Japanese Crisis Only The Latest Hurdle For U.S. Nuclear Industry

Japanese Crisis Only The Latest Hurdle For U.S. Nuclear Industry

NEW YORK -- Even before a tsunami ravaged Japan and presented the world with a potentially calamitous nuclear meltdown, a much-touted expansion of the U.S. nuclear energy industry was already a tough sell with the American public, not to mention the lawmakers in charge of the national pursestrings.

Nuclear reactors are enormously expensive. Unlike Japan, the United States has a trove of other energy resources to draw on -- not least, huge, newly-discovered reserves of natural gas -- limiting the urgency to invest in alternative sources such as nuclear power.

Now, in the wake of an unfolding nuclear crisis in Japan, those championing aggressive construction of nuclear facilities face an immeasurably more difficult task. After a weekend spent absorbing the prospect of full-blown nuclear catastrophe in Japan, perhaps the world's most sophisticated engineering power, Americans appear far less inclined to assume such risks on their own shores, experts say.

"There's no question in my mind that the situation in Japan will delay any major activities in the United States," said Forrest Remick, a former member of the U.S. Nuclear Regulatory Commission and a professor emeritus of nuclear engineering at Pennsylvania State University.

Although nuclear energy has the backing of powerful politicians in Washington, including President Barack Obama, its value as a clean energy alternative has long been haunted by the specter of past accidents -- Three Mile Island in 1979 and Chernobyl in 1986 -- and the vexing questions surrounding disposal of nuclear waste.

But recent times seemed to be placing the industry in a different light. A swelling U.S. trade deficit combined with fears that some oil-producing states nurture anti-American terrorist groups has fueled interest in alternatives to imported petroleum. Concerns about climate change have intensified the search for cleaner sources of energy. In the past decade, those two forces have helped the nuclear industry transcend its association with past disasters, sowing hopes for a nuclear renaissance.

But the scenes from Japan now dominating the media have dealt a considerable blow to that scenario, underscoring the dangers attendant to nuclear power.

"Having a nuclear reactor is bit like having a trained elephant," said Ellen Vancko, the nuclear energy and climate change project manager at the Union of Concerned Scientists, an environmental research group. "When the elephant is trained and well-behaved and does all the tricks, there most likely isn't going to be a problem. But sometimes elephants have a mind of their own, and nuclear power is particularly unique, in that reactors have a life of their own. When it gets out of control, problems occur."

As stock markets opened Monday morning, companies tied to the nuclear industry took an early hit. General Electric, which has a partnership with the Japanese firm Hitachi to design new reactors, slid 2.1 percent to start the day and has continued to fall. The company also designed one of the reactors at the Fukushima Daiichi plant that suffered an explosion Saturday.

Uranium companies saw the sharpest declines, with Denison Mines Corp. plummeting 27 percent and Uranium Energy Corp. falling 22 percent.

Some experts suggested the situation in Japan, while alarming, should not be used as an argument against expanded nuclear power in the United States, because of differences in geography -- Japan is more vulnerable to major earthquakes and tsunamis.

"Unfortunately, we have a habit of not putting things into perspective," said Remick, the former member of the U.S. Nuclear Regulatory Commission. "So I think it will result in an overreaction."

But even those inclined toward that view said the Japan tragedy should compel a swift reassessment of the risks.

"A review on reactors in earthquake-prone regions is certainly called for," said Burton Richter, a Nobel Laureate in Physics and professor emeritus at Stanford University. "If I was doing it, I wouldn't approve any new ones in earthquake-prone regions until this is fully understood."

Currently there are two nuclear power plants in earthquake-prone California, which the industry says have undergone extensive seismic analysis to withstand magnitudes greater than 7.0, along with all other nuclear reactors in the country.

The Japan events present a quandary to President Obama, who has been a vocal proponent of expanding nuclear energy. On Sunday, a White House spokesman staked out the middle ground, acknowledging safety concerns while also reiterating the president's support for nuclear.

"Meeting our energy needs means relying on a diverse set of energy resources that includes renewables like wind and solar, natural gas, clean coal and nuclear power," the spokesman said, adding that the administration is committed to learning from what happened in Japan and "ensuring that nuclear energy is produced safely and responsibly here in the U.S."

Nuclear power is often viewed as a bargaining chip in the political debate over climate change. Nuclear energy production does not directly contribute to carbon dioxide emissions, as do coal-fired power plants, but environmental groups on the left have traditionally opposed or been lukewarm toward nuclear because of the concerns with the waste it produces.

"Throwing a bone to nuclear is not entirely unlike offshore drilling," said Michael Levi, the director of the Program on Energy Security and Climate Change at the Council on Foreign Relations. "Middle-of-the-road Democrats are increasingly seeing support for nuclear as one concession they can make to the other side in trying to find compromise, and this will make it harder for them to do that. That's unquestionable."

As an entrenched part of the utility industry for decades, nuclear has traditionally been embraced by those on the right. Obama has given the nod to nuclear energy several times in recent months.

In his State of the Union speech, he mentioned the concept of a "clean energy standard," which, as opposed to a "renewable energy standard," would put nuclear energy alongside the push for renewables such as wind and solar. And last month he repeated a budget request, also made last year but not approved by Congress, for $36 billion in loan guarantees for new nuclear reactors.

Immediate political fallout from the events in Japan is still difficult to evaluate, with a variety of sometimes-contradictory reactions capturing attention.

On Sunday's political talk shows, both Democratic Sen. Charles Schumer (N.Y.) and Senate Majority Leader Mitch McConnell (R-Ky.) said the situation in Japan did not change their support for nuclear energy.

"I'm still willing to look at nuclear," Schumer said. "As I have always said, it has to be done safely and carefully."

But Independent Connecticut Sen. Joe Lieberman, historically a supporter of nuclear energy as an option for dealing with climate change, suggested the need for a pause.

"I think we've got to kind of quietly and quickly put the brakes on until we can absorb what has happened in Japan as a result of the earthquake and the tsunami and then see what more, if anything, we can demand of the new power plants that are coming online," Lieberman said on CBS' "Face the Nation."

Rep. Edward Markey (D-Mass.) has raised numerous concerns on the nuclear front since the tsunami, asking the Nuclear Regulatory Commission to halt approval of a new design for a new nuclear reactor and calling for safety reviews of 31 reactors in the United States that are designed like the stricken ones in Japan.

Even before the crisis in Japan, the nuclear industry in the United States had been facing decades of stagnation.

Although no one was injured in Three Mile Island, the 1979 disaster in Pennsylvania cast a pall over the industry that led to a significant slowdown in expansion.

No new nuclear power plants have been built in the United States in three decades, although nuclear energy production has increased as existing plants have become more efficient. The most recent reactor was built 15 years ago.

Nonetheless, the United States remains the leading producer of nuclear energy worldwide, with a fleet of 104 nuclear reactors spread across 31 states -- most of them built in the 1970s and '80s. The industry has generally been the source of about one-fifth of the nation's power supply.

Before the economic recession, incentives for nuclear power in the Bush administration prompted a flurry of applications to build more than 20 new reactors and 14 new nuclear power plants. The current near-term expectation is for four new reactors at sites in South Carolina and Georgia.

But the financing challenges proved immense, with the estimated costs of the 14 plants coming in at $188 billion. Regulatory approvals required three to four years of government review. And the recession put a damper on rising demand for electricity.

Cost overruns have often plagued past projects, and the financial risk is often so great that without government loan guarantees, an entire company could be taken down in the event of failure.

The discoveries of vast new deposits of homegrown natural gas in areas like the Marcellus Shale in Pennsylvania and Northeast made the arithmetic difficult for nuclear investment. And the lack of any comprehensive climate bill, with some form of tax on carbon, has dampened the urgency to invest in large-scale nuclear projects.

As recently as last week, the chief executive of Exelon Corp., a utility company based in Illinois that is the largest owner of nuclear plants in the United States, cited much less expensive natural gas as the primary driver of clean energy in the years to come.

"Some in Congress talk about doubling or tripling the size of the existing nuclear fleet to face our energy challenges," Exelon CEO John Rowe said in a speech last Tuesday at the American Enterprise Institute. "Since these plants are not currently economic at today's low natural gas prices, the government would have to spend $300 billion to 600 billion to get these plants built."

Tom Kauffman, a spokesman for the Nuclear Energy Institute, a lobbying group representing the industry, conceded that public opinion in the wake of Japan could alter public opinions on nuclear energy.

"There's a multitude of variables that are going to impact the situation for new builds, and this is one of those variables that will affect people's views," he said. "But new nuclear power plants will be built. We expected it to be slow, and to be measured. Time will tell."

Unlike the United States, which has historically had vast deposits of coal, oil and natural gas to fuel its own electricity, Japan in recent decades has placed much more of an emphasis on nuclear power because the small island country has fewer domestic natural resources, making its energy supply more vulnerable to fluctuations in import prices.

Japan has actively pursued continuous development of nuclear reactors in recent years, and is the third-largest producer of nuclear energy in the world. The country sources about a third of its energy from nuclear, and aimed to grow it more over the next decade.

Several U.S. companies involved in building nuclear reactors, including Westinghouse and GE, have partnered with Japanese companies to develop new technologies.

"They're extremely developed, they're extremely careful and cautious, and my guess on what you'll see coming out of this is there's a lot of stuff they did right in terms of their safety procedures," said Sarah Ladislaw, a senior fellow on energy and national security at the Center for Strategic and International Studies.

"All of that being said," she added, "this just shows, even with all that good planning, what is possible when you're dealing with these kind of facilities."

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