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Nuclear Power for
the 21st Century
Thre is life for the nuclear industry in the new millennium if it is willing to create its own future.

BY VALMORE LOISEL AND WALTER GEORGE KRITSKY

From its inception, nuclear power has been an attractive and somewhat mysterious energy source, perhaps because it allows us to peer beyond the curtain of our understanding of science. In spite of this appeal and in spite of an unprecedented commitment, in sheer numbers, to constructing nuclear plants, the United States has become one of the only countries where nuclear energy has experienced a gradual decline. This decline affects not only the electric utility industry, but also the support service industries, which supply nuclear plants with fuel, equipment, and technical support.

The shutdown of older plants and the lack of investment in newer plants in the United States has established an imbalance in nuclear energy production, which is expected to have a significant impact on the social and economic structure of the nuclear industry, as well as society at large. This impact will become clearer in the next few years as current trends continue toward retirement of older, uneconomic plants; a new, competitive environment; and deregulation of the electric utility industry.

PLANT CLOSINGS
Worldwide, 437 nuclear plants operate in 31 nations, providing 17 percent of the world’s electricity production, or about 2,300 billion kilowatt-hours (kwh). In 1997, nuclear production in the United States exceeded 630 billion kwhs, or 20 percent of the total U.S. electricity production.

During 1996 and 1997, seven new plants were brought online throughout the world, only one of which was in the United States. In addition, three U.S. plants were scheduled to be shut down: the Big Rock Point plant in Charlevoix, Michigan; Maine Yankee in Wiscassett, Maine; and the Zion Nuclear Station in Zion, Illinois. This brings to 16 the number of U.S. nuclear plants in the pipeline for decommissioning, or more than 10 percent of the commissioned installations.

These closings, along with a reluctance to invest in new plants because of economic uncertainties and public opposition, have caused a gradual decline in nuclear power production in the United States. With no plans for new plant construction on the horizon, nuclear power’s share of electricity production will continue to shrink. This decline is expected to have a significant impact on the economy before a new equilibrium in the energy mix is reached.

ENERGY MIX
As the economy grows, electricity generation will expand accordingly. Consumption of electricity is expected to grow about 3 percent per year to reach 5,250 billion kwhs by the year 2010. The mix of energy resources is likely to shift toward natural gas. Recent surveys estimate the United States has at least a 20-year supply of readily available gas from existing reserves.

The economic picture posed by deregulation of the electric industry, a shift to low-cost fuels, and decentralization of power production do not bode well for the long-term economic sustainability of nuclear energy production. While nuclear energy has competed successfully with coal for the past 20 years and is competing economically with coal and gas today, coal and gas will be a significant threat to the nuclear electricity industry during the next 20 years. Oil represents only a small fraction of the mix.

Nonetheless, nuclear power can hold its own for the next 10 years through plant-life extensions. The cost of nuclear production, which has consistently decreased in the last decade, is a strong motivating force to continue using nuclear power.

The nuclear option also has the advantage of not producing carbon dioxide and other greenhouse gases, unlike nonnuclear production sources.

While we expect nuclear production from existing plants to remain flat or increase slightly, the overall contribution of nuclear production to energy demand will drop from the current 20 percent to 13 percent by the year 2010. Increased consumption will be met by natural gas, which will likely increase production capacity to 2,250 billion kwhs. At that time, gas could make up 43 percent of our energy mix, if public opposition to carbon dioxide and greenhouse gas emissions does not increase substantially.

DECOMMISSIONING IMPACTS
From an environmental standpoint, it is unclear what the gain might be when a nuclear plant closes. Antinuclear activists, envisioning the Chernobyl syndrome, reason that society and the environment are exposed to fewer risks whenever a nuclear plant shuts down. These foes of nuclear energy, however, fail to factor in the risks of fossil-fuel energy generation, which increases greenhouse gases. Electricity consumption will not decrease as nuclear plants close. Electricity production has increased one third since 1980 and continues to grow at 3 percent per year. As electricity production increases, the production of greenhouse gases will therefore accelerate.

As the number of nuclear plants scheduled to go offline increases, the support service industries are destined to lose business. The early shutdown of plants that would otherwise need upgrades and maintenance services will only compound the problem. Naturally, it would be in the interest of these support service industries to look forward to a host of new plants coming online in the same time period.

But there’s more than business at stake. Nuclear power plants are high-technology enterprises that provide high-tech, well-paying jobs. What happens in a community when these jobs disappear? Ask the folks in Wiscassett, Maine, who lost their jobs in 1998 when the Maine Yankee plant closed. Maine Yankee’s owners also indicated they would no longer pay taxes into the local economy. For Wiscassett, the plant closing resulted in a 50 percent reduction in tax revenue, from $12.4 million to $6.1 million. Not many small communities can absorb that amount of change. In fact, Maine Yankee will disappear completely from the tax base in 2004, the date set for decommissioning and removal.

Similarly, in other instances where nuclear plants were built in rural areas and local service communities sprung up to support them, the news is not good. These communities are suffering the loss of high-paying, high-tech jobs and the infrastructure that supports them, but few policymakers are addressing these issues.

HOW HIGH THE COST?
To determine the overall economic impact of an industry, we need to consider direct and indirect costs. The size of the industry, numbers of employees, costs and expenses, profits and losses, contribution of an industry to the local economy—all these contribute to economic viability.

Economists generally use two approaches to such economic evaluations. The first is an industry model that measures direct costs and expenses, as well as profits and losses. The second is a Department of Commerce model, which assesses the trickle-down impact of the industry on the national economy.

The advantage of the Department of Commerce model is that it gives a comprehensive view of the real impact of the industry in dollars, using Standard Industrial Classifications codes. Although this model is speedy and more flexible than an industry model, some researchers doubt its accuracy. It is possible, using this model, to overestimate or underestimate the overall economic impact of a specific industry.

According to the Commerce Department model, the nuclear energy industry provided $90 billion in sales and created 442,000 jobs in 1995. Only a fifth of those jobs are actually at a nuclear plant. In fact, for each job created at a nuclear plant, four jobs are created in support service industries. The closing of a single nuclear plant therefore has a fourfold impact on employment within the support service industries. This harsh economic reality explains the depth of the concern among these suppliers, who see the adverse impact of decommissioning spreading well beyond the immediate communities where the plants are located.

POWERING UP
The first question this bleak outlook raises is whether revitalization of the nuclear power industry is possible. Considering the lack of energy policy in the Clinton administration and in Congress, together with the political clout of environmentalists and nonproliferation activists, revitalization would appear to be a difficult task. Moreover, we know that the future of nuclear energy depends upon choices made in public policy, which in turn depend on public acceptance. This acceptance can be gained only if both the perceived and real technology problems can be resolved. And in the public eye, perception equals reality.

Nevertheless, while revitalization may be possible, it cannot be achieved without a plan. Such a plan must transcend the 20-year time-frame within which natural gas will gain share in the energy mix. It must also look well beyond the current schedule for plant decommissioning.

If we are to garner support for nuclear energy as a substantial portion of the energy mix into the 21st century, we will need a long-range plan and a realistic timetable for implementation.

PLANNING AHEAD
First, we need time to develop a plan with a three-to-five-year timetable. The primary goal should be to establish the role of nuclear energy in the future. While the nuclear industry and the Department of Energy work out solutions for safely disposing of nuclear wastes and decommissioning existing plants, we need to keep our options open for bringing new plants online.

The second goal should be to develop a public advocacy campaign designed to promote awareness of energy and environmental issues. We will need to put the economic, environmental, and social relevance of nuclear energy into perspective.

Within the industry itself, we need to develop new plant designs, incorporating lessons learned from the past. New plants will be more efficient and less environmentally intrusive than the first generation of nuclear plants.

One question that needs to be resolved soon is whether the initiative for new plant development will come from the government or from the private sector. Given the current antinuclear climate, private industry probably has the least chance of designing and promoting the next generation of such advanced plants.

COMPETING CONCERNS
Although the details of electric utility deregulation are not totally understood, even by the experts, we do know that deregulation will require a very complex transition. It is too early to forecast outcomes, but downsizing, cost reductions, and mergers and acquisitions will certainly mean that the utilities will be repositioning themselves and redefining their businesses.

The utilities will also be broken up into as many as six separate entities. Three of those entities—generating companies, power marketers and brokers, and customer-service firms—will be largely unregulated. The other three entities—system operators, transmission companies, and distributors—will remain regulated. This new competitive marketplace will certainly redefine the nuclear power industry’s role.

Whether nuclear power can compete in such a free market will depend in large measure on the cost of extending the life of old plants, the overall efficiency of nuclear plants, and the costs of constructing the next generation of plants.

Time may yet prove to be on nuclear power’s side. The 3-percent annual growth in demand for electricity and the limits on extraction of natural gas in the future may prevent gas from accounting for more than the percentage increase in demand. This gives the nuclear industry time to realize the potential role of nuclear energy in America’s future, especially as our concern for clean air and our worries over global warming make fossil-fuel sources less and less attractive.

Right now the nuclear industry needs to take credit for what it has accomplished in creating a relatively clean source of electricity, and it needs to be on standby in case the natural gas bubble fizzles.

The nuclear industry can have a strong future, but first it has to get itself ready: it must have a revitalization plan that it can activate as soon as the opportunity arises; it should promote and implement advanced technologies; it should educate the public about the benefits and tradeoffs of nuclear energy in order to gain the public trust; and it should promote next-generation plants as being safe, economical, and environmentally beneficial.

The nuclear industry has stumbled badly in the United States; but with foresight and luck, it can get back on its feet again and can resume its role as a major energy producer well into the new millennium.n

 

Valmore Loiselle is a nuclear industry consultant in Columbia, South Carolina; he is chairman of the Association of Radioactive Metal Recyclers and owner of Beneficial Reuse Symposia LLC. Walter George Kritsky is vice president and division manager of US Ecology Nuclear Equipment Service Center, in Oak Ridge, Tennessee.

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