Japan’s nuclear-power plant disaster has highlighted an American nuclear industry that hadn't been going anywhere before March 11. Now, it still isn’t going anywhere. This new nuclear crisis reinforces that reality, but it doesn't change it. Here are the top five reasons why the current crisis won’t change things in the U.S. nuclear industry.
1. It didn’t happen here. The 1979 partial core meltdown at the Three Mile Island plant in Pennsylvania is considered the biggest reason a reactor hasn’t been built in the United States in 30 years. Because that happened here, the scrutiny of safety and risk resonated exponentially more than it has with the recent crisis in Japan. U.S. Nuclear Regulatory Commission experts reiterate that reactors in America are built to withstand the worst natural disasters predicted for areas where they're located. Those experts also insist the NRC safety regime is robust, although they are double-checking in light of the Fukushima Daiichi crisis.
2. Upfront capital costs are sky-high. Wall Street was already lukewarm about investing in nuclear power, and the latest crisis will only bolster that sentiment. Despite having $18.5 billion available in loan guarantees and another $36 billion promised in President Obama’s proposed FY2012 budget, only one loan guarantee has been issued more than a year ago. Constellation Energy was close to securing another one in October, but that project fell through after the company couldn’t agree on one aspect of the loan -- the credit subsidy rate -- that the industry says makes it too expensive to accept the loan. Instead, Constellation is investing more in natural-gas plants -- which brings us to the third reason …
3. Natural gas prices are low. Natural gas was poised to make market gains at nuclear energy’s expense before Japan’s crisis; the disaster only reinforces its competitive market position. “Natural gas is queen. It is domestically abundant and inexpensive and is the bridge to the future,” Exelon Chairman and CEO John Rowe said in two separate speeches the week before Japan’s crisis. “Because of natural gas, there is no need for expensive mandates and subsidies.” Exelon is America’s largest nuclear-power company. Rowe asserted earlier in his speeches that Congress should not expand the nuclear loan-guarantee program beyond the current $18.5 billion level. Natural-gas plants cost billions of dollars less than nuclear plants to build (which cost anywhere between $6 billion and $10 billion) and prices are expected to remain low -- around $4 per million British thermal units -- for the next decade at least.
4. Obama and the leaders in Congress like nuclear power. And they have made it clear that Japan’s crisis has not changed their positions. They maintain that Japan was hit with a rare, “black swan” double natural disaster, so no one should rush to judgment about how it should change America’s nuclear industry. Nuclear power is a rare area of bipartisanship for Obama and Republicans. The GOP likes it because it’s a carbon-zero, mature technology that doesn’t need subsidies to operate. (They seem to ignore the billions of dollars the industry needs to build.) Obama likes it because it’s clean -- and because Republicans like it. It can be an easy energy source to like. You can like it without having to deal with it since it hasn’t gone anywhere for 30 years, something you can’t say for oil and gas drilling after BP’s massive spill in the Gulf of Mexico. Experts and media reports have said that Obama’s proposal for a clean-energy standard, which includes nuclear power and natural gas, is dead because nuclear power may not be included -- or even if it is, it won’t be incentivized because companies won’t invest in nuclear power. But nuclear was already not going anywhere. Plus, the two senators taking the lead on the standard, Energy and Natural Resources Chairman Jeff Bingaman, D-N.M., and ranking member Lisa Murkowski, R-Alaska, are big nuclear fans ofand have reiterated their support for it in the wake of Japan’s crisis. They will likely keep nuclear in the mix. The clean-energy standard faces bigger obstacles (like a federal mandate-adverse GOP House) that makes the standard unlikely to go anywhere regardless of nuclear power.
5. Nuclear waste remains a huge unanswered question. Republicans continue to chastise the Obama administration over its decision to yank funding for the Yucca Mountain proposed nuclear-waste repository site in Nevada. And lawsuits concerning that issue continue to wind their way through the courts. The administration has directed a task force to explore other options to store the waste, which is currently done on site at the nuclear plants themselves. That panel won’t finish its report for two years. The Fukushima Daiichi crisis highlights the risks that come along with storing waste on site. At least two of its spent-fuel pools have had problems and may have leaked radiation. This is a supplementary reason why investing in nuclear-power plants is not an attractive option. The liability issues related to waste remain unaddressed as long as the country does not have a plan to store the waste on a long-term basis.