A Free-Market Energy Blog

Nuclear Subsidies Galore …

By Kennedy Maize -- March 19, 2024

“The House bill [H.R. 6544] would also extend the Price-Anderson federal accident insurance subsidy, first enacted in 1957 and renewed seven times since then. The program expires at the end of 2025. It isn’t clear why this federal subsidy for nuclear in still needed when the industry insists its new, advanced reactor designs are ‘inherently’ walk-away safe.”

The U.S. nuclear industry in recent days has hit three cherries on the federal money-and-policy slot machine. The open question is whether the largess (some might call it pork) will have the intended results: revitalizing a moribund industry by hitching its wagon to the feverish fear of climate change and long-run animosity toward nuclear rivals China and Russia.

First, the money–the most tangible of the goodies Congress and the White House have doled out. On March 5, the ranking members of the House and Senate appropriations committees rolled out a consensus on six money balls, including the Energy and Water Development and Related Agencies bill funding all government nuclear programs for fiscal year 2024. Passage is almost certainly a done deal.

For nuclear, the bill includes the following radioactive goodies:

  • $1.685 billion for Department of Energy nuclear R&D, including a priority for microreactors and accident tolerant fuel. This is a $212 million increase over 2023 funding.
  • $2.72 billion in repurposed supplemental emergency funding for a high-assay low-enriched uranium (HALEU) program for advanced reactor fuel development. This is aimed specifically at Russia (the only significant current supplier of HALEU).
  • $280 million for an assortment of nuclear programs, such as $16 million for hydrogen produced from nukes and $137 million for the U.S. Nuclear Regulatory Commission.

House Legislation Passed (H.R. 6544)

The above Treasury payments followed policy victories for the nukes, including legislation and a new regulatory program.

On February 28, the House by an overwhelming  365-36 bipartisan margin passed H.R. 6544, designed to streamline safety reviews by the Nuclear Regulatory Commission and give the Department of Energy some authority to buy electricity through purchase power agreements from commercial nuclear power purveyors.

In some respects, the legislation is a return to the approach of the now-defunct Atomic Energy Commission in the early days of atomic energy. In 1974, Congress abolished the AEC, and the all-power congressional Joint Committee on Atomic Energy, in large part because the AEC viewed reactor safety as a poor cousin to promotion the atom.

The language in the House bill, as described by the Hogan Lovells law firm, would require the NRC to revise it mission statement

to ensure that, while upholding the policies of the Atomic Energy Act of 1954 (AEA), the licensing and regulation of nuclear activities are carried out efficiently without unduly restricting the potential of nuclear energy and to improve the general welfare and the benefits of nuclear technology to society.”

Some observers have suggested this hortatory language is unlikely to survive in the Senate. Senators are trying to combine House provisions with a separate bipartisan bill that passed last year as part of the National Defense Authorization Act but was later axed.

The legislation would also create a cadre of up to 210 Supergrade nuclear ninjas, possibly paid more than NRC commissioners in some cases. According to the bill language, under some circumstances, the NRC chairman Chairman “may, during any period when such a certification is in effect, fix the compensation for such employees or other personnel serving in a covered position without regard to any provision of title 5, United States Code, governing General Schedule classification and pay rates.” These alleged experts appear to have the power to second-guess the Senate-confirmed commissioners.

The House bill would also extend the Price-Anderson federal accident insurance subsidy, first enacted in 1957 and renewed seven times since then. The program expires at the end of 2025. It isn’t clear why this federal subsidy for nuclear in still needed when the industry insists its new, advanced reactor designs are “inherently” walk-away safe. Congress apparently believes it can assess the risks of nuclear energy more accurately than private sector actuaries.

Regulatory Favor

Then there is the third cherry on the governmental slot machine: regulation.

On March 4, the NRC rejected a staff-written draft rule developed over three years for how to regulate the potential new license applications for a variety of advanced reactors. The commission told the staff to rewrite its proposal for a new “Part 53” section of the agency’s authority embodied in 10 Code of Federal Regulations, joining the current sections 50 and 52, which pertain to large light-water reactors.

According to Utility Dive, a key change ordered by the commission “rejected ‘a strict checklist of requirements’ for probabilistic risk assessments while favoring a more flexible framework suited to simplified reactor designs with passive safety features that utilize natural forces, such as gravity or pressure differentials, rather than operator action.”

In a news release, NRC Chairman Christopher Hanson said, “This proposed rule leverages significantly more risk insights than our existing regulatory framework in making safety determinations. Applicants can use our existing regulations today, but this proposed rule will provide future nuclear developers a clear, additional pathway for licensing.” The NRC said it expects to publish the new rule in the Federal Register in about six months.

Legacy of Failure

This latest effort to revive the largely stagnant U.S. nuclear program is the third time in the last nearly 20 years that the government has tried to pump new life into atomic power. The U.S. program started grinding to a halt in the mid-1970s and was barely treading water by the 1990s. The pipeline of new reactor licenses emptied in 1974, and as the final builders of plants under construction either completed or abandoned their projects, the workforce and supply chain infrastructure hollowed out.

In 2005, Congress passed a new “Energy Policies Act,” which offered a smorgasbord of financial goodies for new plants including loans (they called them “loan guarantees” to make them look more palatable to opponents of direct federal subsidies, but the Treasury wrote the checks and received the loan payments), cost overrun protections, and extension of Price-Anderson to 2025.

The 2005 act was largely a failure. The two preeminent U.S. nuclear power developers, Westinghouse and General Electric, ended up sorely financially injured and in Japanese hands. Former NRC Commissioner Peter Bradford commented, “They placed a big bet on this hallucination of a nuclear renaissance.”

Then came the first push for “small modular reactors,” designed to downsize the financial risks and construction costs of nuclear power plants. The strategy was the reverse of the “economies of scale” that drove the first generation of nuclear power plants, where bigger was always assumed to be better, but wasn’t.

In 2009, reactor vendor Babcock & Wilcox, which had substantial experience building nuclear power plants for U.S. submarines, announced it would offer a 125-MW pressurized water reactor (later scaled up to 180 MW) and a year later unveiled an alliance with builder Bechtel Corp. They called the project mPower.

In 2012, the Obama administration announced a $500 million program for development of small modular reactors. In 2013, mPower won financial assistance from DOE, with an award up to around $126 million. The same year, B&W tried and failed to sell a majority share of mPower, then cut back funding by 75%. Bechtel soon soured on the project, and it officially ran out of steam in 2017 after failure to find a customer.

During the same time frame, Westinghouse launched a 225-MW small modular reactor program. It quickly cratered, as the Pittsburgh-based company was unable to find a customer for its machines.

Will the latest government attempt to revive nuclear, driven by global warming concerns, succeed? It’s not a given. There’s lots to like about smaller nukes. They produce no CO2, have a relatively small footprint, can be sited fairly close to load.

But the economics aren’t clear, as the NuScale saga demonstrates. Some of the non-LWR advanced reactor designs will present licensing challenges, as there is little history behind them. Sodium cooled fast reactors may be particularly problematic, given the well-known problems of sodium as a coolant and the experience with Superphenix in France and Monju in Japan, plus issues of nuclear weapons proliferation.


This revised post originally appeared at The Quad Report.

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