“[D]emagogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group…. [The correction is] showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups.”

- Henry Hazlitt, Economics in One Lesson, p. 6.

There are many analyses of the President’s address to the nation last night. As last year, Obama has opened himself up to ridicule and parody (see what MasterResource did).

For this year, in what could well be his last such speech, MasterResource presents timeless logic to unmask the fallacies spewed by our quick-fix, anti-market commander-in-chief.

“Green jobs’? The government-created ones for industrial windpower and for on-grid solar power?

Enter Henry Hazlitt, whose Economics in One Lesson, first published in 1946 and last revised in 1988 (Hazlitt died in 1993), exposes the fallacy of government-as-jobs-creator.

This excerpt is from chapter 1, “The Lesson,” of Hazlitt’s classic of 2oth century economic literature.

———————————————-

Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics, or medicine — the special pleading of selfish interests.

While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.

In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.

In this lies almost the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.

The distinction may seem obvious. The precaution of looking for all the consequences of a given policy to everyone may seem elementary. Doesn’t everybody know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn’t every little boy know that if he eats enough candy he will get sick?

Doesn’t the fellow who gets drunk know that he will wake up next morning with a ghastly stomach and a horrible head? Doesn’t the dipsomaniac know that he is ruining his liver and shortening his life? Doesn’t the Don Juan know that he is letting himself in for every sort of risk, from blackmail to disease? Finally, to bring it to the economic though still personal realm, do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are heading for a future of debt and poverty?

Yet when we enter the field of public economics, these elementary truths are ignored. There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.

But the tragedy is that, on the contrary, we are already suffering the long-run consequences of the policies of the remote or recent past. Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.

From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

Nine-tenths of the economic fallacies that are working such dreadful harm in the world today are the result of ignoring this lesson. Those fallacies all stem from one of two central fallacies, or both: that of looking only at the immediate consequences of an act or proposal, and that of looking at the consequences only for a particular group to the neglect of other groups.

It is true, of course, that the opposite error is possible. In considering a policy we ought not to concentrate only on its long-run results to the community as a whole. This is the error often made by the classical economists. It resulted in a certain callousness toward the fate of groups that were immediately hurt by policies or developments which proved to be beneficial on net balance and in the long run….

It is often sadly remarked that the bad economists present their errors to the public better than the good economists present their truths. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it. But the basic reason for this ought not to be mysterious.

The reason is that the demagogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups.

The answer consists in supplementing and correcting the half-truth with the other half. But to consider all the chief effects of a proposed course on everybody often requires a long, complicated, and dull chain of reasoning. Most of the audience finds this chain of reasoning difficult to follow and soon becomes bored and inattentive. The bad economists rationalize this intellectual debility and laziness by assuring the audience that it need not even attempt to follow the reasoning or judge it on its merits because it is only “classicism” or “laissez faire” or “capitalist apologetics” or whatever other term of abuse may happen to strike them as effective.

Obama, meet Henry Hazlitt–and please consider hiring new advisors as a first step toward repentance.

Editor note: This three-part series began with A Free Market Energy Vision (Part I: Worldview) and continued with Energy for a Free Society: The ‘American Energy Act’ (Part II: Real World Reform).

In their essay on energy policy for the 111th Congress, Jerry Taylor and Peter Van Doren of the libertarian Cato Institute offered nine priorities to move the United States from energy statism to free energy markets.

But there are more areas of pro-private pro-market exchange reform on the federal level. I offer four–perhaps readers can add more in comments.

Nine Policy Recommendations (Cato)

Congress should:

• Open up public lands currently off limits to the oil and gas industry in the outer continental shelf and the Arctic National Wildlife Refuge (ANWR) for exploration and drilling,
• Repeal Corporate Average Fuel Efficiency (CAFE) standards along with all other energy conservation mandates,
• Repeal subsidies for all energy industries including oil, gas, coal, nuclear, and renewable energies of all kinds,
• Repeal fuel consumption mandates for ethanol and resist prospective consumption mandates for other renewable energies,
• Eliminate all targeted public energy research and development programs and replace them with a generalized tax credit for private research and development undertakings,
• Transfer the maintenance of the nuclear weapons stockpile from the Department of Energy to the Department of Defense and privatize the national laboratories,
• Sell the oil from the Strategic Petroleum Reserve and shut the program down,
• Eliminate the Department of Energy and all its programs, and
• Refuse appeals to impose new taxes and/or regulations on energy producers and manufacturers.

More Recommendations

I would add these priorities:

• Abolish the Federal Energy Regulatory Commission (FERC), and repeal FERC’s enabling laws such as the Federal Power Act of 1935 and Natural Gas Act of 1938, to deregulate interstate gas transmission and interstate power flows. Other federal laws that should be repealed to introduce a free market in energy include the Public Utility Holding Company Act of 1935 and the Public Utility Regulatory Policies Act of 1978.
• Complete the privatization of the Naval Petroleum Reserves; (1)
• Privatize all other federal lands containing energy mineral resources (oil, natural gas, coal, shale oil, shale gas, etc.), and
• Sell the federal power marketing agencies: Bonneville Power Administration; Southeastern Power Administration; Southwestern Power Administration; and the Western Area Power Administration.

Further Information?

There are numerous other federal laws that impact energy non-specifically–that can wait until another day. But what other federal energy-specific laws should be considered for repeal?

And what would federal privatization mean for government revenue and debt reduction? Any estimates of asset values that might exist would be very interesting to know about.

—————————-

(1) In 1998, pursuant to Congressional authority, the federal government (U.S. DOE) sold its share of the Elk Hills field in California to Occidental Petroleum Corporation for $3.65 billion–the largest privatization of Federal property in U.S. history.

In 2000/2001, the Department returned the undeveloped Naval Oil Shale Reserve #2 in Utah to the Northern Ute Indian Tribe in the largest transfer of federal property to Native Americans in the last century.

Most recently, the Department of Energy transferred two Naval Oil Shale Reserves–both in Colorado–to the Department of the Interior’s Bureau of Land Management for commercial mineral leasing, primarily for natural gas production and future petroleum exploration.

Source:

House Energy and Commerce Committee members Henry Waxman (D-Calif.) and Bobby Rush (D-Ill.) have requested a climate-science hearing in light of a just-released report from the National Academy of Sciences (NAS). This report, “America’s Climate Choices,” however, presents no new science.

Instead, as climate scientist Chip Knappenberger explains below, the NAS document lays out a strategy for manufacturing a crisis by exaggerating the climate threat and artificially raising fossil-fuel prices in an effort to compel American’s to emit less greenhouse gases.

Congress has heard all of this before and has been unmoved to pass legislation which will raise the price of living and doing business in America by taxing our primary energies–Editor.

Plentiful and inexpensive fossil fuels are the preferred energy source, whether it be to run your car, heat your home, or generate electricity. Oil, gas, and coal are relatively safe, readily portable, fairly efficient, and relatively energy dense. While fossil fuels perhaps are not the perfect energy source, they do go a long way towards meeting our current needs, and the infrastructure (and know how) is in place to allow for rapid expansion into the future. So, all in all, fossil fuels are pretty darn good now–and as far as the eye can see.

Hydrocarbon supplies are not depleting–just the opposite. New technologies (such as those used for hydraulic fracturing, tar sands, and deepwater drilling) are expanding our ability to retrieve fossil fuels from the earth, As a consequence, the supply is keeping up with the growing demand and more—a demand driven not only a growing population of humans, but a growing number of existing humans who are wanting more energy to improve their standard of living. Julian Simon lives!

But the final report from a just-completed investigative effort from the National Academy of Sciences (NAS) seeks to interrupt and reverse the natural improvement of human ingenuity applied to the master resource. Theirs is a manufactured crisis—and one that elevates concerns over climate change above energy reality and concern over the energy-dependent economy.

There are other forms of crisis however, such as that posed by an existing (or perceived) threat. From such crises, new technologies can emerge faster than they would have otherwise. Take the atomic bomb or the space race as an example.

For fossil fuels, the potential for a threat-based crisis arises from their role in climate change and the possible risks to our health and welfare there from. Alas (for some anyway), climate change does not carry the same sense of threat as, say that of a foreign enemy with its sights set on U.S. soil. So the notion of a climate crisis, either now or in the near future, has been slow to (widely) catch on.

The NAS Strategy

A committee assembled by the National Academy of Sciences (NAS), seeks to remedy that situation.

The final of a series of reports has just been released by the NAS from its America’s Climate Choices project—an effort commissioned by Congress back in 2008 to “investigate and study the serious and sweeping issues relating to global climate change and make recommendations regarding what steps must be taken and what strategies must be adopted in response to global climate change, including the science and technology challenges thereof.”

In their final report, the NAS reveals the need to manufacture a crisis to drive Americans away from their overwhelming reliance on using fossil fuels to meet their energy needs, and lays out a strategy for lawmakers and policy makers to do so.

The NAS strategy is a hybridization of two types of crises. Establish a threat from climate change resulting from our use of fossil fuels, and at the same time simulate a fossil fuel shortage by artificially driving up the price of fossil-fuel based energy.

A sort of 1-2 punch.

The NAS strategy first leads with an uppercut:

Climate change is occurring, is very likely caused by human activities, and poses significant risks for a broad range of human and natural systems. Each additional ton of greenhouse gases emitted commits us to further change and greater risks. In the judgment of the Committee on America’s Climate Choices the environmental, economic, and humanitarian risks of climate change indicate a pressing need for substantial action to limit the magnitude of climate change and to prepare to adapt to its impacts.

And then follows with a roundhouse aimed for the knock-out:

Emission reductions can be achieved in part through expanding current local, state, and regional-level efforts, but analyses suggest that the best way to amplify and accelerate such efforts, and to minimize overall costs (for any given national emissions reduction target), is with a comprehensive, nationally uniform, increasing price on CO2 emissions, with a price trajectory sufficient to drive major investments in energy efficiency and low-carbon technologies. In addition, strategically-targeted complementary policies are needed to ensure progress in key areas of opportunity where market failures and institutional barriers can limit the effectiveness of a carbon pricing system.

Fighting Back

The problems of this strategy are immediately obvious:

1) Not everyone buys into the idea of an impending climate crisis,
2) It is virtually impossible to prove that any actions have alleviated the crisis,
3) It is impossible to even theorize alleviating the crisis from the actions of Americans alone,
4) Not everyone wants the price of their energy to go up.

In fact, currently, there are probably many more Americans who are more concerned with the price that they are paying for gasoline than about trying to manipulate the climate to produce some undocumentable alteration that may or may not have any direct impact on their lives. Sure, the April 26th-28th tornado outbreak was a tragedy, as is the ongoing flooding along the Mississippi river. So too was hurricane Katrina. But the role of anthropogenic climate change in those and every other weather event is largely unknowable. Even more unknowable is the role that any reduction in fossil fuel will play in future climate catastrophes. When the next Cat 4 or 5 hurricane makes direct landfall in Miami (just as one did in 1926 and 1992), what will mankind’s role in the meteorological conditions be and how will that role be influenced by the which type of fuel is used to meet our daily energy needs? Are we to be blamed or credited?

The answer is, is that it will be impossible to know. As it will be for all future tornado outbreaks, floods, droughts, heat waves, etc.

But the NAS committee sees things this way:

In the committee’s judgment, the risks associated with doing business as usual are a much greater concern than the risks associated with engaging in strong response efforts. This is because many aspects of an “overly ambitious” policy response could be reversed if needed, through subsequent policy change; whereas adverse changes in the climate system are much more difficult (indeed, on the timescale of our lifetimes, may be impossible) to “undo.”

Great. In their opinion, it is easier to fix the economy than it is to fix the climate (not sure that the current Administration would agree). But, in the eyes of many, the economy needs fixing, while the climate may or may not. I would imagine that for the majority of Americans (as well as folks the world over), the former is more pressing than the latter, and likely always will be.

In the opinion of the NAS committee, which is primarily aimed at lawmakers and policymakers, concerns over climate risk should supercede those of risks to the economy.

But other folks get to offer their own opinions to lawmakers and policymakers as well.

Come future elections, I am sure many will be offered to those running for office who have, or have not, taken the NAS recommendations to heart. The outcome will be telling.

Free market logic needs to reach beyond our own “choir of believers.” And this means improving our penetration with the general media, a challenge indeed.

In Hoodwinking the Nation, Julian Simon noted that even after he had so convincingly debunked the “vanishing farm land” scam, and the U.S. Department of Agriculture reversed its original position, the press largely ignored the correction. Simon ruefully noted “false bad news” sells.

In the case of the official position of Virginia, as documented in the 2010 Virginia Energy Plan, one sees the 2007 plan scripted under a Democratic Governor carried forward under a proclaimed conservative Republican governorship. The tax carve outs for renewable energy interests continue under the guise of the “all of the above” energy sourcing mantra of Governor McDonnell.

Special interests find favor no matter the administration. The 2007 “Virginia Re-regulation” of utilities legislation illustrates the success of the regulated to shape legislation on their terms. Now the same core of Virginia utility producers have been given “enhanced rates of return” in the renewables market, and other taxpayer funded incentives. Wind farms are promoted as job building enterprises.

The VA Scientists and Engineers for Energy and Environment (VA-SEEE) has sought to have the Commonwealth identify the source of their science data, if any, used to formulate public policy. The vast majority of ranking state officials are lawyers by training.

My letter published in the Richmond Times Dispatch, on Christmas Day, is an attempt to educate the public, and call the Commonwealth to task on the use ( or misuse) of taxpayer funds to the benefit of corporate interests. It is perhaps a quixotic effort confined to the publication limit of 350 words or so. However, as the Tea Party movement has demonstrated, it is only by direct public involvement and engagement that the political class will take notice, no matter what the topic, be it energy, climate, or health care.

Letters to the editor

By Times Dispatch Staff
Published: December 25, 2010

Editor, Times-Dispatch:

In this season of giving, it is worthy to note the generosity of the Virginia legislature to the renewable-energy lobby. State Sen. Frank Wagner’s website lists his visionary Virginia Energy Plan (VEP), passed in the 2006 Virginia General Assembly, during the heyday of climate change hysteria.

Gov. Tim Kaine’s 2008 roving Climate Change Commission sought vindication for various imagined catastrophes arbitrarily attributed to man-made climate change. The commission considered it axiomatic that climate change was man-made and resulted from fossil fuel usage; the validity of that assumption justified by “science is settled” U.N. reports and Kaine’s views. The final commission report included recommendations for increased use of renewable fuel sources and energy conservation. Higher consumer utility cost was seen as a desirable incentive for lowered energy usage.

The next year brought Climategate and evidence of climate science malfeasance, collapse of the U.N. Copenhagen climate-change agenda, recognition of 10 years of flat temperatures since 1998, and public awareness that dire forecasts of global climate catastrophes never materialized.

The McDonnell administration has brought changes to the commonwealth. However, the 2010 VEP still carries the imprimatur of Wagner and the favored place given renewable energy at the cost of the under-represented Virginia taxpayer.

Financial failure of green-jobs projects in Spain is ignored. Al Gore has recanted his support for corn ethanol, explaining it as a political calculation of the moment. Yet, McDonnell and Wagner continue to play Santa with taxpayer monies by promoting legislation for offshore wind power even though the 2010 VEP characterizes the 12.5 to 22.5 cents per kilowatt hour price as “not cost effective.” Massachusetts’ Cape Wind project imposes a ratepayer cost premium for wind of 2 to 3 over conventional fuels. Little mention is made of necessary, additional conventional-powered plants to provide base load when the wind fails. Ho,ho,ho!

---

Charles Battig, VA Scientists and Engineers for Energy and Environment. Charlottesville, Virginia.

Specific to energy and the environment, one clear message from the election is that cap-and-trade, top-down, command-and-control regulations are a losing argument with the voters.  Candidates who voted for cap-and-trade, with few exceptions, ran away from that vote.  Voters understand that cap-and-trade is a national energy tax.

With respect to energy policy, the election results will likely yield a modest and marginal improvement.  While it will certainly not be the “environmental doomsday” that the national environmental lobby claims, unless the Republicans have truly changed their stripes, it will also not be the dramatic improvement that some predict or hope.

The Good
With the Republicans in charge of the House and a narrowly-controlled Democratic Senate, massive new federal programs like cap-and-trade appear to be off the table for now.   The biggest improvement we can expect is that the new Republican leadership in the House will carry out the necessary job of conducting oversight hearings and trying to rein in an out-of-control Obama Administration, whose goal from day one has been to fundamentally transform America.

Hopefully, the new Republican majority in the House will provide a counterweight to the Obama administration’s goal of making coal, oil, and natural gas more expensive and more difficult to produce domestically.  In the past, Republicans have not exactly been paragons of the free-market, so it is as important as ever to continue to hold Congress and the administration accountable whenever they move towards government intervention in energy markets.

The Not-So-Good
One doesn’t have to think back long to remember what previous Republican majorities have delivered—policies such as the ethanol mandate, subsidies for inefficient and unreliable energy sources, and moratoria on oil and gas exploration and development, just to name a few. 

In recent weeks, leading Republicans have already pushed for a federal renewable electricity mandate, a carbon tax, utility price caps, a tax on oil imports, and a newer, larger ethanol mandate.  Unfortunately, many Republicans, it seems, are willing to compromise free market principles for the sake of political expediency.

WHAT WILL THE NEW CONGRESS DO?

As noted above, there are both positives and negatives to Republicans increasing their numbers in Congress.

•   “All-of-the-above” energy Republicans. With this new political landscape, President Obama will try to advance his energy agenda in piecemeal fashion.  Some Republicans will be tempted to go along with the President to support misguided notions of their “all-of-the-above” energy policy.  While “all-of-the-above” makes for a good rhetorical device, it is deeply flawed as an actual policy since it seeks to increase federal involvement in all types of energy production.

Instead of increasing federal involvement in energy, Republicans should move away from “all-of-the-above” and instead focus on creating a level playing field for all sources of energy.  Congress should focus on removing impediments to all types of energy production so that individual Americans, not politicians, can decide which types of energy work best for their individual needs.  This agenda would be much more in keeping with the renewed (and welcome) emphasis on smaller government, more freedom, and less federal involvement in all aspects of our lives.

•    Oversight. We expect to see hearings on EPA’s continued and unprecedented assault on affordable energy access and use—starting with the agency’s ongoing development of greenhouse gas rules, and extending to new fuel economy mandates, ozone regulations, industrial boiler regulations, dust regulations, and others.  Also expect to see hearings on the Administration’s hostility to oil and gas production, the Nuclear Regulatory Commission’s agenda for the Yucca Mountain, and analyses of the renewable energy projects funded through the 2009 economic stimulus package to name a few oversight topics.

•    More benefits for nukes and electric cars. In the past, some powerful Members of Congress have supported tax credits and increased government funding for nuclear power and natural gas and electric vehicles. For example, Sen. Burr, who would replace Sen. Murkowski as chairman of the Senate Energy and Natural Resource Committee, has previously supported these policies.

•    Offshore oil and gas exploration and development. The Republicans in Congress will no doubt seek to pressure the Department of the Interior to accelerate the pace of permitting for offshore energy development.

•    Renewable Energy Mandate. As improbable as it seems, some Republicans lead by outgoing Senator Sam Brownback (the Governor-elect of Kansas), are talking openly about imposing a federal renewable energy mandate on electricity users during the upcoming lame duck session. Such a mandate would increase energy costs and reduce electricity reliability and result in a transfer of money from ratepayers to well-connected wind and solar companies and their lobbyists.

U.S. HOUSE OF REPRESENTATIVES ELECTION RESULTS

It is no surprise that Republicans regained control of the House.  As of this writing, it appears that the Republicans are poised to pick up at least 60 seats—more than enough for a comfortable majority. The only real question is, what does this mean for energy policy?

Committee Chairmanships:

•    House Energy and Commerce Committee. Under current House Republican rules, Energy and Commerce Ranking Member Joe Barton (TX) may be barred from seeking the full committee gavel in the 112th Congress, owing to term-limitations.  Barton, however, will request a waiver from that rule—with a final decision likely handed down in a few short weeks.  If that dispensation is not secured, next in line for the top spot is Congressman Fred Upton (MI).  For supporters of less government intervention, Upton has a spotty record.  For example, he has consistently voted to place more federal lands off limits to domestic energy production, was an architect of the incandescent light bulb ban, has voted for ethanol mandates, and has cast votes in opposition to oil and gas production from offshore areas.

•    House Natural Resources Committee. Representative Doc Hastings (WA), the current Ranking Republican on the House Natural Resources Committee, will likely serve as its chairman in the 112th Congress.  This committee plays a central role in crafting policy with respect to energy production on federal lands, both onshore and offshore.  Hastings has a solid pro-energy record, which should bode well for those interested in reigning in the Obama agenda of curtailing domestic energy production on federal lands.

•    Select Committee on Energy Independence and Global Warming. An important first test for the Republicans in the House will be whether or not they dissolve this toothless committee.  Speaker Nancy Pelosi (CA), as a payoff to her pal Congressman Ed Markey (MA), invented this committee.  It has no legislative authority. It is “feathers on a fish,” according to Democratic Representative John Dingell (MI), the dean of the House.  Unfortunately, Representative Jim Sensenbrenner (WI), the Ranking Republican on the committee, has argued strongly that it not be dissolved (with him serving as Chairman, naturally) so it can focus on oversight.  The fact that Sensenbrenner, regardless of his rationale, is unable or unwilling to look beyond his own parochial interests and call for an end to this charade of a committee is a discouraging sign.

U.S. SENATE ELECTION RESULTS

While all of the results are not yet in, it appears the Democrats will cling to a narrow majority in the Senate.

Senator Harry Reid is expected to retain his post as Majority Leader.  He is openly hostile to affordable, domestic energy production. Senator Reid has been the President’s lead advocate in the Senate in promoting an agenda to deliberately increase the price of energy, impose additional regulations, and decrease domestic energy production.

Committee Chairmanships:

•    Senate Energy and Natural Resources Committee. Senator Jeff Bingaman (NM) will remain the Chairman of the Senate Energy and Natural Resources Committee. Senator Bingaman is a lead proponent of a renewable electricity mandate. He is expected to push for this policy during the lame duck session in the coming weeks. Bingaman is hostile to offshore oil and gas production, as demonstrated by his vehement opposition to state revenue sharing of royalties from offshore energy production.
Due to the time zone difference and the complexity involved in counting write-in votes, the outcome of the Alaska Senate race remains undecided. Senator Lisa Murkowski, the Republican incumbent and current ranking member of the committee, is fighting to save her seat as a write-in candidate against the Republican nominee Joe Miller. Senator Murkowski’s record has not always been seen as a good one.  For example, when she fought to pass a ban on EPA moving forward on its greenhouse gas rules, she said she was doing it—above all else—to protect the Senate’s prerogative to pass the same type of regulation; regulation that would increase costs to consumers and drive jobs offshore. If she ultimately loses, Senator Richard Burr (NC) will likely replace her as ranking member.

•    Senate Environment and Public Works Committee. Senator Barbara Boxer (CA) has won reelection and will remain Chairwoman of the Senate Environment and Public Works Committee. Boxer is a darling of the anti-energy environmental lobby and will continue to use her platform as Chairwoman to serve as a foot solider in Obama’s war on affordable energy.
Senator James Inhofe (OK) will likely remain the ranking member on the committee. Inhofe has been a tireless champion in the fight against new draconian greenhouse gas regulations such as cap-and-trade.

THE WHITE HOUSE

Typically there is a shakeup in White House staff after the President suffers an electoral defeat as stunning as this election. And nowhere in the Obama Administration would a staff shake up be more welcomed than in the agencies that deal with energy and environmental issues.

But even if a shakeup were to occur, there is no reason to believe the administration will back down from its regulatory assault on affordable energy. EPA is moving full speed ahead with its offensive on affordable energy, namely through the implementation of greenhouse gas regulations.  EPA will also continue forward with new regulations on dust, ozone, “conductivity” of surface water in Appalachia (in an effort to stop coal mining), industrial boilers, water-cooling intakes, and more.

Yesterday’s election, among other things, is a direct referendum of the administration’s anti-energy agenda.  The administration will recognize this and switch its focus to the less democratic arenas of regulation and litigation to achieve its ends—which include increasing the costs of all traditional and reliable forms of energy and transportation.

The new Republican leadership in the House has the power to prevent this from happening by defunding the White House’s ability to implement their draconian greenhouse gas rules through the budget and appropriations process.  The big question is whether they will have the resolve to take on these powerful agencies.

ELECTION RESULTS IN THE STATES

If the money spent on campaigns indicates their relative importance, the three most important races last night weren’t U.S. Senate or House races, but the contests for governor in California, Florida, and Texas.  While the fight to control the House and Senate dominated the news and election coverage, the races at the state levels might be even more important than control of the U.S. Congress since the states will redraw all 435 Congressional districts for the next decade.  Last night, 37 governorships and 6,118 state legislative seats were up for grabs. As of this writing, eight governorships and five state legislatures have changed from Democratic to Republican hands. Among the big three prizes, Florida and Texas appear to remain in Republican control.

California Prop. 23. California Prop. 23 failed.  This proposition would have suspended the implementation of California’s Global Warming Solutions Act unless unemployment in California fell below 5.5 percent for 4 consecutive quarters.  California will face some severe economic challenges because of the Global Warming Solutions Act as it tries to implement policies that have failed everywhere they have been tried.

The passage of this initiative was always a long shot, but its failure has given some momentum to the proponents of substantial energy limitation and regulation. Thanks to your efforts and support, we have given environmentalists and their allies precious little to cheer about in the past two years. They will surely cheer that they have retained the Global Warming Solutions Act for the time being.

In the future, this defeat will have little practical importance outside of California.  States are not following California’s lead off the economic cliff.  Instead, other states such as Florida and Maryland, which have passed greenhouse gas regulations laws have taken a much more tentative approach and will likely limit their losses during these difficult economic times.

Regardless of the fact that Proposition 23 failed, the reality of the election is that states are going to take one step back from both regional greenhouse gas initiatives (both Nevada and New Mexico have new, conservative governors who will exit the Western Climate Initiative, which in turn will hasten the collapse of its counterpart in the East, the Regional Greenhouse Gas Initiative), as well as renewable mandates (there are about a half dozen governor candidates who have explicitly said they plan on either repealing or scaling back their state’s mandates).

CONCLUSION

The election may be over, but the fight has just begun.  Thanks to your support, many important battles in Congress were won on the energy front.  The stakes, however, are just as high in the coming two years.  The White House will continue to dictate policy, but hopefully its power will be somewhat restricted by the new Republican majority in the House.  Too many times in the past Republicans have compromised important principles and imposed harmful energy policies. We must work to ensure that history does not repeat itself.

And with this two-part scheme, games are played. Wind generators can bid a low price into the pool only to receive a higher FIT, which gives them an incentive to underbid. This might reduce the pool price but not overall cost to Germans for electricity.

Investing in New Generation: What Makes Sense?

If a generation resource is a good investment for its developers then it must return a profit to them.  In a normal electricity market this profit comes from supplying a segment of the demand (peak, intermediate/cycling, baseload) from a plant that is efficient technically and financially.

For existing plants and determinations of electricity costs in the here and now we can figure out the average cost of supplying electricity by calculating the weighted average cost of supply for each time period in the market every day.  If the addition of one generation source raises this weighted average without improving service quality or reliability, then it is not economical and would generally not be chosen in a well-functioning market.

But what about the future?  Electricity suppliers must invest large sums in new generation plants with the expectation that these plants will meet demand at the least cost.  This cannot be known with certainty, and mistakes are made all the time, especially when government policy and rent-seeking drive investment choices.

Transmission network operators – those in charge of the “natural monopoly” part of the power business – try to reduce the risk attendant to future supply by figuring out the least costly way to supply power and energy to their customers in the future, including the wires to transmit the electricity.  They have to take account of a long list of considerations: investment cost, fuel supply, emissions and licensing regulation, proximity to existing load centers and transmission nodes, transmission congestion – you get the idea.

The transmission system operator also has to pay attention to public policy – renewable energy mandates (“portfolio standards”), federal tax incentives (producer tax credits for wind and solar), feed-in tariffs, powerful politicians who do not want their vistas impaired – in a host of ways that directly impact their views of an optimal future generating system.

What Does the Wise Transmission Operator Do?

A wise investor in generation will first figure out what is economic to build? what are the physical constraints on the system? and finally, what limitations will public policy put on otherwise least cost generation choices?

A Case Study of “Germania”[i]

Let us imagine that we have a rather large and wealthy country to play with, one that currently has about 129 GW of installed generation capacity.  Further, we can imagine that this wealthy country, responding to its powerful environmental movement, has decided to

(i) phase out nuclear power;

(ii) limit future coal power-plant operations;

(iii) build a lot (a lot!) of wind generation plants; and

(iv) bring in most of its gas supply from Russia at prices linked directly to refined oil products and crude (i.e., high and volatile).

Such a country would have a great deal of baseload generation capacity – coal + lignite + nuclear – perhaps half of total generation capacity (US has coal + nuclear capacity of about 40%).  Suppose further that green thinking had created incentives (FIT) that pushed wind up to about 20% of total nameplate capacity.  Most of the country’s hydro generation and imports are soaked up by wind mirroring and shadowing.

With all of that generation capacity essentially independent of fuel price trends it is no accident that the cost of generating electricity in Germania is (i) high; and (ii) not responsive to changes in oil and gas prices.  At current world oil prices the average cost of electricity generation in Germania is about 6.7¢/kWh (7.8¢/kWh if crude reaches $110/bbl).

Germania’s Least-Cost Generation System

With natural gas still expensive – kind of like burning oil but more efficiently – what does a least cost generating system for Germania look like in 2020, about the time the initial wave of early “teens” investments go on line?

The first thing you do is throw out the phase outs – keep the existing nuclear and efficient coal plants in operation until you have a more cost-effective substitute;

Second, phase out your highest cost oil plants – heavy fuel oil and old combustion turbines (2.6 GW)

Third, build some new, more efficient coal plants (1.6 GW) and CCGT units (4.5 GW), and nuclear (4 GW), reduce emissions per kWh by more than 30% in the new coal plants;

Fourth, operate existing wind (28 GW) but do not build new generation from that source.

Total annual cost in 2020: $48 billion at 6.7¢/kWh for average supply cost and 6.6¢/kWh for new supply.

Back to Our Previously Scheduled Programming

Everyone in Germany’s power sector knows that this least cost system is simply some renegade economist’s fantasy.  Back in the Real World of Energy Policy, there are several important considerations that must be accommodated:

Stay clean – phase out at least 25% of older coal and lignite plants, make permitting of new coal plants difficult;

Stay green – stay the course on wind energy; and

No nukes – continue to phase out nuclear power.  Build only enough new nukes to keep the Gauls happy.

So what does Germania get for its $53 billion annual outlay for electricity (at 7.6¢/kWh average supply cost and 7.8¢/kWh for new supply)?

Less coal and lignite – existing units fall to 45 GW from 58 GW, new coal rises to 3.1 GW to make up for some of the lost legacy capacity;

Less nuclear power – existing nuclear capacity falls to 15 GW (from 19 GW), new nuclear capacity falls to 2.7 GW from 4 GW in the least cost case;

More gas – 6.5 GW of new CCGT, up from 4.5 GW in least cost case;

More wind – another 17.5 GW, for a total of 35.5 GW of wind, 25% of total nameplate capacity; and

More imports – enlarged interconnection with Benelux and Denmark/Norway is only cost effective way to shadow additional wind and meet peak demand.

And if the price of oil rises to $110/bbl by 2020, then this system will cost Germania $62 billion annually at 8.8¢/kWh.

The True Green Scenario – phase out 50% of coal and nukes, double wind installations, increase imports – costs about 7.9¢/kWh on average, 8.3¢/kWh for new supplies and carries annual costs of $56 billion.  This option requires 15.6 GW of new CCGT, 2.1 GW of new combustion units, 10.6 GW of import capacity and operates existing HFO units at 100% of capacity (!), even building a couple of new HFO plants to meet demand – not green, not cheap and not feasible (it only solves inside the box).  And by the way, higher oil prices for this beauty will cost $66 billion/y at 9.3¢/kWh.

Does ‘Green’ Always Have to Hurt?

Easing off the green pedal a bit creates enough breathing room in Germania to generate a lot of clean electricity at a much lower cost.  A more moderate program, even with 10 GW of new wind, can be done at a far lower cost with just a few adjustments:

Slow the phase out of existing coal and nuclear plants – keep 85% of existing coal and nuclear plants in operation in 2020;

Build new coal and nuclear plants – reduce emissions per kWh and burn less coal overall, and improve the efficiency and security of the nuclear fuel cycle;

Import more – let more medium term supply come from lower cost Benelux and Scandinavian suppliers to mirror/shadow wind and follow load.

A more moderate program of this sort could supply Germania for about $49 billion annually at an average cost of 6.9¢/kWh.  Even higher oil prices do not hurt as much as in the more aggressive scenario, with $110/bbl crude oil increasing total annual costs to $56 billion at 8.0¢/kWh.[ii]

As a Great Philosopher Once Said, “A man’s got to know his limitations”

In a world of unlimited wealth, where electricity can be stored and plants can be built instantaneously on a whim, a complete remake of a large power system seems feasible and even desirable to some.  Back in the real world, where everything takes time, costs money and different sources of electric power are not perfect substitutes for one another, such ambitions are difficult to realize.

Germania set up too many targets on too short a time frame.  The result was a series of conflicting mandates and constraints – close it down; no, we need it, keep it open; will the Jutes cooperate on supply? What happens to our gas supply when “bad weather” rolls in from the East (as it eventually does in Germania)?

A cleaner, greener power supply system is possible over a longer period of time at a far lower cost than a crash program.  Orderly replacement of older coal plants with more efficient and cleaner new ones makes sense given the country’s resources, geography and demand patterns.  As in the US a crash program to overhaul the system will ultimately force increased reliance on older, less efficient coal plants; it ignores microeconomic rationality for chimerical goals and wastes a lot of money and energy in the process.  Or to paraphrase that revered Soviet philosopher, “you may not be interested in markets, but markets are interested in you.”  Germania ignores market forces at its own peril.

[ii] The cost of new supply is below the average cost of supply by about 7% for this moderate scenario, while the “Green” future shows new supply above average cost by about 2-3%.

Reprocessing and Recycling in the U.S.

The reprocessing of nuclear fuel first began in the U.S. in January 1943. The Bismuth Phosphate Precipitation Process was used for recovering macroscopic quantities of plutonium. The REDuction-OXidation (REDOX) process was the first successful solvent extraction process to recover both uranium and plutonium; it was further refined into the Plutonium and URanium EXtraction (PUREX) process, which has become the most common and fully commercialized liquid-liquid extraction process for the treatment of spent nuclear fuel (SNF).

In order to support a self-sufficient commercial nuclear power industry in the 1960s, the Atomic Energy Commission (AEC, circa 1946 to 1974)—the predecessor regulatory agency to the NRC (1974 to present) and the Department of Energy (circa 1977 to present)—encouraged the transfer of nuclear fuel reprocessing from the federal government to private industry. The three privately owned reprocessing plants constructed were the Western New York Nuclear Service Center (West Valley, N.Y.), Midwest Fuel Recovery Plant (Morris, Ill.), and the Barnwell Nuclear Fuel Plant (Barnwell, S.C.).

West Valley, N.Y.: The regulatory lesson. The West Valley facility started reprocessing SNF assemblies using the PUREX process in 1966, and by early 1972 it had reprocessed nearly 1,000 SNF assemblies. However, throughout 1973 and 1974, the AEC adopted increasingly rigorous safety criteria for nuclear facilities, mainly related to seismic issues. In September 1976, West Valley closed due to the economics of complying with heightened regulatory requirements applied retroactively.

Morris, Ill.: The technical lesson. The Midwest Fuel Recovery Plant (MFRP), completed in mid-1971, became a prototype for intermediate-size reprocessing plants to be built near existing nuclear power plants in an effort to reduce transportation costs and public acceptance obstacles. In addition, the designers attempted to minimize the generation of radioactive liquid effluents by avoiding, to the maximum extent practicable, the use of solvent extraction. The facility utilized an Aquafluor process that featured only one stage of solvent extraction and used remotely operated equipment. The waste was to be calcined, placed into containers, and stored in a pool awaiting shipment to a federal repository. During the design and construction phases, processes were demonstrated in the laboratory with bench-scale testing before being incorporated into the facility.

Unfortunately, equipment failures and technical problems prevented the plant from achieving full-scale operation. Its longest sustained run was 26 hours, and in March 1974 all operations were suspended. In July 1974, the MFRP was determined to be inoperable in its as-built configuration and to require a second decontamination solvent extraction cycle that would take a minimum of four years to complete. Finally, given the projected costs and the increasing regulatory scrutiny at West Valley, operations were terminated in August 1974. The MFRP closed without ever having reprocessed a single SNF assembly. It is currently used as an independent wet-pool storage installation.

Barnwell, S.C.: The political lesson. The Barnwell Nuclear Fuel Plant (BNFP) was the first large-scale commercial reprocessing facility in the U.S. consisting of:

· A fuel-receiving and storage station.

· A separations facility to chemically process SNF assemblies into liquid uranium, liquid plutonium, and liquid high-level waste (HLW) using advanced PUREX technology.

· A uranium hexafluoride facility to convert the liquid uranium into uranium hexafluoride.

· A plutonium conversion facility to convert the liquid plutonium to an oxide.

· A waste solidification facility to solidify the liquid HLW and store it prior to shipment to a federal repository.

The BNFP separations and uranium hexafluoride facilities were finished and undergoing preoperational testing when the NRC terminated all licensing actions on December 23, 1977, as part of U.S. policy to defer indefinitely the reprocessing of commercial SNF in response to proliferation concerns.

The “Decision” to Defer

During the 1976 presidential election campaign, critics raised concerns over the acquisition of plutonium from civilian nuclear power programs, the proliferation of nuclear weapons, and controls over exporting nuclear technology. In response to these concerns, and just prior to the 1976 election, President Ford announced a major decision by the U.S. government calling for a temporary halt to reprocessing that was aimed at stopping the proliferation of nuclear weapons capability.

In 1977, the Carter Administration extended the moratorium into a long-term policy to defer indefinitely the commercial reprocessing and recycling of plutonium produced in U.S. nuclear power plants. As a result of this decision, approximately 97% of the recoverable uranium and plutonium from SNF became nonrecoverable waste products.

Although the goal in principle was desirable, it ultimately eliminated all U.S. commercial reprocessing. In spite of the U.S. position, reprocessing continued elsewhere in the world, causing the U.S. to lose much of its influence in international nonproliferation efforts.

In October 1981, President Reagan lifted the indefinite ban on U.S. commercial reprocessing activities. However, even overlooking the negative history of the West Valley, Morris, and Barnwell plants, the availability of low-cost uranium, numerous plant cancellations, and premature shutdowns eliminated any interest in and financial incentives to reprocess SNF. By 1993, President Clinton had reaffirmed the U.S. deferral policy that discouraged reprocessing and research.

Reprocessing Around the World

As in the U.S., reprocessing programs were started elsewhere in the world in order to support defense and nuclear energy programs. Currently, reprocessing and recycling is conducted in France, the United Kingdom, Japan, Russia, India, and China; Germany and Belgium have conducted pilot activities. Several facilities provide reprocessing and recycling services across national boundaries. Those facilities use an optimized PUREX process that separates uranium and plutonium and encapsulates the remaining transuranics (such as americium, neptunium, and curium) and fission products into a vitrified waste form.

For example, in France, the mission of the AREVA La Hague plant, which entered service in 1966, is to reprocess SNF. Reprocessing consists of separating and conditioning the various components of the SNF for recycling. Approximately 97% of the used fuel is recyclable when it leaves the reactor—96% as uranium and 1% as plutonium—while 3% is nonreusable waste materials and fission products. Therefore, natural uranium resources can be conserved, and the volume and toxicity of the final waste materials can be significantly reduced by treatment and conditioning specific to each type of waste.

The AREVA La Hague plant has a commercial reprocessing capacity of 1,700 metric tons of SNF per year, equivalent to annual SNF discharges from 90 to 100 light water reactors (Figure 1). For more than 20 years, AREVA La Hague reprocessing agreements have been in effect with the French nuclear program, Japanese power companies, and 29 European power companies, which are located in Germany, Belgium, Switzerland, and the Netherlands. From 1990 to 2007, the La Hague site has reprocessed approximately 23,600 metric tons of SNF for the recovery and recycling of uranium and plutonium for new fuel. The waste products consisting of transuranics and fission products are then vitrified for long-term storage. The volume of material requiring repository disposal is reduced by a factor of six compared with directly disposing of SNF.

1. AREVA operates a state-of-the-art used nuclear fuel reprocessing center in La Hague, France, that accepts fuel from nuclear plants across the European Union and Japan. Courtesy: AREVA

According to Dr. Alan Hanson, executive vice president, technology and used fuel management for AREVA (Bethesda, Md.), the economics of recycling can vary. “It is clearly economical to recycle aluminum because of the huge energy costs required to make aluminum, but it may be marginally economical to recycle paper. Nevertheless, it is the right thing to do. In the case of recycling used fuel, you can eliminate the need for 25% to 30% of new uranium. In addition, by reprocessing, we convert the waste form, primarily comprised fission products and transuranics, into highly stable vitrified glass that we believe is a better durable waste form than the fuel assembly itself.”

The COEX Process

Under GNEP, various reprocessing and recycling options have been proposed for separating SNF constituents into several product streams. Hanson stated that AREVA has proposed a recycling strategy based on a new integrated co-extraction (COEX) process (Figure 2).

2. In the AREVA COEX recycling process the used nuclear fuel is separated into three major streams: uranium-plutonium, uranium, and fission products and minor actinides. The COEX process does not separate out pure plutonium, which reduces the risk of its being used to build nuclear weapons. Source: AREVA

Whereas the PUREX process was originally designed to purify plutonium for weapons purposes, the COEX process does not separate pure plutonium at any point in the recycling plant. COEX consists of two colocated processes: the treatment process and the mixed oxide (MOX) fuel fabrication process. One additional attraction of MOX fuel is that it provides a way to dispose of surplus weapons-grade plutonium in the current U.S. fleet of conventional light-water reactors (LWRs).

In the COEX treatment process, SNF is separated into three major streams:

· Uranium-plutonium, extracted together and then turned into MOX fuel.

· Uranium, which is sent to external facilities for purification, conversion and reenrichment, and fabrication of additional recycled fuel.

· Fission products and minor actinides, which are vitrified into glass logs, stored on site as HLW, and eventually disposed of in a licensed repository.

In the COEX process, the uranium-plutonium mix is turned into MOX fuel for use in LWRs. Hanson commented that “The uranium-plutonium output stream is precipitated and co-precipitated and never, either as a product or in the piping in the facility, is pure plutonium. In that regard, COEX meets the nonproliferation requirements of GNEP by not producing pure separated plutonium, and the output product is one step further away from being usable for weapons purposes.”

The next generation of reprocessing and recycling plants in France that will ultimately replace the La Hague facility will use the COEX process.

Here in the U.S., AREVA announced in May 2008 that Shaw AREVA MOX Services LLC and the DOE had signed an agreement implementing construction of the Mixed Oxide (MOX) Fuel Fabrication Facility at the Savannah River Site in Aiken, South Carolina. The facility will remove impurities from surplus weapons-grade plutonium and mix it with uranium oxide to form MOX fuel pellets for reactor fuel assemblies. The assemblies then will be used in commercial nuclear power reactors. The facility’s design is based on AREVA’s La Hague and Melox fuel treatment facilities in France. From a physical protection perspective, the self-protecting, highly radioactive nature of the used MOX fuel will prevent direct handling of the assemblies, which will deter diversion of the residual plutonium.

U.S. Missed the SNF Boat

The closed fuel cycle option that involves reprocessing and recycling SNF has gradually gained recognition thanks to more than 40 years of demonstrated operational experience in France and a higher level of reliable economic data from actual operations. The Boston Consulting Group conducted an independent study funded by AREVA to review the economics associated with the closing stages of the once-through and recycling strategies. Proprietary data was obtained from AREVA, which reflected more than 20 years of nuclear materials reprocessing and recycling experience.

The study compared the long-term cost of recycling SNF against the possible cost of a repository handling the same SNF in a once-through strategy. In one scenario, the overall discounted cost of recycling SNF was on the order of $520/kg. This result was comparable to the cost of a once-through strategy, estimated at $500/kg, especially considering uncertainties, such as the price of uranium and repository costs.

Examining another possible scenario, the consulting group considered a new integrated recycling plant scheduled to open in 2020 that would use the COEX process, handle 2,500 metric tons per year of SNF, and be combined with a repository (such as Yucca Mountain) for storing HLW and legacy SNF. This scenario was projected to have a total net present cost of $48 billion to $53 billion. This result is equivalent to the net present cost of an exclusive once-through strategy with Yucca Mountain and an additional repository estimated at $47 billion to $50 billion.

Furthermore, the projected total undiscounted life-cycle cost for the recycling strategy would be approximately $113 billion, compared to approximately $124 billion to $130 billion for the once-through strategy. Given the intrinsic uncertainties used in the study, and the fact that almost 30 years have elapsed since President Reagan lifted the indefinite ban on U.S. commercial reprocessing activities, the economics of a recycling strategy are comparable to, if not better than, those of a once-through strategy.

International SNF Reprocessing

Through international agreements and contracts, and following International Atomic Energy Agency (IAEA) regulations, it is very common for European companies to ship their SNF by rail to La Hague for reprocessing and recycling. For example, 235 metric tons of SNF from Italy’s nuclear power plants will be sent to France for reprocessing.

However, French nuclear law does not allow AREVA or any other entity to take waste and keep it in France. Although the recovered uranium and plutonium can be recycled for new fuel, the vitrified waste products are returned to the country of origin or another third party, as long as it is not in France. Therefore, Italy has to take back its vitrified waste products at some point in the future, but no later than 2025 (Figure 3). Other countries that ship their SNF to France for reprocessing must adhere to the same requirements.

3. The vitrified waste is kept in storage cells located below the floor at the La Hague facility. Courtesy: AREVA

Overseas shipments of another country’s SNF and shipments returning the vitrified waste for disposal must use specifically modified ships that adhere to the International Code for the Safe Carriage of Packaged Irradiated Nuclear Fuel, Plutonium and High-Level Radioactive Wastes on Board Ships (INF Code).

Hanson indicated that because processes are in place for a country to export its SNF and re-import its vitrified waste for disposal, this option could help the U.S. alleviate its SNF storage problem. However, international agreements would need to be developed between the NRC and France’s equivalent regulatory agency, the Nuclear Safety Authority (ASN).

“Furthermore, there is a well-utilized international program through the IAEA for transporting nuclear materials,” Hanson noted. “However, every nation that adopts these regulations tends to modify them in practice to meet their own needs. Because of that, there is a difference between the NRC’s and France’s regulations to certify nuclear transport casks. In practical purposes, there is no existing transport cask that has been licensed by both the NRC and the ASN. So there is no existing fleet of casks to move the fuel today between the United States and France. Possibly some of the existing fleet of transport casks could be adopted for this purpose, but there would need to be some up-front engineering and licensing considerations that must be worked out. Still, the biggest challenge in making this option economically justifiable is the cost of the marine transport of the used fuel and vitrified waste.”

Hard Lessons Learned

It remains unclear if a logical and politically acceptable path toward developing a national, long-term storage facility for SNF and HLW  or construction of a fuel reprocessing facility is possible in the U.S.. It is our opinion that there is not. The DOE and its predecessor agency has tried and failed multiple times, over several decades. State veto power over siting a storage facility makes approval of a facility essentially a national referendum on nuclear power, given that a veto must be overridden by the Senate and the House. Also, the extremely long period of time required to develop any storage facility would certainly span presidential administrations of both political parties, making any project like Yucca Mountain susceptible to closure when the political winds change. Why would we expect a different result at a new site a decade hence?

History can be a stern teacher, and we should learn this important lesson. There is no long-term, politically expedient road to a Yucca Mountain–type facility anywhere in the U.S. We expect the blue ribbon commission to spend the next two years or more studying the problem only to come to the same conclusion. Nuclear fuel reprocessing has only received political lip service for decades. If there isn’t the political will to complete Yucca Mountain, building a reprocessing plant in the U.S. is beyond comprehension.

As a nation, we would be better served if Congress would amend the NWPA and NWPAA to delete the statutory responsibility of the DOE to store SNF, refund the NWF contributions, and quickly settle the 60-plus lawsuits pending to cover all current and future nuclear plant SNF storage costs. The elegant solution is to prime the nuclear fuel reprocessing pump by reprogramming NWF money into building such a facility without using public money. This approach also will minimize the size of a Yucca Mountain-like repository and thus improve the chances of actually siting and building a waste fuel repository.

Portions of this post were first published in POWER magazine and co-authored with Contributing Editor James Hylko.

Ratepayers Pay to (Not) Play

1. View of the above-ground support structures and north and south portals at the now-defunct Yucca Mountain repository. Source: Department of Energy/Office of Civilian Radioactive Waste Management (DOE/OCRWM)

The nuclear industry is unique among energy producers in its contractual commitment to cover the full costs for managing its waste. The Nuclear Waste Policy Act (NWPA) of 1982 directed utilities to levy fees on electricity generated by nuclear power and to pay those fees into a federal Nuclear Waste Fund (NWF) that was to be used to develop and operate a national repository. In return for the payment of fees, the NWPA directed the federal government to accept ownership and begin disposing of the spent nuclear fuel (SNF) and other high-level waste (HLW) no later than January 31, 1998. Those fees included the cost of transporting SNF to the repository.

Since 1983, consumers of electricity from nuclear power plants have paid approximately $32 billion into the NWF. Consumers in Alabama and Georgia, for example, have sent more than $1 billion to the NWF and continue to contribute over $44 million a year. The current balance in the NWF exceeds approximately $22 billion, and consumers nationwide are contributing about an additional $750 million a year. The difference between total collections and the current balance is roughly equal to the approximately $9 billion already spent on preparing the Yucca Mountain site to date.

The key unanswered question: Is the federal government responsible to reimburse ratepayers for the cancellation of Yucca Mountain? The U.S. Senate Committee on Environmental and Public Works weighed in on this issue in 2008 and prepared an estimate of the potentially huge long-term liabilities. The committee estimated additional liabilities of $7 billion by 2017 and $11 billion by 2020 should Yucca Mountain be cancelled.

The committee’s estimates seem to be in the ballpark, given the torrent of federal lawsuits that have been filed by utilities. First up was the suit filed by Energy Northwest in 2006. The U.S. Court of Federal Claims ruled on March 5, 2010, that the DOE owes Energy Northwest nearly $57 million in damages for breach of contract involving the former repository. The amount awarded offsets costs incurred by Energy Northwest to construct a used fuel storage area at its Columbia Generating Station Unit 2, located in Hanford, Washington. The court found the breach of contract was the failure of the DOE to begin accepting SNF from nuclear power plants in 1998 when Yucca Mountain was to be in operation per the DOE’s “Standard Contract” with nuclear power plants.

The Energy Northwest suit is the first of more than 60 similar suits filed by nuclear utilities. If each nuclear plant in the U.S. received the same award as Energy Northwest did for Columbia, then almost $6 billion would be owed to those utilities to cover future costs of storage and processing.

If Not at Yucca, Then Where?

If the desolate Yucca Mountain location (on federal land) is unacceptable, can there possibly be another politically acceptable location for such a repository in the lower 48 states? Probably not. However, the second paragraph of the DOE press release describes the next steps in the process that the DOE has been directed to take: “President Obama is fully committed to ensuring that the Nation meets our long-term storage obligations for nuclear waste,” said DOE General Counsel Scott Blake Harris. “In light of the decision not to proceed with the Yucca Mountain nuclear waste repository, the President directed Secretary Chu to establish the Blue Ribbon Commission on America’s Nuclear Future to conduct a comprehensive review of policies for managing the back end of the nuclear fuel cycle and to provide recommendations for developing a safe, long-term solution to managing the Nation’s used nuclear fuel and nuclear waste.”

If we are enlightened by history, this committee will be unable to identify a politically acceptable site within the two years given to produce a final report. We believe that, absent suitable representation from the utility industry — Exelon’s John Rowe is the only utility representative on the 15-member commission composed mainly of former politicians and political appointees, five university professors, and several think tank associates — the process will be troubled from the start. The commission is being co-chaired by former Congressman Lee Hamilton, who represented Indiana’s 9th congressional district from 1965 to 1999 and served on the 9/11 Commission, and Brent Scowcroft, who served as the national security advisor to Presidents Gerald Ford and George H.W. Bush.

Once the interim report is released in 18 months (and rest assured the candidate locations will be leaked early and often), the extreme political pressure on Chu will surely delay the final report.

This commission’s report is reminiscent of the Energy Policy Act of 2005 and its provisions for identifying “Corridors of National Interest.” In that case, the DOE prepared an interim report for the Federal Energy Regulatory Commission (FERC) listing perhaps a dozen regions where FERC should take action to enforce construction of interstate transmission lines when they were blocked by individual states. Within weeks, political fallout caused the draft report to be removed from the DOE website. When the DOE report was finally issued many months later, only two regions were listed. Moreover, absolutely no further progress has been made over the past two years.

Why should we expect faster progress by the DOE on a much more contentious issue than power lines? In addition, the time given to committee members to complete their work is out of balance with that of past studies. Also, witness the fine hand of Nevada Senator Harry Reid. Withdrawing the Yucca Mountain Nuclear Regulatory Commission (NRC) application “with prejudice” eliminates that site from further consideration by the Blue Ribbon Commission.

Underlying motives are always unclear when blue ribbon commissions are appointed. Yes, the political landscape has changed since a similar location survey was completed about 20 years ago — that one identifying Yucca Mountain by name in legislation as the nation’s SNF repository. Nevertheless, appointing this blue ribbon commission and apparently pushing for a new long-term SNF repository was an excellent strategic move for the administration. If the federal government does not continue its quest for a long-term repository for SNF, then ratepayers are due a $33 billion refund from the NWF (plus interest, we would assume, since 1983). Furthermore, each of the nuclear utilities will sue for the cost of providing individual long-term on-site storage of SNF, transportation, and other costs, if they haven’t already.

We believe the total liability of the federal government could quickly surpass $50 billion plus operating costs of the many facilities in perpetuity should a Yucca Mountain replacement not be found. Pursuing a new repository appears to push into the future these NWF repayments and reimbursements caused by DOE’s contract breach with each nuclear plant owner.

In Part V, we look at the spotty history of nuclear fuel reprocessing in the U.S. and how the U.S. has fallen decades behind other countries in reprocessing infrastructure.

Portions of this post were first published in POWER magazine and co-authored with Contributing Editor James Hylko.

This post looks at the legislative history of the ill-fated Yucca Mountain repository and the formation of a committee to explore alternative storage sites (again). In Part IV, we will look at some of the legal and political repercussions of Yucca Mountain’s failure.  Finally, in Part V, we explore failed attempts to reprocess nuclear fuel in the U.S. and examine the global state-of-the-art reprocessing plants now operating or under construction.

The Retrievable Surface Storage Facility

The AEC announced plans (circa May/June 1972) to construct an engineered, at-grade Retrievable Surface Storage Facility (RSSF) to be used until a permanent geological repository would be available. The plan was to locate the RSSF at an AEC or federal site in the western U.S. However, the environmental impact statement (EIS) issued by the AEC in support of the RSSF concept drew intense criticism from the public and the Environmental Protection Agency (EPA). Both criticized the plan because of the possibility that economic factors could later dictate using the facility as a permanent repository, contrary to the planned interim use of the RSSF. In this instance, it was unacceptable to proceed with an interim storage system unless there were unambiguous assurances that a permanent repository would be developed.

In 1975, Dr. Robert Seamans—in one of his first acts as administrator of the Energy Research and Development Administration (ERDA)—withdrew the EIS associated with the RSSF and decided that a permanent waste repository should be given budget priority. ERDA was created to assume the responsibilities of the then-dissolved AEC that were not covered by the newly formed NRC.

In 1976 a multiple-site strategy was initiated that would have led to the development of several repositories by 2000. Letters were sent to 36 state governors, informing them of these plans and asking for their cooperation in site exploration activities. A number of generic studies were undertaken at the Nevada Test Site, the Permian Basin and Palo Duro sub-basin in Texas, and Salina Basin in Michigan, Ohio, and New York. Exploration of specific sites would begin in Texas, Louisiana, Mississippi, Washington, and Nevada for the site that would host the first commercial waste repository.

As a group, these states realized the importance of becoming more intimately involved in the nuclear waste management decision-making process. ERDA offered to work closely with the states and to keep the governors informed of how its programs were progressing. It also promised to terminate a project within a state if technical issues were not resolved through mutually accepted procedures. The states, in effect, were being offered what they believed to be veto power over construction of a waste facility within their jurisdiction. Thus, what began as a new initiative to involve states in participative decision-making soon devolved into individual states halting projects because they were reluctant to consider a facility in their state.

The AFR Storage Concept

Because of the geologic disposal program’s relatively late start and the federal government’s deferral of commercial reprocessing, concerns were raised that a number of operating reactors would run out of room to store their spent nuclear fuel (SNF) on-site. Should that occur, and if there were no alternative locations for storing the SNF, the reactor would be forced to shut down. To address this particular concern, and while ERDA was reorganized into the current DOE, in 1977, ERDA pursued an “away-from-reactor (AFR) storage” concept for any spent fuel that utilities wished to transfer to the federal government. The government would then take title to the fuel and be responsible for its permanent disposal. At the time of transfer, the utilities would pay a one-time charge that would fully pay for storage and disposal costs.

The AFR concept was initially designed to serve four different functions: preventing the shutdown of reactors pending repository development; providing time for the geologic disposal program to mature; allowing the U.S. to accept limited amounts of foreign spent fuel to achieve nonproliferation objectives; and maintaining access to plutonium and uranium in the SNF should reprocessing become viable again in the future. However, the AFR concept was viewed very much as the RSSF concept had been several years earlier. The result was also similar: The project was terminated in 1981.

Nuclear Waste Policy Act

In 1982, Congress enacted the Nuclear Waste Policy Act, which was signed by President Ronald Reagan on January 7, 1983. The NWPA represented the most expensive civil works project in history, establishing a schedule for the DOE to site and for the NRC to license geological repositories for permanent disposal of SNF and high level nuclear waste (HLW). The DOE was directed to assess numerous locations around the country for possible sites and present a minimum of three finalist sites. Although this legislation was a decisive step forward, its attempted implementation again raised a public outcry based on accusations that government agencies were acting in secret to identify storage sites.

To finance the project, the NWPA established the NWF, to which electricity consumers would pay a fee of one-tenth of a cent for every nuclear-generated kilowatt-hour of electricity consumed. The DOE would draw upon the NWF to finance the siting, construction, and operation of repositories. In exchange for payment into the NWF, the DOE was required to take title to the SNF and HLW following the opening of the first repository — scheduled for January 31, 1998.

In February 1983, the DOE carried out the first requirement of the NWPA by formally identifying nine potentially acceptable locations (the host rock is shown in parentheses), for the first repository:

· Vacherie dome, Louisiana (domal salt)

· Cypress Creek dome, Mississippi (domal salt)

· Richton dome, Mississippi (domal salt)

· Yucca Mountain, Nevada (welded tuff)

· Deaf Smith County, Texas (bedded salt)

· Swisher County, Texas (bedded salt)

· Davis Canyon, Utah (bedded salt)

· Lavender Canyon, Utah (bedded salt)

· Hanford Site, Washington (basalt flows)

By 1984, the DOE believed that one or more repositories would be available by 2007 – 2009 and that sufficient repository capacity would be available 30 years beyond the expiration of any reactor operating license to dispose of SNF and HLW generated during that time. In addition, the DOE reaffirmed its obligation to accept SNF assemblies beginning in January 1998, whether or not a permanent disposal facility was ready. This announcement was to enable utilities to plan for their projected waste disposal needs with confidence and certainty.

After evaluating the nine candidate sites, the DOE selected three finalists: Yucca Mountain, Deaf Smith County, and Hanford. These sites advanced into the next round of intensive scientific study described as the “site characterization process.” Critics had claimed the sites were recycled from surveys performed in the 1970s and that the NWPA required the DOE to conduct a new screening process rather than proceed with sites considered prior to the passage of the NWPA. On May 28, 1986, President Ronald Reagan approved Yucca Mountain for site characterization under the NWPA. By that time, nearly $1.5 billion had been spent surveying, drilling, recording seismic information, monitoring, and analyzing the Yucca Mountain site.

Nuclear Waste Policy Amendments Act

President George H.W. Bush signed the NWPAA on December 22, 1987, which supposedly “settled” the waste storage issue by codifying the Yucca Mountain site in Nevada as the nation’s first geological waste nuclear fuel repository. Characterization of each site had been estimated to take five to seven years, costing somewhere around $1 billion to $2 billion, so work on the other two finalist sites was postponed indefinitely.

The NWPAA outlined a detailed approach for disposal involving review by the president, Congress, state and tribal governments, the NRC, and other federal agencies, while retaining the 70,000 metric ton limit on the amount of SNF and HLW that the DOE could place in the first repository. According to the amendment’s legislative history, the intent of this limitation was to ensure that no state would have to bear the entire nuclear waste disposal burden. The DOE also extended the timetable for opening the first repository from 1998 to 2003. However, if Yucca Mountain was found to be unsuitable, Congress was to be notified and provided alternatives.

Regional Equity Concerns

Regional equity concerns were raised because a majority of the SNF was being generated in the eastern U.S. while all of the final repository candidate sites were located in the west. At one time, however, there were 12 potential sites for a second repository in seven eastern states.

To counter the regional equity issue, a monitored retrievable storage (MRS) facility would be integrated into the ultimate disposal system and preferably be located in the eastern U.S. Also, the licensing process would be straightforward because the MRS did not have to isolate wastes for thousands of years but simply serve as a temporary, multi-decade storage facility; then shipments would be consolidated in dedicated trains and trucks taking waste to the repository.

Three sites had been identified in Tennessee, with the preferred site being Oak Ridge, which was originally identified for the postponed Clinch River breeder reactor in 1983 when funding was terminated. The State of Tennessee was against designating Tennessee alone as a contender and sued. The proposal was held up and ultimately went to the Supreme Court. The DOE won the case and submitted its proposal to Congress.

Nevertheless, in order to prevent the MRS from becoming a de facto repository — similar to the RSSF and AFR facility — the DOE recommended certain conditions linking MRS development to repository development. The license for the MRS would contain conditions allowing construction and operation of the MRS only when repository construction and operation was proceeding and would limit the total capacity of the MRS to 15,000 metric tons of waste.

The NWPAA had also established the Office of the Nuclear Waste Negotiator to negotiate agreements with states or Indian tribes willing to host a repository or an MRS. Such an agreement could contain different conditions than those imposed on a DOE-sited facility. However, the office was not reauthorized by Congress and was eliminated in 1995.

The Yucca Mountain Saga

Between 1987 and 2001, the DOE would spend another $3.8 billion on scientific and technical studies of Yucca Mountain. For instance, in 1997, a 5-mile tunnel through Yucca Mountain was completed to function as an Exploratory Study Facility. In 1998, a second 2-mile cross drift tunnel would facilitate additional experiments in the potential repository host rock. These tunnels, and the numerous niches and alcoves, created the world’s largest underground laboratory (Figures 1 and 2).

1. View of the South Portal of the Exploratory Studies Facility showing the 25-foot-diameter tunnel boring machine. Source: DOE/OCRWM

2. Tunnel boring machine cutter head at the South Portal in April 1997. Source: DOE/OCRWM

From the surface, more than 180 boreholes were drilled deep into the geology and its surrounding features. Independent scientists working for Nye County, Nevada, drilled additional exploratory holes and collaborated with DOE scientists on their findings. These efforts were further supplemented by numerous laboratory experiments and excavation of similar geologic features both nearby and at sites around the world. The results ultimately provided an understanding of the Yucca Mountain geology and its ability to safely contain radioactive wastes.

In 2001, the DOE issued reports containing thousands of pages of information, summarizing the extensive site characterization effort. Over the next year, the department would hold more than 65 public hearings, sending 6,000 letters to individuals, corporations, and groups, eventually responding to more than 17,000 comments. In 2002, President George W. Bush approved the secretary of energy’s recommendation of Yucca Mountain as the site for a nuclear fuel repository.

In April 2002, Governor Kenny Guinn (R) of the State of Nevada, as provided for by the NWPA, vetoed this decision. In the NWPA’s unprecedented procedure for ensuring that any site decision received thorough and fair consideration, the governor’s veto could only be overridden by a majority vote in both houses of Congress. For three months, Yucca Mountain was debated in Congress, in committee hearings, and on the floor of the House and Senate. Eventually, Congress would vote to override the objection by approving the Yucca Mountain site 306-117. Later, the Senate would approve the Yucca Mountain site by voice vote following a procedural “motion to proceed” vote, 60-39. This approval, known as the Yucca Mountain Development Act (YMDA), was signed into law by the president on July 23, 2002, allowing the DOE to prepare and submit a license application to the NRC.

By the time the YMDA was enacted, the DOE had spent $7.1 billion on the evaluation of multiple sites, detailed study of Yucca Mountain, the preparation and defense of the site recommendation, and related waste acceptance and transportation planning activities. It would spend another $1.5 billion preparing the Yucca Mountain license application, including transportation and waste acceptance plans. After years of delay, the DOE submitted the 8,600-page license application to the NRC in June 2008 (Figure 3).

3.    The Yucca Mountain license application. Source: DOE/OCRWM

After a preliminary 90-day screening period, the NRC determined that the application contained sufficient information to formally docket the application and move on to the next stage of technical and scientific review. Approximately 40 NRC staff members and consultants reviewed the license application prior to the docketing decision. The license application was not reviewed for merit during this screening period, but rather to determine whether it was complete enough for the NRC to proceed.

According to federal legislation, the NRC must complete the Yucca Mountain license application review within four years. However, there is no penalty if the NRC fails to finish the review within the required time period. According to the DOE, the earliest the repository could start accepting waste, given a smooth licensing process and consistent funding, was 2020. The total system life-cycle cost that includes the cost to research, construct, and operate Yucca Mountain for 150 years, from the beginning of the program in 1983 through closure and decommissioning in 2133, was estimated to exceed $96 billion.

The Only Option Remaining: On-Site Storage

Today, the only available solution for utilities is to store SNF on-site in water pools or in long-term above-ground storage casks. The volume of the water pools within each reactor limits the number of fuel assemblies it can hold at one time. Conceptually, the number of dry casks that can be used to store SNF is unlimited.

The water-pool storage option involves storing SNF assemblies under at least 20 feet of water to provide shielding from the radiation and removal of decay heat (Figure 4). About one-fourth to one-third of the total fuel load is removed from the reactor, typically every 18 months, and replaced with fresh SNF. You may recall that early in the development of commercial nuclear reactors, the government was expecting to construct a nuclear fuel reprocessing plant and the pools were sized to hold and cool SNF until it could be transported to the reprocessing facility. On April 7, 1977, President Jimmy Carter banned the reprocessing of commercial reactor fuel in the U.S. Since then, many of the nuclear plant spent fuel pools have either reached or are nearing capacity (Figure 5).

4. Storing spent fuel assemblies underwater in a storage pool. Source: DOE

5. This chart shows the cumulative number of filled pools at nuclear power plants. All operating nuclear power reactors are storing used fuel under NRC licenses in spent fuel pools. Some operating reactors are using dry cask storage. Source: NRC

Current regulations permit re-racking of the storage pool grid and fuel rod consolidation, subject to NRC review and approval, to increase the amount of SNF that can be stored in a pool. However, both of these methods are constrained by the size of the pool.

In the early 1980s, utilities began looking at using dry casks to increase on-site storage capacity. The process of loading a cask, consisting of a steel cylinder designed to hold typically two dozen SNF assemblies, takes place underwater in the storage pool. Once the assemblies have cooled for given period of time, they are transferred underwater from the storage racks to the submerged cask. Next, the cask is removed from the storage pool, where excess water is removed. Then it is backfilled with an inert gas to enhance decay-heat transfer capabilities, welded or bolted closed, inserted into a concrete overstructure (depending on design), and stored vertically on a concrete pad. The cask itself provides the necessary radiation shielding. Other above-ground designs seal the SNF inside a steel cylinder, which is then inserted either vertically into a concrete silo or horizontally into a concrete vault. The concrete provides the radiation shielding (Figure 6).

6. Spent nuclear fuel storage canisters are designed to be placed either vertically in aboveground concrete or steel structures, or stored horizontally in aboveground concrete vaults. Courtesy: NRC

The NRC approves dry-storage systems by evaluating each design for resistance to accident conditions such as floods, earthquakes, tornado missiles, and temperature extremes. Some cask designs can be used for both storage and transportation. The dry-storage casks are located in an independent spent fuel storage installation (ISFSI). Such storage may be either at the reactor site or elsewhere.

Site-Specific and General Licenses

The NRC authorizes storage of SNF at an ISFSI under two licensing options: site-specific licensing and general licensing. Under a site-specific license, an applicant submits a license application to the NRC, and a technical review is performed on the safety aspects of the proposed ISFSI. If the application is approved, the NRC issues a license that is valid for 20 years. The license contains technical requirements and operating conditions (including fuel specifications, cask leak testing, surveillance, and other requirements) for the ISFSI and specifies what the licensee is authorized to store at the site.

A general license authorizes a nuclear plant licensee to store SNF in NRC-approved casks at a site that is licensed to operate a power reactor under 10 CFR Part 50. Licensees are required to demonstrate that their site is adequate for storing SNF in dry casks. The licensee must also make any necessary changes to its security program, emergency plan, quality assurance program, training program, and radiation protection program to incorporate the ISFSI at its location. In addition, these evaluations must show that the cask’s technical specifications covered in the Certificate of Compliance (CoC) can be met, including analysis of earthquake intensity and tornado missiles (objects accelerated by very high winds). The NRC issues a CoC to the vendor following a technical review and approval of a dry storage system’s design in accordance with 10 CFR 72. The certificate expires 20 years from the date of issuance and can be renewed in additional 20-year increments.

The first U.S. commercial ISFSI was licensed by the NRC in 1986 at the Surry Nuclear Plant in Virginia. Since then, dry cask storage has become common among licensees needing additional SNF storage capacity. According to the NRC, SNF is currently in dry storage at 40 general license ISFSIs and 15 site-specific license ISFSIs. For example, Southern Nuclear’s Hatch and Farley nuclear plants safely store spent fuel in above-ground dry storage casks (Figure 7).

7. Southern Nuclear’s dry-cask storage system at Hatch Nuclear Plant. Courtesy: Southern Nuclear

Southern Nuclear is the operator of the Vogtle nuclear plant. At Vogtle, all of the used fuel for both units is stored safely under water in two storage pools located in the protected area of the plant. There is still storage capacity available in the existing pools to last for years. Therefore, by combing the existing capability of the storage pools and dry-storage facilities when the spent fuel pool does reach capacity, all of Southern Nuclear’s sites have the capability to safely store spent fuel on-site for the duration of each plant’s operating license.

Part IV will review the legal and political impact of the Yucca Mountain failure.

Portions of this post were first published in POWER magazine and co-authored with Contributing Editor James Hylko.

Project Salt Vault

The primary objective of Project Salt Vault was to demonstrate the safety and feasibility of handling and storing high level nuclear waste (HLW) solids from power reactors in salt formations. The engineering and scientific objectives were to:

· Demonstrate waste-handling equipment and techniques required to handle packages containing HLW solids from the point of production to the disposal location.

· Determine the stability of salt formations under the combined effects of heat and radiation (approximately 4,000,000 curies of radioactive material, yielding up to 109 rads).

· Collect information on creep and plastic flow of salt needed for the design of an actual disposal facility.

· Monitor the site for radiolytic chemical reactions, if such should occur.

The demonstration site selected was the inactive Lyons, Kansas mine of the Carey Salt Co. The 1,020-foot deep salt mine had operated from 1890 to 1948 and had been kept open for possible future use. Preparations for the demonstration began in 1963, and the first radioactive material was placed in the mine in November 1965. The tests involved the emplacement of actual irradiated fuel assemblies from the Engineering Test Reactor (ETR) in Idaho. The ETR assemblies were chosen because of their availability on a dependable schedule and their relatively high radioactivity levels.

Seven sealed canisters containing 14 spent nuclear fuel (SNF) assemblies were transported by truck in a lead-shielded carrier to the site. The canisters were lowered into the mine one at a time through a 19-inch-diameter charging shaft. In the mine, the canisters entered a lead-shielded vessel on a trailer pulled by a diesel-powered tractor called the “waste transporter.” The hauler delivered the canisters, one at a time, to an array of lined holes drilled in the floor. The waste transporter was also used to recover and transfer the canisters at the end of the tests.

The canisters were placed in a ring-like arrangement in the floor of the mine (Figure 1). Electrical heaters — used to compensate for lower heat release rates of the fuel elements compared with actual waste — were attached to the lower liners to raise temperatures in the central pillar in order to obtain information on its in-situ structural response to heat.

1. In-situ testing of nuclear wastes was conducted in the mid-1960s at the Carey salt mine. Source: Kansas Geological Survey

The program plan called for replacing the waste every six months to maximize the radiation dose to the surrounding salt formations. At the end of each phase, the spent fuel was retrieved and returned to Idaho.

The results showed that the structural properties of salt were not significantly altered by the high radiation levels. Useful information was gathered with respect to thermal stresses, migration of brine-filled cavities, and salt-flow characteristics as a function of temperature. For example, the demonstration revealed that inclusions of moisture, or brine, in the salt beds had a tendency to migrate up a thermal gradient toward a heat source placed in the salt. Quantities of brine were measured as migrating and interacting with the deposited waste canisters.

All the predictions of thermal and radiation effects based upon theoretical modeling and laboratory experiments were confirmed by the in-situ demonstration. Despite the rather high radiation levels and high thermal loading, no measurable radiolytic or excessive structural effects in the salt were observed. In addition, operations at Lyons, both at the surface and in the mine, were carried out without the use of hot cells (shielded nuclear radiation containment chambers used to protect workers). Maximum personnel recorded dose during any quarter was 200 mrem, principally to the hands of a worker.

The results of the Project Salt Vault demonstration led many in the AEC to believe that the use of bedded salt was satisfactory for the disposal of radioactive wastes. The experimental phase of Project Salt Vault was terminated in June 1967 when the last canister was removed from the mine. The Lyons Mine was then placed on standby on February 1, 1968.

The Beginning of the End

Workers from Project Salt Vault recall that it enjoyed the support of the local community. Four factors contributed to this climate of acceptance:

· The experiment was designed from the beginning to be reversible; that is, once it was completed, all the waste would be completely removed.

· Consultations were held with local groups before the project began.

· Efforts were made by Oak Ridge National Laboratory personnel to conduct the studies in full view of Kansans.

· Once the research started, regular tours were conducted in which the general public could visit the mine.

However, two intervening events forced the AEC to withdraw from the Lyons site. The first was a fire in 1969 at the Rocky Flats facility in Colorado, which produced pits for nuclear weapons. The accident generated a large volume of low-level, plutonium-contaminated debris. Following standard operating procedures, the managers of Rocky Flats sent the waste to the National Reactor Test Station in Idaho for storage. That action outraged Idaho’s political leadership, which saw no reason why their state should become the “dumping ground” for waste created in Colorado. They acted and ultimately extracted a commitment from AEC Chairman Glenn Seaborg (1961 – 1971) that all of the waste would be removed from Idaho by 1980. That pledge necessitated the construction of a disposal facility. The second factor, dominating an entire decade, was the growing opposition to nuclear power punctuated by the Three Mile Island accident in 1979.

Confronted with the immediate need for a repository, and given the available information at the time, the AEC’s siting strategy was to quickly identify a site for storage of nuclear wastes in a salt dome underlying about 500,000 square miles in portions of 24 states. Most importantly, bedded salt deposits were completely free of circulating groundwater and were isolated from underground aquifers by impermeable shale. Any fractures that might develop would be sealed by plastic deformation and recrystallization of the salt. The regions considered cut down the site options because only salt deposits 200 feet thick and lying within 2,000 feet of the surface were deemed suitable for the first waste repository. The largest areas meeting these criteria lay in central Kansas, although there were two smaller areas in Michigan and one in west central New York. In 1970, the AEC announced that, pending confirmatory tests, the Lyons site was being selected as the first full-scale national repository.

The degree to which the AEC had consulted with state and local officials before this announcement is in dispute. What is clear is the AEC’s decision did not receive the same ringing endorsement as the earlier experimental tests had. Moreover, state and local political opposition to the Lyons site was intense, particularly when technical problems with the site became apparent. The political arm-twisting had just begun.

Political Opposition Begins

A widely held view among leaders of the Kansas Geological Survey was that there was insufficient knowledge about repository design, the heat-flow models were primitive, and there were large gaps in the understanding of waste-rock interactions and rock mechanics. These concerns, among others, were the basis for opposition from U.S. Representative Joe Skubitz, who represented a Kansas district that did not include Lyons, and Governor Robert Docking. What followed was a barrage of criticism, and, despite the agency’s best efforts, protests asserting that the AEC was tramping on state interests took hold in the public mind.

As an example of the political discourse at the time, Skubitz inquired why the Kansas salt fields were selected instead of a site in the Salina Basin, which would have been closer to the operating and planned reprocessing plants in New York, Illinois, and South Carolina. The agency responded by saying the Kansas site possessed geologic characteristics more favorable than those of the salt in the Salina Basin. The AEC furthermore justified the long transport routes to Kansas by suggesting a reprocessing plant would be built in California, thus making the Lyons site centrally located. In retrospect, the AEC was tone deaf when responding to the nontechnical factors, relying on its highly technical justifications for the Lyons site. Furthermore, it is believed that the Kansas salt mine was chosen because of prior local acceptance of Project Salt Vault and because the AEC did not have the resources to investigate other locations, nor did it wish to spend two years studying other sites.

By August 1971, the controversy escalated to the level of involving both Kansas senators, Robert Dole and James Pearson, who sponsored an amendment to the AEC’s authorizing legislation. The amendment prohibited buying land or burying waste materials at Lyons until such time as an independent advisory council, appointed by the president, reported to Congress that the establishment of a repository and burial of waste could be carried out safely. Thus, the AEC’s inability to satisfy concerns of state officials resulted in its losing considerable autonomy in implementing a major policy.

In September 1971, newly discovered technical difficulties would severely threaten the project’s future. Roughly, 20 oil and gas boreholes in the area were found to be impossible to plug, and the unexpected disappearance of water from a nearby solution mining operation raised many questions about the geologic integrity of the salt domes for storing liquid nuclear waste. In February 1972, the AEC withdrew from further operations at the Lyons site, citing technical uncertainties and problems with political and public acceptance.

In the 1980s, Kansas refused to issue a permit for low-level nuclear waste to a new contractor. The shaft was permanently sealed in December 1994. (Though this article does not concern waste from the DOE defense program, it should be noted that transuranic radioactive waste from that program (and from nuclear power generation) has been transported to and stored at the Waste Isolation Pilot Plant near Carlsbad, N.M., since March 1999. That geological repository is in the Permian Salt Basin.)

In Part III we look at the rise and fall of Yucca Mountain and the how dry-cask storage is now used to store spent nuclear fuel.

Portions of this post were first published in POWER magazine and co-authored with Contributing Editor James Hylko.