Saving the NPT and the Nonproliferation Regime in an Era of Nuclear Renaissance

Testimony before the
House Committee on Foreign Affairs,
Subcommittee on Terrorism, Nonproliferation, and Trade

Rayburn House Office Building, Room 2172

July 24, 2008

Jack Spencer
Research Fellow for Nuclear Energy Policy
Domestic Policy Studies
The Heritage Foundation

My name is Jack Spencer and I am the Research Fellow for Nuclear Energy Policy for The Heritage Foundation.  The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

Thank you for inviting me to testify today before the Subcommittee on Terrorism, Nonproliferation, and Trade.

As we sit here today there are approximately 440 commercial nuclear reactors operating around the world. One hundred and four of them are operating in this country alone. With the exception of a few highly publicized and, I might add, mostly misunderstood, accidents, these reactors have operated safely, cleanly, and to the benefit of society for most of their lifetimes.

This is not to suggest that no problems have ever arisen. It is merely to acknowledge the relatively good track record of nuclear power.

And it is this track record that essentially brings us here today to discuss ways to save the Nonproliferation Treaty and the nonproliferation regime in an era of nuclear renaissance.

Is a Nuclear Renaissance Under Way?

Answering such a question is difficult. Certainly the world is preparing for an expansion of nuclear power. But the size and scope of that expansion remains unknown. It is clear that many countries, including the United States, are beginning to look at nuclear power as a viable alternative for meeting future energy demand.

Indeed, approximately 39 nuclear power reactors are under construction around the world. More important to the question before us today is the large number of reactors that could come online in the next few decades. Nations across the world have voiced an interest in building nuclear power plants.  Literally hundreds of reactors are in the planning stages. But even that could be a fraction of what is about to come if there is truly a nuclear renaissance.

The likelihood of a massive expansion of nuclear power depends on the factors behind the growth. If it is a question of energy independence and economics, then the expansion of nuclear power in the United States, while potentially significant, will likely remain moderate. However, a mandate to reduce CO2 emissions could bring about a much more comprehensive expansion.

Recent analysis by the United States Department of Energy's Energy Information Agency suggests that the United States will need to add approximately 268 gigawatts of new nuclear power by 2030 to meet the CO2 emissions objectives mandated by the Lieberman-Warner climate change bill (S.3036).[1] In terms of reactors, assuming an average of 1.3 gigwatts per reactor, the U.S. would need to construct approximately 200 reactors over the next 25 years.

If the rest of the world were held to similar emissions levels, 268 gigawatts in the U.S. would extrapolate to roughly 1000 new reactors for the rest of the world. This would meet anyone's definition of a nuclear renaissance.

Whether such an outcome is likely-or even possible for that matter-is certainly up for question. However, what is clear is that the path towards drastic CO2 reduction will lead to an accelerated expansion of nuclear power.

But even aside from being CO2 free, nuclear energy has many attributes that make it attractive. For that reason, I believe that even absent CO2 restrictions, nuclear power in one form or another will play a larger role in energy production around the world in coming years. China and India provide good examples. Neither of these countries are necessarily concerned about CO2 emissions, yet both are planning a significant nuclear expansion to meet their skyrocketing energy demands.

The question then becomes, what can the U.S. and the international community do to manage this potential growth so that states can enjoy the benefits of nuclear power without increasing the risk of proliferation.

The Nonproliferation Regime

While the nonproliferation regime is under stress, it is not broken. Indeed, it is largely working. The treaties, agreements, organizations, and initiatives in place today provide peaceful nations with numerous tools to control the spread of dangerous technologies and the authority to act when dangerous behavior is identified. The question is whether supplier states follow the established rules and to what extent peaceful nations are willing to compel proliferators to discontinue risky behavior.

North Korea, for example, did not surprise anyone when its so-called peaceful nuclear activities were revealed as a cover for a nuclear program. To the extent there were any surprises in the early 1990s, the international community had ample time to respond. Whether changes in policy toward North Korea altered its behavior can be debated, but certainly the nonproliferation regime worked insofar as it gave the world ample warning of North Korea's intentions.

The same is true today with Iran.  The world is not unaware of Iran's programs. The problem is with states that enable Iran's actions and the difficulty of developing a cohesive policy to compel a change in its behavior.

One could argue that the Iran and North Korea problems are examples of nonproliferation regime failure. Perhaps they are to the extent that the purpose of nonproliferation policy is to prevent any spread of nuclear technology for the purposes of weaponization. But the reality is that as long as the basic building block of the international system is the sovereign nation-state, no international treaty or regime can stop a state from pursuing dangerous programs. It is not a problem of nonproliferation policy, but a problem of hostile, dangerous regimes.

That is not to suggest that current nonproliferation policy could not be modified.  Any set of rules used to manage something as dynamic as nuclear technology will always require adjustments to accommodate for tactical changes by would-be proliferators. That is why there are regularly held NPT conferences, Nuclear Suppliers Group meetings, and so forth. 

In essence, the fundamental bargain of the Nuclear Nonproliferation Treaty is sound. That being said, there is no question that a global nuclear renaissance will present new and unique challenges.  But if met appropriately, I believe that a global nuclear renaissance is not incompatible with nonproliferation objectives.

Reestablishing America's Credibility as a Commercial Nuclear Power Leader

The U.S. no longer dominates the commercial nuclear technology field. Its industry has atrophied over the past three decades. During that time other nations-most notably France, Russia, and Japan-have continued to build their commercial nuclear capacities. Now they are prepared to supply the world with commercial nuclear technology.

Even if a nuclear renaissance were to come at the expense of nonproliferation objectives, it is unclear whether the United States is in a position to do much about it. Like us, other nations are facing serious energy challenges. The fact is that notwithstanding optimistic predictions about renewable sources, nuclear power helps solve many nations' energy problems.

That is not to suggest that the U.S. has nothing to offer or has no leverage. It does. While other countries were developing strong nuclear industrial bases and commercial business models, the United Stats was engaged in significant research and development and perfecting nuclear power plant operations. Furthermore, despite its lack of domestic nuclear industry, the United States remains the most influential nation in the world.

These three things (R&D, expertise in operations and maintenance, and prestige) are precisely what is needed to ensure that a global nuclear renaissance moves forward without unduly jeopardizing the nation's nonproliferation objectives. America's research and development in nuclear technology will be critical to the future of safe, global nuclear energy. These technologies will bring about safer reactors, proliferation-resistant fuels, and new methods for managing nuclear waste. Exporting these technologies will be critical to achieving our nonproliferation objectives.

America's nuclear plants operate at over 90 percent capacity, which is an extremely efficient level. This allows the U.S. to produce much more power per reactor than anywhere else in the world. Thus, by exporting our operations and maintenance expertise, other nations would need fewer reactors. America's reactors are safe, efficient, and secure. If every reactor in the world operated like those in the U.S., there would be little proliferation risk. 

The challenge for the United States will be to integrate its principles into a new rule-set that governs peaceful nuclear commerce. 

The following recommendations can help meet this challenge. 

First the U.S. must take the lead in developing an international nuclear fuel supply program. Such a program must be at the center of any strategy to save the nonproliferation agenda in an era of nuclear renaissance. The international component of the Administration's Global Nuclear Energy Partnership is a good first step, but must evolve further. Because fuel supplies can never be unconditionally guaranteed, the program should assure fuel access as long as certain nonproliferation guidelines are followed by participant countries.   Another important component will be that fuel suppliers maintain title of the fuel throughout the fuel cycle. This means that supplier nations must also have a workable spent fuel management strategy.

This should be expanded upon to codify new rules to govern commercial nuclear activities broadly. The most effective way to protect U.S. interests in an era of nuclear renaissance is to ensure that the rules and norms of the global nuclear industry are consistent with American ideals such as free-markets, openness, and transparency. As part of this effort, fuel supplier states should agree to open their markets to international competition. Supplier companies (including state-owned companies) should operate as private, for-profit firms, and every effort should be made to eliminate tariffs and quotas that artificially distort the commercial nuclear market.  Doing this requires the U.S. to be fully engaged in the near-term by ensuring that agreements, such as 123 agreements, respect proliferation concerns without unduly sacrificing commercial activity. If these agreements do not strike this balance, the United States risks diminishing its influence over international nuclear trade policy by isolating itself from the global nuclear market. 

Third, the United States must not cede control of any nuclear fuel services to an international body such as an international fuel bank or an international nuclear waste management agency.  While an international fuel bank could have some merit as an insurance policy for countries whose fear of being denied access to fuel would limit their participation in a larger nuclear fuel supply program, such an effort must not be used to control nuclear fuel distribution broadly. Furthermore, the international community should not be responsible for managing nuclear waste. Instead, each nation should operate under its specific rules and regulations as they pertain to nuclear waste issues. Reprocessing, permanent geologic storage, and other used fuel processing technologies would be brought to bear as each nation deems appropriate.

Instead of ceding power to international bodies, the U.S. should take a more active role in safeguards and verification. The International Atomic Energy Agency currently has a monopoly over this responsibility. While the IAEA has a critical role in promoting safety, security, and cooperation in the nuclear field, safeguards and verification need additional oversight. A more active U.S. role, especially in activities involving fuel services, would have multiple benefits. First, it would allow the IAEA to focus its efforts on high-risk countries and activities. Second, it would provide another level of scrutiny for potential proliferation concerns-especially those associated with nuclear fuel services.

And finally, the U.S. should reiterate its support of the enduring role of Article IV of the Nuclear Nonproliferation Treaty. The reality is that any country can pursue whatever technologies that it chooses. As the article states, countries' rights to pursue peaceful nuclear technologies are "inalienable." This inalienability, however, is not absolute in the context of the NPT.  It is contingent on fulfilling their obligations and responsibilities under the pact. Any nonproliferation regime that does not respect the rights of individual states will ultimately fail. The key is to devise a system that promotes buy-in from both suppliers and consumers of nuclear fuel services. If the system is economically rational, credible, and reliable, then peaceful nuclear countries should find participation beneficial. Only those that would seek to use nuclear technology for nefarious purposes would find benefits in operating outside of the system.

In conclusion, the current nonproliferation regime provides the international community with the tools to control the spread of dangerous nuclear materials. However, none of these tools can magically prevent a dedicated nation (or other international actor) from seeking threatening capabilities. This is not a nonproliferation policy problem or commercial nuclear problem, but a hostile regime problem. Preventing hostile regimes from acquiring nuclear capabilities requires the political will to use the available tools effectively. Furthermore, there will always be a struggle to keep technology of all sorts out of the hands of those who would misuse it. This struggle, however, is not a justification to deny society the benefit of critical technologies such as nuclear power.

That concludes my testimony today. Thank you for this opportunity. I look forward to your questions.

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