CARNEGIE INTERNATIONAL NONPROLIFERATION

CONFERENCE

PART 1: TOWARD A NUCLEAR

POWER RENAISSANCE?

FACT OR FICTION

WELCOME: TOM ISAACS,

LAWRENCE LIVERMOORE NATIONAL LABORATORY / STANFORD UNIVERSITY

SPEAKERS:

ROBERT ROSNER, ARGONNE NATIONAL LABORATORY

JOHN ROWE,

EXELON CORPORATION

SHARON SQUASSONI,

CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE

MONDAY, APRIL 6, 2009

Transcript by Federal News Service Washington, D.C.

TOM ISAACS: Good afternoon. I’m Tom Isaacs, and I have the privilege and pleasure of chairing this afternoon’s session, which is titled, “Toward a Nuclear Power Renaissance? Fact or Fiction.” And we have a wonderful panel who will discuss this for us. I want to just make a couple of introductory comments, the first of which is that I’m really pleased at the spread of different kinds of panels that are at this symposium. Quite often we see folks who are focused on the energy side of the nuclear equation and the development of R&D and the sales and development and operation of nuclear power plants, and then there’s a very different community that worries about arms control and disarmament and proliferation. And then yet there’s a third community that worries about waste management made up of geologists and hydrologists and geochemists and psychologists and occasionally psychiatrists. (Laughter.) And it’s not often that these communities actually intersect, but it’s I believe very important for those communities to intersect if we’re going to be successful in charting a successful nuclear future. Is there going to be a renaissance of nuclear power I think is largely a question of definition, much like the Charlie Brown – where you take the goal post and you try and make sure the football goes through.

Your definition of renaissance can be quite personal. It depends whether you think a renaissance is the growth of nuclear power, the spread of nuclear power. What kind of timeframe are you talking about? Are you talking about the growth of new nuclear power plants in the next 10 years, or are you talking about nuclear power for this century? And are you talking about the introduction of new technology? Is that part of the renaissance as well? And hopefully, we’ll explore some of these activities. In particular, with regard to the mainline concern of this gathering, people are concerned about the growth of nuclear power from a security point of view, but maybe more from the spread of nuclear power as we see more and more countries getting interested in nuclear power and thinking about their energy security for the longer term, not five years or 10 years, but 20 years, 30 years, 40 years. The concern grows that with the spread of nuclear power there will be an increase in proliferation concerns and an increase in waste management concerns, both very important. And as people think about the prospects of more and more countries wanting to get their hands on enrichment and/or reprocessing technology, which, as we all know, are dual use technologies and can bring countries to the doorstep of having nuclear weapons capabilities because those are the kinds of facilities that can produce directly weapons usable materials, it aggravates the concern even more. And we’ve certainly heard lots of discussion already about this issue that some call latent proliferation, in other words, under the guise of moving forward, or even under the legitimate use of moving forward to have more and more nuclear expertise and more and more nuclear facilities and materials. Countries move closer and closer without violating laws in many regards to the capability to quickly transform to a nuclear weapon state. So I think one of the premises is that if you look at the issues of energy and security and waste management, as I mentioned, they tend to be looked at in three separate categories and even by three different communities of people. And I think it’s very interesting to consider and explore the possibility that if we look at these things together, that is, the possibility of having more nuclear power and a broader reach of nuclear power while simultaneously reducing proliferation concerns

and waste management concerns below where they are today, that to me seems to be – capture the objective of a nuclear regime going forward and I hope would get explored a bit more. The only other point I’ll make before introducing the panelists is that we have seen lots of attention paid to the front end of the nuclear fuel cycle, in particular, ideas of fresh fuel assurances and nuclear reactor supplies tied to fresh fuel assurances, to try and provide a disincentive for countries to develop their own enrichment capabilities. And certainly, that’s a very important thing because enrichment, as we know, is a very hazardous thing to see spread around the world because of its potential for proliferation concerns. But there may be more opportunity to do things at the back end of the fuel cycle. Once you turn on a nuclear power plant, you immediately have a million-year problem. And we all know that it’s been quite difficult for countries – most countries, not all, but most countries – to find solutions. And, in fact, we’re struggling in this country today with what we’re going to do with our backend fuel policy, what we’re going to do with Yucca Mountain, with all the work and expertise that has been developed in that regard, and it would be a shame if we lost that capability. Nonetheless, as we think about going forward and putting together the beginnings of a future for nuclear power that allows a spread of nuclear power and reduces waste management concerns, it may be that those countries that are contemplating it will need more help at the back end of the fuel cycle than they will at the front end, and so by looking at the entire fuel cycle and not just at the fresh fuel assurances, there may be some opportunity to move forward in a way that meets all of those objectives simultaneously better than if we look at them individually. So having said that, I want to now move on to introducing our speakers. The objective here will be for all three speakers to speak in turn, after which I will moderate a question and answer period. I’ve asked our speakers to be full with their comments, but to be also brief so that we leave some time, some adequate time for a discussion. So I want to encourage them and encourage you to hold your questions until after all three speakers have spoken at which point you’ll – you can line up as you see fit. The three speakers are in the following order: First, we will hear from John Rowe. John is the chairman and CEO of Exelon Corporation. It is the largest market capitalized electric utility industry representative. They have 17 nuclear power plants. That’s the largest number owned by any company I’m – I believe, and John is the most senior chief executive in the industry. He will be followed by Sharon Squassoni. Sharon is the senior associate at the nonproliferation program here at the Carnegie Endowment for International Peace and has been analyzing nonproliferation and arms control issues for two decades. She’s also worked for the Congressional Research Service and has worked in the government for – on arms control issues, so she has a very broad and diverse background that should be of great use. And last and least – no – and last, but not least – (laughter) – is Bob Rosner, who is the William E. Wrather Distinguished Service Professor at the University of Chicago, but is more affectionately known to us as the director of Argonne National Laboratory. And so with that, let me turn it over to Mr. Rowe.

JOHN ROWE: Thank you. I appreciate the introduction, Tom, and thank you all for being here. The answer to the question, is the renaissance fact or fiction, is really quite simple. In the United States the renaissance is still sort of like Giotto at Assisi. It’s a beginning. In much of the rest of the world we’re all the way up to Michelangelo somewhere in the Sistine Chapel. It’s a fact. It’s happening. In my career I’ve been through a whole group of cycles on nuclear energy. I witnessed and helped with the burst of building in the early ’70s, the public reaction and industry reaction after the Three-Mile Island accident in ’79, the deteriorating economics of nuclear in the ’80s and early ’90s. And now there are 17 license applications pending for as many as 26 new reactors. But most of those – nearly all are dependent on the Federal Loan Guarantee Program, and there’s only enough money there for six or eight, perhaps the beginning of a renaissance, no more. But why do I think it might be a genuine beginning instead of just a Prague Spring? Well, the first answer is clearly the climate issue, which must be dealt with, and let me state before I get to numbers and facts and factoids my belief that nuclear technology is the only one we know that can deal with it. Now, we must deal with it, and there is no one technology that will do it all by itself. So where do we start? Well, it’s kind of like a prayer. Whether in Christianity or Islam and probably in other religions as well, you’re required to start prayers in a certain form. And the prayer as to the wedge of technologies to deal with climate change has to start – energy efficiency comes first. And indeed, it should. Technology is evolving more rapidly on the demand side and at end uses than it is on the supply side. New innovations that use energy more efficiently appear almost daily. And I have seen case after case where energy efficiency really works. And let me give you one I’m especially proud of. Two years ago we redid our home offices, 10 floors in a 1970 building in Chicago. We succeeded in cutting our energy consumption by 50 percent, and there we were able to do it economically. But at the same time, it will be hard to hit a 25-percent goal at the other buildings around our system. All sorts of things go on with energy efficiency. One is different technologies work more or less well in different applications. Another is customers have genuinely different desires. Usually energy is not the only thing they’re buying when they make an investment. Another is that some of the technologies, like LED lights, are very expensive. You have to be committed to the long-term investment. And yet another is feedback loops. Every time we invent a more efficient technology we also tend to invent a new technology that people want that use more electricity. Now, no one can design a real supply curve for energy efficiency. People have lots of ideas, including my company, and we think there’s a lot of it out there that is cheaper than any supply side resource. But it doesn’t come on command. It needs to come either through standards or through price effects. And then it comes. But the best studies I’ve seen on how much energy efficiency is there – and the best I’ve seen is probably the Brattle study – suggests that something like 40 percent of the growth in demand, not of the demand, but of the growth in demand, can be met through increased efficiency.

And if that is true – and again, accepting other projections of economic demand – we still have more than 100 gigawatts of new supply that will be needed over the next 20 years.

From whence does it come? Some like renewables. Personally, I’m a huge bull on efficiency. I’m relatively bearish on renewables. Wind is expensive. In our view, it costs somewhere between $50 and $80 per ton of CO2 avoided. Wind involves very substantial backup problems, but it’s the most economic renewable substantially available at the present time.

The Economist magazine recently published estimates that suggest that wind and renewables

are $70 to $140 per ton of CO2. I have heard estimates from the California Air Resources Board that their renewable portfolio standards will cost $150 per ton of carbon [avoided emissions]. That’s fifteen cents per kilowatt hour. If you add that to the existing 18 cents, you have a California that can’t compete for anything that’s energy intensive.

Now, solar, in my view, is much more promising than wind, because the technology really is

improving. But right now in our numbers solar is in the hundreds of dollars per ton of avoided carbon. It has to include – improve a lot.

So I think – and the numbers I see say that we can’t get there with just efficiency in

renewables without having a very damaging effect on our economy. So what are the alternatives? Natural gas is everybody’s first choice. And at today’s natural gas prices, it’s more economic than anything else we can do, except the early tranches of efficiency. We estimate that natural gas is somewhere between zero and $10 a ton of avoided carbon. In other words, the market is saying do it with gas. But we all know how volatile a commodity natural gas is.

Our second option is coal. We cannot retire all our coal fleet overnight. So the issue is can

we capture and sequester the CO2? I have seen innumerable estimates of what that costs. My own view is it’s substantially more expensive than new nuclear, and at least as environmentally risky. Tom said at the opening when you start a nuclear reactor, you create a million dollar problem. Well, if you really see it that way, I’m not very sure that we’re going to have many new nuclear reactors in this country. A million-year problem, he said. But I submit when you burn coal, you also have a million-year problem.

And I’m endlessly fascinated – why groups that have historically distrusted nuclear find that

carbon sequestration is so easy and safe. My personal view is it’s one of those things that’s loved because it doesn’t exist yet. And then you get to the nuclear option. Unless we are successful in reducing the cost of solar energy by at least a factor of four, which we may be, I have seen no supply estimates that tell us how to deal with CO2 without a substantial tranche of new nuclear energy. That is not to say that there may not be one, but I haven’t seen it. It’s not wind. It’s not biofuels. As best I can tell, it’s got to be either solar or nuclear.

So what is the case for nuclear today? Capacity factors are over 90 percent. The safety

record of the industry in the U.S. has constantly improved. Companies like EDF and Hitachi have – and Toshiba – have recent experience building nuclear plants. The economics are, at least to the best of our knowledge, far better than solar and probably better than wind, particularly when you consider that it’s a 24-hour supply. I don’t think they’re better than gas at $4.

The problem is, of course, first, a new nuclear project is vastly expensive. We estimate two 1,500-megawatt units to cost on the order of $12 billion in today’s numbers. I represent the biggest company in my industry, and that’s bigger than my balance sheet. So we can’t do it without the federal subsidy.

The second problem is, of course, the waste issue. We’ve spent 20 years and $9 billion on

Yucca Mountain, which is for all practical purposes dead or dormant. We have great deal to do – to find an alternative methodology of storing the spent fuel, which may be a million-year problem, but the volumes are a lot smaller than they are for a lot of other million-year problems. Or we have to reprocess, but reprocessing brings about the proliferation risk, which the next speaker is more competent to talk about than I am. And reprocessing, at least in the current forms, also creates more low-level waste.

Point is the challenges are huge, and yet if we look around the world, there are 50 to 60

nuclear plants proposed for construction, and the odds of those being built are much, much higher than the odds are for the 26 nuclear plants on the drawing boards here in this country. It’s going to happen, and it’s going to happen in nations which have quality controls as good as ours, and it’s going to happen in nations that don’t. And the issue is how we work with those to create acceptable margins of nuclear safety and acceptable controls for weapons-grade materials.

It’s not an easy picture. But again, let me say – and I say this with not – without a glimmer

of joy. I can’t see any picture for dealing with climate at the present time that will keep this country competitive without nuclear energy being a big part of it. Oh, I wish there were an easy option. I don’t like to build things that create million-year problems. I don’t like to build things that require all the financial risk and all the politics that a nuclear plant requires. But I can’t see this country succeeding and meeting its obligations without it.

So let me wrap this up with a parable, not from the Bible, but from Sidney Hook’s

autobiography. In his later years and drifting toward that ugly word, neo-conservatism, Hook described his Trotskyite youth by saying, “In the ’30s, we intellectuals judged capitalism by its works and socialism by its promises.” Ladies and gentlemen, I submit that we judge carbon sequestration, or solar or wind, by their promises, and we judge nuclear energy only by our fears. And if we continue that dichotomy, it’s not very good for the American energy supply, nor, frankly, is it very good for our ability to influence the evolution of nuclear energy in other countries.

Thank you.

(Applause.)

SHARON SQUASSONI: Thank you. Thank you, Tom, for organizing this panel. Tom Isaacs asked me to talk a little bit about the international aspect of the global nuclear renaissance, and I have some slides, which – hopefully we can get started.

For those of you experts in nuclear energy, this is old hat to you, but nuclear energy today provides 15 percent of global electricity demand. We have about 31 countries that now operate power reactors, 12 countries where uranium is enriched, and five countries where spent fuel is separated commercially. We’re not talking about military programs here, just commercially. And zero countries that now have a geologic repository for nuclear waste.

And so this is what it looks like geographically with – the United States at about one quarter of global capacity. And this is what commercial enrichment of uranium looks like with the plant at Resende in Brazil opening just recently. And this is commercial reprocessing of spent fuel. So Mr. Rowe mentioned a little bit about the history of nuclear power in the United States. In the 1950s, nuclear energy was perceived as too cheap to meter. We had a spurt of growth, many, many reactors being built in the 1960s to the mid-1970s. In the United States and globally after Three-Mile Island, which we just had the 30th anniversary of, and Chernobyl, many countries backed off of nuclear power. A lot of reactor orders were cancelled in this country and elsewhere. And in 1990s – and here I’m going to show my non-proliferation orientation – at least the U.S. made the argument that nuclear power was uneconomic and unnecessary, particularly for oil-producing nations. This was an argument we used with respect to Iran. And in Europe and the U.S. we built a lot of natural gas plants, which then, you know, acted as base load generation. In the 2000s since the Bush administration – and it’s not clear where the Obama Administration will go – but nuclear energy was promoted as pretty much acceptable for all, and the question is was it also desirable to all states?

All right, so why is there a lot of nuclear energy enthusiasm now? I prefer that term to a renaissance because in many countries it’s not clear that this will come to fruition. Well, clearly, global warming, as John Rowe mentioned, and energy security also plays a role in countries’ calculations. Nuclear energy has been rebranded as clean, green and secure, and as a result, since 2005, more than 25 states have announced new plans for nuclear power. Now, this number, 25, is lower than you might hear elsewhere, and that is because these are states that do not now have nuclear power and have pretty definite interest. So I’m kind of ruling out Yemen – (chuckles) – for example.

As Tom mentioned in his introduction, the renaissance is more than just numbers. It might

mean new kinds of reactors. For the advanced states, there will be different choices than for the developing states – for example, Generation IV reactors versus what we call grid-appropriate, or smaller reactors – new locations, which I’ll show you on some maps in a little bit, new capabilities. We’ve been talking about recycling techniques and possibly closed fuel cycles for more states. And there is the possibility of more states with uranium enrichment. And I would suggest that the institutional frameworks are lagging right now to restrict the spread of sensitive nuclear technologies. And some of the security and safety regimes are not mandatory.

So just one footnote about forecasts, forecasts of nuclear energy growth. And what I’m

going to show you are not forecasts, but scenarios. The economic models are only as good as their assumptions. They basically posit a GDP growth rate and then go on to project electricity demand and a share of nuclear energy in producing electricity.

Government plans can also change, and climate change analyses are highly speculative and

built on many different assumptions. And you can see, for example, some of the scenarios that the International Energy Agency puts out, make a lot of assumptions about the availability of technology and life extension of reactors, as well as the infrastructure capacity to ramp up.

The three scenarios that I’m going to show you today – the first I call realistic growth to 2030, and this is basically an economic model that the Energy Information Administration puts out. And they basically say we’ll have about 100 more gigawatts of capacity in 2030.

The second one is what I call the wildly optimistic scenario, which is if you took all states’

projections and took them seriously, that’s what you would come up with. And that’s adding 474 gigawatts of capacity, so basically doubling. And then the last scenario is a fourfold increase. And this is based loosely on about adding 1,300 gigawatts on the MIT high scenario for 2050. This is the 2003 MIT study on the future of nuclear power.

And so this is what that is going to look like. We go back to our current capacity, and there

we have our realistic growth. You can see growth certainly in China and India and Japan, little decline in OECD Europe. This is the wildly optimistic scenario. You can see new nuclear states. Those are the colored in red circles. And then finally, the climate change, appropriately green – (chuckles) – scenario has a lot more countries adding nuclear power, including some like Australia.

So those are the reactor scenarios, but it has implications for enrichment. You need to look

at the front and the backend. And you can see they’re using the same color scheme. We have today’s capacity in a orange, orange-ish yellow color, of 40 to 50 million seperative – of work units per year. And then it moves up, and you can see as you – if you assume mostly light water reactors, you’re going to need to double, triple your enrichment capacity. And the question is, where does that go? Where is that enrichment capacity going to be built?

And so here is what that might look like. So there’s the economic model, realistic growth.

There’s new growth. The wildly optimistic plans – South Africa you have adding capacity. And then in a climate change capacity, you may see countries such as Canada, Australia, and others adding enrichment capacity.

On the backend, you also have spent fuel implications. As you might know, one gigawatt

reactor—that’s about 1,000 megawatts—produces 20 tons of spent fuel per year. A country has to make a choice. Do they store that spent fuel, or do they recycle? And that’s really tough to predict. So I didn’t produce any maps – (chuckles) – associated with reprocessing, but it boils down to national waste policies versus international norms. You may have countries like South Korea saying they don’t have enough existing storage capacity. We need to do something with that spent fuel.

Whether or not you have an international repository can affect those choices. What kind of

fuel cycle? Do you have a once through? One recycle? Are you building fast reactors? And also, cost has an impact on this. And the Global Nuclear Energy Partnership – I put an arrow at the bottom because that seeks to effect countries’ decisions on how they handle their spent fuel.

You know, the next session tomorrow is going to look at constraints I think, so I’m just

going to race through this. Two points really. We’re going to need ramp up industry capacity because over the last 20 years worldwide we’ve only connected 10 reactors or fewer to the grid in the last 20 years. There are skilled labor shortages.

Some of the latest management experience in building reactors – these are the AREVA

reactors that Olkiluoto and Flamenville have had some problems, and we need to replace aging reactors. By 2050, or I guess 2030, the World Nuclear Industry Status Report says a lot of the

current reactors will reach their retirement age. And so do you replace them? Do you extend their lives? What are the risks for extending the lives beyond 40 years, even beyond 60 years?

The thing I want to focus on just for a minute or two is the limits for new nuclear states, and

this is the – all those countries that you’ve seen. Do they have the physical and intellectual nuclear infrastructure? Where are they in the process of development? Do they have the legal financing, regulatory frameworks? Have they developed, or can they develop, or how long will it take to develop safety and security cultures? And for some states there will be funding issues.

All right, so just briefly – this is a depiction of the states that are interested in nuclear power,

most of them for the first time. The darker the color, the more serious those states are, or the further along they are. And then just out of interest, I mapped on top of this map Foreign Policy Magazine’s index of failed states for 2008. And you can see there are a couple of those countries in there that are at risk, which calls into question their ability to implement regulations.

Okay, one slide on plans in the Middle East. There’s a lot of data up here. I want you to

take one thing away. Look at the red. In those cases, there are – whether it’s safeguards, safety conventions, security or liability, there are some gaps there that will need to be filled.

All right. I’m running out of time, so I think I will jump to my conclusion. So a lot of this –

I talk here about implications for safety, security, and nonproliferation, which is in my new report, but I will jump to the conclusions, which is there are certain risks in all of those areas. We need to manage the risks now on a government-to-government basis, a vendor-to-vendor basis. It’s not enough to provide incentives for states to forego enrichment and reprocessing. And states such as the United Arab Emirates, which recently renounced enrichment and reprocessing – those are positive steps, but probably the only lasting solution will lie in multilateral facilities.

And so I would suggest that we need to promote all energy options – I don’t think John

Rowe and I disagree here – including efficiency and all approaches, including regional facilities, cross-border transmission, and regional fuel cycle centers. We need to let international financial institutions continue with their basically neutral approach rather than an aggressive promotion of nuclear energy. We need to adopt the IAEA’s additional protocol as a standard of supply, as well as tighten restrictions on sensitive technologies.

And finally, I think that we need to phase out national enrichment plants, perhaps in a legally

binding treaty. And I would suggest that the vehicle of the fissile material production cutoff treaty could be a useful way to level the playing field among existing enrichers, future enrichers, just require that all of them are multinationally operated and owned and managed.

So thank you for your attention, and I look forward to your questions.

(Applause.)

ROBERT ROSNER: Well, it’s a pleasure to be here. I might say that I feel a bit odd. I’m representing as the director the laboratory that in a sense started the whole story here. So I will take a rather different cut at the kinds of questions that we’ve been just hearing about. We’re going to be talking about the promised nuclear renaissance, which, in my view, in the U.S. has really not yet

really started at all. But I think what might be very useful to – in order to address that question is really to think about the context. First of all, what has been done? What has been done recently? To begin with, there is, in fact, a roadmap—that, for example, the DOE National Laboratories have put together – that does have a long-term focus that turned out actually to disagree in part with what the past administration, in fact, sought to do, a roadmap that, in fact, is quite consistent with the National Academy Study on the future of nuclear energy. We have yet to see exactly where the Department of Energy wants to go under this administration, but obviously, it is in a phase of reevaluating – but I think either through rumor or perhaps through a fact, it’s pretty clear that the future of Yucca Mountain looks pretty dim at this point as a permanent repository, certainly within the next 10 years or so, maybe 15 or 20 years, or maybe even longer. And I think it’s also clear that we need to very clearly distinguish between what we want to do in the short-term, the intermediate term and the long-term—these perspectives are really quite different, and there’s much to be said for thinking about the long-term future in terms of really transformational technologies. That is something to aim for. And in that context, I ask the question, what is the role of the national laboratories in the United States and academia? How do we deal with issues of integrated assessment, assistance approach really looking at lifecycle costs? And, of course, one of the reasons for this meeting – thinking about the international realm. I would say that some things that are – and still remain – pretty murky; one of these things within the United States is exactly – speaking to the issue that John addressed – is exactly what is the role of industry, especially on the R&D side and the interactions of industry with both academia and the laboratories? Now, all of this has been done in a particular context that’s already been mentioned; the CO2 / climate change context. And I can’t resist – I played with one of Scott Adam’s cartoons, and as a deep believer in his jaundiced view of public life—this modified carton resonates with what John talked about before, which is that we tend to be very optimistic about things that don’t exist and very pessimistic about the things that we have in hand. So where are we today? I think it’s fair to say that if you talk about the US nuclear proponents – and by proponents I mean, for example, the nuclear industry, and that has two components; the folks that build plants and the folks that operate them—they really have had a shock – Three-Mile Island – and they changed the way they did business. If you look at the operating records for the existing plants, they’re really outstanding. They’ve gotten into a self-policing regime, which has been extremely effective. Another sign of the effectiveness is just simply the efficiency of the plants, the availability of power; they’re operating in the U.S. at availabilities in excess of 90 percent. And, for example, in the state that I live—the State of Illinois— it’s pretty clear that we are enjoying the fruits of that increased focus on safety and efficiency. Almost 50 percent of the electric base power in the in Illinois is produced by nuclear plants.

In the academic community and in the national labs it’s clear that there are lots of folks that are excited about a nuclear future, and we’re rearing to go, but the question is how do we go about that? And this reduces to a series of questions and obstacles. One of them is that ferment is actually occurring only among a relatively small number of players, who are eager to focus on a transformational approach to nuclear energy in the U.S. But if I look at the design tools that are used by industry or by the NRC for that matter, today, these are – compared to what’s available, for example, in the aeronautics industry – inadequate to the task: antiquated doesn’t even begin to describe it. And the Labs and academia are struggling to change that, but principally limited by inadequate funding of the research programs. So we are blocked on the long-term R&D side of things.

There are workforce inadequacies. We already heard about that. This is a problem both here and outside the United States. We have a lack of funding. If you actually, for example, ask about the R&D situation, we’re really not funding at a level which is consistent with a promised nuclear renaissance, and, of course, there’s still concerted opposition among long-term nuclear foes and, quite frankly, perhaps insufficient engagement by the folks that are pro-nuclear in what I would call neutral venues, that is, they haven’t really grabbed the bully pulpit.

So where do we go? And my claim is that we need to be very clear about the goals. In the

short-term, I think it really is all about getting going. This really means, for example, doing something that in the national lab context has not really been done very much, which is to really engage R&D that’s directly relevant to industry today; and in the larger context, to deal with the interim storage issue now.

In the intermediate term, it really is all about addressing the cost issues, that is, the economic

issues, and again, the interim storage issue. And finally, in the long-term, really – it really is all about aiming for a sustainable nuclear economy. It just does not make sense to talk about nuclear as playing a major role unless you talk about it in a context of something that’s sustainable, and this, in my mind, really means talking about transformational technologies. It means going beyond the existing thermal (LWR or PWR) nuclear plants, going beyond the pitifully small fraction of energy that’s extracted from the present fuel, and thus to go towards closing the fuel cycle. It’s a misnomer to call spent fuel, “spent.” Of course, it is not spent. It’s far from spent. It still contains most of the extractable energy that it started out with.

And certainly, for the U.S. I would strongly argue that we do not follow other– let’s not play

“follow the leader,” let’s instead actually take advantage of the fact that we did not invest in major thermal reprocessing, let’s go in really very different directions, that is, that we close the nuclear fuel cycle through technologies that might include those that were thought about actually by Enrico Fermi himself, for example, fast neutron flux reactors, or going to much deeper burn in the context of “once through” technologies, including new ideas such as the LIFE project at Livermore National Lab.

Now, in the public domain it’s all about how you sell things, and there’s a lot to be said for

being realistic and not overselling, yet still having lofty goals. The fact of the matter is in the United States, or for that matter abroad, it is very hard to come up with a case that within, say, the foreseeable, say, 20, 30 years that nuclear power is going to play a critical role in doing something about the CO2 load in our atmosphere. We simply cannot build at a fast enough rate to actually doing anything of that sort, say, allowing us to stay below 550 parts per million equivalent of CO2.

If you asked however, for the longer-term future, if you think about a century time scale,

then that pessimism is not appropriate. I think by going to a closed fuel cycle, and really building out the way that folks have thought about it, then it is the case that nuclear is the only non-fossil fuel energy source that does not depend on local climate, weather, insulation conditions, etc., and is demonstrated to work now. We have it today—the obstacles are not with the technology per se, but rather with issues such as safety (here I include all issues such as worries about terrorism and proliferation) and economics (the latter especially appropriate in the U.S.).

Now, the question here in the U.S. is whether or not we can actually turn American industry

around – the international industry doesn’t have to be turned around – they’re already right there – it really depends on how we go about investing in transformational technologies. And to repeat what I said just a moment ago, I strongly believe that simply running after international competitors, that is, for our industry to go running after them (by, for example, looking at variants of aqueous reprocessing) just an enormous mistake.

So my claim is that for nuclear energy to play a significant role within the U.S., we really do

have to think about a century timescale, not ten-year timescale, and we really do have to think about transforming the nuclear industry. And there are a bunch of issues that we have already been focusing on, including the key issues of, safety, safeguards, and cost containment. And cost containment for new nuclear plants in the United States context very much has to do with the way that our regulatory process works.

Today both the design process of nuclear plants (and thus their construction) and the

processes underlying their regulations are not science-based. They are based centrally on phenomenology. Our existing design tools and the tools used as part of the regulatory process focus on experimentally well-studied (and well understood) point designs, but are not in any real sense ‘predictive’ (at least in the sense that is traditionally understood by physicists). This makes certification of any significant design departures from existing designs (no matter if one is talking about new fuel types or changes in reactor designs) a painful and drawn-out process. You have to “bake and cook” new fuel types, for example, and their certification takes not months but years. Speeding the regulatory process up for fuel qualification or reactor design, would lead to huge cost impacts, since it has been estimated that every year of delay in the licensing process leads to construction cost increases of around a billion dollars.

Now, how do you that? Well, it really is all about doing something that has happened in

other industries that are also engineering-based, but have entered the era of ‘science-based’ engineering. Examples include the airframe and jet turbine industries. To basically go to a science-based engineering discipline approach, which is rather different than what we have today – means being able to rely on high-fidelity integrated simulations. In order to carry out such simulations and rely on them, you have to be able to do science-based validated modeling. And this takes smart people and it takes money. Ask yourself whether a field that’s widely regarded in the United States as moribund is going to attract first rate engineering talent. The folks that are really smart, the kids that are at our universities that are really bright, the best and the brightest, are hardly going to go into a field that seems moribund and headed for extinction. So to change things, one has to change the public perception.

And by the way, this can be done, and we’ve done it before. It’s been done, for example, in the case of our nuclear weapons program. When the United States agreed no longer to test, the question was how were the national labs, the weapons labs, in fact going to certify the stockpile? And the answer was to really change the way one thinks about the nature of the stockpile, the way one does engineering of the stockpiled weapons.

And over the last decade there’s been a huge change in how that’s done, and the nuclear –

the National Nuclear Security Administration – NNSA – has also engaged universities in this program, that is, funded an open program that in the first rounds challenged five universities to pick five very difficult problems for which solutions that are purely phenomenologically based were simply not feasible. And all five were able to actually succeed, given the appropriate funding to do that (and access to the smart students I mentioned earlier), and thus science-based engineering and the related simulation capabilities are a reality today and the national labs, and quite frankly, academia really know how to do this today.

So since I don’t have much time remaining, let me just say that while all this may sound like

a sort of the dream—the dream here is to be able to operate in a framework where you can look at the nuclear fuel cycle as a system and be able actually to simulate the whole thing, including the possibility of actually optimizing both the subsystems and the system as a whole—I believe that it will be possible to realize this dream over the next decade or two. Right now system-level optimization is basically a phenomenological discipline. It’s not science-based. And we know now that it’s possible to do things differently.

The movie shown here is an example of a very simple kind of calculation that already shows

the power of simulations. Those of you familiar with cores of nuclear reactors know that cores have fuel pins in them. The fuel pins are separated by wire wrap, and the wire wrap was designed to act both as a spacer to separate the fuel pins as well as to, if you like, stir the thermal transfer fluid. And it turns out when you do actually do a modern 3-D high fidelity calculation, it turns out the wire wrap does something totally different from what was originally expected. And this of course means that one can change the design, and get the wire wrap to do what it was intended to do. In this very simply case, one of the issues in mixing is to avoid hot spots that affect, for example, the long-term metallurgy performance of the fuel rods, the casing. More recently, we’ve gone quite a bit further in our simulations, looking at fairly large bundles of fuel rods, and starting to include neutron transport to the hydrodynamics. The ambition is that within the next few years to be able to do a first principles 3-D, full fidelity simulation of an entire core. This is within our reach within the next few years, that is, by somewhere around 2012, 2013 we will be able to do that, and then go far beyond as we enter the exascale computing era.

So let me end by just pointing out some caveats. It is sometimes said that we can’t trust

simulations. But I think a fair fraction of the folks in this hall have probably flown on Boeing 777s that were designed by a computer, never had a prototype built, and I don’t think you worried about looking out the window and worrying whether or not the wings were going to fall off. The point is that these disciplines—just as the nuclear industry—are data rich, and thus it is quite feasible to truly validate the simulation codes and put them to good use to design and build highly functional and optimized complex systems that work well: safe and economically viable..

Or you could say, well, we’ve got plenty of time. Let’s not worry about it, and let’s not rush

into things. But waiting is I think a sure-fire way of basically guaranteeing that this country is going

to be mediocre, and mediocre in a way that’s damaging to our international standing. Would you as someone looking outside the United States at the United States give us much credibility if we really do not have the technical capabilities to actually play – be players in this field?

And finally – about nuclear – it’s always said it’s too expensive, and my comment is always,

well, compared to exactly what? And tell me exactly what economic model would you trust that tells me what things cost in 50 years. And if you believe such a model exists, I’m sure there are successors to Mr. Madoff that I’ll introduce you to.

So with that –

(Laughter.)

ISAACS: Thank you very much to all of our speakers. I think that we’ve got a wonderful breadth of presentation here. I’d like to encourage those of you who have questions now to please move to the microphones. I’m reminded of that old Yogi Berra saying, “Predictions are really hard, especially about the future.” I think that we see here a range of potential visions, but still a general sentiment, I would say, that we’re likely to see more nuclear power in the future and a number of emerging opportunities and challenges. I can tell you now that we will have a difficult time in the timeframe we have – get all these questions in. So I’m going to learn from this morning’s presentation and ask for two questions at a time, and then I’ll ask our panelists to respond. And I ask you to keep your questions, please, very brief and just state your name and affiliation. Dick, do you want to go first, and then you, please. Q: Richard Garwin, IBM fellow emeritus. There’s some confusion between dollars per ton of carbon and dollars per ton of CO2. I think that Sharon had it right, and I think John Rowe had some confusion. $100 per ton of CO2 is $370 per ton of carbon saved. On the reprocessing, we do not have the option, should not have the option of following our friends, the French, because that does not save anything. It does not save repository space, except causes more delay before you can put it into the repository, and it’s vastly expensive as you can figure yourself from the cost of the Japanese plant and Rokkasho-mura and the fact that you need to reprocess 5 kilograms to get 1 kilogram of mixed oxide fuel. And finally – ISAACS: If I may ask, in fairness to all the people behind you, can you cut it up? Q: I thoroughly support Bob Rosner’s simulation. I propose to have such a laboratory to develop our next – our future breeder reactors. ISAACS: Yes, please. Q: Steven Dolley with Platts Nuclear Publications. This actually dovetails pretty well with Dr. Garwin’s question, which is – want to put just a fine point on the reprocessing discussion that we’ve had so far, and if we can get some sense from each of the panelists – given what’s going on with Yucca Mountain, difficulties of siting a repository and all that, will it be possible to have a

nuclear renaissance in the United States without reprocessing and closing the fuel cycle? Dr. Rosner addressed that, but I’d be interested in some perspectives from the other panelists. ISAACS: Okay. Thank you. Would one of – Mr. Rowe or Ms. Squassoni like to deal with the issue on the dollars per ton of carbon saved? ROWE: Well, he’s clearly right. I was just – I wasn’t confused. I was just in inelegant. ISAACS: Okay. (Chuckles.) ROWE: He’s clearly right. ISAACS: Okay. ROWE: On the larger question the gentleman with Platts asked – yeah, I think my industry should be very wary of building very many nuclear plants, particularly on new sites, without some progress toward a workable federal solution to either waste disposal or reprocessing. But it’s a very vexed issue in my industry, and there are a great many people, both in the industry and in the government, who think we should just go ahead because it is, after all, safe to store the fuel on the sites. I’m still uneasy about that. ISAACS: Bob? ROSNER: Yes, there are a couple of questions there. One of them had to do with thermal reprocessing. So just to be clear, the National Lab Directors Council a year ago wrote a letter and a white paper to the then DOE Secretary Bodman that stated very clearly that we were opposed to – and we thought on technical grounds, not cost grounds, but technical grounds – that thermal reprocessing was a mistake. And this was actually at that time contrary to the position of the nuclear energy program within DOE. And by the way, the present secretary was one of the signatories of that letter. Then the second issue had to do with simulation. It seems to me that it’s very hard to see how you go about really changing technologies without that today, and especially changing the way that we go about thinking about the nuclear energy system as a whole without that. It’s really much too complicated to be able to do in a way that we’ve been dealing it – with it in the past. So I am fully in accord with Mr. Garwin. ISAACS: Thank you. Again, let me ask you to state your name, but please try and keep your questions or comments extremely short. Sharon? SQUASSONI: Could I just – ISAACS: Sure. SQUASSONI: – I just wanted to add something. Steve, I think, you know, this is a – actually several states in the U.S. have passed laws that said, you know, unless you have a solution to

nuclear waste, you can’t build anymore nuclear power plants. These laws haven’t been challenged since we haven’t built anymore in the last 30 years. But I think the real thing that’s going to be a problem in the United States is not the issue of waste, although you might think it should be. It’s going to be cost. And John Rowe mentioned that without loan guarantees, we’re not going to see a lot of nuclear power plants built. The cost doesn’t go away and the risk doesn’t go away, and so the real question is who’s going to pay? Is it going to be the vendor? Is it going to be the utility? Is it going to be the rate payer? Is it going to be the taxpayer? (Chuckles.) And so that’s what we need to have a public debate on. And in the context of global climate change, the real question is if you’re going to pour a lot of government money, whether it’s in the form of loan guarantees or other kinds of subsidies into nuclear power, what is in the opportunity cost? What other energy options won’t you be pursuing? ISAACS: Thank you. If I could have – question very quickly and very quickly. Thank you.

Q: Thank you. My name is Oksana Elkhamri and I’m from the Pacific Northwest National Lab, and I have two very quick questions. My first question is directed to Mr. Rowe. As you’re probably aware, a number of emerging nuclear energy states are considering relying on the foreign assistance to operate their first nuclear power plant. Some foreign companies, such as France’s EDF have expressed interest in providing such assistance. To what extent do you see U.S. utilities becoming players in the global nuclear energy market? My second question is directed to Ms. Squassoni. I think you gave us some good reality check on the projected nuclear renaissance. I was curious as to what factors did you take into consideration in determining whose plans are more credible and which countries’ plans are less credible? Thank you. MR. ISAACS: Thank you.

ROWE: Answer to the first question – ISAACS: Wait, wait one second, John, if you would. I want to try and get – ROWE: Oh, excuse me. ISAACS: Yeah. Q: Right. Amandeep Gil, Stanford CISAC. My question is for the last speaker. You talked about a fairly autonomous man on the moon kind of a mission approach to getting ahead of the curve. My question is couldn’t we think of a international space station or the IT industry kind of a model in which you draw in countries like China and India, as Sharon mentioned, into a more responsible culture and perhaps leverage some of their engineering manpower to work on small reactors, thorium cycle, et cetera?

ROWE: Answer to the first question is I think U.S. utilities will participate, but I suspect they will be relatively small competitors in the international operation business. ISAACS: Okay. ROSNER: The answer to the second question – actually, I can complete the answer to the gentleman from Platts. In the case of, for example, code design, a number of the American labs have actually been working, for example, with the French, with the CEA, and I completely agree. I think we will see more and more of that, including collaboration with the Russians – we’ve had some discussions with them – and as well with the Japanese. As far as the reprocessing is concerned, I think one thing to keep in mind is that a closed fuel cycle doesn’t necessarily have to look like a fuel cycle in which you have burners or breeders at the tail end. Another way of doing it is just to have reactors that have just a much higher burn in a ‘once through’ fuel cycle design. And there are proposals on the table to have burn-up rates that are, you know, in excess of 90 percent. So in that case, you would never be in the position of having to reprocess. So I think it’s early days, actually, in terms of the design of alternates to the present thermal cycle, and this is the reason why I argued in my talk about research investments at this point, because the – on the downstream, in the long-term when you think about the – you know, the century timescale, the nuclear fuel cycle can look very different from what we have today. SQUASSONI: Just briefly on the question of the credibility of plans. The International Atomic Energy Agency has a whole set of milestones that, you know, states should follow. But really, it’s a moving picture. It changes over time, and those numbers have changed in the last year. Basically, you get a sense of – does a country have a – you know, have they put out a bid for a proposal? When they say they want nuclear power, have they identified either, you know, electricity demand or a certain capacity? Does it really make sense given the size of their transmission grid? And so that’s why my number is a little bit lower than some of the things you might’ve seen in the media. ISAACS: Thank you. Here and here, please. Q: Ed Lyman, Union of Concerned Scientists. For Mr. Rowe – on the position of the Nuclear Energy Institute – and I believe that you’re still chair – correct me if I’m wrong – of the board – has evolved over the last few years from a position more similar to the one that Dr. Rosner expressed in the lab director study endorsing long-term R&D on reprocessing and now is more favorable toward a near-term approach using aqueous reprocessing and something more similar to PUREX in MOX and light-water reactors. Now, in light of the criticism of the lab director’s report of that approach, I was wondering if you could provide some insight – why the utilities have now decided to embrace this strategy when there’s no demonstrable benefit. Thanks.

ISAACS: Okay. ROWE: I think – ISAACS: One – John, let me just – I’m – okay, please, quickly. Q: Christina Hemsell (ph), Monterey Institute. Since he stole my question, I’m going to go with a new one. Someone mentioned of the speakers the South Korean problem with storage of spent nuclear fuel, and they – since they have – and I’m going to try to link proliferation into the idea of a renaissance. Since South Korea has signed with the north an agreement on no reprocessing on the Korean peninsula, they are looking at pyro-processing and defining that as not reprocessing. So my question to all of you is as we’re talking about a nuclear renaissance, are any of these technologies truly proliferation resistant? Should we be concerned about pyro-processing? Is that reprocessing? If a country adopts a proliferation resistant technology, if it is indeed so, isn’t this encouraging other countries who believe it’s too expensive to go ahead with second generation technologies? Doesn’t this give, you know, North Korea an excuse to do reprocessing, other countries to get gen two technologies? ISAACS: Thank you. Anybody care to respond, or – ROWE: Well, let me start with the gentleman from the UCS question. I think it ascribes a level of precision to the NEI position beyond that which is actually present. I think the NEI position is largely intended to state we believe we should be looking at long-term methods of reprocessing, particularly those that are more proliferation resistant rather than simply relying on the once through cycle and the plan to put it all at Yucca Mountain. But I don’t think it’s – goes a whole lot deeper than that. And I think on the second question both my colleagues are more capable of answering it than I am. ISAACS: Do you want to say something? Q: I don’t have anything – (inaudible). ISAACS: In the interests of time, of which we have little, I’m going to ask each of our remaining questioners to posit a question to the group. You can then answer whatever ones we have before we’re thrown off the stage. Please keep it to 30 seconds or less, questions only. Why don’t we start here? Q: This is for Mr. Rowe. I had noted a difference between your position on what a renaissance looks like and what NEI’s position is, which is a full-blown renaissance. I wonder if you might expound upon that, particularly with regard to confidence levels about the cost and the reliance on federal loan guarantees when the private financial institutions won’t touch this. ISAACS: Thank you. Yes?

Q: Yeah, he just stole my question actually.

(Laughter.) ISAACS: Excellent. Goodbye. Next?

(Laughter.) Q: Jessica Varum from the Center for Nonproliferation Studies. And I’m just wondering with regards to increasing the proliferation resistance of next generation reactors and fuel cycles, there are a number of technically elegant ideas out there from fuel doping to thorium, et cetera. But they all involve a price premium, and what I’m hearing from you folks is if we’re going to have a nuclear renaissance, it has to be cost effective. So does that mean we’re going to have a renaissance without regard to proliferation? ISAACS: Thank you. Dave, last question. Q: This is for John. Dave Rashan (ph). Some states, the state where I live in now, Florida, for example, has a goal; 20 percent renewables for the utilities in 2020. What would you do if you really can’t build more nuclear plants and you’re heading for 2020? ROWE: Well, I’m going to retire and move to Florida. But –

(Laughter.) RASHAN: I already did from the same company.

(Laughter.) ROWE: – if look on our Web site and look at our basic low-carbon planning document, Exelon 2020, you’ll find that we attempted to compare nuclear to efficiency, to uprates in nuclear, to gas, to wind, to solar, to carbon sequestration. And all of our numbers are susceptible of challenge, but we believe they were as close as you could at the time we prepared them. And we included those numbers with and without the subsidy effects for each technology. At the time nuclear was substantially cheaper than wind. It would be closer today because the low gas price, which is a supplement to the wind, makes wind a bit more competitive. But in the short-run, a company like mine can neutralize its carbon footprint without new nuclear plants. It simply – the industry and the country can’t do it an economical prices. We have the advantage of having 17 already running, so we have a very small carbon footprint. But as you might suspect, we get certain tranches of efficiency which we think are cheaper than anything else. And then we get a mix of upgrades to our existing nuclear fleet, and new gas fired capacity, which is next in economics. And after that, you get out to the much more complicated questions of do you actually build new nuclear? Do you try to do it with wind and gas? And where is solar, which is still very

expensive on the test. But we are keenly aware that a subsidy is just a matter of somebody else’s money, and we in our planning look at all of these costs with and without the subsidies. ISAACS: If I could ask if there’s any last short comments from our panelists – SQUASSONI: Yeah, I would just say on the question of proliferation resistance – you know, 30 years ago we looked at this and decided that, you know, you didn’t want a technical fix. You wanted institutional political frameworks. And what we’re facing now, particularly in the case of South Korea – you know, is pyro-processing reprocessing? It’s a special case because, you know, some consider it no more proliferation resistant than reprocessing, but South Korea has mostly U.S. origin spent fuel. It is considered under our law as alteration in form or content. So the issue is: South Korea looks at what we’ve decided to do with India and says why not let us consent to pyro-process or reprocess? So you go back to the basic political bargain of the NPT. We can build a lot of reactors. We still haven’t solved the question of restricting enrichment and reprocessing, and we really need to grapple with that. ISAACS: Bob, any last comments? ROSNER: Yeah, I want to address this issue of reprocessing and the question of proliferation. I don’t think anyone on the technical end would argue for a nuclear renaissance that did not take the stand that whatever we do has to go in the direction of making a system more proliferation-resistant. I mean, I can’t imagine anybody not making that case. And this is one of the reasons that we at the national labs – one of the reasons that we thought that a process – reprocessing steps that basically involved a small variation of PUREX was just a huge mistake. Why would you do that, the process that was designed originally to separate out plutonium? It just made no sense. It is, however, also the case that there is no such thing as a – as any technical solution that is absolutely totally proof against proliferation. There is no such thing. You can make it more difficult. And there are proposals out there, for example, on the front end, for example, to have burners that, for example, would never need enrichment, or at the backend – that you wouldn’t have a need for reprocessing, that is, you have a deep burn. So the LIFE project at Livermore is an example of that. But all these things are in the offing. They require more R&D. And I certainly – the thing that makes me so hopeful is precisely the fact that we’re going in the direction of having a better understanding of where we need to be, which is to be proliferation-resistant within the United States, that we are part of the solution. ISAACS: Thank you. Q: One last question? ISAACS: No, you can’t, I’m afraid, Dave. There’s no time. I’ve just been given the hook. So I want to thank all of you for your engagement – (applause) – and thank the panelists as well.

(END)