After years of policy wrangling and bureaucratic delays, the
Department of Energy (DOE) has identified the four companies
approved to receive federally backed loan guarantees to help
finance the construction of new nuclear reactors in the U.S. All of
the recipients have one thing in common: strong international
connections. With protectionist sentiment on the rise, the DOE
should be commended for recognizing the critical role that the
global nuclear industrial base must play in reestablishing the U.S.
Access to Global Supply Chains
Critical to U.S. Nuclear Renaissance
America's first orders for nuclear power plants will depend on
global supply chains and free trade. Any tariff or regulatory
barriers to trade in nuclear components drive up the costs
associated with building new reactors. Given the already high
capital costs inherent to nuclear power, protectionism could
inflate the cost of new projects enough to stop the nuclear
renaissance before it begins.
Thus, ensuring access to global goods and services is critical
to reinvigorating nuclear energy in the U.S. and the domestic
nuclear industrial base. The U.S. currently lacks the industrial
capacity to support a substantial expansion of domestic nuclear
power; however, as new orders for reactors increase, incentives for
investors to rebuild production facilities in the U.S. will rise.
New U.S. and world demand for nuclear components will give a
healthy boost to the financial outlook for the industry, attracting
the significant investments necessary to expand international
capacity and provide the impetus to start rebuilding America's
commercial nuclear industrial capacity.
Rebuilding America's Nuclear
While the U.S. commercial reactor business faded decades ago,
the U.S. did not abandon the nuclear sector altogether. Instead of
building new plants, the U.S. commercial nuclear industry turned to
making its existing plants run more efficiently and safer. So while
other countries may lead in new plant construction, America excels
in operating them.
Moreover, the United States remains a leader in researching and
developing nuclear technologies. America's vast national laboratory
system and private sector expertise provides the resources and a
scientific foundation for the U.S. to again compete as a global
leader in the commercial nuclear world.
Moreover, while building commercial reactors in the U.S.
stopped, building reactors altogether did not. As commercial
construction waned, the nuclear components industry consolidated to
meet government demand for nuclear aircraft carriers and
submarines, as well as other federal requirements. These companies
are now reengaging in the commercial nuclear business and will
likely be at the forefront of a resurgent U.S. nuclear components
Securing U.S. Access to International
The U.S. should keep the momentum moving behind the growth of a
strong and efficient U.S. nuclear industry. America's policymakers
should keep U.S. markets open and encourage lower trade barriers
around the world. The DOE should be commended for recognizing the
important contribution that foreign companies will make in
expanding nuclear power in the U.S. Going forward, the Obama
- Reject protectionist measures that restrict access to the
global supply chain. Trade measures including tariffs, quotas,
domestic preferences in procurement, and excessive regulation
increase costs, limit access to critical expertise, and undermine
the broad expansion of nuclear power in the U.S.
- Work to dismantle trade and investment barriers protecting
commercial nuclear industries in foreign markets. Much of the
world's industry is dominated by state-run--and
state-subsidized--firms, and trade restrictions are used to protect
those firms as a general rule. Yet the cost, safety, and
competitive benefits of opening commercial nuclear industries to
the rigor of international trade are not for the U.S. alone. Open
markets would allow consumers everywhere to benefit from lower
power costs and safer technologies--and could result in boosting
demand for new capacity. Freer trade could fuel a virtuous cycle of
growth in the industry, allowing U.S. and other firms a chance to
contribute to a global expansion of nuclear power.
- Help move the Convention on Supplementary Compensation for
Nuclear Damage (CSC) forward. Many countries use the lack of
liability protection for U.S. companies as a means to protect their
domestic nuclear industry from U.S. competition. The CSC creates a
liability framework to manage international liability issues.
Parties to the convention operate under common liability rules for
nuclear activities. While the U.S. has ratified the convention, it
has not yet come into force because enough other countries have not
ratified it. Bringing the convention into force should be a top
priority for the Obama Administration.
- Reject further loan guarantees (or their functional
equivalent). The original intent of the loan guarantee program
was to help mitigate the political and regulatory uncertainty
associated with being among the first companies to build new
nuclear plants in the U.S. With these first projects now receiving the
green light to move forward, those uncertainties should be
addressed as the plants are constructed. Expanding the program at
this point will be counterproductive. It distorts capital markets,
stifles competition, encourages government dependence, and
suppresses private-sector financing solutions.
These reactors will be among the first new nuclear power plants
ordered and built in America in three decades. The DOE wisely
selected companies using different technologies and will operate in
both regulated and unregulated markets--a move that better enables
market forces, rather than government dictate, to determine the
best and most competitive way forward for the industry.
Having access to foreign reactor designers, utilities, component
manufactures, and financing ensures that America's nuclear
renaissance is safe and competitive and brings the best value to
consumers. U.S. policymakers should resist protectionist forces to
help bring about America's nuclear renaissance.
is Research Fellow in Nuclear Energy in the
Thomas A. Roe Institute for Economic Policy Studies and is Jay Van Andel Senior Trade Policy Analyst
in the Center for International Trade and Economics at The Heritage