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Copyright 2000 Federal News Service, Inc.  
Federal News Service

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March 30, 2000, Thursday


LENGTH: 4179 words


 On behalf of the Nuclear Energy Institute (NEI), I would like to thank you, Chairman Murkowski, Ranking Member Bingaman and the members of this Committee for inviting NEI to testify on the value of the more than 100 nuclear power plants that provide our nation with vital energy security and environmental protection benefits.

The Nuclear Energy Institute (NEI) coordinates public policy for the U.S. nuclear energy industry. We represent 270 members with a broad spectrum of interests. In addition to representing every U.S. utility that operates a nuclear power plant, NEI's membership includes nuclear fuel cycle companies, suppliers, engineering and consulting firms, national research laboratories, manufacturers of radiopharmaceuticals, universities, labor unions and law firms.

The bills under discussion todayS. 882, the Energy and Climate Policy Act of 1999 and S. 1776, the Climate Change Energy Policy Response Act--reinforce two unassailable precepts to effective management of potential climate change: first, addressing greenhouse gas emissions demands informed, science-based energy policymaking; and second, solutions will require long-term, cost-effective technologies deployed on a global basis. On both counts, nuclear energy will continue to play a successful and prominent role. THE LESSONS OF HISTORY

As Shakespeare has told us, "Past is Prologue." As early as the 1960s, nuclear energy's ability to avoid emissions that pollute the air was well understood. When energy security and environmental policies converged in the 1970s, increased use of nuclear energy became an integral element in energy policy decisions designed not only to achieve energy security and economic benefits, but to protect air quality as well.At the time of the first oil embargo in 1973, approximately 20 percent of United States electricity supply came from oil-fired power plants. In some parts of the nation--the Northeast, for example--the percentage of oil-fired electric generation was considerably higher. Serious as it was, however, the 1973 embargo was only the first of two massive shocks to .America's energy industry during the 1970s. The second came during the unusually cold winter of 1976-77. Acute shortages of natural gas and the legacy of federal price controls on interstate gas transmission forced widespread shutdowns of schools and factories for weeks throughout the Midwest. Obtaining natural gas for power generation--at the time, the source of 18 percent of U.S. electricity supply--was impossible.

The years proceeding the embargo era also saw the development of ambitious regulatory efforts to improve the nation's air quality. Concern over the environment compelled energy choices that protected our air quality while meeting increasing demands for electricity and economic growth. To achieve both these potentially divergent goals, the nation turned to nuclear energy.

The Clean Air Act is the principal federal statute addressing air quality and manmade emissions by setting concentration levels for various pollutants allowable in the ambient air. Regulations then prescribe various limitations on emissions required to meet these standards. Pollutants controlled by the Clean Air Act include sulfur dioxide (SO2), ozone (and its precursor nitrogen oxide, or NOx) and particulate matter (PM). Much of the burden for reducing concentrations of these pollutants has been focused on the electric utility industry because of the ease and cost effectiveness of controlling large, stationary sources compared to smaller, mobile sources. However, reducing emissions was not the only method employed to achieve compliance with increasingly stringent Clean Air Act limitations. Avoiding the emissions in the first place while increasing electricity output was also critical.Although some view air pollution compliance regimes as affecting only emitting sources, they are actually being enforced against the total electric supply system. Emission caps and permits under ambient air quality standards represent a finite level of pollution permitted for a range of industrial activities, including electricity production. These restrictions remain static even if the total amount of electricity needed to satisfy demand in a specific region increases. States or regions utilizing emission-free electricity sources, find it easier to simultaneously meet both government imposed emissions limitations and growing consumer demand for energy. The increased use of nuclear energy beginning in the late 1960's and early 1970's provided this additional compliance tool.

When comprehensive Clean Air Act limits were first implemented in the early 1970s, overall generation from emission-free sources was about 18 percent of the total electricity produced, most of it coming from hydroelectricity. In 1973, just five percent of the U.S. electricity supply came from nuclear power plants. In the subsequent decades, 89 new nuclear reactors began operating, more than tripling the amount of electricity Americans receive from nuclear energy. Today, 103 nuclear reactors supply approximately 20 percent of annual U.S. electricity, provide a hedge against volatile fuel prices and other supply disruptions and are the primary source of electricity in many of the states that produce or use nuclear power. In total, non-emitting generation (nuclear and hydroelectric) comprises 31 percent of total domestic electricity production.

Nuclear energy's cumulative avoidance of emissions since the 1973 oil embargo is enormous, as illustrated by statistics on only two pollutants. Between 1973 and 1998, the use of nuclear energy avoided the emission of 87.2 million tons of SO2 and more than 40 million tons of nitrogen oxides (NOx) at the same time it helped states satisfy increasing demand for electricity. In 1998, SO2 emissions would have been 5.1 million tons higher; emissions of NOx 2.4 million tons higher had fossil generation been used instead of nuclear energy.When the United States responded to the oil and gas shocks of the 1970s by rebalancing its energy supply portfolio, it reduced dependence on oil- fired power plants (from approximately 20 percent of supply in 1973 to just three percent today) and increased reliance on coal and nuclear energy. Nuclear power plants also became a major compliance element for Clean Air Act requirements in states where they operate. Attainment designations permit programs, and other compliance actions under State Implementation Plans, implicitly rely on the continued availability of existing non-emitting electricity. Nuclear energy, by avoiding additional emissions as electricity output grew, acted as a silent--yet vital--partner in Clean Air Act compliance.


Lessons learned about the role of avoidance technologies in meeting Clean Air Act requirements during the last 20 years are prologue to the long-term, technology based solutions that will also be needed to address man-made greenhouse gases like carbon dioxide or methane. But unique factors affecting the control of these gases make avoidance technologies ever more critical carbon is the energy source in the fuel, not a byproduct material that can be eliminated through end-of- pipe controls or low content fuels. So unlike conventional pollution control programs, avoidance and sequestration technology rather than emission control programs will be the primary methods of addressing carbon. S. 882 and S. 1776 are the first major legislative initiatives in the climate change debate to recognize this significant fact and promote responsive policy measures.

As with pollutants controlled under the Clean Air Act, climate change policies generally focus on sources that emit greenhouse gases or on technologies that reduce them. When the 1990 greenhouse gas emission baseline was calculated for the United States, 20 percent of the electricity was being supplied by nuclearplants, avoiding the release of over 141 million metric tons of emissions had carbon-based fuels been used instead. Today, U.S. nuclear plants avoid a total of 165 million metric tons of carbon annually; cumulatively, nuclear energy has avoided more than two billion metric tons of U.S. carbon emissions since 1973. From a compliance perspective, this contribution is essential. Based on current emission levels, the United States would be required to reduce greenhouse gas emissions by 162 million tons to achieve its original voluntary commitment to reach the 1990 baseline under the United Nations Framework Convention on Climate Change (UNFCCC). Without the avoided tons from nuclear energy, that commitment requirement would double to over 325 million tons.

The existing treaty commitment prompted the Clinton administration to call for voluntary commitments by industry to reduce carbon emissions. In response, various industries, including electricity providers, have undertaken to voluntarily mitigate their greenhouse gas emissions in partnership with the Department of Energy. In 1998, nuclear power plants provided almost one-half of the voluntary carbon reductions (the largest component) achieved by U.S. industry under the voluntary reporting program established in Section 1605b of the Energy Policy Act.

These voluntary avoidances were achieved primarily through increased efficiency and plant uprates. Since 1990, three new nuclear power plants were added to the power grid; Watts Bar in Tennessee and Commanche Peak Units 1 & 2 in North Texas. In addition, the equivalent of sixteen 1,000-megawatt nuclear power plants have been added to the grid through dramatic increases in electricity output. These "virtual" new power plants have allowed the United States to avoid millions of additional tons of harmful air emissions, while also being one of the most successful energy efficiency programs of the last decade.

But not all of this progress is being captured effectively in the current 1605b program. NEI supports the provisions of S. 882 that improve the NationalInventory and Voluntary Reporting provisions in Section 1605b. Specifically, the bill recognizes that a ton avoided is as valuable as a ton reduced, and ensures that avoided greenhouse gas emissions will be equally registered and recognized in Department of Energy programs. DOE should develop standardized benchmark measurements for calculating emissions avoided. These could be based on emission levels of likely substitute generation.

Right now, most companies calculate avoidances through internal offsets because they also own emitting plants. With a benchmark based a standardized figure, such as the emission rate in the power pool, companies that own and operate primarily avoidance technologies can still participate in the program. This need for standardized benchmarking holds true for all non-emitting technologies such as hydro and renewables--production increases at those facilities should not have to rely on offsets against co-owned emitting generation to be counted and recognized. These accounting improvements will help achieve a goal of your bills--use accurate and transparent government sponsored reporting to identify the technologies that are managing greenhouse gas emissions so consumers and the market can respond.


The current fleet of nuclear energy plants has done yeoman's duty in the overlapping demands of energy and environmental policy requirements. Nuclear power plants have reduced America's dependence on foreign, oil, safely and reliably provided 20 percent of the country's electricity, successfully managed our used fuel and avoided emitting billions of tons of pollutants into the air. And, our industry provides the major contribution to carbon risk management.

Population growth and economic expansion are expected to increase U.S. electricity demand by 50 to 75 percent over the next ten years. To meet more stringent Clean Air Act requirements and effectively manage carbon risk, the United States mustincrease its percentage of available non-emitting sources of electricity, such as nuclear energy, solar, hydro and wind, above the current baseline of 30 percent. Of these technologies, nuclear energy is the only expandable, large-scale electricity source that avoids emissions and can meet the baseload energy demands of a growing, modern economy. The current assets have only a finite potential remaining to enhance these services through up-rates, improved efficiency, and license renewals for an additional 20 years. The industry and the country must begin planning now to build new nuclear plants.

Continued research and development will be key to maintaining existing capacity and bringing on new plants to meet our future environmental challenges. In comparison to other electricity generating sources, nuclear energy is unequivocally the most economical federal research and development investment. In 1998, the federal government spent one penny on nuclear energy R&D for every kilowatt-hour of electricity generated at nuclear power plants. By comparison, the cost of natural gas R&D per kilowatt-hour generated, was 36 cents; for solar photovoltaics, $21,566; and for wind energy $10,700. Today's high-tech industries either adjust to rapidly changing circumstances or they fall behind their competitors. Obtaining a fair share of our nation's R&D funding is essential for the expanded utilization of our nation's clean non-emitting nuclear energy.

Both S. 882 and S. 1776 recognize that the pace of research and development of advanced energy technologies that can reduce greenhouse gases is too slow and that most programs are under-funded. NEI believes that adequate funding of current programs coupled with the additional funding provided in these bills, will go a long way to ensuring that the United States maintains its leadership around the world in avoidance technologies capable of cutting back greenhouse gases emission levels while supporting sustainable development.The President's Committee of Advisors on Science and Technology (PCAST) shares this view. Their recent report acknowledge the importance of nuclear energy to avoiding carbon emissions and suggests that the Administration should recognize. nuclear energy as an energy option that could contribute substantially to meeting national and international goals.

Programs such as the Nuclear Energy Research Initiative (NERI), and Nuclear Energy Plant Optimization (NEPO) should be funded at levels double the Administration's 2001 budget request. These programs are designed to produce generic improvements that reduce capital and operating cost for both current and available advanced designs. Although DOE's Energy Information Agency (EIA) continues to grossly overstate the cost of advanced nuclear generation at $2,390 per kilowatt of capacity, detailed engineering estimates put the figure at $1,500.00 and dropping. Our nation's energy and security needs and environmental goals demand that we continue programs that will make nuclear energy technology available today and for future generations. Funding also is important for the Energy Department's University Support Program, that helps maintain research reactors and enhances educational programs in nuclear science and technology at colleges and universities.

NEI also supports funding for current and future waste management technologies important to the nuclear industry. Foremost among these is the federal repository program. Keeping this program on track towards a presidential decision in 2001 on whether or not to proceed with construction of Yucca Mountain is the centerpiece of our national policy for used nuclear fuel disposal. The nuclear industry is encouraged by the impressive scientific foundation for decision-making that has been established and is actively supporting full program funding to ensure that approaching program milestones can be met. Along with repository siting, improved future waste management technologies should be pursued to maximize the value of our disposal capacity. By minimizing waste created and the amounts offuel used, technologies such as transmutation (the conversion/accelerated decay of used nuclear fuel into less toxic materials) and the Fast Flux Test Facility (FFTF) help improve energy efficiency. These technologies hold promise to help future generations effectively manage and isolate used fuel in geologic repositories.

S. 882 would provide R&D funding to develop new technologies or improve existing technologies, including development of advanced nuclear generation designs, that reduce or avoid greenhouse gas emissions and improve energy efficiency. S. 1776 includes provisions for a Department of Energy review of energy technology research and development. This includes an assessment of the market status of each energy technology, of the potential barriers to deployment of the technology, and of the length of time it will take for commercial use in a manner that will result in meaningful emissions reductions.

NEI supports both efforts to ensure that largescale, non-emitting generation is further developed and expanded to manage future risks from carbon emissions.

In what may be viewed as a response to the energy policy initiatives in this committee's legislation, the Clinton Administration is collaborating with more than a dozen nations to lay the foundation for an international research and development program for globally deployable advanced reactor designs. Known as the International Nuclear Energy Research Initiative (NERI/I), this new nuclear R&D initiative, funded jointly by all participating nations to promote bilateral and multilateral research, is focused on advanced technologies to improve safe and efficient nuclear power plant operation and waste management. NERI is strongly supported by the nuclear industry.

Increased international deployment of nuclear energy will be a key element of the global response to climate change. The Byrd-Hagel Resolution, supported unanimously in the Senate, identified developing country participation in greenhouse gas emission abatement as a minimum condition to U.S. acceptance ofbinding emission limitations under the Kyoto Protocol. Large-scale, non-emitting technology like nuclear energy will be undeniably crucial for any meaningful participation in greenhouse gas emission abatement in advanced developing countries like China. For other developing economies that are not yet producing significant levels of greenhouse gases due to lack of economic growth, emission avoidance will be the major alternative available to provide meaningful participation. Research and development that ensures the United States retains its premier place in nuclear technology production is not only a domestic compliance requirement, but also a crucial international need in attaining a global solution to the climate issue.


The Administration's meager R&D funding requests for nuclear energy point to a disconnect between its rhetorical support for action to address climate change and its lack of active support for the primary technology capable of addressing the issue without crippling the nation's electrical energy supply.

With more than 2,200 reactor years of operating experience, the United States has the largest commercial nuclear power industry in the world.

Other nations that rely on nuclear energy to meet both energy and clean air goals--notably France, Japan and South Korea--have achieved self sufficiency in nuclear power because of technology transfers and partnerships with U.S. nuclear power plant suppliers. The successful industry/government research and development program that led to the design and certification by the Nuclear Regulatory Commission of three advanced light-water reactor designs is a model of successful R&D in the nuclear energy industry. Fortunately, some of these advanced reactors are being built in Asian markets to meet new electricity demand and as part of their commitments to reduce carbon and other emissions. Unfortunately, the American taxpayers that paid for their design are not similarly benefiting from their use domestically, yet many of our international economic competitors are.

Fortunately, during the 1990s, there was a steady improvement in nuclear power plant safety and production, with the average capacity factor for all 103 nuclear power reactors reaching 86.8 percent in 1999--a 9.2 percent increase over 1998. Unfortunately, this efficiency improvement will top out, with no baseload, nonemitting generation increases in the works to enhance our avoidance capability.

Fortunately, owners of the vast majority of nuclear power plants are expected to extend the operating licenses at existing plants for an additional 20 years, a move that will preserve the existing air quality compliance contribution from these facilities. Just a week ago, in a landmark decision, the NRC approved relicensing for two reactor units at Calvert Cliff's plant in Maryland. Twenty-eight other units have either begun the renewal process or announced their intention to do so. Unfortunately, future air quality compliance requirements, including carbon risk management, will need more than just continued operation of existing facilities to succeed.

Our growing economy in the digital age will compel more--not less electricity use in the future. At the same time, many non-emitting sources will find it difficult to increase their contribution. Hydropower generates about 10 percent of U.S. electricity, but the Energy Information Administration projects an increase of less than 1,000 megawatts of hydropower by 2020. There may be significant opportunities to expand other non-emitting renewables, such as solar and wind, but those sources require dwindling land resources and may not be co-located with demand. Therefore, additional nuclear energy remains the primary emission-free option to power economic growth.In recent years, state and federal initiatives have launched a more competitive electricity industry. As companies prepare to do business in this new competitive electricity market, the unbundling of their products and services will require a reexamination of costs and allocation of value to activities that previously were not valued. The importance of nuclear energy to clean air and carbon abatement is one of these previously unvalued services for which companies must receive economic benefit to prevent competitive disadvantages and position nuclear power plants to continue their crucial environmental contribution. Any plausible strategy to mitigate greenhouse gas emissions will require an expanded contribution of nuclear energy in the United States and around the world.

Nuclear energy remains a cost competitive alternative in the emerging deregulated electricity market. Free-market competition demands that the "playing field be level" for all electric utility companies. In addition to ensuring future R&D funding for nuclear energy, Congress also must pave the way for sensible, market-based business decisions that will preserve and extend the operation of today's nuclear power plants. These include a streamlined, objective NRC licensing process, the elimination of unnecessary requirements that may prevent effective ownership transactions in a competitive market, and the implementation of the nation's program for safe, centralized disposal of used nuclear fuel.

And most importantly, public policy incentives to encourage carbon abatement or avoidance technologies must be equally applied, be they production and/or investment tax credits to address climate change, access to market-based pollution control mechanisms, or access to favorable financing and other funding mechanisms. Equal treatment in these market and incentive programs will allow new nuclear plants to effectively compete with alternative forms of generation, ensuring that nuclear energy's unique ability to provide energy security and environmental protection remains available to the American economy and American way of life.


Next month, America will celebrate the 30th anniversary of Earth Day, and the significant environmental strides we have made since 1971. One of the most prominent environmental protection advancements in the industrial sector during this time has been the increased reliance on nuclear energy to power our fastgrowing digital economy. Congress should not lose sight of this important clean air and greenhouse gas compliance tool, and policymakers should employ a strategy that maximizes nuclear energy's potential to improve air quality. Research and development funding, streamlined business regulation, waste management program implementation, and equal access to incentives will ensure that nuclear energy will continue to help meet our nation's intertwined public policy goals regarding energy production and environmental protection.


LOAD-DATE: April 1, 2000

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