Is there enough support in Congress for nuclear energy expansion? What kinds of incentives does the industry need to extend its reach? During today's OnPoint, Marv Fertel, president and CEO of the Nuclear Energy Institute, gives his take on what the best legislative approach on clean energy is. He discusses a recent study conducted by the Massachusetts Institute of Technology that focuses on the costs of building new nuclear plants and discusses some solutions to the nuclear waste issue.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Marv Fertel, president and CEO of the Nuclear Energy Institute. Marv, thanks for coming on the show.
Marv Fertel: Thank you, Monica.
Monica Trauzzi: Marv, we're going to talk about the recent MIT report on nuclear power in a moment. But first I want to discuss the latest coming out of the Senate on a possible renewable electricity standard that we might see during the lame-duck session. There could be a renewable electricity standard, there could be a clean energy standard. Do you think the Senate should hold off until next year to perhaps do something a little more comprehensive on energy?
Marv Fertel: I've always thought that if you're going to do a standard, and I'm not sure standards are the right way for our country, it should be a clean energy standard, as opposed to just a renewable. But, for one, I don't think they're going to be able to get anything through in the lame duck. So I think we will end up doing it next year as part of a more comprehensive or at least maybe a little bit more thoughtful approach to what we really need in energy.
Monica Trauzzi: Is there broad enough support for going the clean energy route as opposed to renewable electricity?
Marv Fertel: I think there's more support probably, certainly from the Republican side of the aisle for clean energy. And I think for a number of the Democrats that come from coal states and so forth, they probably look more to a clean energy standard than just a renewable standard.
Monica Trauzzi: OK, and so the MIT report fits perfectly into the discussion. It says that nuclear power use is growing worldwide, but there are still costs, worries about cost, and setting up plants, what it means. So this recent report is calling on the government to put more money behind, more incentives behind building of new plants. So that means we're essentially taking a bigger bet on nuclear. How much of a financial risk is it?
Marv Fertel: Well, first what I would say is we really think that Senator Bingaman's approach with the Clean Energy Deployment Administration, which would really look at a loan guarantee and other things, not just for nuclear, but for clean energy, is a good way to go. We're trying to deploy renewables, nuclear, clean coal in a relatively aggressive posture over the next 20 or 30 years. And financing is a major issue. The other thing I'd say, Monica, on loan guarantees, loan guarantees help reduce the cost of the electricity, either because they reduce the cost of capital or they help you to leverage with more debt. And that helps on the economy as we transition to this lower carbon footprint.
Monica Trauzzi: But do these incentives, these loan guarantees mean that the industry is basically shifting the risk to taxpayers?
Marv Fertel: I don't think so. Actually in nuclear we actually pay for these loan guarantees, just like we would if we were getting it from somewhere else. And we're not building a nuclear plant. It is an $8 to $10 billion investment. You're going to have billions of dollars of equity in it, so you're not going to walk away. You're going to want this project to be very successful.
Monica Trauzzi: So much of the report focuses on how much it actually costs to build a nuclear reactor. Do we know if the cost of building a reactor will come down and what evidence is there of that?
Marv Fertel: I think the answer is we know it should come down. And the best evidence is if you take a look at some of the other countries that have been building in a pretty progressive way. South Korea has seen the cost of their reactors come down. I think it's down about 40 percent or 45 percent from first ones down to the fifth or sixth of a kind when you're building the same reactor. So if you stay standardized and you get better at the construction, you're going to reduce the cost.
Monica Trauzzi: How long should these government incentives be around for and at what point does competition begin to dominate?
Marv Fertel: I think competition will always dominate. I think I would look at it like we have the export/import bank for financing projects overseas. I think some form of clean energy bank will provide a base. After a while the commercial banks will want to get into the business more and you'll see companies look for where do they get the best deal. So I wouldn't put a timeframe on it. I would say we need some form of platform for clean energy deployment. And the commercial industry, banking industry will come into the game as they see the opportunities for them to make money.
Monica Trauzzi: The nuclear industry has put a lot of money behind PR, yet there continues to be resistance towards nuclear energy. Why do you think there continues to be resistance?
Marv Fertel: Well, you know, I'm not sure there is that much resistance. Our polling, which people may challenge, shows very good support on the order of 75 percent or more for going forward with new plants and for license renewal. Our support on the Hill, I can tell you, is extremely good in talking with members of both the House and Senate, Republicans and Democrats, and the administration is very supportive.
Monica Trauzzi: So why haven't we seen a new nuclear plant built in 30 some odd years?
Marv Fertel: Well, we actually have seen a lot built. We built 50 during the '80s, OK? We haven't ordered because we had a bunch in the pipeline. We're building two right now. One in Georgia, Southern Company, and one in South Carolina, SCANA. But it's a business decision. It's a decision on is there a need for electricity and is this the best decision for my company?
Monica Trauzzi: So, how would you compare the Obama administration's handling of nuclear to the findings in this report?
Marv Fertel: I think the Obama administration has been, I'm not sure they're going one for one with the MIT report, but they're clearly advocating more loan guarantees. They're advocating more deployment in nuclear. We think they should have continued licensing on Yucca Mountain, which they haven't, but they are looking very aggressively at other technologies and approaches through the blue ribbon commission for closing the fuel cycle or at least for using used fuel in a more productive way. So, I think it's not a one-for-one match, but I think that they're going down the same road on a whole bunch of fronts that the MIT report says.
Monica Trauzzi: OK, so you mentioned Yucca, waste disposal. What does the report specifically say about how it should be handled in terms of how many locations we have throughout the country for waste?
Marv Fertel: I think there's a number of things in the MIT report that we would agree with. One, it calls for looking at centralized storage for a period of time. I don't necessarily agree the period of time they talk about is correct, but centralized storage makes sense. You can manage used nuclear fuel for a long time safely in storage. During that period what they're calling for is to look in R&D for either recycling or other technologies that can help you dispose of the used fuel in a more and better way and get more energy out of it. And, again, we would agree with that. And the third thing that they call for that seems to make a lot of sense to us is probably the formation of a new government corporation to actually manage the overall used nuclear fuel program, rather than leave it in a department that has a whole bunch of other responsibilities. And we would agree with that too.
Monica Trauzzi: Okay, we're going to end right there. Thank you for coming on the show.
Marv Fertel: Thank you very much, Monica.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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