Energy Policy:

Energy Secretary Bodman outlines plans on Yucca, nuclear waste and oil security

The Energy Department recently announced the Global Nuclear Energy Partnership (GNEP), an ambitious, international plan to recycle spent nuclear fuel. But lawmakers on Capitol Hill are raising questions about the cost and feasibility of the GNEP program, and what it could mean for the long-delayed Yucca Mountain repository. During today's OnPoint, Energy Secretary Samuel Bodman explains his thinking on GNEP, Yucca Mountain legislation and the interim storage of nuclear waste. Plus, Bodman addresses high oil prices and President Bush's pledge to lessen the U.S. "addiction" to foreign oil.

Transcript

Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining us today is Sam Bodman, the secretary of the Energy Department. Also with us is senior reporter Mary O'Driscoll. Mr. Secretary, thanks a lot for being here today. We appreciate it.

Samuel Bodman: I'm happy to be here, Brian.

Brian Stempeck: I want to start off, you recently announced, from the department, the Global Nuclear Energy Partnership.

Samuel Bodman: Right.

Brian Stempeck: Basically a broad plan, a very ambitious goal, very expensive long-term project.

Samuel Bodman: Right.

Brian Stempeck: Give us a sense on how this came about.

Samuel Bodman: Oh gosh, we've been focusing on the whole question of management of spent fuel really since I got to the department about a year ago. And I asked our deputy, Clay Sell, to look into the matter. He'd really specialized in nuclear matters during part of his prior career. And so we went to work on it. I had sort of the senior oversight of it, but the real work was done by Clay and his colleagues. And they developed an approach that we think makes a lot of sense. We presented it to the advisers to the president, then to the president and got his sign off on it. So we're quite enthused about it.

Mary O'Driscoll: One of the major complaints that we're hearing about this very ambitious program is that you are making some real significant changes in U.S. policy on reprocessing waste. And then managing the reprocessing and, as you call it, the recycling of waste.

Samuel Bodman: Right.

Mary O'Driscoll: Just through an annual budget and appropriations process and not through any kind of large scale debate or discussion about the change in approach on this kind of issue on Capitol Hill. How do you respond to that?

Samuel Bodman: Well, I think we're going to get plenty of response and debate on Capitol Hill about this matter; at least it would appear that that would be the case. GNEP is intended to recycle spent fuel and at its core we have a situation where we have over a hundred commercial nuclear reactors in this country. They've been accumulating spent fuel. Our department has the responsibility for taking title to that spent fuel. And we have been working on a program for the ultimate disposition of the waste in Yucca Mountain. That's sort of one path. The other path is what we call GNEP, the Global Nuclear Energy Partnership, which we believe has the potential -- and we're still saying potential because we don't know -- but it has the potential of recycling that waste. When you have spent fuel, Mary, 90 percent of the energy that was in there when it was brand new fuel is still there. It's in a different chemical form and it needs to be removed and recycled. The problem that we have with other means of recycle is that one gets pure plutonium, which can be used by people who wish to do harm to others, terrorists and the like. So this technology enables us, we believe, to recover plutonium with a mixture of other transuranic elements, which we think will prevent the use by terrorists for proliferation purposes.

Mary O'Driscoll: OK. I wanted to ask, to get to that in a minute, but I wanted to ask, you're talking about two tracks here. You've got the Yucca Mountain track and you have the GNEP track, but you're saying that, you have said in the past that they are linked together. I wanted to know how closely they're linked together. You told a group of reporters last week, for instance, that you were not going to pursue any kind of interim storage until you had a license, interim storage waste until you had a license for Yucca Mountain at hand. But doesn't that kind of create a problem where you've got, you don't know what you're going to be doing with the waste because both Yucca Mountain and this Global Nuclear Energy Partnership are pretty long-term programs that aren't going to really show any development for a while?

Samuel Bodman: Well, Yucca Mountain is a longer term program than we'd like to have it, sure. But it is not nearly as long term as GNEP is going to be. And so we're going to have to deal with -- whether GNEP goes forward or not, we have to have Yucca Mountain. And we need to have a final repository. If we are only successful in moving forward with Yucca Mountain and we're not successful with GNEP, now which it remains to be a question that perhaps we can talk about later, if that's the case, we will proceed with Yucca Mountain. And proceed to store the fuel there as we now plan to do. We had, we will be filing legislation related to Yucca Mountain. You alluded to that. And the primary focus of the legislation will be first land withholding and secondly, a financial or fiscal reform of the program in order for us to fund it in a more effective way. I think I got a little bit ahead of myself the other day when I said that there will not be inclusion of any discussion of interim storage. I'm still unclear about that, frankly, and it's still a matter that's still being debated. So I'd rather not go further with it until we finish the internal debate within the administration.

Brian Stempeck: There seems to be a growing sense from some camps that all the attention being paid towards GNEP is making it a higher priority than Yucca Mountain. Almost in a sense the department is turning its back on Yucca Mountain. Do you think that's an accurate assessment at all?

Samuel Bodman: Oh no. We're very committed to Yucca Mountain. We have to be for the reasons that I mentioned. Yucca Mountain is the law of the land. It's been passed by Congress, signed by the president. It's been reviewed by Congress, reviewed by the president. So this is something that we are committed to do, among other reasons, as I said, it's the law of the land. And so we will pursue it. We are committed to looking at GNEP. The goal here, over the next three years, is to do enough work that we can narrow the cost bands. And that we can make a determination of, if you will, on a go or no go basis, as to whether we should go forward with the global nuclear partnership. That's the issue.

Mary O'Driscoll: OK, and you're also talking about $3 to $6 billion before you figure out whether to make that final, that go or no go decision. So that's an awful lot of money to be spending on something like that, isn't it?

Samuel Bodman: No. If I may, the cost over the next three years, it's about $250 million that we have asked for '07. It'll be, I think, it's $700 million for '08. And, oh like maybe $800 or $900 million for the next year. That effort will put us in a position, we believe, during '08 to make a decision. If we can't, we'll, we will do everything we can do while this administration is here. And bundle it all up and hand it to the next administration who comes in. But it's, we believe it makes great sense to pursue this. The $3 to $6 billion that you mentioned, that's the capital costs over a period of time for the three components --

Mary O'Driscoll: OK.

Samuel Bodman: -- of GNEP, which is the separation of the spent fuel and the culling out, if you will, of the transuranics that can be recycled, the development of a fast reactor, which can burn the transuranic materials and the third part, which is the fuel device that will, or manufacture of fuel elements from the transuranic that are removed so that they can be put into the nuclear reactor.

Mary O'Driscoll: OK, one question, I wanted to kind of track back to Yucca Mountain. Senator Domenici has been telling reporters, actually today, that he does not see any Yucca Mountain legislation coming out this year. You've talked about the need to reform the funding for Yucca Mountain.

Samuel Bodman: Right.

Mary O'Driscoll: Getting better access to the nuclear waste trust fund.

Samuel Bodman: Right.

Mary O'Driscoll: And a need to jumpstart the program and get things back on track.

Samuel Bodman: Right.

Mary O'Driscoll: And also the nuclear industry is very eager to be able to find some way to get the waste off their sites --

Samuel Bodman: Right.

Mary O'Driscoll: -- and into an interim site or some place, so that they don't have to keep storing it on there. Are you concerned that Senator Domenici is saying "not this year"? That it might have to be pushed off until next year?

Samuel Bodman: Senator Domenici is a much greater expert on the legislative calendar and procedures than I am and so I would be concerned, truly, if he mentions that. We hope to be able to deliver up soon, I would hope within the month period of time, the proposed legislation that has been signed off on by the administration. And we hope that we can get action on it this year. We'll see how that works out.

Mary O'Driscoll: OK.

Brian Stempeck: I want to switch subjects to the world oil markets. We recently had the president of OPEC on our program. He said the idea of $60 per barrel on oil is actually a fair price, a price he doesn't think is hurting the world economy. I wanted to see if you agree with the OPEC president's assessment of the world oil markets?

Samuel Bodman: Well, first I make it a policy, in this job in particular, but in general I would say not to forecast oil prices. You know, I think a fair price is something that both buyers and sellers find acceptable. I would say, in terms of our being the primary buyer or the largest buyer of oil in the world, $60 is a pretty high price, at least as far as we're concerned, as far as the president's concern. That's why we've made a number of proposals, the president has, in his State of the Union address and the subsequent budget announcement, budget proposal that we made to Congress to develop alternative forms of energy, that hopefully could lead to a reduction in the pressure on oil markets. So we're hopeful that we could see a reduction in prices below the $60 level, but I wouldn't say anything more than that. We're going to work hard to try to, to try to reduce that pressure. We have real issues, Brian, because we have, for the first time in my lifetime, we have, I'm seeing an inability of the suppliers to keep up with demand. And that's what's driven prices up into this $60 to $70 range, which is, I've seen attendant increases in gasoline costs that are really felt by American consumers. And so the president of OPEC is quite right that the economy seems to be holding up pretty well. But clearly the margin for error and slippage in the economy has been reduced by this head wind that we're facing. And so we're hopeful of reducing the price.

Mary O'Driscoll: I wanted to know, the president in his State of the Union address talk about reducing our dependence on foreign oil or oil from the Middle East.

Samuel Bodman: Right.

Mary O'Driscoll: Which then in your remarks afterwards was amended a little bit to, you know, that's not exactly what he was saying. What can you tell us is the real goal of the State of the Union address to getting off of foreign oil? I mean, what is the real goal here that you're looking at? Because it got a little muddy there in the discussions --

Samuel Bodman: Yeah.

Mary O'Driscoll: -- after the State of the Union.

Samuel Bodman: Yeah, I think the best way I would put it is that, would be to create enough alternative sources of motor fuels that we could relieve the pressure on our gasoline by, of order 5 million barrels a day and do that over the next 20 years. That's kind of how I think about it. And there are those who would attribute that to the Mideast. We, in fact, import oil from literally all over the world. And I think the president was trying to deliver a message, a goal, if you will. And the way I think of that goal is to reduce the consumption of oil by 5 million barrels a day. If you do that I think we'll see some real diminution of the pressure on oil. And the largest, or the best candidate to help accomplish that would be ethanol and the manufacture of ethanol from cellulose, which is part of the research program that the president put forth in that State of the Union.

Mary O'Driscoll: OK.

Brian Stempeck: One last question for you, Mr. Secretary, because we're running out of time. There's a lot of instability in the world oil markets right now, in Nigeria, in Saudi Arabia, the attempted attack there.

Samuel Bodman: Right.

Brian Stempeck: The situation on Iran with nuclear power and a potential shut down of oil exports there as well. In the event of a major supply crisis, what is the White House's plan of response? Beyond just going to the strategic reserves, what other plan does the White House have in the event of a major supply crisis?

Samuel Bodman: There is going to be clearly a response if any one of these events occurs; if we were to see a shutdown of Nigerian oil on world markets, if we were to see a shutdown, for whatever reason, of Iranian oil or of any major producer. There, I believe, would be a significant increase in price that would be attendant thereto. Increased prices would help reduce consumption. We would have available to us the strategic petroleum reserve, which is some 700 million barrels of oil, that would,l if it were 100 percent of the oil that we needed it would last us, I think, for two or three months. But given the fact that this would be a partial shutdown, I think we would get good support over the course of a year. So we would have some time to adjust, but there's no doubt we would be looking at higher prices. And I think that with higher prices we will see an even more aggressive stimulation of alternatives. And that would be the primary response. But the government does not have, I wish there were a magic bullet that I had as the secretary of Energy, or that the president had, that could impact this. But I don't believe there is one.

Brian Stempeck: All right, Secretary Bodman, we're out of time. Thanks so much for being here today.

Samuel Bodman: Happy to be here.

Brian Stempeck: I'm Brian Stempeck. This is OnPoint. Thanks for watching.

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