Thursday, December 13, 2012

Spent nuclear fuel disposal is not a "subsidy"

One thing that tends to raise my hackles without fail is when the inevitable game of "Name the Energy Subsidy!" comes up, somehow the issue of spent nuclear fuel disposition gets lumped in. Namely because spent fuel management is pretty much the opposite of what is typically thought of as a "subsidy."

To give some background - prior to 1982, the management of spent nuclear fuel was the sole province of nuclear generators. In this regard, coupled with the dual expectation that uranium resources would be relatively scarce and that fast "breeder" reactors would be used to create a virtually inexhaustible source of plutonium-based fuels from non-fissile U-238, the nuclear industry began private-sector arrangements toward chemical reprocessing and recovery of uranium and plutonium from spent fuel. (This still leaves the issue of locating a high-level waste repository for the remaining radioactive materials not recycled, however the mass and volume of said materials would be substantially reduced).

This continued until 1976, when President Ford issued a temporary moratorium on civilian reprocessing of spent fuel, followed by President Carter's (infamous) 1977 executive order permanently banning it, based on international nonproliferation concerns. (Reagan would later reverse this order, but the damage by that time had been done). This came just as plans were underway to by Allied General Nuclear Services open a relatively advanced reprocessing facility in Barnwell, South Carolina. Ford's (and subsequently Carter's) executive orders came after $500-700 million had already been committed to the Barnwell facility. It is one of many sobering lessons in the history of the nuclear industry how mercurial shifts in politics can bring about financial ruin when dealing with capital-intensive investments.

Fast-forward to 1982 - faced with a crisis in managing spent fuel brought about by the sudden halt in the domestic reprocessing industry, Congress passed the Nuclear Waste Policy Act of 1982. One of the main provisions of this act is that the federal government assumes the role of locating and constructing a suitable geologic repository for the permanent disposal of spent nuclear fuel. (The subsequent 1987 amendments, termed the "Screw Nevada" bill, amended the 1982 Act, short-circuiting the site selection process to designate Yucca Mountain as the sole candidate site, in part due perceived cost savings by narrowing down the site selection process.)

[As an aside, there are two excellent articles I can recommend to those more interested in a full treatment of the history of how we came to where we are today - the first, "The U.S. Spent Nuclear Fuel Policy: Road to Nowhere" by James M. Hylko and Dr. Robert Peltier, PE, which focuses more on the chronology of U.S. high-level waste management, and the second, a recent article in The New Atlantis, "Yucca Mountain: A Post-Mortem" by Adam White, which delves more into the politics of Yucca Mountain.]

bizzaro subsidies
However, a key facet of this bill which is often overlooked is the fact that the industry is required to pay for the cost of disposal; specifically, they pay a fee of 1 mil/kWh ($1/MWh) of nuclear electricity generated. In other words, the Nuclear Waste Policy Act is by its very nature a "polluter pays" arrangement (which really, is as it should be). To date, the Nuclear Waste Fund has accumulated nearly $30 billion (accounting for accumulated interest), while spending about $8 billion on site characterization for the Yucca Mountain Project. Only in Bizarro-world is a net payment of $22 billion from the utilities (and, by proxy, electricity consumers) to the federal government considered a "subsidy." One can quibble over whether the sum is sufficient - right now the fee generates about $750 million per year - but the fact is, no one's getting a free ride on that front.

So I was somewhat distressed to see the waste "subsidy" canard come up this discussion of energy subsides over at Scholars and Rogues. Specifically, a couple of quotes jumped out at me:
The continuing cost of such temporary storage, and the nearly $100 billion needed for “research, construction and operation of the geologic repository over a 150 year period” at Yucca Mountain, is a subsidy for the nuclear industry.
Fifty-five thousand tons of spent fuel rods, with no permanent home in sight, suggest nuclear subsidies will continue. But before Congress, presumably with White House “cooperation,” ends any energy subsidy, perhaps they’ll take time out from their internecine bickering to actually produce a coherent national energy policy that reflects all available technologies and considers the viability of energy technologies in light of fossil fuel emissions decimating the global climate.
spent fuel pool subsidyHuh? In what universe is an industry tasked with the responsibility of paying for its own waste disposal (particularly after the utter and repeated failure of the federal government to live up to its contractual obligations with utilities) a "subsidy?" Much of the rest of the article contains some risible arguments about subsidies to the nuclear industry (the value of the Price-Anderson Act is a contentious issue, namely because while it does act as a liability backstop for nuclear accidents, not a single dime has ever been paid out under the act; further is the cross-insurance requirement that literally guarantees "an accident anywhere is an accident everywhere"); however, given that I have a day job, I really didn't feel like debating every single claim. Needless to say though, the issue about calling waste management a "subsidy" struck me as profoundly incorrect.

So, in the spirit of Rod Adams, I left a comment, but I decided to share my comment here as well. (Forgive my long-windedness...)

I will leave the debate over some of the "subsidies" you bring up for others, but there is one major issue I must take issue with - you state the cost of spent nuclear fuel storage is a cost borne by taxpayers (i.e., a subsidy). This is most explicitly not true.

First, the cost of on-site storage is explicitly paid for by the generating utilities (i.e., under the law, this is their obligation) - not the federal government. Second, per the Nuclear Waste Policy Act, nuclear operators have been required to pay a fee of 1 mil/kWh of nuclear electricity generated (i.e., $1/MWh) to cover the costs of geologic disposal. (Per the NWPA, the federal government assumed the responsibility for permanent geologic disposal - in 1987, this was amended to select the Yucca Mountain site.)

In this time, the federal government has collected nearly $30 billion (including accumulated interest) from the utilities to cover the costs of Yucca, with about $8 billion being spent in site characterization. This most certainly does not look like a subsidy in the conventional sense.

One can argue whether the nuclear waste fee is sufficient to cover future costs - at present, the waste fund accumulates about $750 million per year, and will continue to do so as long as the reactor fleet operates. One could likewise argue with your characterization of "no permanent solution" - geologic disposal, by its very nature, is designed to be a "permanent" solution, namely by placing spent fuel in long-term isolation from humans and the environment. And this is not the only waste disposition strategy available - other strategies, like reprocessing to separate out shorter-lived fission products from still-useful actinides can both substantially reduce waste volume and the overall long-term radioactivity (i.e., the actinides, like Pu and other fissionable heavy metals, are the majority of the "long tail" of radioactivity in spent fuel - nearly all of the rest is gone after around 300 years). However, I would also point out that it was political decisions by the federal government in the 1970s that ended U.S. reprocessing efforts being undertaken by private industry - and thus left the federal government in the role of assuming responsibility for spent fuel disposal.

Overall though, the fact that the nuclear industry is responsible for paying its own way with regards to spent fuel disposal significantly undercuts the argument that this constitutes a "subsidy" in any form.

Meanwhile, what other energy sector requires that hazardous wastes be so methodically isolated from humankind until the end of time? Certainly coal ash has toxic heavy metals (lead and mercury) which never become less toxic, as do older generations of photovoltaic cells. I don't say this to diminish the challenge in responsibly managing nuclear waste, but rather to point out that this is a more universal problem - the only difference is that nuclear is the only sector actually held to account for this negative externality, including paying for the actual costs of permanent disposal.

Monday, December 3, 2012

Yucca Mountain is dead. Long live Yucca Mountain!

Last October, during the Republican primaries, I made a prediction regarding the future of Yucca Mountain - namely, don't bet on it. Not, of course, because it's particularly deficient on a technical level (it's not perfect, but you can judge the science that went into it for yourself.) But rather, the battle for Yucca mountain left its opponents holding the political high ground - particularly when even none of the Republican hopefuls would defend the site at risk of angering Nevada voters.

Yucca Mountain
Skip forward to today. Mitt Romney (last seen saying anything to the residents of Nevada that he think would lead to his election) has lost, meaning any possibility of a reversal of fortune for Yucca Mountain is pretty much dead in the water for the next four years (and likely now for all time).

Politically, not much has changed. Harry Reid still wields an inexplicable* position of influence over the Senate, and Obama still holds the presidency. Absent a surprise intervention by the Supreme Court on the Yucca licensing issue or a sudden change of heart by the residents of Nevada outside of Nye county (the potential host of Yucca Mountain, and generally more supportive overall of the project, namely because of the perceived benefits in terms of high-paying jobs and local investment which generally balance out perceived risks), it is unlikely anything much is going to happen.
(*One of my students in my Nuclear Waste Management class asked me how Harry Reid managed to ascend to such a position of influence from what is otherwise an inconsequential state - to which I had to answer, "I don't know, it is beyond the scope of this class." I really don't have a good answer for this one.)

As an aside, relevant to this discussion is an interview in this month's Nuclear News with Chairwoman Allison MacFarlane:
Q: Do you have technical concerns about a repository at Yucca Mountain, such as the rock form or the possibility of contact with an aquifer?

Let me explain. The technical analysis that I did on Yucca Mountain was in the pre-2002 time frame. Since then, in 2008, the Department of Energy submitted a license application. Then the NRC did some technical analysis. I haven’t looked at either of those. So I haven’t updated myself on the technical situation or on any new information that’s come in within the last 10 years. And so, as a careful scientist, I would hold off on making any judgment.
(Emphasis mine.)

On one hand, as a fellow scientist, I appreciate Dr. MacFarlane's reticence toward commenting on a technical issue which she herself recognizes that she is not current on. On the other hand, it is somewhat distressing that the chairwoman of the NRC would not deign to familiarize herself with those very same findings.  (I realize that Dr. MacFarlane obviously has a very full agenda, but nonetheless given that her specialty with geologic disposal of nuclear wastes was one of her core competencies given for her nomination to head the agency, the fact that she has been an extremely outspoken critic of Yucca Mountain, and the fact that this is a timely and controversial topic facing her agency, one would think that she might find the time for a bit of... "light weekend reading...")

Process matters

By this point, your response is probably something along the lines of, "Thanks for the update on News of the Obvious." But to be honest, it seems like a great many people haven't seemed to get the memo yet. Following a discussion on Jim Conca's recent Forbes piece featuring WIPP (the Waste Isolation Pilot Project in Carlsbad, NM, which is responsible for handling military-origin transuranic wastes to be buried deep in salt bed caverns), the question was inevitably asked - "If WIPP is working, why can't Yucca Mountain?"

Herein lies the problem. Debates over the technical details of Yucca aside (details which have been exhaustively studied for nearly two decades), it was never about technical feasibility. One of the most salient arguments I have tried to convey upon my students (and anyone else unfortunate enough to be caught within earshot) is that process matters. Again and again this has been emphasized - by myself and by the findings of the Blue Ribbon Commission themselves. (As well as by social science experts - see for example, this decent op-ed by Chris Mooney on science communication right around the time Yucca faced the axe.)

WIPP worked namely because WIPP made sure to do the process right. From the start, WIPP focused on public engagement and local consent - trying to build understanding and consensus before they broke ground. And to that end, they've been remarkably successful. WIPP enjoys extremely high levels of support from the local Carlsbad community, largely in part due to the influx of high-paying jobs it has brought an otherwise very rural economy. And by committing to transparency and public oversight from the start, the WIPP project managed to soften much of the opposition which may have otherwise doomed such a project - namely because the public felt like both they had a say and that the process was fair and trustworthy. (Mind you, it is unlikely one will ever gain complete consensus - namely because there are some who persist in asserting that nuclear waste is an "unsolvable" problem and frankly have no interest in solving it...)

But far too often in the technical community, there is an attitude that this process can be circumvented. "Who cares what the unwashed masses think? We're right and they're not" - a fine ethos for a dictatorship run by scientists and engineers, a recipe for repeated and painful failure in a democracy. This is the attitude that I see prevailing each and every time I hear someone hammer on why we need to keep pushing on Yucca Mountain - either by forcing a showdown on the licensing process or some other means. And let me reiterate - on a technical basis, I think Yucca Mountain is a sufficient (not ideal, namely because it consigns otherwise recoverable resources to waste, but sufficient) solution.

Hell freezes over.
Here's the problem - it's off the table. There is about a snowball's chance in hell of any of the following factors aligning to rescue Yucca Mountain right now: Chairwoman MacFarlane rescuing the Yucca Mountain license (previously withdrawn with prejudice by Secretary Chu), a sudden reversal in position by President Obama, an intervention by the Supreme Court to finish the Yucca Mountain licensing evaluation, a marked shift of opinion in the state of Nevada, or the sudden departure of Sen. Harry Reid.

Like it or not, the political deck has been stacked against Yucca. Perhaps why it's so hard for technical folks to accept is because of this - it's a victory of politics over science - and unabashedly so. But even assuming Yucca were never to have been derailed by an opportunistic president looking to make a deal with an influential senator, the problems at the core still remain - a process built on a foundation of rolling over state-level consent. It is hardly believable that the opposition which has escalated through the courts up until the 2010 would suddenly evaporate upon Yucca's grand opening. Instead, it is far more likely that another decade of contentious (and expensive) lawsuits would have followed, bankrolled (in somewhat ironic fashion) by the same funds legally obligated to the state of Nevada for hosting the repository by the Nuclear Waste Policy Act.

$8 billion and all I got was this lousy blog post

Hence my point of emphasis to folks still pushing Yucca Mountain: he's dead, Jim. Let this one go and start thinking about what to do right now while we begin the process again, this time hopefully learning something from our $8 billion lesson.

The sunk cost is perhaps what is hard for most to accept, particularly in the nuclear community. $8 billion is a high price to pay for learning to respect the process of siting a repository in equal measure to the level of technical effort that went into it. But again, this is where the hard-nosed realism of technical folks must prevail - what do you hope to do now? Wishing for a more favorable political situation won't bring back your $8 billion or put a single fuel assembly into the ground. Instead, it's going to require a hard gut check and some long thinking about where we go from here.

So what now?

Let me quote now from wisdom of the Bard Jagger:
You can't always get what you want
But if you try sometimes, you just might find
You get what you need
Dry cask storage
In the short term, what is needed is some means of storing spent fuel, particularly from already-decommissioned sites (i.e., "orphaned fuel") in a consolidated interim storage facility. Such a facility would be inherently temporary by nature, something which can be enforced by contractual penalties as a means of making such a site more attractive to the host community. Fuel would be kept in concrete storage casks, where it is currently safely licensed to be kept for periods of up to 60 years, and may potentially be safely stored for up to 100-200 years, following further study.

Meanwhile, the main upshot of such a move to interim storage is that it provides a workable solution for the time being until the process of siting a repository can be restarted (which it inevitably must be). This something both recommended by the BRC and is now being proposed by outgoing Senator Jeff Bingaman (D-NM). Whether it or not it goes anywhere in Congress is anyone's guess (although it will likely and unfortunately be eclipsed by much of the talk of the coming "fiscal cliff.")

My own feelings on interim storage have evolved somewhat over the years; it was not long ago that I was critical of such a strategy, namely because it felt like "kicking the can down the road" to future generations. But here's the rub - as much as I generally favor strategies like reprocessing on the grounds of energy recovery, as far as economics go, it simply can't compete with the cost of mining new uranium, even with the repository cost tacked on - and the requisite technologies like fast-spectrum reactors which can effectively transmute and fission long-lived actinides (thermal spectrum, "light water" reactors like those we run now aren't particularly efficient at this) - simply aren't here yet. In that sense, absent the infrastructure to reprocess and effectively burn all of the long-lived constituents of used fuel (not just plutonium), it may just make sense to let it sit around for awhile under well-monitored conditions. Even assuming technology never progresses forward, the end result is a cooler, less radioactive fuel that is less expensive to dispose of. (It is one of the few problems in life that manages to get cheaper the longer you wait.)

Such a position doesn't necessarily sit perfectly with me - as a technical person, I have a bias toward action. (Which of course would be why my research focuses on advanced waste management and recovery strategies). But such a solution is certainly better than a complete failure of the federal government to meet its obligations to ratepayers (i.e., consumers of nuclear electricity) who have paid $30 billion over the last two decades to handle this problem, only to be met with nothing to show for it.

Siting even an interim storage for used fuel won't be trivial - it will likely run into some of the same political challenges Yucca Mountain has faced, if the fate of the proposed Private Fuel Storage facility in Utah is any indication. (PFS has negotiated with a Native American tribe - the Skull Valley Band of the Goshute Tribe - to host such a facility. Despite the fact that the facility is on tribal lands, the state of Utah has attempted to do everything in its power to block the proposed facility - namely by denying rail and road access.) But it may serve as a useful trial run for getting the process right when it comes to the "real thing," i.e., siting a permanent geologic repository.

On a final note, I will be supervising my students' end of semester projects this evening. The task I assigned them was to propose an amendment to the Nuclear Waste Policy Act, taking into account the failures of U.S. high-level waste management policy (including a technical analysis of their proposed alternatives compared to the "baseline" scenario). It should be interesting to see what they come up with.

Sunday, November 11, 2012

What is most important to outreach? Just showing up.

In my prior wrap-up over the Chattanooga MOX hearing, one of the key takeaway lessons for nuclear outreach I found while helping to organize students attending the NNSA hearing on surplus weapons-grade plutonium disposition in MOX fuel is this: Showing up matters.

In fact, there's an old Woody Allen quote circulating around which summarizes this best:
80% of success is just showing up.
In a later interview, Allen would extend upon his prior quip:
I made the statement years ago which is often quoted that 80 percent of life is showing up. People used to always say to me that they wanted to write a play, they wanted to write a movie, they wanted to write a novel, and the couple of people that did it were 80 percent of the way to having something happen. All the other people struck out without ever getting that pack. They couldn’t do it, that’s why they don’t accomplish a thing, they don’t do the thing, so once you do it, if you actually write your film script, or write your novel, you are more than half way towards something good happening. So that I was say my biggest life lesson that has worked. All others have failed me.
Why bring all of this up again? Namely because I think a recent outreach case organized by Meredith Angwin (of Yes Vermont Yankee) and Howard Shaffer at a recent public hearing in support of the Vermont Yankee reactor so perfectly reinforces this point. Angwin and Shaffer managed to organize a crowd of supporters of the plant for a public hearing on its renewal for a Certificate of Public Good (required for the plant to continue to do business in the state - this in spite of the fact that the actual safety license to operate is controlled exclusively by the NRC). In fact, they managed to do this and then some, with supporters outnumbering opponents three-to-one.

The result? News coverage of the event represents their side and their message in addition to the opponents. They (VY supporters) controlled the tone of the meeting, keeping it civil and respectful. (This is in marked contrast to some meetings where Angwin reports being hopelessly outnumbered - and thus where the tone is decidedly different).

The exact same thing was seen when one contrasts the meeting coverage of NNSA hearings in Chattanooga versus meetings later that week in Decatur, AL (closer to the Brown's Ferry reactor, a TVA candidate site for MOX). With nuclear supporters absent, the "public" consisted of professional anti-nuclear activists going from meeting to meeting repeating the same (debunked) arguments. (Notice that certain individuals, like Tom Clements of the Alliance for Nuclear Accountability, show up multiple times). The tone of the stories reflects the absence of supporters - as a result, opponents have the narrative to themselves - they are the public. When supporters were present (as in Chattanooga), it is reported as "spirited debate" - the existence of a pro-nuclear side is acknowledged.

In other words, the media won't come find you if you're not there. What makes up much of reporting, particularly at the local level like this, is storytelling. When one side is absent, their story doesn't get told. Reporters aren't going to seek it out - in fact, they're unlikely to even acknowledge its existence. This is why showing up matters so much. Ultimately, the way most of the public will learn about issues like MOX (or Vermont Yankee, etc.) will not be through direct contact with opponents or supporters, but rather through reported accounts in the media - which means if one side doesn't show up, the public simply will not know about it. It's simply not part of the narrative.

As an aside, I am currently at the ANS Winter Meeting in San Diego, CA - do say hello if you catch me sometime while I'm there. (I already had the pleasure of meeting Will Davis of Atomic Power Review for the first time last night, and I'm hoping to run into more folks from the online community). This probably explains my itching to emphasize the importance of outreach so much, of course - namely because I'm also going to be talking about some of these same important lessons with other nuclear professionals while I'm here.

Saturday, October 20, 2012

Does nuclear lack a natural constituency?

A quick Turing test from the prior round of U.S. presidential debates - see if you can spot the speaker:
We have increased oil production to the highest levels in 16 years. Natural gas production is the highest it's been in decades. We have seen increases in coal production and coal employment.
Look, I want to make sure we use our oil, our coal, our gas, our nuclear, our renewables. I believe very much in our renewable capabilities; ethanol, wind, solar will be an important part of our energy mix.
Number three, we've got to control our own energy. Now, not only oil and natural gas, which we've been investing in; but also, we've got to make sure we're building the energy source of the future, not just thinking about next year, but ten years from now, 20 years from now. That's why we've invested in solar and wind and biofuels, energy efficient cars.
Let's take advantage of the energy resources we have, as well as the energy sources for the future. And if we do that, if we do what I'm planning on doing, which is getting us energy independent, North America energy independence within eight years, you're going to see manufacturing jobs come back. Because our energy is low cost, that are already beginning to come back because of our abundant energy.
In order: Obama, Romney, Obama, Romney. Most notably, while the word "energy" showed up 40 times during last Tuesday's debate, "nuclear" showed up only twice (and only once in the context of energy, within the throwaway line given by Governor Romney above). Compare and contrast with coal (22 appearances), natural gas (8 appearances), oil (26 times), wind (7 times), and solar (3 times).

It is consistently puzzling how an energy source which supplies about 20% of U.S. baseload electricity and the overwhelming share of its carbon-free energy portfolio manages scarce mention in debates over energy. Instead we have two candidates practically tripping over themselves to extol the virtues of increased fossil fuel production (which, depending on your constituency, will sometimes include a nod to chimerical "clean coal" or carbon sequestration technology) but who can barely suffer more than an obligatory mention of nuclear.

It isn't because either candidate seems particularly hostile to nuclear (at least, not openly); both have quietly supported nuclear, generally in the context of "all of the above" energy policies which differ primarily in the respective weight given to fossil exploration and renewables. It would seem, as I have often asserted, in a world both where energy scarcity and environmental impacts of energy are at the forefront, opposition to nuclear is a self-marginalizing position. So why it is exactly that it fails to merit more than passing mention? Consensus doesn't seem to be it; if the above ideological Turing test is any indication, both Obama and Romney seem intent upon defying traditional expectations by endorsing (however insincerely) traditionally-favored energy resources of their opponents. (As a result, we have such scintillating "debates" as to which candidate really loves fossil exploration more...)

The superficial answer commonly given in response to this of course would be that fossil interests (and perhaps, by proxy, renewables, if one is the conspiratorial type) represent tremendous financial interests, and thus, political interests. But this explanation only goes so far - particularly when one looks to polling data as to how energy preferences break down within the public.

Rather, I am inclined to wonder if this is a case of where nuclear, unlike fossil and rewnewables, lacks a well-defined constituency - being relegated to a tepid, forgotten center (where it enjoys broad, lukewarm support by many and hot, focused opposition at the fringe). It is perhaps progress (and a keen awareness of the urgency brought on both by the need for action on climate change and developing abundant future energy resources) that nuclear is no longer seen as ideologically confined to the rightward end of the political spectrum; but instead I am forced to once again go back to the hypothesis that we are seeing energy as a marker for pre-existing cultural affinities.

To wit - for all of the talk by both Romney and Obama on developing coal resources, does either seriously expect to see any significant new developments in coal-fired electrical capacity? (A telling example of the direction of things to come is TVA's shuttering of the John Sevier coal plant, which was recently replaced by a combined-cycle natural gas facility. In a single year, TVA's coal portfolio has shifted down from around 50% to 30% - with the gap entirely being made up for by gas.) Even if one does believe new coal-fired generation will emerge, does either seriously believe this will emerge when projected costs for so-called "clean coal" outstrip the production costs of new nuclear?

Or, more importantly, if support for nuclear was more than token for both candidates, why is it exactly than in Romney's 21-page energy plan, the proposals for nuclear come down to a single bullet point: "Revitalize nuclear power by equipping the NRC to approve new designs and to license approved reactor designs on approved sites within two years." (How this will be accomplished is left as an exercise for the reader). Note the striking absence of any mention of small modular reactors and their potential to revitalize export-driven manufacturing in the U.S., or even such basic measures as reforming antiquated laws restricting vitally-needed foreign investment in new domestic nuclear capacity - nuclear, it would seem, is an afterthought. Nor is it any better with Obama, where his campaign's "issues" site for energy lists oil exploration and (inexplicably) clean coal (one gets the feeling we're actually back in the Bush years), but fails to even mention nuclear.

The very fact that the Romney campaign would speak effusively of renewables as an improbable part of a vague, "all-of-the-above" energy strategy while Obama bafflingly promotes both fossil exploration and dubious "clean coal" technology (see also, vaporware) point to an effort to reach voters not on the rational basis of carefully-considered energy policy, but rather, in a word, pandering. (Yes, quel surprise indeed coming from a political campaign).

So why is this? Because again, by and large for the public, I am largely convinced that support for particular energy sources comes not from their practical value but from what these represent. It is immaterial as to whether availability and diffusivity inherently limit the ability of renewables to produce electricity at the large, consistent scales required to power modern civilization - because these sources, at their core, represent aspirational goods which somehow magically disconnect environmental consequences from energy. Fossil resources represent abundance - an energy abundance which can be found here at home, supporting an economic fantasy of "energy independence" powered by domestic, low-cost energy sources (to which environmental concerns are ancillary).

What brings this charade crashing down is the dissonance with how each of these sides deals with the issue of nuclear. If the latter camp truly cared about abundance, nuclear would plausibly be of co-equal priority - uranium resources are relatively abundant in the U.S., and most of the uranium it imports are from friendly countries like our neighbors to the north. Further, nuclear is relatively cheap - particularly once plants are built - and those plants can supply energy for entire generations at tiny marginal costs. Thus, if it was simply about energy abundance, one would expect more than simple tepid support - one should see more folks like Lamar Alexander exhorting the country to double our current fleet by building a hundred new nuclear reactors. But they don't. Instead we are given platitudes extolling the virtues of abundant natural gas and coal - not uranium.

Meanwhile, as to the former crowd that values minimizing environmental impacts, it is immaterial as to what backs up intermittent sources (i.e., it's the same resources in which they claim they are attempting to displace). If the plausible goal were to eliminate CO2 and air pollution as much as possible, one would think that nuclear, given its high capacity and availability, would be at the vanguard of the movement. And yet it is shockingly absent - instead, once again, natural gas and ephemeral promises of "clean coal" (which, in fairness, is probably more about a cynical electoral sop to coal-producing states than it is a serious policy proposal) take the fore. Constantly we hear from these same people theoretically devoted to the cause of creating a clean energy future about the virtue and necessity of natural gas as a "bridge" fuel - as if carbon-free nuclear energy simply did not exist. (Or as if natural gas did not pose a far more substantial risk in terms of deaths per unit energy produced).

What nuclear seems to lack here is the existence of a natural constituency  Again, look at what a rational examination of the expressed interests of our two major constituencies above should theoretically produce - nuclear, by all accounts, should be a hands-down consensus winner. Yet instead it is relegated to scarcely a mention in high-profile debates.

Again, it is far better for nuclear not to exist solely in the thrall of one ideological pole, given the ease at which it can be marginalized on a partisan basis. But perhaps the bigger issue now is that nuclear, enjoying a broad but shallow public consensus, finds itself politically homeless.

Friday, September 14, 2012

Mixing it up over MOX - a wrapup from Chattanooga

Crowd at the MOX hearingTuesday's meeting in Chattanooga over the draft Supplemental Environmental Impact Statement (SEIS)  over potential plans by TVA to use MOX fuel fabricated from surplus weapons plutonium had no shortage of passion. The meeting drew a packed house of MOX supporters and professional anti-nuclear activists ("professional" in the sense that these individuals clearly make a career out of attending such hearings).

Surprisingly absent however was any evidence of nuclear zombies; while the opponents employed some degree of necromancy in their arguments, no "nuclear zombies" were spotted at the meeting. (To which I wryly observed during the meeting, "All that zombie defense training for nothing...")

For those who missed it, I did a bit of live-blogging at the ANS Nuclear Cafe as well as live-tweeting the meeting (as @sskutnik, under the tag #MOXchat - and #MOXsnark as my snarkiness level progressively increased throughout the meeting...) Meredith Angwin of Yes Vermont Yankee was following the meeting via Twitter and has already posted her thoughts; I've been a bit delayed up until now (such is the life of a professor...), but I wanted to get in my impressions from the meeting.
UTK ANS students

Strong turnout

We had an extremely healthy contingent of students in attending, both from the University of Tennessee (where we had a little over 20 overall) as well as Chattanooga State's local ANS section (as seen in the bright blue and orange shirts in many pictures). A great deal of credit for this goes to Laura Scheele, the Outreach and Public Relations director for ANS national, who coordinated with both the UTK and Chattanooga State sections as well as organizing a welcome hospitality room (always popular with students!)

Also in attendance was Suzy Hobbs-Baker of PopAtomic Studios, who put together some very cool pro-nuclear signs. (One anti-nuclear activist who wandered into the hospitality room as Suzy was putting together some of her signs before the meeting rolled her eyes and said, "You have got to be kidding." Whimsy, it would appear, is lost upon the opposition. Such a lack of whimsy of course did not stop her from helping herself to some cookies courtesy of ANS.)

No zombies, but zombie arguments

As I noted above, there was a surprising absence of zombies at the Chattanooga hearing; we speculated as to whether the budding thespians had caught wind of our plans to organize on the hearing and decided to head off to greener pastures (or at the very least, softer targets).

In a rare, refreshing display of honesty, one housewife-cum-activist (this being pretty much her own self-description: "My husband pays the bills, which allows me to do this full-time"), while reading off of a notecard of pre-prepared talking points, admitted, "I don't really understand this, but I'm going to read it anyway..." There were numerous "technical" (speaking very generously) arguments of dubious merit pertaining to MOX fuel - they could be summarized essentially as follows:

  • MOX fuel burns (thermally) hotter, so it's more dangerous
  • These reactors "weren't designed" for MOX fuel
  • MOX fuel is ill-understood and experimental
  • MOX fuel with weapons-grade plutonium behaves differently than reactor-grade plutonium
  • MOX fuel leads to much more rapid neutron embrittlement of reactor pressure vessels
Some of these arguments I've handled before, but let's go through them again. 

Thermal output

As to the thermal output - indeed plutonium does release somewhat more energy than uranium upon fission. However, the reactors are being run at the same thermal output - which is controlled the same way we control uranium-only cores: with chemical shims (like soluble boron), burnable poison rods, and control rods - all of which keep the total temperature of the reactor the same as before by controlling the rate of fission.

Reactor physics of MOX fuel

The next three arguments essential come under the same umbrella - the myth that MOX fuel is somehow new and ill-understood. MOX fuel itself has been used for decades around the world in countries that reprocess used nuclear fuel, so the idea that it's somehow ill-understood is clearly false on face. 

Beyond this, many of the opponents arguments came from half-complete understandings of how reactors work; it was particularly apparent that they were being fed cherry-picked half-truths to convey a sense of technical credibility to their arguments. For example, opponents argued that MOX fuel makes the reactor more difficult to control. In a limited sense, this is true; plutonium has about 1/3 the fraction of delayed neutrons (~0.2%) as U-235 (~0.64%). 

[Aside: In reactor theory, neutrons come in two forms - "delayed neutrons," which come from fission products or decay products (on the order of a few milliseconds to a few minutes after fission), and "prompt neutrons," which are the neutrons released at fission. Reactors are typically run as "delayed critical" - meaning that the delayed neutrons are the component which keeps the chain reaction going; the reactor is in fact subcritical (not self-sustaining) from prompt neutrons alone. The existence of delayed neutrons is what allows for a reactor to be safely controlled, namely by allowing for smooth, easily controlled changes in reactor power.]

Here's the problem with the opponents' argument; nobody is proposing to run a full core solely upon plutonium fuel. Rather, the TVA proposal would, at a maximum be looking at a 40% core of MOX fuel, ramping up from an initial loading of around 4%. Further, there is of course an ongoing trend with nuclear opponents, that somehow there is a completely non-existence of an engineering discipline. A key issue to stress here is that before any fuel assembly is loaded into a reactor, an inordinate amount of engineering work is done to know just how the fuel will behave to ensure it will be done safely. No one is simply doing engineering by the seat of their pants, contrary to the beliefs of some.

Once the argument that MOX fuel is somehow "experimental" is knocked down, opponents quickly come back with a new variant - that somehow plutonium of weapons-grade variety (i.e., with a Pu-239 content over 90%) behaves substantially differently than that of reactor grade origin (where Pu-239 is about 55-70%, with about 20-25% Pu-240).

Pu composition by reactor type

With plutonium, odd-numbered species (Pu-239, Pu-241) are "fissile," meaning they will fission with thermal neutrons (i.e., the kind which exist in a light-water reactor). Even-numbered plutonium species will not; they typically absorb neutrons to become odd-numbered plutonium species (e.g., Pu-240 will become Pu-241), meaning these species have a net negative reactive worth (i.e., they parasitically absorb neutrons).

However, once again - these are things which are well-understood from an engineering perspective; the amount of plutonium in the MOX rod is determined by how much "reactive worth" is necessary. One of the students who spoke (and was later quoted by the Times-Free Press) has actually studied this exact issue (differences between weapons-grade and reactor grade plutonium for reactor fuel) and found minimal differences in reactor behavior. In other words, this is most certainly not some "experimental" fuel never tried before - all of this is well-understood physics.

Everyone's a reactor engineer...

The same goes for whether reactors are "designed" for MOX fuel; reactors are designed to remove efficiently remove heat from fuel rods and contain radioactivity. Reactor cores are designed to distribute fuel assemblies such that the rate of fission (and subsequently reactor power) is as evenly distributed as possible, with minimal peaking. Thus, the argument that somehow reactors are not "designed" for MOX-loaded cores run at the licensed and designed reactor power is utter nonsense, based upon a total misunderstanding of how reactors are designed and operated.

Finally, one of the most bizarre and self-contradictory arguments was the idea that MOX fuel will uniquely lead to accelerated materials issues with reactor pressure vessels - i.e., neutron embrittlement. Again, an argument based upon a half-truth. The average number of neutrons released in fission by plutonium is again higher than uranium (a quantity known as "nu-bar"; nu-bar for Pu-239 is about 2.98, compared to 2.6 for U-235, about a 15% difference). However, the actual quantity of interest - the neutron flux (i.e., the number of neutrons actually flying around in the reactor) is directly proportional to the rate of fission - itself proportional to the reactor power. In other words, if the reactor power is held constant, all other things being equal the neutron flux will also be about the same. (There are some minor differences here, getting deeper into the technical details, but the end result is that the net difference in neutron flux basically ends up being a wash.) In other words, the argument that somehow plutonium-based fuels will somehow uniquely lead to accelerated neutron embrittlement is utterly bogus - completely notwithstanding the fact that NRC regulations require regular sampling of reactor pressure vessel materials (a "coupon" is taken from the vessel itself and tested for properties of embrittlement).

...or an economist

Not surprisingly, many armchair economists were also present among the opponents, with several pointing out the fact that the disposal of surplus plutonium in MOX fuel costs more than vitrification and disposal in a geologic repository (in this case, likely WIPP in New Mexico) in glass logs. A response to this - repeatedly brought up by myself and others present is that fissioning the plutonium is the only way it can ultimately be permanently destroyed. (This perhaps most brilliantly summarized by Dr. Howard Hall, who noted that "as a chemist, the most difficult thing for me to do is to put an atom back together after it's been fissioned.") Opponents also neglect a few key issues as well - the first and most important of which is that we have a standing agreement with Russia to destroy this plutonium in MOX fuel, namely because of Russian concerns about future retrievability in glass log form. (While the plutonium is rendered far more inaccessible in glass log form compared to its original metal pit form, it is clearly not impossible even with present technology to recover; by contrast, plutonium fissioned in MOX fuel is both destroyed, with the remaining material both contaminated with "nuisance" species like Pu-240 and Pu-242 as well as being trapped in a form which would need to be processed, while being protected by a lethal radiation field.)

Additionally neglected is the fact that the DOE has already made the decision to go the MOX route and has already invested considerable resources in making this happen, meaning any savings argument is moot; the meeting at this point involves TVA's decision to accept the MOX fuel for reactors. (Topical limitations did not stop MOX opponents from airing a laundry list of complaints against nuclear energy writ large, particularly with respect to TVA.) However, even assuming abandoning the MOX program was under consideration (neglecting technical concerns and focusing strictly upon the economic argument being presented), given the funds already committed to the MOX fabrication facility, we are well past the point where vitrification (a technically inferior solution) would even save money on the balance.

Of course, economics was not always the strong suit of opponents; a particularly amusing moment of the evening was when one opponent began his speech indicating how he hadn't paid an electric bill in over two years thanks to his home solar panels, then proceeded to preface an argument against the relative economics of MOX by saying, "As a TVA ratepayer..." It was quite clear that the meaning of "ratepayer" wasn't quite understood.

The importance of being nice

One of the most surprising things to me about the overall tone of the meeting was the general air of civility in the affair. Perhaps my expectations had been set too low on the basis of some of the zombie theatrics of Greenpeace types at prior TVA hearings (not to mention some of the horror stories Meredith Angwin has reported in connection to Vermont Yankee meetings), but overall MOX proponents and opponents alike were polite and respectful of one another. (This did not prevent the odd condescending remark from the protestors - one of the more personally enraging ones went along the lines of, "I'm glad to see all the students here tonight - but we don't need cheerleaders for MOX here, we need solutions." As if the years of hard work students put into their degree programs is irrelevant.)

One thing I stressed to students beforehand was the sage advice I took to heart from Meredith: be nice. (And if you can, bring friends.) More importantly, I tried to stress the importance of being courteous and respectful even in the face of opponents who at times took a hostile, dismissive, or even condescending tone. (At several occasions in the evening Angwin was referred to as our "patron saint" of pro-nuclear activism...) [Edit: Meredith notes that her frequent co-blogger / co-activist Howard Shaffer is even more active; I would happily amend to note the two as "co-patron saints" of nuclear activism...]

A particularly interesting facet of the meeting was in how one could readily identify MOX opponents before they even got to their arguments - solely by their tone of voice. In nearly every case, opponents would grow progressively louder as they spoke, some nearly shouting by the end (despite the presence of a microphone and room small enough that none of this was necessary).

That being said, each side respectfully allowed the other to speak - there were no disruptions or booing; generally speaking, there was even polite applause for each speaker despite whose side they represented. (An interesting finish to the story; when we wrapped up and headed out to dinner afterwards, the opponents ended up at the same restaurant, sitting at a table right next to us. While there was some mildly belligerent exchanges between one opponent and one of our students, generally speaking both sides were again polite and respectful to one another.)

Showing up matters

Lest anyone doubt the impact of knowledgable people simply showing up at meetings like this, I offer the following exercise in compare & contrast: Take a look at the coverage of the MOX hearing in Chattanooga (attended by an overwhelming number of ANS local section members from the University of Tennessee and Chattanooga State) versus the hearing on Thursday in Decatur, Alabama (near the Brown's Ferry reactor, one of the proposed TVA sites for burning MOX fuel). (For further contrast, have a look at the before and after reporting of the Chattanooga meeting as well).

The distinction in coverage when knowledgable nuclear advocates are present could not be more clear; in their absence, a small caravan of nuclear opponents traveling from meeting to meeting are allowed to speak unopposed as the singular voice of "the public." (Take a look at the articles and see if you can't spot some repeated names, for example.) There is little question in the Decatur coverage whether a contingent of the public exists who supports the program (apparently, they don't) - instead, opponents have been allowed to freely carry the day, completely unchecked.

Without trying to belabor the point too much: showing up matters. Reporters have no technical basis to evaluate the questionable claims of nuclear opponents (which really, the MOX opponents unabashedly represented); nor do reporters have any reason to seek out the existence of an opposing view when it is absent from public forums such as these. By contrast, when knowledgable individuals show up to these meetings, particularly in large numbers, their presence simply cannot be ignored - even if their numbers may be underreported. (The Chattanooga Times-Free Press reporter indicated about a dozen students were present; by my count, we had about two dozen from the University of Tennessee alone in two vans, not even counting the over two dozen from Chattanooga State.)

Final thoughts

Something to stress here in all of this - and again, something I made sure to emphasize with the students coming on their own time despite busy class schedules - is that in addition to the simple importance of speaking out at events like this (something I feel is an ethical obligation of nuclear professionals), one of the most important aspects here is to have fun. Outreach events like this can be stressful, especially with opponents ready to label students as simple shills or puppets of the "nuclear corporatocracy" to use one opponent's terms. Some of this came from having some fun with opponents' catchphrases - "Don't fall into the MOX pit!" and "Are you cheerleading or finding solutions here?" were repeated more than once in humorous fashion afterwards.

Events like this fulfill a vital part of the role of organizations like ANS to inform the public such that decisions are made on the basis of facts and not simply demagoguery, but that also doesn't mean that they can't also be a fun way for students and professionals to get together to share their passion for technology they see as vitally important for society's future.

Monday, September 10, 2012

Wading into the "nuclear zombie" horde

Tomorrow evening, the NNSA will be hosting a public meeting concerning its Supplemental Environmental Impact Statement on the disposition of surplus weapons-grade plutonium (WGPu) as mixed-oxide ("MOX") fuel for consumption in power reactors.

This is not a new policy - the decision to dispose of the surplus weapons material was put into place during negotiations with the Russians which took place during the Clinton Administration. The goal was quite simple: with the Cold War at an end, both countries had far greater stocks of weapons material than reasonably necessary for defense, and disposing of this material was determined to be a national security priority. In particular, both the U.S. and the Russians have agreed to dispose of 34 metric tons (about 75,000 pounds) of surplus bomb material.

Such an agreement is similar in form to the "Megatons to Megawatts" program now winding down, in which surplus highly-enriched uranium (HEU) formerly for weapons was down-blended into low-enriched uranium (LEU) for reactor fuel and permanently destroyed.

Scrambled eggs / plutonium
The NNSA proposal works along the same lines - take what is currently a weapons-grade asset and blend it down (in this case, convert the plutonium into an oxide powder and blend it to about a 4% mixture with uranium) and then burn it in reactors. The advantage to this approach is relatively straightforward: by burning the plutonium in reactors, the plutonium isotopic makeup becomes "scrambled" - basically rendering it useless for weapons, even if it were ever recovered from the spent MOX fuel. Further, the irradiated fuel adds a second physical barrier to theft and diversion - namely that now this material is now trapped inside a highly radioactive fuel rod. (The treaty agreement likewise forbids the two countries from reprocessing the spent MOX fuel for several decades.)

So who would object to what sounds like a sensible application of the "swords to plowshares" concept?


Specifically, "nuclear zombies." Greenpeace and other anti-nuclear activists, in continuing their slow decline into generalized misanthropy over any stated concern for the environment, have come out in force against the NNSA proposal, going so far as to set up shop in Chattanooga. Their particular M.O. in this has been a series of "nuclear zombie" theatrics - starting with a TVA hearing on completing the mothballed reactor project at Watts Barr Unit 2. The anti-nuclear critics leaped upon the construction restart as reviving a "zombie" reactor build (once dead, now undead - yes, clever there folks) and have been working with the meme since.

In keeping with the theme, I'll be leading a contingent of trained nuclear engineering students zombie hunters  from the University of Tennessee down to the public meeting tomorrow both as a show of support and more importantly as a resource in trained experts who can sort the facts from the theatrics.

As always though with zombies, it's important to remember the most important rule of dealing with zombies: Always remember the double-tap. As we prepare for the charge into the zombie horde, it's thus useful to put down a few of the "living dead" arguments out there which seemingly seem to lumber on from beyond the grave. As a good companion piece, I also highly recommend Dan Yurman's full frontal assault on the zombie horde.

Zombie argument #1: MOX fuel is unsafe

Several countries, including France and Japan, already use MOX fuel in their reactors. This plutonium comes from recycling the plutonium that is built up in uranium fuel as reactors are operated. (Thus, to emphasize: plutonium in reactors is not a foreign concept - in the course of regular operations, plutonium is built up and burned within the fuel. In fact, near the end of a fuel bundle's lifetime, much of the energy produced from fission comes from the fissioning of plutonium itself, in addition to the depleting fissile uranium in the fuel).

Plutonium fuel does burn a bit "hotter" (fission releases a nominally larger amount of energy for plutonium compared to uranium), but as Yurman points out in the above article, this is relatively similar to how a wood-burning stove works. Certain woods burn hotter (think hardwoods); but control of the reactor power and temperature is governed by many devices beyond the fuel, including burnable poisons and control rods which regulate the reaction rate. The goal of MOX fuel is essentially to use it as a replacement for ordinary uranium fuel - meaning the reactors are to run at the same power level as before. This is a well-understood concept.

Further, the MOX fuel would not compose more than a fraction of the core loading. Yurman points out that TVA's initial plan (if they decide to participate in the MOX fuel program) would likely involve starting out with a loading of about 8 assemblies in the reactor; pressurized water reactors typically will have around 193 assemblies, meaning MOX will start off making up around 4% of the core, with an eventual ramp-up to around 40%.

Zombie argument #2: MOX is an inferior way to dispose of plutonium

Of the more sophisticated "zombie arguments out there, one that seems to arise again and again is the idea that disposing of plutonium in MOX fuel - be it from civilian reprocessing or from disposal of surplus weapons materials - is an inefficient and expensive way to deal with the problem. Instead, they say, we should dispose of the material in glass logs ("vitrification") and then bury the glass logs in a deep geologic repository. Such approach has been vocally promoted by the now-current chairwoman of the NRC, Dr. Allison MacFarlane. (Have the zombies gotten to her too, do you suppose?)

In particular, some critics have pointed out the formerly proposed "two track" approach first sketched out by scientists and engineers with the Department of Energy at Savannah River, where the conversion of weapons material will take place. There are of course two problems with this - the first being that this approach was originally proposed because of identified problems in handling about 9 metric tons of the plutonium, as it was contaminated and deemed potentially unsuitable. (The remaining 25 metric tons were to be converted into MOX). However, as those problems were overcome, the decision was made to proceed exclusively on the MOX track, thus saving money by not creating two separate facilities.

From a strictly technical standpoint, disposal of surplus plutonium in MOX fuel is the preferred pathway of numerous technical and scientific organizations, including the National Academy of Sciences, the American Nuclear Society, as well as numerous academic organizations, including the Harvard Project on Managing the Atom. (It's rare when I agree with the last party, so you know there's something going on when that one happens).

Second, and perhaps more important, is the fact that there is significant diplomatic pressure from the Russians to convert and burn the material as MOX fuel rather than to vitrify it, as they are concerned that the vitrified material encased in glass logs may one day be recoverable. By contrast, once the MOX fuel has been irradiated, not only is the material far more difficult to handle, but the plutonium content itself becomes contaminated with "unfavorable" species of plutonium which render the material unusable for weapons use. Thus, the MOX route represents a more permanent disposal pathway.

Finally, a factor which should not be neglected, is that MOX fuel represents a viable way to extract a useful resource - energy - out of what was formerly simply an implement of mass destruction. One can quibble that the economic costs of the MOX route do not necessarily outweigh the economic value of the electricity produced, but regardless the material would have to be converted into a form suitable for disposal - be it for conversion into glass logs or into reactor fuel. In this regard, it is useful to look at this from a marginal cost perspective - i.e., the benefit of electricity should not be weighed against the full cost of the MOX fabrication facility but against the marginal difference in the cost of the MOX facility versus vitrification. In this regard, MOX begins to look like a much better deal, even if it doesn't break even. (Lacking for immediately accessible numbers, this is difficult to quantify).

Zombie Argument #3: Nobody wants MOX

A relatively specious argument which can be relatively swiftly put down. First, TVA has expressed interest - hence why these hearings are taking place in the first place. In addition to TVA, Duke Energy has also expressed potential interest in purchasing the converted MOX fuel from the Savannah River Site.

Most of the reason U.S. utilities have been reluctant to purchase MOX fuel for reactors up until now comes down to cost - pound for pound, MOX fuel does cost more, and utilities receive no credit back toward fees paid into the nuclear waste fund for any net reduction in waste sent to an (eventual) repository. (The Megatons to Megawatts program, by contrast, produced a fuel which is the same exact form as used in current reactors - hence, it was cheaper and easier).

However, because the NNSA plan is explicitly designed to dispose of surplus weapons material, it is being done with a subsidy to offset this cost. (Again, to emphasize: what is being paid for is to ensure a final disposition of the plutonium.)

Closing thoughts

Like with ordinary zombies, I'm not even really sure we can expect the level of sophisticated arguments that I've deconstructed above so much as a slow grope for brains. (Yes, cheap shot, I know.) I say this only because I remain unconvinced that "nuclear zombie" demonstrations, which Greenpeace and other anti-nuclear organizations have invested considerable resources into, have anything to do with setting the tone for well-reasoned, thoughtful consideration of alternatives.

Ash with his boomstick
If you need to find me at the meeting tomorrow, I'll be the guy with the
. (Note: No one's bringing any weapons. Please don't sue.)
Regardless, I will be there tomorrow, braving the zombie horde. If you're anywhere around the Chattanooga area tomorrow, do consider joining us. One of the key points I have continued to emphasize with my students is the need to simply show up - not only such that groups interested more in theatrics than in debate don't simply carry the day by default, but also such that we can be there as a resource - answering questions from the non-zombified public and putting to (final) rest some of the more putrified misinformation.

The hearing will be at the Chattanooga Convention Center (1150 Carter Street
Chattanooga, TN). Open house starts at 5:30, followed by a technical presentation by the NNSA at 6:30 and public comments following up 8:00.

Tuesday, September 4, 2012

A cost-free way to open up nuclear investment

Late last week, the Atomic Safety and Licensing Board (ASLB) rejected a license application for the proposed Calvert Cliffs Unit 3 (an AREVA EPR) build in Southern Maryland. The reason? It was against the law.

Specifically, when the build was originally proposed, it was to be a 50/50 joint ownership stake by Constellation Energy and Electricite de France (EDF, the state-owned French utility giant). However, in November 2010, Constellation sold its 50% stake in the reactor to EDF, making it the sole potential owner of the unit.

According to Federal law (10 CFR 50.38), foreign investors are ineligible to apply for a license to operate a nuclear facility in the U.S. While Unistar was still the nominal applicant, the ASLB determined that the venture was solely owned by EDF and thus EDF was the effective applicant - and thus, ineligible. (The lawsuit, incidentally, was filed by the anti-nuclear activist group NIRS, indicating that anti-nuclear groups will not hesitate use every tool at their disposal to block or shut down any nuclear power facility - and to hell with the cost to the environment as a result.)

If this seems entirely backward in a world of global production and investment, that's because it is. The current regulation is an artifact of the Atomic Energy Act of 1954, which first authorized private ownership of nuclear facilities. (Prior to this - per the Atomic Energy Act of 1946, all nuclear technology was considered a state secret, during the short time in which the U.S. enjoyed a monopoly on the technology.)

Is there any real compelling reason for restrictions on foreign ownership and investment in nuclear facilities to exist at a time when the U.S. holding a monopoly on the technology has long since passed? Issues of safety here of course are irrelevant - the facilities would be licensed and regulated by the NRC, just as any other nuclear facility is now. About the only salient objection is the political one - i.e., the implications of a foreign entity maintaining controlling ownership in key infrastructure. (Although it's hard to see anyone getting particularly upset about the reverse - U.S. entities owning a controlling stake in infrastructure in other nations.)

For those who have a bit of a longer memory, the controversy should ring familiar - i.e., it's the same arguments which were played out during the Dubai Ports World deal, in which DP World, a UAE-based company, would take over management contracts for six U.S. ports already under foreign management.

EDF as Philip J. Fry: Shut up and take my money
Meanwhile, an issue to consider is the fact that bringing together capital to complete a construction bid like Calvert Cliffs 3 is no mean feat (particularly in an economy where investors seem all too skittish about long-term investments in energy infrastructure). Given the difficulty then, it seems positively insane for any political leadership to turn away large investments in long-term energy infrastructure (especially non-emitting baseload like nuclear, which has a long expected operational lifetime).

Setting aside the politics of free trade for a moment, if Republicans have any seriousness behind their twin rhetoric of advocating for expanded use of nuclear energy and in relying on the free market to sort out our energy mix, then this one should be a no-brainer: let companies like EDF put up the investment and apply for a license. The same is true for Democrats as well - if they're serious about both jobs (nuclear construction has them in spades) and especially about creating clean energy sources for the future, investors like EDF should be welcomed with open arms, not turned away at the door.

Again, the best part of this? This costs nothing. Investors like EDF wish to voluntarily invest their money in a vital public good (carbon-free electricity) - all that needs to happen is for leaders to be willing to say, "Oui."

Saturday, September 1, 2012

Does declining gas exploration indicate a price "explosion" or just a new equilibrium?

A few interesting points came out of the follow-up discussion on my prior post, in which I argued that, contra Rod Adams, natural gas prices are not set to "explode" anytime soon.

Meredith Angwin of Yes Vermont Yankee made a keen observation that over the last year, the number of new natural gas exploratory wells is collapsing. Why is this happening? Namely because of the cratering current price of natural gas.

In fact, a very interesting thing appears to be happening right now with shale / unconventional natural gas recovery boom - the industry appears to be a victim of its own success. Or rather, drillers have been sinking new wells without regard to price (again, see the sharp boom in new wells up until about October 2008, where new wells peaked). As a result, proven reserves have fairly substantially increased - and in particular, known reserves of "dry gas" (i.e., nearly pure methane, the most commercially valuable component of natural gas) have in fact "exploded" - nearly doubling over the last decade.

Meanwhile, neglected in these considerations is that shale fracturing wells in particular aren't cheap to drill; as a result, anomalously low natural gas prices means that some drillers have been losing their shirts over the same much-publicized "boom" in natural gas production. 

This is where we get back to the discussion of natural gas prices overall. What appears to be occurring is a basic disequilibrium; a disruptive event in supply (i.e., introduction of large new resources) prompted a rush to invest/explore this resource, which in turn created a significant rise in supply over the short term, rapidly dropping the price to a point where the market price is below the profitable price of recovery.

Thus, as far as exploration goes, we seem to be observing is basic mineral economics: exploration follows price. When price drops (i.e., we had an over-abundance of exploration), exploration drops. As prices rise to the point where new wells achieve a net profit, it's a relatively safe prediction that exploration will again begin to rise. What is essence is developing are two constraints on natural gas price - a "floor" on prices (i.e., below which it is not economically viable to recover gas from new wells) and a "ceiling" (driven by the large increases in known supply). My colleague Alan observed this some time ago when he speculated as to whether we are seeing the end of natural gas price volatility (at least for now).

So, will natural gas prices rise? Probably - but given the very large amounts of known reserves, price acts as a strong signal to start drilling again. Given the large known new reserves, this will inherently push back against any significant rises in price - as it gets more profitable to drill new wells, new producers will inevitably get into the game, particularly because we know the gas is out there. The real question is, "At what price does this happen?" I'm not an expert in gas recovery, so I don't know - but like Meredith, I suspect it will be around $5-6/MMBtu. A columnist at Forbes suggests it may be $8/MMBtu. Either way, I remain deeply suspicious at this point of the idea of prices "exploding" (and hence my bet with Rod) - what instead appears to be happening is the search for a new price equilibrium.

A final addendum - as commenter Robert pointed out, all of this really applies to the U.S. - something worth emphasizing. Other places, where either fossil resources like coal and natural gas are less abundant (i.e., South Korea and Japan) or where there these resources are more valuable as exports (i.e., UAE) have a completely different picture for the relative economics of nuclear versus natural gas. In particular, it is likely far easier to make the economic case for nuclear in these places - meaning even if new builds for nuclear may be slowed or delayed in the U.S. for the time being, the same is not true abroad.

Friday, August 31, 2012

Wishful thinking on natural gas prices

Rod Adams of Atomic Insights has posted a string of arguments in the general thread that natural gas prices are set to explode - or at least, precipitously increase - and that further, the current historic lows in natural gas prices are a mirage, one carefully put into place by gas producers to squeeze out competition, particularly in the electricity sector. In his latest post, "Where is the huge increase in US natural gas supply?" Rod points to EIA data indicating that the "flood" of new natural gas is anything but.

There's just a small problem in this assertion - the data doesn't support Rod's claims. And I say this as someone who obviously would like this to be true. Low natural gas prices have largely put the brakes on new nuclear construction - the latest casualty being Exelon's planned Victoria unit in Texas. Obviously, Exelon has made its position known on whether it will be investing in new nuclear units in an environment where natural gas is currently cheap (it won't), so this comes as a surprise to no one. In fact, the overwhelming majority of new electric generation capacity in the U.S. over the last decade has been natural gas.

Rod makes the claim that the cause of currently low natural gas prices is less due to new supply and more due to slumping demand for energy given the recession. As evidence of this, he points to this chart from the EIA, indicating gross withdrawals of natural gas at U.S. wells.

Rod's argument is that the new supply hitting the market isn't exactly overwhelming - and therefore, when demand picks up, so will prices. The data Rod is using to justify this reasoning is withdrawals at the wellhead - which indicates how much supply is hitting the market. The trend is easier to see on the annual withdrawals basis.

While we don't see an "explosion" in terms of orders of magnitude difference, looking at the data, it's clear that natural gas withdrawals have increased by over 20% since 2005 - hardly insignificant.

But frankly, this is the wrong metric to look at the begin with. If we want to know the real story with natural gas supply, we need to look at proven reserves (i.e., the amount of natural gas we have reasonable certainty of economical recovery from the ground). Again, going to the EIA data, we see the same trend; since 2003, proven U.S. reserves have increased from about 7.5 billion barrels to 9.3 billion in 2011 - a 24% increase. Again, while not mind-blowing, this is not insignificant.

However, we're still missing one last piece of the puzzle - natural gas consumption. This of course is the key to Rod's argument - we've demonstrated that supply has increased, although perhaps not "exploded." But Rod claims that much of what has contributed to temporarily low gas prices has been slumping demand due to a down economy. We can easily evaluate this claim by looking at total consumption data.

On a month-by-month basis, peak consumption (in January) did decline from 2011 to 2012 - by about 5%. This may be partly due to a sluggish economy, but probably more so due to an anomalously warm winter. To get a better feel for total consumption trends however, one should look at the annualized data, "smoothing out" some of these peaks.

On an annual basis, natural gas consumption has been rising - since 2003, net consumption has increased by about 10%. Looking at just the last six years (from a minimum in 2006), gas consumption has grown at a maximum of about 14%.

So now to recap - natural gas supply, in terms of proven reserves, has increased by about 24%, while natural gas consumption has only grown by 14%. Basic economics allows one to predict what happens to price under this circumstance - supply has, in the short-term, outstripped demand. However, while demand has dropped off a little in 2012, supply has been outstripping demand for the last 10 years - this is not a temporary phenomenon.

Now, one can make the argument that eventually demand will catch up with supply - in which case, prices certainly will begin to creep back up. But there is no evidence that proven reserves themselves are declining, which means predictions of the imminent explosion of natural gas prices have, unfortunately for nuclear, little basis in reality.

This gets me back to a recurring point I make many, many times - for nuclear to be viable, reducing capital costs and eliminating the risk premium must be the absolute first priority. (A second, equally important priority would be in establishing a clear price signal on carbon dioxide - very much contrary to the giveaway to natural gas producers which the EPA's current target amounts to.

Expecting a deus ex machina spike in natural gas prices to save new nuclear construction simply isn't going to happen in the short-run. It may be true in the long-run - a decade or more away. And certainly any utility looking to hedge against future price volatility in fuels would be smart to invest in nuclear. But there isn't any evidence that a sudden increase in gas prices will come to nuclear's rescue in the near-term, and this is important - not because I don't want to see new nuclear get built, but because nuclear advocates need to be clear-eyed about the reality confronting them. Self-deluding arguments might feel good in the short-run, but they do little to see to it that new nuclear plants actually get built.

Update: In the spirit of Bryan Caplan of Econlog, Rod has made a wager ($50) with me; that there will be at least one month by end of 2014 in which natural gas prices at Henry Hub will exceed $10/MMBtu (Rod is betting that they will exceed this). I have to say, I respect anyone willing to put their money where their mouth is. I hope I'm wrong, but I doubt I will be.

For reference, here's the historical EIA data on natural gas prices. (For clarification: 1 MMBtu = 1000 Btu; 1000 cubic feet of natural gas contains about 1020 Btu, or 1.02 MMBtu)