing is in place, the fee that nuclear energy
consumers pay to the federal government for waste management should
be repealed. Under the current system, consumers pay for waste
disposition through a flat fee, called the mil, that is paid to the
federal government at the rate of 0.1 cents per kilowatt-hour of
nuclear-generated electricity. This fee as currently assessed has
no market rationale. It is simply a flat fee that rate payers pay
to the federal government. It has never been changed, not even for
In a market-based system, instead of paying a pre-set fee to the
federal government to manage used fuel, nuclear power operators
would fold waste-management costs into the operating cost, which
would be reflected in the price of power. This cost might be higher
or lower than the current fee; more important, it would reflect the
true costs of nuclear power.
Pricing Geologic Storage as a Scarce Resource. The idea
would be to price the space available in Yucca Mountain according
to a set of relevant variables, including heat content of the
waste, predicted production of used fuel, repository capacity, and
lifetime operation costs. Each of these variables would help to
determine the price of placing a given volume of waste in Yucca at
any specific time.
As the repository is filled, the fee to emplace additional fuel
would obviously increase. The fee could also increase, depending on
the formula, as new plants are constructed or old plants' licenses
are renewed because they would produce additional used fuel,
thereby increasing the demand for repository space. Prices
would be lower for waste that radiates less heat. Prices would fall
if Yucca's capacity is expanded or if waste is reduced through
This would create a market for repository space. The fee could
be structured in a number of ways. One example would be to charge a
floating fee according to a predetermined formula. Under this
scenario, the fee would shift constantly as the price variables
change. For example, a volume of waste with less heat content would
cost less to emplace than a similar amount with a higher heat
profile. An alternative to a floating fee might be one that resets
at timed intervals, such as once a year.
The exact structure and implementation of the fee could be
determined at some future point. One simple option would be to
divide the capacity available in Yucca by the lifetime costs
to give a price to emplace an amount (e.g., a ton) of waste in the
repository. As the repository was filled, the price per ton would
Nuclear power operators could then decide, given the price to
place waste in Yucca, how to manage their used fuel. As the
price to access Yucca goes up, so will the incentive for nuclear
operators to do something else with their used fuel. This should
give rise to a market-based industry that manages used fuel in the
The market would dictate the options available. Some operators
may choose to keep their used fuel on site to allow its heat load
to dissipate, thus reducing the cost of placing that waste
into Yucca. Companies may emerge to provide interim storage
services that would achieve a similar purpose. The operators could
choose options based on their particular circumstances.
As prices change and business models emerge, firms that recycle
used fuel would likely be established. Multiple factors would
feed into the economics of recycling nuclear fuel. Operators
would make decisions based not only on the cost of placing
waste in Yucca, but also on the price of fuel.
If a global nuclear renaissance does unfold, the prices for
uranium and fuel services will likely rise. This would place
greater value on the fuel resources that could be recovered from
used fuel, thus affecting the overall economics of recycling.
Instead of the federal government deciding what to build, when to
build it, and which technology should emerge, the private
sector would make those determinations.
Some nuclear operators may determine that one type of recycling
works for them, while others may decide that a different method is
more appropriate. This would create competition and encourage the
development of the most appropriate technologies for the American
Such a market for repository space could give rise to a broader
market for geologic storage. As waste production causes Yucca
storage costs to rise, companies could emerge that provide
additional geologic storage at a lower price. This additional space
would in turn reduce the value of the space available in Yucca.
Alternatively, as Yucca fills, nuclear operators may decide to
develop additional geologic storage facilities in a joint venture.
While this may seem unlikely, given the problems associated with
opening Yucca Mountain, other communities may be more
receptive to hosting a repository once a reliable safety
record is established and the economic benefits of hosting a
repository are demonstrated. The federal government would still
take title to any waste placed in future repositories once they are
Predicting how a market might evolve is impossible, but
unlike the government-run process that led to the Yucca Mountain
site--a process mired in politics--private entities would establish
the path forward by working with government regulators. Private
entities would also be able to pursue their plans without having to
contend with as much of the bureaucratic inertia that accompanies
Most important, this system would encourage the introduction of
new technologies and services into the market as they are needed,
as opposed to relying on the federal government. New technologies
would not be hamstrung by red tape or overregulation. This system
would also allow for the possibility of no expansion of nuclear
power. If the U.S. does not expand nuclear power broadly, there is
probably no reason to build recycling or interim storage
Establishing a Private Organization to Manage Yucca
Mountain. As permanent geologic storage is commoditized, the
problem then becomes one of establishing responsibility for
managing that scarce resource. Leaving that responsibility with the
government provides no benefits. No overarching need mandates
that the government must manage Yucca Mountain or used nuclear
fuel. Furthermore, leaving this responsibility in the hands of
government comes with all kinds of pitfalls, including
inflexibility, inefficiency, politics, and being subject to
annual appropriations, to name a few. Similarly, a public- private
partnership is not necessary and has no inherent advantages.
Instead, a completely new organization--a private entity
(PE)--should be established to manage Yucca Mountain. The PE's
purpose would be to ensure that Yucca is available to support the
commercial nuclear industry's need for permanent geologic
storage indefinitely and to set the fee for placing waste in Yucca.
This fee would be the primary mechanism for managing access to
the repository. Its one operating mandate should be to remain
open to receive waste either until a second repository is
opened or until the last commercial nuclear power plant ceases
The federal government should not be part of the management
team. The PE could be organized in any number of ways. It could
take the form of a nonprofit organization that is independent of
but represents the nation's nuclear energy producers. Such a
structure would ensure that no operator receives preferential
treatment and that the PE operates as a service to all nuclear
operators. It also would prevent a profit-seeking entity from
holding a monopoly over a key asset on which an entire industry
depends. The federal government would provide oversight through the
Nuclear Regulatory Commission (NRC) and other appropriate
The PE should be created as soon as possible and immediately
commence a three-year transition plan, which would coincide with
the NRC's review of the Department of Energy's application for a
Yucca Mountain construction permit. During the transition period,
the PE would work with the Department of Energy's Office of
Civilian Radioactive Waste Management to move the application
for the Yucca construction permit through the NRC. After three
years, when the license is granted, the PE would take control of
Yucca operations, which would include overseeing Yucca construction
and preparing for long-term operations.
Establishing a Waste Disposal Fund. The NRC requires that
each nuclear plant operator establish a funding mechanism to ensure
that resources will be available to decommission the plant once
operations cease. This is achieved either through
guarantees from its parent company or by establishing a
decommissioning fund. This protects the taxpayer from the
financial obligations of plant decommissioning if the operator
becomes financially unable to carry out that responsibility.
A similar funding mechanism should be required for new plant
licenses and life extensions to cover the costs of waste disposal
once the mil is repealed. This could be included in the
decommissioning fund or set up as a separate entity. It would not
be a payment to the federal government and would always be
controlled by the nuclear operator. The monies set aside
should be adequate to finance the geologic disposal of any used
fuel held on-site in dry storage. This guarantees that waste
disposal funds will be available, even if the operator becomes
Other Issues. Changing from the current system of waste
management to a market-based system raises a number of issues:
- How will repository construction be funded if it is dependent
on disposal fees?
- What will happen to the Nuclear Waste Fund?
- Who is responsible for the disposal of existing nuclear waste,
which has already been paid for?
- What happens to defense waste?
The Nuclear Waste Fund and Construction of the Yucca Mountain
Repository. The Nuclear Waste Fund was set up by the 1982
Nuclear Waste Policy Act to pay for the costs of waste disposal.
The fund has approximately $19 billion, and about $7 billion has
been spent so far on repository activities. Congress should abolish
the fund and make the money available to the PE for licensing and
constructing of the Yucca Mountain repository.
According to a 2001 analysis by the Department of Energy,
licensing and pre-emplacement construction will cost an
estimated $5.74 billion, and decommissioning will cost $4.04
billion. The Nuclear Waste Fund can cover both of
those expenses, according to the 2001 analysis, and still have
significant funds at its disposal. The balance should be applied to
post-construction operating costs. It must be noted, however, that
the Department of Energy is currently reevaluating those
costs, and a new price structure could emerge. On the other hand, a
private entity could price Yucca's costs differently even from
DOE's new assessment.
Once used-fuel management is subject to the open market, it is
always possible that no one will use Yucca Mountain, thus depriving
it of the funds it needs to maintain operations. Given this
possibility, the PE should be authorized to assess nuclear
operators a fee to maintain minimum operations at Yucca if revenue
streams are not adequate. This fee should be triggered only under
Disposal of Existing Used Fuel. While a new regime to
deal with new used fuel may make sense, it will not fix the
existing problem created by the federal government's failure to
dispose of existing waste despite being paid to do so. As a result
of its failure, the government and the taxpayers have incurred an
expensive ongoing liability for 58,000 tons of used fuel stored
around the country.
The courts have confirmed this liability. As a result, the
taxpayers have already paid $94 million in lawyer expenses and $290
million in damages. The government is appealing another $420
million award. The government's long-term liability for used fuel
is projected to reach $7 billion by 2017 and $11 billion by 2020. While
no solution will satisfy all parties entirely, a resolution that
allows a sustainable used-fuel strategy to emerge would be in the
broad national interest.
One remedy would be to set aside an amount of space in Yucca
Mountain for each reactor operator equal to the amount of used fuel
that it produced before discontinuation of the waste fee. Operators
could use this space without further fees as they see fit,
including selling it to other operators.
Given that America's reactors have already produced around
58,000 tons of waste, if the mil were repealed today, the PE would
set the fee based on the total available space minus 58,000 tons.
The capacity should be set based on scientific and technical
parameters of what could safely be stored in Yucca.
Defense Waste. One of reasons that Yucca must be opened
is that the United States has significant amounts of
defense-related nuclear waste that is slated for disposal. Current
plans set aside 7,000 tons of Yucca's capacity for defense
The federal government would be a customer for waste-management
services just as every other operator is and would pay a fee for
placing its waste in Yucca. Alternatively, the government could buy
waste-management services on the open market to process its waste,
thereby minimizing what is placed in Yucca.
Defining the Federal Role in Waste Disposal. Although its
involvement in used-fuel management should be minimized, the
federal government will continue to have a number of critical
roles. During operations, the federal government would have
significant oversight responsibilities. As is currently the
case, the Nuclear Regulatory Commission would oversee operations,
and other federal agencies, such as the Environmental
Protection Agency, would continue to play a regulatory role. The
national laboratory system would also play a critical role in
facilitating research and development.
The federal government would fulfill its final obligation by
taking possession of the closed and decommissioned Yucca Mountain
whenever that may occur, along with any geologic repositories that
may be built in the future. This is a critical role for the federal
government because it is the only institution that can
maintain assured liability for the waste in perpetuity.
Steps to Overhaul Nuclear Waste Management
To begin the process of overhauling the nation's nuclear-waste
management regime, Congress should amend the Nuclear Waste Policy
Act of 1982 to encourage development of a market-based management
system for used nuclear fuel. Specifically, Congress should:
- Create the legal framework that allows the private
sector to price geologic storage as a commodity;
- Empower the private sector to manage used fuel;
- Repeal the 70,000-ton limitation on the Yucca Mountain
repository and instead let technology, science, and physical
capacity determine the appropriate limit;
- Create a private entity that is representative of but
independent from nuclear operators to manage Yucca
- Repeal the mil, abolish the Nuclear Waste Fund, and
transfer the remaining funds to a private entity to cover the
expenses of constructing Yucca Mountain; and
- Limit the federal government's role to providing
oversight, basic research, and development and taking title of
spent fuel upon repository decommissioning.
The current approach to managing used nuclear fuel is
systemically broken. It was developed to support a nuclear
industry that was largely believed to be in decline; that is no
longer the case. The federal government promised to take title of
the used fuel and dispose of it; this removed any incentive for the
private sector to develop better ways to manage the fuel that could
be more consistent with an emerging nuclear industry. And the
federal government has proven incapable of fulfilling its
obligations to dispose of the fuel.
The current system is driven by government programs and
politics. There is little connection between used-fuel management
programs and the needs of the nuclear industry. Any successful plan
must grow out of the private sector. The time has come for the
federal government to step aside and allow utilities, nuclear
technology companies, and consumers to manage used nuclear
Overhauling the nation's nuclear-waste management regime
will not be easy. It will require a significant amendment of
the Nuclear Waste Policy Act and a long-term commitment by
Congress, the Administration, and industry. But developing such a
system would put the United States well on its way to
re-establishing itself as a global leader in nuclear energy.
Jack Spencer is Research
Fellow in Nuclear Energy in the Thomas A. Roe Institute for
Economic Policy Studies at The Heritage Foundation.
Phillip J. Finck, Deputy Associate Laboratory
Director, Applied Science and Technology and National Security,
Argonne National Laboratory, statement before the Subcommittee on
Energy, Committee on Science, U.S. House of Representatives, June
figure is an extrapolation based on the French experience with
Department of Energy is due to release a new assessment of Yucca's
lifetime costs, which could alter the estimates provided by the
Committee on Environment and Public Works, "Ten