American Enterprise Institute

October 6, 2006

[Edited transcript from audio tapes]

8:45 a.m.	Registration and Breakfast
9:00	Welcome and Introduction	Jon Entine, AEI
9:15		Panel 1: Nuclear Power and Climate Change
	Panelists:	Judi Greenwald, Pew Center on Global Climate Change
		Ernest J. Moniz, Massachusetts Institute of Technology
		William Tucker, author of Terrestrial Energy
	Moderator:	Steven F. Hayward, AEI
10:45	Break
11:00		Panel 2: Economic and Regulatory Concerns
	Panelists:	Christopher E. Paine, Natural Resources Defense Council Paul Joskow, Massachusetts Institute of Technology
		Richard J. Myers, Nuclear Energy Institute
	Moderator:	Jon Entine, AEI
12:30	Luncheon
1:00		Keynote Address
	Speaker:	Dale E. Klein, Nuclear Regulatory Commission
2:00		Panel 3: Next Generation Nuclear
	Panelists:	Edward Cummins, Westinghouse Nuclear
		Edwin Lyman, Union of Concerned Scientists
		Charles W. Pennington, NAC International
	Moderator:	Kenneth P. Green, AEI
3:30	Adjournment

Proceedings:

Jon Entine:  I would like to welcome everyone to the American Enterprise Institute. My name is Jon Entine, and I am an adjunct fellow here focusing on science and public policy issues.  I am very pleased that we have such a distinguished group of panel participants and representatives from AEI to discuss the issues of nuclear energy, global warming, and environmental issues.  For lack of a better word we are in an “environmental pickle.”  It is generally acknowledged the global warming is a fact and a potential threat. 

At this conference at least we will set aside the debate over the myriad possible causes of global warming and focus on what we might do to address it; we are going to look today at nuclear energy.  Traditionally political predilection has driven the debate over nuclear energy with exceptions, of course.  Conservatives have tended to be supportive of nuclear technology considering the risks acceptable and the Left has been instinctively hostile.  Political passions have often masqueraded as economics and environmental science.  The double threat of global warming and high energy prices may be challenging those once rock-hard positions. 

Twenty years after Chernobyl left the nuclear industry all but dead, the environmental and political landscape looks quite different.  Fossil fuel prices are high.  New plant designs are safer, and to the point of our forum today, greenhouse gas emissions from fossil fuels, coal, most notably, are considered by many people to be at dangerous levels.  From a risk-risk perspective, from an economic perspective, nuclear energy is now back on the table, and even the socially responsible investment community, which has, as one of its founding tenets an absolute opposition to nuclear energy, is deep into debate about whether it might reverse or at least publicly soften its opposition to nuclear energy. 

The hard reality may be this, that no matter how much people talk about conservation, solar and wind power or even drilling for more oil and gas for the foreseeable future, the nation’s real choice in generating electricity may be between coal and nuclear.  What do we do?  What should we do?  To begin tonight’s discussion is Steve Hayward from the American Enterprise Institute.  Steve is the F.K. Weyerhaeuser fellow in environmental studies at AEI and a senior fellow at the Pacific Research Institute.  Among his many publications, Steve is author of the annual Index of Leading Environmental Indicators and AEI’s Environmental Policy Outlook.  Steve?

Panel 1: Nuclear Power and Climate Change

Steven F. Hayward [moderator]:  Thank you, Jon.  I will just introduce the panel from here at the table and I like to frame our discussion the following way.  One of the more interesting thought experiments making the rounds in climate change policy circles these days is the stabilization wedges approach of Stephen Pacala and Robert Socolow of Princeton.  Maybe you may be familiar with it in its simplest outline. 

The idea is that the problem of greenhouse gas emissions becomes less daunting if we divide the problem into seven different wedges, or pie-shapes if you like, and implement the strategies of each wedge over a 50-year time horizon.  The seven wedges include such plausible though not uncomplicated ideas such as doubling the fuel economy of the world’s auto fleet, having more efficient building standards, carbon sequestration, renewable energy and bio-fuels, of course.  And one of the wedges is nuclear power. 

It was an odd thing, though, to note that … I missed it at first, most people did, that in Vice-President Gore’s book and movie An Inconvenient Truth, he mentions the stabilization wedges framework.  Except in the Vice President’s rendering of it, there were only six wedges up on the screen or in the book.  He left out without comment the nuclear power wedge of Socolow and Pacala.  Now the Vice President has more recently … I think he has been getting a lot of questions about this and the reason he said, “Well, yes, I think there is some role for nuclear power but I think the role is small because of proliferation problems, and some of the other problems that have been around for awhile.” 

So let me give you a couple of statistics to keep in mind as we go forward.  It is not a coincidence, as the old saying goes, that the industrialized nations with the lowest greenhouse gas intensity that is the greenhouse gas emissions per dollar of GDP is France which generates about 80 percent of its electricity with nuclear power.  According to the International Energy Agency, the United States generates about 0.55 kilograms of carbon for every dollar of economic output.  The comparable figure for France is 0.29 kilograms, just a little more than half as much as the United States.  Now not at all of that, of course, can be attributed to nuclear energy, but it is a compelling thought experiment to note that if the US had the same greenhouse gas emission profile as France, global greenhouse gas emissions would be seven to eight percent [audio glitch] than they are, a substantial difference. 

And I will just say that it is a rare day when the American Enterprise Institute holds up France as an example possibly to emulate.  Well, a lot has changed since the China Syndrome, Three-Mile Island and Chernobyl 25 years ago, and both in terms of technology and also the relative trade-offs between various ways of looking at how to bend the growth curves in greenhouse gas emissions.  As our case is new, so we should think anew, as the old saying goes, so we need to revisit some of the seemingly inherent problems of civilian nuclear power, such as waste, weapons proliferation, threats of terrorism and so forth.  And also the very basic question of whether nuclear energy is cost competitive with other energy sources or in what ways might it be cost competitive if we had a regime of emissions-trading or carbon tax. 

We have three well-qualified speakers to dialogue these and other questions, starting with Judi Greenwald from the Pew Center for Global Climate Change where she has the splendid title of the Director of Innovative Solutions.  I am going to petition to become the Director of Retrograde Solutions here at AEI, I think.  Miss Greenwald brings extensive experience in and out of government to this problem.  She spent time at both the US Nuclear Regulatory Commission and the EPA.  And with that, Judi, the floor is yours.

Judi Greenwald:  Well, I had an experience this morning that is sort of like what happens to a lot nuclear plant owners, that it took me about twice as long to get here as I had estimated.  Of course, that is going to ultimately double my parking costs and damage other things, so there are all these extra costs that I had not foreseen, and so here I am.  Sorry for the boring title, “Nuclear Power and Climate Change,” and I presume this goes …

I am Director of Innovative Solutions.  I feel like I need to tell you a little bit about the Pew Center on Global Climate Change.  Many of you are familiar with us but just to sort of figure out where we are in the world, it is kind of tough for people.  We are sort of an interesting organization.  We were founded in May, 1998.  We are independent.  We are non-profit.  We are non-partisan and we are actually a one-stop shop on climate change.  We are actually several organizations and one, and I think this is what is sometimes confusing to people.  We do research. 

We do education and outreach mostly to opinion leaders like policy makers, the press and business, and we work with businesses.  Our research is multi-faceted; we do science and impacts, policy, economics and solutions.  We commission peer-reviewed research.  We also do research in-house.  Our education and outreach we do, as I mentioned, is mostly to opinion leaders. 

We also work with our businesses on doing education outreach.  And the work we do with businesses is through our business environmental leadership council, which are 41 mostly Fortune 500 companies who are part of the problem with greenhouse gas emissions and climate change, but also want to be part of the solution.  And the companies tend to be active on solutions on at least one of three fronts, sometimes two or all three.  They are reducing their own greenhouse gas emissions; they are developing technologies that can reduce greenhouse gas emissions over time.  They are proactive on policy, advocating for a policy that is reasonable, business-friendly, and market-based.  We often work with the companies on policy and advocacy.  We do not take any money from the companies so we are independent of them, and they are independent of us, but we both do have this sort of approach to climate change that we really need to do something about, and that we need to do it in a way that makes sense. 

I probably should introduce the challenge.  I am not sure how much the other panelists are going to talk about what we are really up against with climate change.  So only for those of us who closely follow the peer-review literature, it is becoming clearer and clearer that climate change is a very serious problem.  We need to get started on doing something about it now.  Just about everybody - ordinary citizens who read news magazines or listen to the news, or now the weather channel is going to start doing some work on informing people about climate change - knows that we are getting absolutely surer and surer that the climate is changing, that humans are making a major contribution to that and we really need to reduce greenhouse gas emissions quite dramatically in order to deal with this.  There is a very complex debate about exactly how much to reduce by when. 

In the literature on this, you often see concentration targets, the targets of getting the greenhouse gas concentrations that are in the atmosphere down to something like 550 parts per million [indiscernible] a range of targets for the purposes of the next couple of sites I am going to talk about, about 500 or 550 parts per million just because that is what some of the analyses are that you can look that.  And that would require an increase of 100 to 300 percent of present-day primary power consumption to come from non-carbon fuels.  That is a tough goal, in our view, necessity.  But it is something; it is quite a challenge.  In the near-term, we think there is an awful lot that you can do right now with existing technologies, more efficiency, fuel switching. 

There are all kinds of things that we can get started on right away.  We also need to start a policy now that will set up the framework that will drive reductions at ever-lower levels over time.  Over the long-term we see both an essential role for R&D and for mandatory policy that actually caps emissions and sets up a market for carbons.  Carbon reductions have value and we see that as key elements of driving greenhouse gas reductions over time down in the long run.  This is different from how you may hear the administration describe the prime-base [sounds like], tend to set up a dichotomy that you either need technology R&D or you need a mandatory policy.  They favor technology R&D. 

Our view is that you need both, and that is what we advocate.  We also think that it is important to consider all the low-carbon options because of the magnitude of the challenge.  This is Socolow’s wedges that we just heard about.  Basically, what Socolow has done is he takes one of the productions, and there are a range of these, that show greenhouse gas emissions globally about doubling over the next 40 or 50 years to about 14 billion tons of carbon per year.  We are now at about seven.  And they need to divide [sounds like] the difference between 14 and seven.  You want to cut emissions in half, you need to divide that into seven pieces of each a giga ton [sounds like], and so he sort of thinks about dividing it into seven pieces … what that might look. 

What are some of the pieces that she would need to help you solve this problem?  If you try to think about it, all at once you probably cannot think of anything that is going to get you the whole way there, and even as you will see, when you divide it into seven pieces it is pretty daunting.  One example of a wedge - this is just 1/7 of what we have to do - would be two billion cars going at 60 miles per gallon instead of 30 miles per gallon.  So you can imagine it, but it is not easy. 

And another wedge that is commonly mentioned that he has talked about, but, of course, Vice-President Gore apparently does not talk about is you need about 700 gigawatts a nuclear power; that would be about a wedge which is about twice current global capacity.  So our view is that we do look at nuclear power as one of the potential wedges, particularly for a couple of reasons.  One is it is one of those things we have already done.  We have nuclear power.  We know that we can do it.  And also it is a really important potentially GHT-free source of base load power, so that is something that we think is important. 

We did a report about a year-and-a-half ago by Granger Morgan and some of his colleagues at Carnegie Mellon University, and they looked at what would it take over the next 50 years to radically reduce greenhouse gas emissions from United States electricity sector.  They found a very important role for energy efficiency and renewables. Our organization is very supportive of moving ahead on that front. But they found they could not figure out, when they did the modeling and tried to play around with different costs and different rates of technology penetration, they really could not see how we could get big reductions at least over the next 50 years.  If you go out a hundred years sometimes people think it looks a little easy.  You can see energy efficiency and renewables ramping up fast enough to get you deeper reductions over a very long term, even beyond 50 years, but over the next 50 years it really looked like you needed either nuclear power or coal burning, but with carbon-captured storage or coal use because it might be coal gasification with carbon capture and storage as one of those needed to work to meet the base-load needs [indiscernible] in a low-carbon way in order to really get the deep reductions over 50 years.  Probably you could imagine a scenario where you get some of both as a way to meet the target.  So it looks like you really would like at least one of those, and perhaps some of both to work in order to meet the greenhouse gas challenge that we face. 

There are also some interests; we have not spent as much time looking at those but there is also some interests in nuclear power and among other zero-carbon or low-carbon sources of electricity as being a way to actually indirectly power the transportation sector.  Two of the three major options that people look out over the long term for the transportation sector is being zero or low-carbon, cellulose ethanol or these two other options that are actually sort of dependent on the electricity sector ultimately to get where you need to go.  Hydrogen, which you have to make hydrogen from some things so you need to have to make it from electricity or from carbon fuels in some way, or electric cars which would run on batteries but those batteries would have to be charged by electricity. 

So there is some interest in a role for low-carbon powers or zero-carbon powers such as nuclear even indirectly in the transportation sector.  This is probably familiar to all but there are many barriers to using nuclear power, even though the opportunity and the clear usefulness of it are obvious.  Cost, waste disposal, proliferation risks and safety are the ones that are talked about a lot. 

Some people list public concern as a separate one.  In fact some people are relatively dismissive of the first four and say it is really just a public that is concerned but they really should not be so concerned.  Our view is that public concern is about real issues and that we actually are worried about all four of those issues and see them as genuine; barriers, and that the public has reason to be concerned, but we do think that the particular issue about public education does often get called at, so I just wanted to do that.  At the moment we are most focused on the issues of waste and proliferation for a couple of reasons.  Some people say it is about some of the other issues as well, but just so you understand our perspective, we see the waste issue as kind of threshold.  If we do not have a place to put the waste, it is sort of hard to imagine this going anywhere. 

Other people say the same thing about cost.  If electricity - utility executives are not going to pick nuclear because it is too costly, then that is the threshold issue, but I guess because of what has happening lately where we have just put in a bunch of public policies to really get at the cost issue, I sort of feel like we can let those roll out for awhile and see how they play out.  But, really, where there is some more work needed are on the waste and proliferation issues, similarly with safety.  The nuclear industry safety record has been quite good for sometime and there is a new generation of plants coming that look like they are going to be even better, so while we think these are very important issues we see them in the process of being addressed and making some progress, whereas on proliferation risk and waste, I would say we are pretty stuck. 

And you probably maybe know this, but about 20 percent of electricity now comes from nuclear power.  So the answer to the question which I am sometimes asked, which is can nuclear power be part of the solution to climate change?  And the answer is it already is.  You are already using nuclear power.  If we were to displace these power plants we probably displace them with something that had carbon in them or there is at least some chance we would, and then we would have greenhouse gas emissions and we have to do something about that. 

So at the moment the nuclear power plants are playing a role in avoiding carbon emissions from that sector.  So the question is, though, can it play a bigger role?  That is, I think, the really big question.  In fact, will its role decline over time is another question as all these plants come up for re-licensing.  Are we going to re-license them?  Are they going to last as long as some folks would like them to?  So many of you know this.  Despite its significance in generation capacity the last plant was ordered in ’79; approximately 10 percent of US nuclear plant licenses will expire at the end of 2010, and more than 40 percent will expire by 2015. 

You get this sort of big [indiscernible] in the next few decades.  Looking out to 2045 which not everyone does, but as I mentioned earlier, we do look out the next 50 years or so when we think about this problem.  And basically all the plants will be up for re-licensing, so the fate of this generation of plants is going to have a big impact on greenhouse gas emissions from our US electricity sector.  We recently had what I would describe as a very supportive set of policies for the nuclear industry that was enacted last year, the Energy Policy Act of 2005.  We have generous tax credits, loan guarantees and risk protection to encourage construction of new plants, extension of the Price-Anderson Act, funding for nuclear energy R&D, standby support for new reactor delays if it is not the utility’s fault.  Tax treatment of decommissioning funds has become more usable for plants operating at a competitive environment and funding and support for personnel and training.  We have licensing reform. 

We now have several industry consortia who will [indiscernible] to test the construction and operating license process with actual funding from the federal government to get through that, so this is a pretty policy firmly environmental, at least on the cost side.  These industry consortia are seriously looking towards the possibility of building plants, as growing interest in investment community, at least some part because of these generous subsidies.  So there are people at least seriously looking at building another generation [indiscernible].  Nobody has broken ground, so this is not for sure. 

So our view is that we want to keep the nuclear option open; we have to be frank about both the challenges and the benefits of nuclear power.  We ask the questions that are similar to how Ernie Moniz and his folks at MIT ask it, which is, despite its significant risks and challenges, how can nuclear power be made to work in the context of a carbon-constrained world?  We see both environmental groups and conservative groups re-thinking their views on this.  I think conservative groups may be focusing more now on the dangers of global warming, and many environmental groups are now focusing more on the potential for nuclear power to be a solution to climate change, and then what can you do to solve nuclear power’s other problems. 

We see the path forward … we will see how the implementation of these and [indiscernible].  We will see how the private sector responds.  We do really think we need a broader set of waste disposal solutions, such as interim [sounds like] storage.  We think that a lot of more work is needed on that.  We are not sure what we think about GNUP [phonetic], although we are not actually sure we understand what GNUP is.  The goal has been described to us as enhancing energy security and promoting non-proliferation. 

Certainly we would agree with that goal, but we are pretty worried about this emphasis on re-processing both on a cost basis, as well as a proliferation basis.  If it is true that the only way we can have nuclear power is that we do reprocessing based on what we know now, then it is really not feasible.  It is just much, much more expensive than a lot of other options.  In a post-9/11 world, just based on what we know, this would probably be considered intolerable. 

I am just feeling this even more since last week.  I got my toothpaste confiscated on my way back from a trip to Columbus, Ohio.  I am thinking, you know, nuclear power in this environment better be awfully, awfully safe and not subject to diversion of materials.  And I am saying this in part to be provocative, but this is actually what we think. 

What the nuclear industry really need is a mandatory climate policy that will give important cost advantage to nuclear power and other low-carbon options over high-carbon options and that will provide incentives for investors on the private sector to invest in this technology to make it work.  It will provide a long-term stable view, or stable situation, for nuclear power if you know that overtime we are going after carbon that is probably a more stable and [indiscernible] some of the tax breaks that can go away.  So, in conclusion, climate change is a real problem.  Nuclear power can be an important part of the solution to climate change but it has to solve serious problems of its own. 

Just to sort of make sure that we talk about this during the discussion, I want to emphasize that our view is to provoke you somewhat.  What the nuclear industry really needs is a mandatory climate policy.  Thank you.

Steven F. Hayward [moderator]:  Thank you, Judi.  That sets up very well for our second speaker, Professor Ernest Moniz, who is a professor of Physics and Engineering at MIT.  He, also like Judi, brings a long experience in government, having been an undersecretary to the Department of Energy, also at the office of Science and Technology Policy in the White House.  Professor Moniz?

Ernest J. Moniz:  Thanks.  Well, so far we have had only one speaker so far and already everything has been said.  But you know the second part of that phrase.  So I will try to add a little color to some of Judi’s points.  It is pretty clear as we think about the energy challenge, [indiscernible] challenge the whole going forward, there are kind of these three major pressures.  Meeting supply, in particular, in the emerging economies; energy and security, oil being one of those issues; and energy environment, where greenhouse gas emissions and climate change are a challenge that clearly goes to the very heart of a system that is at least today largely based on the use of fossil fuels. 

And addressing that challenge, one thing I would do is reverse the question in the title of this workshop. 

Addressing that challenge, as Judi recommends in her last bullet, will certainly increase electricity prices.  The question is whether increased prices are the solution for nuclear power as opposed to the other way around.  Now I would like to make a few points.  Judi has touched on these, but I will state them a bit differently before getting into some recommendations. 

One, I would like to emphasize why this, in my view – kind of a mid-century view - is just right, not less, not more but just right, as we think about this problem.  Secondly, to reinforce this idea that there is no silver bullet.  And I think this is important in addressing the question, why nuclear power in the climate change context?  And, third, this issue of the terawatt [sounds like] scale being relevant.  As we will see, the United States to address that over this next half century or so, yes, we would be talking about averaging, bringing on line around 10 gigawatts per year.  It does not violate any law of physics but it is a bit of challenge, at least in our current environment. 

Now with regard to the mid-century view on the time scale, this is now going back in time.  And just noting - this is market share, if you like, of different primary fuels since the mid-19th century in United States.  And the only point here - you see coal and oil and gas coming in - is that 50 years is kind of a characteristic time scale for getting major changes of the energy supply mix.  So, really, that is a kind of a time scale.  Obviously power plants have a typical life of 50 years, large power plants et cetera, et cetera.  That is really kind of a time scale where one can look for seriously transforming, at least potentially, the energy infrastructure. 

Second is on the climate change side.  This is a cartoon.  The numbers there you see are billions of tons of carbon, so currently today … actually this is a few years out of date.  Currently this is around 780 gigatons of carbon in the atmosphere, of course, in carbon dioxide.  I will not go through the arithmetic.  All I want to say is that if you take … Judi talked about 550 PPM a doubling of pre-industry.  If you take the range of 450 to 550 as kind of a prudence target and you ask what is the cumulative budget for a emitting carbon dioxide to reach those concentrations, which by the way would correspond to 900 and 1100 gigatons of carbon, respectively, in the atmosphere, and you take Judi’s linear rise of carbon emissions in a business-as-usual approach, then a simple arithmetic to say the budgets are exhausted in roughly 60 and 30 years, respectively, for 550 and 450.  That is why the 50-year horizon is also correct because that is when roughly … that is when the budget gets exhausted without a serious change of where we are going. 

Now if you want to address that you follow the Willie Sutton advice.  The first thing you ask is, “So where is the carbon to get out?”  Looking here again at US emissions you see basically two big numbers.  Transportation and oil and electricity and buildings, and those emissions of electricity are almost entirely in the United States from coal.  But basically the point of this is in the end there are three major, if you like, technology buckets to look at.  Efficiency, use less, particularly fossil fuel, in a climate context.  Secondly, alternative transportation fuels that are at least carbon-light [sounds like].  Third, carbon-free electricity.  So those are the three kind of principal areas. 

Now I am going to show one scenario from an MIT economic model.  You can ask Paul about it in the next panel.  It is called the epi-model [sounds like] at MIT.  The Joint Program on Climate Change addresses it.  The point here is not to go into the details of this model; it is a response to a particular carbon-pricing scenario.  All I will say is that this scenario…  This is oil, this is gas, this is coal, nuclear, renewables, hydro, wind and bio-fuels.  Now the point here is that this is an anti-wedges scenario.  In this particular scenario, everything is more or less constrained, except coal, which includes carbon sequestration. 

And so that is the carbon free electricity.  About two thirds of this is sequestration, and bio-fuels to address the transportation issue.  Efficiency has knocked this down by about 25 or 30 percent, so in this particular model for nuclear in particular, nuclear is constrained to be constant.  So why do we need nuclear?  Well, again there is no law of physics that says we need nuclear to address this. 

However, for example, the sequestered carbon here …  Scale really matters.  The sequestered carbon here corresponds to about three terawatts of power, but perhaps, of more interest, it corresponds to sequestering 100 million barrels per day of super-critical carbon dioxide.  Now, again, it does not violate any law of physics.  If we look at the crude knowledge available today about the capacity of [indiscernible] aquifers, looks to be okay but that is a very hard problem.  That is the real meaning of “There is no silver bullet.” 

Any of these technologies, any of them, pushed to enormous scale, begins to introduce new challenges.  You can figure out what those would be for 100 millions barrels a day of CO2 sequestration.  Similarly, the bio-fuels up here would correspond to 45 million barrels a day of bio-fuels.  It does not exhaust all the world’s arable land, but it is tough. 

So then we come back to Judi’s point.  Of course, a substitute up here could very well be electricity; that, of course, then adds to the burden of how you are going to get a portfolio of carbon-free electricity to address to rest that problem.  That is really, in my view it is the scale issues as that those wedges as I have been discussing now twice are not simply trivially expandable to fill whatever space you want. 

Now, turning to nuclear more specifically, the origin of many of these statements comes from a report done by a set of colleagues, including Paul, by the way, who was the main driver of our economic and regulatory analyses which he will discuss in the next panel.  This is a report published in 2003 that took a comprehensive multi-disciplinary view about this question of how we want to enable nuclear power to grow to this kind of terawatt scale.  And I should have said, given that that was three terawatts for coal with sequestration, you could see how a terawatt is at least a significant piece of that kind of contribution.  This is just a scenario, and I am not going to go into details how it is arrived at, about what a terawatt distributed around the world might look like.  And there are a couple of messages here that are important for this discussion. 

One is it is very difficult to see how the world has a terawatt without the US playing at, say, 300 megawatts, in other words, a tripling in both cases, roughly speaking.  I mean, we are not pulling the train it is just a little bit hard to see how one gets there. 

Secondly, one may have the view Iran is in the news, et cetera, that somehow this terawatt then leads to nuclear power, like, all over the damn place.  Well, yes and no.  Basically, around 80 percent of the market share is likely to be … we are around 85 percent of the market share is today, mainly in the developed countries, but there is clearly growth and of small programs as we have seen with Iran and possibly Brazil, Indonesia et cetera, et cetera.  We will come back to that in the context of proliferation concerns.  This was just to show, by the way, as Steve said, France -- this is carbon dioxide per GDP and you see that when you have carbon-free electricity, big surprise.  You actually emit less carbon. 

Now let me now finally come to this question of key factors for the nuclear power future.  Safety is clearly important, but  I am not going to go there.  Judi mentioned that certainly recently, performance has been very good and new designs and additional safety features which one expects to get on another order of magnitude in terms of lowered probability of core damage, but, three, economics, which again Paul will cover.  I will not cover this.  Paul will do it in the next panel. 

But spent fuel management and proliferation risks which Judi characterized as “threshold issues,” to use her language, going to spent fuel management; there is a lot of churning going on right now in terms of reexamination of our spent fuel policies.  And here I just list the drivers of that reconsideration.  One is renewed interest in nuclear power construction.  Certainly, Yucca Mountain, even if it is ever opened, its statutory capacity, at least, is well- spoken for at the moment, in fact, over-spoken for already.  A large growth scenario here and elsewhere in the world would certainly require reexamining spent fuel management policies. 

Secondly, licenseability of Yucca Mountain is very much up in the air.  I like to emphasize that the consensus in the scientific community remains that geological isolation is a safe and effective way of addressing long-term spent fuel or high-level waste isolation, however, it is also important to remember that that statement does not translate to any individual site.  Any individual site has to go through the appropriate characterization and measurements, et cetera, et cetera.  And that is what the NRC will determine.  Suffice it to say for the moment that there are real issues about Yucca Mountain satisfying the key criteria for long-term isolation.  I am not saying it is not a good enough … it certainly is not an ideal site. 

Third, the failure of the government to begin to accept spent fuel has enormous implications for this first-mover initiative, getting nuclear plants out there.  I say “first-mover initiative” because, given those time scales we discussed earlier, it is clear if you want to make this terawatt or the 300 megawatts in the United States by mid-century we do not have time to screw around.  I mean, we have to start now and that is why the first-mover initiative is so critical, to be followed, presumably, by a carbon dioxide emission pricing, which I agree with Judi, would be ultimately the policy that should be the way of - well, laying the market aside, what is the best way to address the carbon?  And then some of you may have seen the federal court just awarded, for example, $143 million to the Yankee plants for the failure to move spent fuel. 

Fourth driver is again this global expansion of nuclear power creates new challenges to the non-proliferation regime.  We should emphasize that challenges to non-proliferation regimes are intimately connected with spent fuel management policies.  Roughly speaking, if you live the transuranics in the spent fuel and put them in the ground, they contribute the dominant long-term heating that drives repository challenges.  If you take them out, they are weapons-usable, and it drives a non-proliferation issue.  So those are very closely-linked questions. 

And fifth, terms of the drive, the administration has proposed this somewhat controversial Global Nuclear Energy Partnership which entails looking at advanced fuel cycles, and in fact take all those transuranics in principle and burn them up in a reactor, probably a fast-spectrum reactor, none of which operates today in the Western world. 

So having given those drivers let me discuss what I consider … it is obviously a complex policy landscape.  The question is what to do, and I would offer some kind of priorities that may enable this growth scenario.  I should say these should not be ascribed to the MIT study group.  Some of them are coincidence, some of them are not.  But number one is this first-mover initiative is essential if this program of nuclear contributing significantly is to be realized in time.  Pricing CO2 emissions relatively soon would be critical in my view to sustaining that momentum. 

Secondly, I think we need to establish a process and a program plan for taking federal title to spent fuel and for moving it as soon as possible; this does not mean tomorrow because this would also face complex challenges from reactor sites to one or more federal locations for consolidating interim storage for the order of a century.  This is not a frustrated reaction to Yucca Mountain.  It is something actually in general terms in our report we endorsed as a proper strategic element of a sensible spent fuel management plan.  And I would say that it has a number of benefits. 

In a certain sense if you think about … let us call it Yucca Mountain or any large scale, long-term spent fuel isolation program.  It is a very complex massive, technically and scientifically challenging long-term first-of-a kind program, just what government inherently can do very well … it is a joke. 

And such programs - I mean, it is not only Yucca Mountain - are not very amenable to schedule-driven structures, and yet this is interfacing with the private sector or utilities that have a very, very different discipline required.  I would argue the interim storage as a strategic element in the system provides you the kind of flexibility to at least begin a certain “decoupling” of those very, very different dynamics that you have in the private sector and in this kind of a complex government program, and it gives you additional flexibility at veritably little cost and does have other advantages such as at 100 years versus 10 years.  Get about factor of five reduction in the heat load, and again heat load is a critical repository design question. 

Third, Yucca Mountain should not be abandoned as interim storage is developed.  These are parallel complementary activities.  But we should take a fresh look, given if one were to pursue interim storage, once you take a look at how Yucca Mountain would operate under different system conditions such as a 100-year interim storage before one emplaces the spent fuel. 

Fourth, this is now going into proliferation.  The administration should intensify its starting steps to promulgate an international fuel cycle arrangement based on fuel leasing.  That is nuclear supplier countries, I mean, fundamentally this is just saying look around you, look at how the nuclear world works today.  There are relatively small number of supplier countries with fuel cycle facilities like in Richmond, and reprocessing.  Basically for some time period which I will come back to, lock this in for a time period, not permanently, in a way that makes economic sense for small nuclear programs.  Again the administration has taken a few steps on security of supply, which is part of this picture.  But they are baby steps; they need to be more comprehensive, more aggressive and they also need to begin to address the back-end.  A state [indiscernible], this is of some work done with MIT and Scowcroft Group colleagues. 

We believe that there can be a sensible organization of this kind of a scenario.  It includes commercial contracts as a base; it includes things like an IAEA Strategic Reserve, analogous to the IAEA functioning in the oil markets.  Very importantly one would ask countries, user countries if you like, to commit for, say, a 10-year period at a time, and not talk about birth rights which only seem to confuse the issues.  But do something that is economically based.  It has incentives.  Spent fuel is removed.  And, number two, I would offer fresh fuel incentives.  For example, give carbon credits for new nuclear plants in countries that agreed to this arrangement, which is a very significant benefit even with today’s European carbon market costs compared to nuclear fuel costs.  It more than covers all of the fuel costs, for example, even with today’s carbon pricing in Europe. 

Two other comments:  We do not suggest this solves everything, but it does the hard problems, but it would presumably play a much sharper spotlight on the problem cases and hopefully get, for the first time ever, the Security Council to actually do something on proliferation rather than just to talk about it.  It should be quite remarkable. 

Finally we believe strongly, or I believe strongly - again, I will taint anyone else, the Administration and Congress should not advocate the processing of current spent fuel inventories over the next decades; specifically, we should continue to discourage, as we have since the Ford and Carter administrations, the PUREX/MOX process.  Frankly without paying much attention to it, the nightmare scenario envisioned in the ‘70s in some sense has been realized as 250 tons of separated plutonium has accumulated in countries using the PUREX/MOX fuel cycle. 

There is a long set of issues why it is not needed.  It is not economic.  Uranium supply is adequate; the waste management benefits of this cycle are vastly overrated.  You only get them if you recycle MOX many times.  It has never been done at all.  Not once have they been recycled, MOX fuel commercially.  And there is a long-term benefit.  This gets technical, we can discuss it later.  If one recycles the fuel very fast, that would require a very well-tuned system, which, by observation, has proved elusive.  Two hundred fifty tons accumulating is not what you would call a fine-tuned system. 

And my last comment is, in principle, would endorse the concept behind the global nuclear energy partnership, a long-term R&D program to see if the technical and economic challenges of advanced fuel cycles that in fact burn all the transuranics are practical.  They are 50 years away from implementation if they prove successful.  We strongly - or, while endorsing the overall concept, strongly disagree with the administration’s current implementation plans of rushing the demonstration plants before you are ready to make sensible integrated decisions about fuel form reactor and separations. 

So, finally, just to mention again, time is a critical issue; time is a critical issue for first mover plants.  It is a critical issue in terms of what you get with interim storage.  It is a critical issue with non-proliferation by focusing on stay-put periods.  And there is time to explore these advanced fuel cycles, at least, technically, if not in the political sphere.  Thank you.

Steven F. Hayward [moderator]:  Thank you, Professor Moniz.  It does strike me that I have had an epiphany.  We finally discovered one kind of recycling that we are probably not for.  Our final speaker this morning is William Tucker, a veteran journalist and long-time friend of AEI.  He has been writing on energy and environmental issues as long as I can remember.  His next book is tantalizing, entitled Terrestrial Energy: How a Nuclear Solar Alliance Can Save the Planet.  It will be out early next year. 

William Tucker:  Thank you very much, Steve.  Power Points, Power Points. Somebody told me last night that Paul Allen hates Power Point.  He says it.  Microsoft did not invent it.  They only bought it. There is a great New Yorker, a PowerPoint cartoonist. Guy sitting, living and kneeling in front of his girlfriend on a couch and he has his laptop in front of him and she says to him, “That is a very nice Power Point, Howard.  But the answer is still no.”  First, I want to thank Kim Dennis and Henry Olsen III for making this possible.  They sponsored the first stages of this book, and AEI has been very helpful on this, Terrestrial Energy: How a Nuclear-Solar Alliance Can Rescue the Planet. 

Terrestrial energy is not so familiar.  Let us start with solar energy; it is much more familiar.  Solar energy provides us with all the energy we need in a day.  It gives us daylight.  It gives us heat.  This is interesting because the chemicals that make up the earth in the rocks and in water are all at a low-energy state, at a minimum-energy state.  There is no energy stored in any chemicals on earth.  You have to put energy in to get energy out, not so with organic molecules, which are, in effect, stored solar energy.  Firewood is obviously the most common in history. 

In the 18th century we discovered coal, and coal was in fact the industrial revolution.  Unfortunately, it continues to be the industrial revolution.  We burn a billion tons of coal a year still, up from 500 million tons in the 1970s.  Oil is a more rare form solar energy.  We peaked out in our oil production in 1970.  This has pretty much been the geopolitical history of this country since then, trying to find a substitute for this oil.  We imported 15 percent of our oil in 1970; we now import 60 percent.  It is never going to go down.  Our production peaked out in 1970 and has been slowly descending ever since. 

Natural gas has a kind of peculiar history.  It was very highly regulated for 30 years.  In the 1970s we thought we were running out of gas; then we deregulated.  We found we had more than we anticipated.  We started using it for a lot of unusual things, and we started using it to produce electricity.  Unfortunately, we sort of hit a wall.  In 2000 gas prices have skyrocketed.  We now import 15 percent of our gas from Canada.  That is probably going to go up, too.  We are pretty well topped-out on domestic production. 

Now people talked about harnessing solar energy in terms of using the kinetic energy created by the sun.  You see these windmills produce about 1 – 2 megawatts.  If you put a thousand or so of them, all nicely, evenly spaced, you can get about the equivalent of an average coal plant.  There is a problem with wind in that an electrical grid is very tightly balanced, has very tight voltage balances, and you have to maintain that balance between supply and demand.  When you have a supply that is constantly fluctuating, going up and down, it is very difficult to keep that balanced.  You can mask it up to about 20 percent of production.  So you notice most European countries get up to about 20 percent; basically they are using it for their spinning reserve.  All utilities want to have 20 percent extra supply and that is what - but going above 20 percent is going to be very difficult. 

Now photovoltaics have enormous potential.  The wonderful thing about photovoltaics is that at its most intense, the sun is most intense at the time that we need it most, hot summer afternoons when everybody has their air conditioning on.  This is when electrical utilities hit their peak needs and this is when photovoltaics can deliver its peak power.  So I think we have an enormous opportunity there.  If we cover all half of California or every roof top in the country, there is a very good chance of supplying of [indiscernible] out these peak loads, which are always the huge problem of utilities.  They have to build capacity and they may only use it 15 days of the year. 

Now, there is another form of energy often grouped with solar energy that actually has nothing to do with the sun, and that is geothermal.  What is a geothermal plant?  Well, as it turns out, the earth is an enormously hot place.  The temperatures at the center of the earth reach 7,000 degrees; that is the temperature of the surface of the sun.  As you go down every 100 feet, the temperature increases about 16 degrees.  When you get to what is called Mohorovicic discontinuity there, rock becomes liquid.  You have reached the melting point of rock, and it just keeps getting hotter as you go down until you hit about 7,000 degrees of a liquid iron core. 

Now what is geothermal energy?  Terrestrial energy?  Well, it occurs when molten rock comes close to the surface… volcanoes and other formations.  That heat, all that generated heat at the center of the earth, comes in contact with ground water, and when that happens you get steam.  You get these fumaroles, these steam fills that exist in [indiscernible] and other places.  If you harness that steam you can produce electricity.  That is what a geothermal plant is.  Now, where does the heat at the center of the earth come from?  Well, there seemed to be two sources. 

First is that when the solar system itself was coalescing out of a dust cloud where lots of impacts …  and the planets formed by big chunks of rock cladding other chunks of rock and adhering, there was a lot of heat built up in that process, and that residual heat probably accounts for about 40 percent of the heat that is left in the earth.  The other 60 percent, the majority of the heat at the center of the earth comes from those two tiny elements at the bottom of the chart there, thorium and uranium.  Each constitutes about one percent of the earth’s crust, but they are radioactive.  They are disintegrating at a very slow rate, and when they disintegrate they give off terrestrial - they give off heat.  And that heat, the heat from those two tiny radioactive elements is, in fact, the energy that raises the temperatures at the center of the earth to 7,000 degrees. 

So what do we do when we use coal to create electricity?  While we take the stored solar energy that we find in the earth in the form of coal, we mine it; we bring it to the surface.  We concentrate it.  We ignite it; we set off a chain reaction that releases all that stored heat.  We use the heat to boil water to produce steam to drive turbines to create electricity.  What do we do with a nuclear plant?  We take the terrestrial energy that is stored in the earth.  We mine it.  Concentrate it.  We ignite it.  We start a chain reaction.  We release all that latent heat.  We use that to boil water to produce steam to drive turbines to create electricity. 

So a nuclear plant is, in fact, simply a refined version of a geothermal plant; it is terrestrial energy.  This is why, when Albert Einstein signed the famous letter to President Roosevelt in 1939, he turned to the three scientists that had brought it to him, and he said, “For the first time in history, man will be using energy not derived from the sun.”  Now, how did we find out about all this?  Well, back in 1905 a much younger Albert Einstein formulated what became probably the most famous equation of the 20th century, which was E = mc 2.  How many people heard of this?  Very good. 

How many people know exactly what it means?  What it means is that energy and mass are, in fact, different aspects of the same thing.  Everybody always knew – we have known since the 18th century that there was a conservation of mass.  Lavoisier did these very careful experiments where he calculated the amount of mass in chemical reactions, and mass is neither created nor destroyed.  Then in the 19th century we learned that there is a conservation of energy, that energy is neither created nor destroyed, it just simply changed form.  What Einstein postulated is that energy and mass have the same conservation between them.  Energy can become mass, and mass can become energy, but in order to make the conversion we have to use that factor, the “m” there, C2.  C2 is the speed of light2.  And that is a very, very large number.  Converted into feet, it comes out to a factor of about one quintillion.  That means that a very, very, very small amount of matter converts into a very, very, very large amount of energy. 

The explosion at Hiroshima produced 15 kilotons of energy.  The largest bomb that had exploded at that point was one ton.  The amount of mass that was converted into energy to create that explosion was one gram, one gram of energy.  The explanation lies in our standard model of the atom.  We know that the concept of the atom is those - protons and nucleus at the center, the electrons in orbit around - this does not really quite convey the reality, though.  Strangely, if the atom itself were about four times the size of this room, the nucleus would be a barely visible pinhead.  The nucleus is an amazingly small locus, and yet the nucleus contains 99.9 percent of the mass in the atom.  This defies our conventional association of volume with mass.  The mass is enormously concentrated in the nucleus of the atom. 

Now, when we burn coal, when we burn oil, when we do any chemical reaction that produces energy, we are in fact converting mass into energy, but that conversion takes place in the orbits, in the orbiting electrons.  It changes the energy levels of the electrons, and the electrons themselves are only about 0.1 percent of the mass within the atom.  When we go into the nucleus and draw energy, we are drawing on the 99.9 percent of mass in the atom.  As this concept that we have to find alternate energies… we are going to look around.  It is not as if this energy is lying around the universe just waiting to be found. 

The universe is pretty well- understood at this point.  The only place we are ever really going to find alternate energy is within the nucleus of the atom.  Now what does this mean for the environment?  Well, fortunately, it is great news for the environment because the energy tapped at the nucleus is so highly concentrated; it means that we get an enormously smaller environmental footprint when we deal with nuclear energy.  This is a unit train; it feeds the coal plant - the average thousand-megawatt coal plant, one of these cars rise every three days.  Every one of those cars is filled with 10 tons of coal.  It will provide 20 minutes of electricity.  Most of our coal now comes from the Powder River Basin.  A train leaves Cheyenne every six minutes.  In 1999 it was every 20 minutes, and we are pretty well-stretched out on providing coal to the whole country right now.  Each of those carbon atoms will combine with two slightly heavier oxygen atoms to produce three billion tons of carbon dioxide that goes into the atmosphere every year. 

Now what happens at a nuclear plant?  A nuclear plant refuels approximately every 18 months.  It changes half of the fuel rods.  Each of those 10 flatbed trucks will arrive at the plant.  They have this fuel, bundles of fuel rods and the fuel is not highly radioactive.  It can be handled safely with gloves.  The rods will stay in the reactor for three years.  At that point they will be taken out.  They look just the same.  They have the same shape, size as they started.  It will be stored …  mostly their interim storage has been the swimming pools that are … people actually swim in these things.  It is safe but you are not supposed to do it, but the NRC catches somebody doing it every once in a while.  No carbon dioxide emissions from a nuclear plant. 

Well, there must be some problems, right?  Some great compensating problems that make it difficult?  Can a nuclear reactor explode?  Well, this is what Conrad suggested during the Three Mile Island here.  This is the thinker contemplating a mushroom cloud coming out of the reactor.  And the answer is it cannot, and the reason is pretty simple.  There are two isotopes in uranium, the regular isotope U238, which is not fissionable.  It does not provide any power.  It is just filler, it is just there.  U235 is the fissionable isotope.  This is the one that splits in half and provides all the energy.  U235 has been disintegrating much more quickly throughout geological history.  It now comprises only 0.7 percent of the uranium ore.  In order to get up to reactor-grade level, you have to enrich the uranium to three percent.  You have to triple its content. 

Now does anybody know where you have to go to build a bomb?  Enrichment.  Yes, exactly, ninety percent.  You have to have 90 percent U235 that the whole process takes more than a year of a very highly technical enrichment.  A reactor has nothing to do with a bomb, basically.  Can a reactor melt down?  Yes, indeed, it can.  Here is what happened at Three Mile Island.  The control rods on the left there, they are in the steel pressure reactor vessel.  The green is the cooling water.  When you lose coolant, those rods become exposed; they overheat and they melt down.  They melt down to the bottom of the reactor vessel there.  Now the China syndrome proposed what would happen is this: once the fuel rods melted to the bottom of the reactor vessel, they would melt through the reactor.  It is solid stainless steel, and it would melt through the reactor vessel.  Then they would get on the floor of the containment there, reinforced concrete floor, they would go through the floor, and then they would go through about 100 yards of earth.  They would hit ground water and explode and take away half the state of California, or something. 

What actually happened is the fuel melted down to the bottom.  It did not even melt through the chromium lining of the reactor vessel.  Three-Mile Island was an industrial accident; nobody was hurt.  Chernobyl, quite different.  The reactor lid blew right off.  This is the containment structure the Russians had built.  Actually, I am exaggerating.  They had no containment structure.  Soviet science would take care of it.  So the area has been evacuated.  Fifty people were killed.  Now, if you listen to some groups they will tell you, “Well, that is only the beginning.  A hundred and thirty thousand people eventually died from cancer.”  Two hundred fifty thousand … pick a number.  All this is based on the concept that there is no safe dose of radiation. 

Now there are three concepts of how exposure to low radiation can work.  The first is that there is no safe dose.  We know from the upper portion there from exposure of the atomic bomb that you get … there is a consistent rate of cancer for high exposures. 

Now a lot of people have said, “Well, there must be a threshold.”  Alright, the [indiscernible] thesis says that low levels can actually be healthy.  This is the free-enterprise rate [indiscernible].  In bold are these people who are exposing themselves to about 400 times what EPA says is a safe level.  I sat in that chair there for about a week absorbing … it felt very good. 

This was in Taiwan.  Somebody built a set of apartments with some steel that had radioactive cobalt in it.  They went back, they discovered 20 years later, and they found that the bottom-line is that cancer rates in that building, the expected cancer rates according to the regular population would be about 160 per year.  There are actually four cancers per year.  People, this was an article that appeared in Physicians and Surgeons, there seems to be a prophylactic effect to low-level exposure. 

Radioactive waste, the simple answer is there is no such thing as radioactive waste; ninety five percent of fuel rods is U238, the same stuff we take out of the ground.  The five percent, some of it is useful, some of it is just U235 which can be recycled through the reactor.  What we are doing in Yucca Mountain is building a facility for the 95 percent of the U238, which is just exactly what you find in your backyard.  You take a shovelful of dirt in the backyard and dig up some uranium, you have a waste problem.  This is about three years’ worth of nuclear waste at the dry-cast storage.  France stores all its waste from 30 years of providing it 75 percent of electricity in one room, at Le Havre. 

Very simply, I think we need a nuclear-solar alliance.  I think that the nuclear and solar compliment each other very nicely.  The problem is to replace coal; coal is not going easily.  Coal is a huge industry and unfortunately the railroads even sort of own the coal industry, or vice versa.  A similar 70 percent of the freight carried in this country now is coal, so they are not to go down easily. 

But I think if the nuclear and solar forces could form an alliance and pass on like a carbon pact, we will be well on our way to solving global warming.  I feel it is a bit like where we were with conservation in the 1970s.  Everybody thought we could not possibly conserve energy.  We ended conserving beyond the wildest projections of what the most optimistic people thought we could do.  I think if we get going on nuclear, the problem will prove to be much easier than we ever anticipated.  Thank you very much.

Steven F. Hayward [moderator]:  Thank you Bill.  We have a few minutes for questions and comments.  Wait until the microphone comes around to you not only so that everybody can hear your question but also for the C-Span audience.  And please identify yourself at the beginning of your question.  So I will wait for hands.  While we wait for someone to ask the first question … no one ever wants to ask the first question.  Do the panels have any follow- up comments they want to make or observations or cross-questions, or whatever?  I am looking for hands.

Ernest J. Moniz:  I would make one comment.  I just note that Bill’s statements about, for example, let us say, volume of waste in France have the merit of being correct.  However, I want to emphasize that things like volume of waste are largely irrelevant as far as the management in a geological mine repository, so we have to be a little bit careful that…  And so I just recall my statement that the waste management benefits of the recycling done, for example, in France, PUREX/MOX, are vastly exaggerated. They are actually, certainly with today’s operation of the fuel cycle, very minimal.

Steven F. Hayward [moderator]:  Okay, gentleman in the back.

Andy Paterson [audience member]:  Hi, Andy Paterson from Environmental Business International.  Many of these investment decisions will be made for reactors, obviously, that we built past 2008 and obviously 2012, so I am asking the panel to make a forecast, since many of you are active in circles that know how the campaigns are putting policy papers together.  What is the range of options around nuclear power that you could see in either a Democrat or a Republican administration going past 2008, given that we kind of know the candidates now?  You are in touch with those people and what kinds of policies are being debated.  What is the range of policy we might see around nuclear power?

William Tucker:  I will just say quickly I do not know whether it is a partisan issue at this point.  It is probably more a question of the NRDC, the utilities and the nuclear opposition.  There are 27 proposals in front of the NRC right now for new plants.  The industry is raring to go, particularly with this incentive of production tax credit for the first 6,000 megawatts.  The question on everybody’s mind is what is going to happen when opposition groups come in and start opposing.  Are they going to be able to drag it out in court again?  This is what happened in 1980s, and if the whole process bogs down again then nuclear will not be economical. 

Judi Greenwald:  I guess I do not know much about what the candidates are saying specifically about nuclear power but most of the leading presidential candidates do want to do something about climate change.  So I think the likelihood of their being a carbon price post … in the period when these plants would be coming on line and perhaps during their construction, I think, is quite high.  In terms of the other issues, as I said in my presentation, and I will just reiterate,  I think we have been from a public policy perspective we have been about as generous as one can be in terms of getting these first set of plants going in now. 

I do not think it is so much what the next set of public officials will do as what the investors and utilities are going to do.  We have given the incentives.  We will see how they take advantage of them.  Yes, it is true there are a lot of folks working on this but nobody has broke ground yet, so I think at the moment the ball is really in the private sector’s court in terms of this next generation.  And then for the long term, I think it is really these issues of proliferation and waste disposal.  And I do not think any of the candidates are really talking about that, and I think that is something that we really need to address somewhat along the lines of what Ernie talked about in the specifics.  But we really need to get on that right away.

Ernest J. Moniz:  I actually agree with the comments made.  Just to note and reinforce Judi’s last point that what is very unclear is how the waste management issues will resolve.  And that can be a show-stopper for first movers.

Steven F. Hayward [moderator]:  We have some other questions.  The gentleman right here in front.

Stefan Bjork [phonetic] [audience member]:  I am Stefan Bjork. I am coming originally from Sweden. I have been working with the global warming issue in more than 20 years now.  And I already have the industry perspective.  I want to comment about when I see…  And I know something about the United States planning process, how difficult it is to build something because they have so many lawyers as a proportion of the population.  And if you compare with France who has managed to be in nuclear power plants so they supply almost 80 percent of the electricity by nuclear, it is factual but not here in US.  That is very important for that. 

First is that France is a very centralized state and the local prefects do not have any power to oppose.  The Central government decides, and then they have just one monopoly power producer during all the years when they built this.  That means that they have built nuclear reactors in industrial scale.  Not like USA, like a cottage industry with just one or two reactors that they replaced.  There have been four or six at one place.  And then the third important factor is that Electricite de France has [indiscernible] labor in any French company and they are all communists.  And they are driving Electricite de France as a source of wealth.  The people there retire when they are 51 or 55.  They have social benefits that you never dreamt of.  And they know and if it needs that it is the environmental groups come to try to close the power station, you not only have the young.  You also have the Communist movement in France telling them to shut up.  And I never imagined that you will create this structure in United States.

Steven F. Hayward [moderator]:  So maybe France is not such a model to be followed.  To say it is a little bit humiliating, I apologize, a little bit humiliating for someone from Sweden to complain that Americans have too much planning.  Gentleman behind you there, yes.

Charlie Pennington [audience member]:  I enjoyed the presentations.  I am Charlie Pennington from NAC in the back-end of the nuclear fuel cycle.  Quick question.  There is a strong association with CO2 and global warming.  If we had a tax on CO2 are we sure we are attacking the right carbon in the atmosphere?  I sympathize with methane and think methane might be the real culprit.  We are dealing with scientific association right now.  Confidence in attacking the carbon problem, when you do that with the taxation you are going to have a veritable warfare between the coal mining unions and the nuclear power producers.  There is going to be quite a contest that ensues.  Just a quick question on the confidence that CO2, the association of CO2 and global warming is, indeed, the right association.

Judi Greenwald:  The confidence is quite high.  And it is not just here too, it is that methane is playing a role as well.  What the scientists look at is the total concentrations of greenhouse gases from man-made sources that are growing over time.  So methane is a significant part of the problem.  It does not dominate per molecule.  Methane is a more aggressive warmer; it has a higher global warming potential than CO2.  So like if you take the cost of reducing a certain amount of methane, you actually get more bang for your buck, but there is not as much methane.  We are not emitting as much.  But that is definitely an area that should be considered. 

We advocate any kind of program that includes all the greenhouse gases, so that if you reduced methane you would get more credit for reducing that because we would do it on a global warming potential weighted basis, and there is a lot of work going on, and there are a lot of folks who are working on things.  Some of it actually turns up as jokes in the newspaper.  But leaking natural gas pipelines are sources of methane and people are going after that. 

Also, the whole situation with cows, that if you actually change their feed you actually can reduce their methane emissions, so there is work going on that.  These are significant sources, at least on the agricultural side.  It tends to be more important.  Outside of this country we tend to have fairly advanced agricultural practices.  There is not as much bang for the buck to get out of that particular set of responses, but that is there too, but we think you have to go after all of the gases.  All of them play a role in global warming and it is becoming ever clearer that these things are closely associated, and that we are seeing effects sooner than we thought.

Ernest J. Moniz:  I just have two very brief points.  One is that there are a number of proposals that talk about addressing these other greenhouse gases in the early phase because of the bigger leverage, and some of the political issues could be handled more easily.  But the other thing is to remember that CO2 really has the very, very long residence time in the atmosphere, which is why it is a cumulative problem that simply must be grappled with it if you are serious about climate change.

Steven F. Hayward [moderator]:  Time for one or two more.  Yes, sir.  Right here. 

Reyes Maniqui [phonetic] audience member]:  I am Reyes Maniqui, US State Department.  I have a question to Professor Moniz about the nuclear fuel supply scheme.  As we know, having nuclear power has become, in the developing world, a symbol of worldwide global status.  So I wonder how realistic is it to expect that countries like Brazil, like other emerging market countries, will accept such a scheme when we know that they expect to become global powers quite soon?

Ernest J. Moniz:  Clearly the issue of kind of asymmetries and technological leadership is a dynamic that has to be addressed.  By the way, I think you put finger on a very difficult case, Brazil.  One in which I certainly cannot endorse frankly this administration’s free pass on their enrichment plans.  But, nevertheless, going back to the broader question, there are several ways of addressing that.  First of all, one should remember again the underlying economic issue of building fuel cycle capacity for what is a very, very small program.  Certainly in Brazil’s case, that would be the case for a very, very long time.  I recall that we do not call on our proposal for a new treaty, if you like, as opposed to a pretty pragmatic negotiation with benefits and incentives for a fixed time period, maybe to be renewed. 

Number two is that it is very difficult for me to understand, although others may understand differently, how let us say spinning a loader is the symbol of technological leadership as opposed to other areas where I could much better invest my resources for technological leadership- nanotechnology, biotechnology et cetera, et cetera.  Third, in our proposal we would also embark on this let us call it fuel cycle of the future R&D program, internationally admitting into that program countries that sign up for this arrangement.  And so if in the end a completely different set of technologies in terms of fuel form, reactors, separations technologies proves to be effective, they have not been shut out of that development. 

Now doing that itself is a proliferation issue which has to be addressed carefully.  For example, sharing the work on plutonium metallurgy may not be the ideal area for cooperation.  But, frankly, where is the money?  The money in the end is in the reactor.  That is where the big money is, frankly, and I do not see a major issue in terms of having cooperative research in that area.  So I think it is a hard problem.  You are actually right, but I think there are levers that one can pull.

Steven F. Hayward [moderator]:  Okay we have time for one more big question or a couple of small ones.  Gentleman here in the back.

Ben Landow [phonetic] [audience member]:  Ben Landow, United Press International.  I am wondering a kind of difference between Judi Greenwald, and you said that nuclear potentially offers greenhouse gas free source of power, and, William Tucker, you were pretty matter-of-fact, saying nuclear energy is pollution-free.  I wonder if you all could discuss your differences.

Judi Greenwald:  Well, it is not about whether it emits greenhouse gases.  I mean, we agree that you do not get greenhouse gases from nuclear power.  There are some emissions throughout the fuel cycle, but that is true with every electric- generating source, but compared to the very carbon-intensive coal or even gas, I mean, nuclear is close to zero greenhouse gas emissions.  The issue more is whether nuclear can solve its own problems.  And that is our question.  Just because it is good on greenhouse gas emissions does not mean that all the other problems go away. 

So I think our view is that because of its potential it is worth significant public policy and perhaps investment to solve those problems, but it is not a done deal.  And so we see a future in which there is an overall carbon policy that the public officials and investors and all have the role to play in enabling that to be one of the options, but it is not clear that in the end it will be able to play the kind of role that that some people would like it to play.  It depends on whether it can solve…  I would put the waste and the proliferation on the top, but also the cost and the other issue.

William Tucker:  When people say nuclear is going to produce emissions they usually include the construction process, but the same holds for wind.  The wind has much higher construction cost than nuclear.

Steven F. Hayward [moderator]:  One more question here.  Lady right there.

Lora Herman [audience member]:  Thanks.  My name is Lora Herman.  I am with the Potomac Communications Group.  And my question is to ask you to clarify the difference between climate policy.  I am getting confused as you differentiate between a climate policy that deals with carbon versus one that deals with greenhouse gases.  And could you describe a little bit more about what those policies might look like, what the differences might be?

Judi Greenwald:  It is just a broader coverage of gases.  [Audio glitch] we advocate is that you cap overall greenhouse gas emissions that would include at least six gases and some of them have long names and some of them you heard of.  Carbon dioxide would be one of them; carbon dioxide is the biggest contributor, not because each molecule is so much of a contributor but that we emit so many molecules of it.  So what we advocate is covering all the gases, and we actually advocate sort of a tough reduction schedule, but a lot of flexibility on how it gets implemented.  So people could, you know … 

Let us say I am a power plant and I emiting 10 times then I cannot quite figure out how to reduce my emissions, but my neighbor can reduce his to zero.  So I could buy emissions reduction credits from him.  And that we would, in our scheme, advocate counting other folks who could reduce their methane emissions.  There would be a waiting system and you would make this tradable reduction credits.  That is kind of like what they are doing in Europe now under the emission trading system that they have under the Kyoto Protocol.

 Ernest J. Moniz:  Just quickly in response to the Swedish comments.  We sort of have the equivalent of the communist here in the Southern redneck.  Actually, most support for nuclear power in this country comes from people living in towns with reactors.  They are 90 percent in favor and they go to the NRC and testify they want the plants re-licensed.  And mostly [indiscernible] are very cautiously building their new reactors in the south.

Stefan Bjork: [Inaudible, followed by audio glitch]

Steven F. Hayward [moderator]:  We are almost at the end of our hour.  Professor Moniz.

Ernest J. Moniz:  Well, I just wanted to actually add something on the policy question although it is not going to be your question.  I just want to add a point that there is a lot of discussion about imposing in one way or another let us say a carbon emissions price that is viewed as getting a toe in the water.  A small tax, and it will be political palatable, we will get a consensus and will go forward. 

Well, maybe it is good to get started that way but I would like to just make the point that if we are going to meet even this relatively relaxed shall we say doubling goal, 550 parts per million, frankly, we do not have that much time before we have a price that is aligned with technical realities.  It is a price that drives you to actually change the technology and not just collect money.  So I think that is another very difficult political dynamic that we are going to have to address soon.

Steven F. Hayward [moderator]:  Judi and Ernie, either one of you, it might worth for people who are not familiar with some of the basics on this.  If you just went through in 30 seconds the inventory of greenhouse gas emissions.  I mean, CO2 is, what?  Eighty or 85 percent of what we inventory and methane is … you want to take us through that?  The point is that CO2 is where the growth is projected to be more than the others.  Is that not also…

Judi Greenwald:  They are all growing.  But what Ernie mentioned earlier is important too is that the lifetime in the atmosphere for methane is shorter.  But there is sort of interesting early opportunity to got methane and you get sort of a nice early hit, but over time the CO2 stays in the atmosphere for something like 200 years, so you really have to get at the CO2, and it is kind of hard to get it back except through trees to some extent.  We could send you a chart if you want to distribute, but I believe it is something like 80 – 85 percent for CO2.  I think it is in the order of 10 percent from methane and then about five to eight percent of the other industrial gases.  But if you do an analysis of where the most cost- effective reductions are on a global warming potential weighted basis, you find that you want to go after some of those industrial gases and methane first.  We actually have a report on this that I can share.  It sort of shows a graph of how you could get some early big reductions from those high global warming potential gases at a relatively low cost to get you started. 

I agree with Ernie that we need to get started, but also it is going to have to ramp up fairly quickly over time in order to incentivize the kind of innovation that we need.  But we can get started at a relatively low cost with a number of these high GWP gases as well as efficiency.

Steven F. Hayward [moderator]:  I think we will give a quick last question to our grand maestro for the day, Jon Entine.

Jon Entine [audience member]:  This question is directed at Judi but others can weigh in as well.  You had mentioned that there is a bit more of a willingness among the liberal community to look at nuclear energy.  One of the areas that I know of is the socially responsible investment community which is actually examining its long-time opposition, the screens and so forth.  I wonder if you can inform us, to the degree that you are involved in those kinds of discussions, how realistic that is.  I mean the base in the liberal community has been adamantly opposed to it obviously based on some of the pre-suppositions of the 1960s and ‘70s about nuclear energy.  Is there a genuine rethinking of this?  Is there a chance that there is a de-freeze in the way they talk about this?  I know this is horribly complex because of political issues involved - but I wonder if you could just shed some light on that.

Judi Greenwald:  Far be it for me [audio glitch] for the liberal community.  I think what is going on, at least within the environmental community which I am more familiar with than the whole broad liberal community, is that people are doing what we have done, which is you sort of take the deep dive on global warming solutions.  I mean, you look what concentration targets you want to hit.  You look at your technological options.  You do some modeling.  You take it out over time.  You play around with the economics and you find that there are not a lot of options.  And nuclear has a lot of advantages to it compared to some of the other options that folks are looking at.  You are sort of faced with that fact.  You want to solve this very important global warming problem and nuclear is one of the options that is sort of hard to just dismiss. 

So then you wind up having some soul-searching about how you feel about its potential role in solving that problem as compared to other solutions and also looking at some of the things you are very worried about.  I mean, these concerns that folks have about nuclear power are real.  In our view they are quite serious.  And so the question is, can you solve those problems to an extent that you are comfortable having that as a solution to the other problem, or you are just having another problem. 

One of the interesting dynamics that goes on in the environmental community is that different people tend to work on these issues.  I am actually fairly unusual in that I both…  I worked at the NRC for a while and I worked at DPA and I have worked on both the global warming kinds of issues and nuclear.  The folks who work on these issues tend to be different people.  So you have the folks who have really been anti-nuclear advocates for a long time.  They tend not to be the ones who are really working most deeply on climate change.  So there is a little bit of an internal conversation going on now about folks who know about each of those issues and trying to figure out how to balance the different interests and concerns that they have had overtime.  And there is a mutual education going on. 

So I do not think it is clear yet where ultimately the environmental community will come out broadly.  But I know this re-thinking is going on.  I know people are having these conversations.  We are doing the analyses.  We are trying to figure out how to weigh these various options, and that is the conversation that is happening.  And I guess I would hope that on the other side, and to the extent that this is a divide…  I am not sure it is on this issue.  The same kinds of things are going on, sort of looking at global warming as a real problem, looking at the potential solutions and trying to understand what it is that we can do as a society to solve these problems in all these fronts.

William Tucker:  Yes, I would say this is what you might call a group of closet supporters of nuclear power among the environmental community.  Fred Krupp of Environmental Defense says in very careful language he is not opposed, or is willing to consider … and it is just a question everybody is afraid to stick their heads up first.  And one of the reasons is because they depend so much on public contributions, and they are afraid they will lose a lot of their supporters and membership if they get upfront on this. 

Ernest J. Moniz:  Well, actually I have a question for Jon.  I am a simple physicist.  What is the liberal community?

Jon Entine:  Oh dear, you would have to do that at the end of the hour.  Please join me in thanking the panel.  We will take about 10-minute break.  Please reconvene about 10:55.  We are going to start promptly at 11 to stay on our schedule.  Thank you all very much.

Panel 2: Economic and Regulatory Concerns

Jon Entine [moderator]:  I think we will begin the second session.  The prior panelists have touched on one of the key issues that is driving the debate, the economic viability of nuclear energy considering safety and regulatory concerns.  We are gong to discuss these economic and regulatory issues more in-depth in this panel.  Our first panelist is Christopher Paine.  Christopher is a senior analyst and deputy director of the Nuclear Program of the Natural Resources Defense Council, NRDC, here in Washington.  The bios for each of the participants are actually in your packets, so I will just let Chris begin his presentation now.

Christopher Paine:  Because his wife lost her passport during a Chinese holiday so it is taking 10 or 12 days to get a new passport.  I am going to run through some slides, some, quickly, because the issues have been covered by other panelists, but here is the status of nuclear power plants today worldwide - 441 units and 367 gigawatts, 16 percent of global and 20 percent of US electricity. 

And here is the generation of nuclear electricity worldwide and the first thing to notice about this chart is the concentration of generating capacity in just a few countries.  The distribution of plants is highly uneven around the world.  Only 31 countries - 16 percent of UN member states - operate nuclear power plants and 75 percent of nuclear electricity is concentrated in just six countries.  Twenty-two of the last 31 nuclear plants, however, have been connected in Asia, and the historical peak of 294 operating reactors in Western Europe and the US together, considered as an entity, was reached in 1989.  Now, here you see already the decline in operating reactors in the EU 25, and this is the trend that is going to continue.  Global warming or no global warming, it looks as though reactor deployments in Europe will continue.  The net new capacity in Europe will go down. 

Now, worldwide since about 1989, the industry has been in a relative stagnation, a 17-year period.  And this was a period of enormous global growth.  There you can see sort of the flat-lining of the nuclear industry.  Capacity has gone up as larger reactors replaced more numerous smaller reactors, but the capacity increases when slight … and it is basically for a prolonged period, a flat stagnant performance.  And then the question is, why is this happening?  Because of reverse environmental interventions by environmental activists, fear, there is the legacy of Chernobyl, or are there fundamental economic factors that work that are causing this stagnation?  Now here is a simple chart based on the data in the previous slides.  You can see from 56 to 89, the industry grew rapidly roughly 13 reactor deployments a year.  That slowed to 1.2 a year from 1990 to last year. 

And the most recent projection that I have been able to … which just appeared from the International Economics Institute in Japan projects three to four years from now until 2030 worldwide.  In gigawatts, you can see that the decline in gigawatts has been less than the decline in the reactors as more powerful reactors have come on line replacing smaller ones.  But even with the optimistic projection that the Japanese generally accord nuclear power … it is not a wildly optimistic one, but, for example, it presumes a full build-out of the Indian and Chinese nuclear programs which may or may not occur.  But even assuming that, an addition rate in gigawatts of 4.6 gigawatts a year, nuclear share worldwide declines to 10 percent from 16 percent of total generation, now this modest rate of growth is not going to pull any climate warriors’ irons out of the fire, but to the extent that these plants replace dirty pulverized coal plants in Asia, they can be a useful adjunct to a global warming policy that really focuses on other measures. 

The question is how will they be used in Asia?  The President told us when he was signing the India Nuclear Cooperation Agreement that he hoped the Indians would use their nuclear plants to replace advanced combined-cycle gas plants.  If this occurs, if this is the primary import substitution for a natural gas, this is not going to be the most effective use of nuclear and its even modest contribution will be further vitiated through a strategy like that.  So that is one not very good advice to the Indians and a similar thing might happen in Japan because of the desire to limit natural gas imports. 

So, this modest contribution to nuclear may not be as helpful as it might be.  Now, here in the US the Energy Information Administration expects only six gigawatts of new capacity, and so there is your much touted nuclear revival.  It is a slight change in the slope in the overall projection.  That is assuming that six gigawatts are pursued following incentives that have been granted by Congress.  Now, EIA forecasts, even with a national average capacity factor of more than 90 percent, nuclear power accounts for about 15 percent of total US generation in 2030, but in the meantime, 26.4 gigawatts of new renewable generating capacity will be added.  That is four times nuclear’s rate. 

So that is sort of where we are now, what we can look forward to, unless something more changes besides the incentives.  So the question is can nuclear really deliver serious amounts of carbon reduction?  We can talk about ideological positions and problems with nuclear and so forth, but can we realistically do what we needed to do by that target date of [indiscernible] 2050?  We looked at this at NRDC, and we asked the question in line with the seven slices of one gigaton of carbon a year, if each displacing one gigaton of carbon a year, how much nuclear capacity would be needed to revert carbon accumulation sufficient to warm the atmosphere by two-tenths of a degree C during the second half of the century? 

And to achieve this level of carbon displacement, our model suggests that from 2010 to 2050 the world would have to add about 700 gigawatts, electric; that is about 15 plants a year.  So that is more than three times the optimistic Japanese forecast of what would be needed to be added.  So there is the projected ramp that would be needed.  It is a 40-year ramp and the question is what would this cost?  Well, it is 1100 nuclear power plants, it is 15 enrichment plants, its 14 Yucca Mountains containing 10,000,000 kilograms of plutonium or it is 50 reprocessing plants and 10,000,000 kilograms of separated plutonium or separated plutonium with other transuranics.  We estimate this would cost at a minimum 2.5 to 3 trillion dollars in capital. 

Now, how likely is a nuclear revival on this scale?  I think the financial requirements alone suggest that it is not that likely to mobilize that much capital in such a short period of time.  But the MIT study, which many people have referred to and which is an extraordinarily useful effort to kick start this discussion talks about a $100-a-ton carbon tax that would make nuclear competitive with a conventional central station coal plant, and $200 a ton of emitted carbon would make nuclear competitive with gas-fired combined-cycle at moderate to sustained high natural gas prices.  But the study did not examine nuclear versus integrated coal gasification combined cycle with carbon capture and disposal under various carbon tax scenarios because that is some work that needs to be done, still.  There is the [indiscernible] chart. 

And the thing that really struck us at NRDC as missing from the MIT analysis was that it was too narrow; it only compared nuclear costs with large central station fossil power costs, when the fastest growing portion of the energy market is distributed on-site co-generation end-use efficiency, and renewables - wind and solar.  And they have current or projected, and we can argue about the projected, especially with solar, but I will say more about that in a moment.  But these alternatives have current or projected lower average delivered costs than nuclear.  The MIT study did not take account of the fact that our carbon taxes or “cap and trade” will also benefit new-technology plants featuring coal gasification combined cycle and all forms of carbon-neutral generation. 

Now a nuclear plant today, and this is the delivered cost, these comparisons are usually made looking at the capital cost, the overnight cost, hardware cost and comparing those.  But the bottom line is the delivered cost.  If you can compare nuclear, say, with end-use efficiency, or localized solar plants, you have to use the delivered cost, because those sources have much lower delivery cost or no delivery cost in the case of end-use efficiency.  And they have no grid-capacity factors and they have no individual unit capacity factors that have to be applied.  So, those comparisons look rather grim for nuclear power when you look at how to rank order utility investments to provide the most carbon reduction per dollar.

 And that is what it is all about.  It is not the absolute level of carbon reduction [background noise]] any particular method irrespective of the cost, it is the most carbon reduction per dollar investment.  That is the measure of merit.  And so you can see the prices there and you wonder why any utility in the southeast would be contemplating nuclear base load at 9.7 cents per kilowatt hour delivered compared to 2.5 cents to 3 cents for end-use efficiency.  They can extract 15 to 20 percent.  I mean, just going from lighting, if 35 percent of the load in the southeast and you substitute LEDs for conventional lights or compact fluorescents, you are more than halving that demand. 

So why would it not make sense for Duke power simply to buy an LED plant and start manufacturing light bulbs and hand them out to their customers and figure out a way to get compensated for that from the Public Utility Commissions, a much more rational approach than rushing out to build subsidized nuclear power plants.  Nuclear electricity from new plants is at least two to four times more costly than improving end-use efficiency, but it is 1.4 times more costly than wind, with or without the tax credit because both of them enjoy tax credit.  So you just subtract the tax credit out, and you still get 1.5 times more costly.  It is 2.4 to 3.7 times more costly than recovered heat co-generation which is a very under-appreciated source of energy. 

Europe is doing a lot better in that area, and Japan.  And we can do a lot more with recovered heat co-generation before we need to move to a heavily subsidized program to deploy nuclear power plants.  And I am not reflexively opposed to nuclear power.  I am just saying if you look at this from an economic perspective, there is a rank ordering to these investments that makes sense.  So the nuclear revival based on the economic fundamentals is going to take a while.  This is a quotation from right before Congress passed the incentives.  Tom Capps, the chairman of Dominion, said that he is not going to build a nuclear p