WIN Seattle Conference, July 20, 2010 A Changed Environment for Nuclear Power Gregg D.

Renkes

Introduction Good morning and thank you to Janese for asking me to join you today. From the mid1980s until about 2002 I was very involved in the nuclear industry, largely from the U.S. and International policy perspectives. This work took me all over the world and allowed me to compare many different approaches to nuclear power technologies; always as a context for how we could do things better here at home. Among my many wanderings, I even had the opportunity to stand inside the containment vessel of the Monju fast breeder reactor as it was readied for fuel loading in 1992. But more on that later. In 2002 I moved from the Washington DC to the Pacific Northwest to find a much better quality of family life. As all of you visiting from out of town for this meeting can appreciate, we have found an environment we love and a place where we will stay. After a stint as Alaskas Attorney General I landed in Seattle where there were few opportunities to be involved in nuclear energy. I applied myself first to the development of biofuels and more recently the development of solar energy in California. Oddly, my work in renewable energy has reignited my passion for the promise of nuclear energy. The world can simply not achieve environmentally sustainable economic growth without it. I have been asked to speak about how increasing concern for the global environment is changing the outlook for nuclear energy. It would be easy to make the observation, as many have done, that increasing demand for, and regulation to achieve, a larger share of carbon-free energy sources will spur a renaissance for nuclear energy world wide. But if that were the end of the conversation we would have made much more progress on our nuclear energy future between 2002, when I left the industry, and now. As I look at the progress, or lack thereof, over the last eight years, it is clear that it will take more than concern for the global environment to advance the nuclear industry toward its tremendous potential as a sustainable energy source that can drive world economic growth. It will take game changing innovation. So today, my purpose is to get you thinking about the possibilities and what might be done now to meet the challenge of sustainable economic growth in the decades to come. First, Ill present some observations about the current global need and increasing receptivity for nuclear energy. Second, Ill discuss the changes I have observed as I look back at the last eight years. Finally, Ill share with you a local story that represents, generally, if not specifically, what could be the way forward.

The Current Environment for Nuclear Energy The recent and continuing Global economic crisis has exposed not only the challenges of todays global economy and the remarkable level of interdependence among nations; it has increased the urgency for plotting the kind of global economy we need in the decades to come. Sustainable economic growth cannot be fully restored without access to energy and electricity. For all countries in recent years, a growth of around eight-tenths of a percent in energy use is required for one percent in GDP growth, and this represents significant progress in energy efficiency. You can still plot the growth in GDP and the growth in energy use on pretty much the same curve. The relationship between economic growth and energy is inescapable. Yet, they way we have produced energy so far is not sustainable. Carbon releases resulting from fossil fuel combustion need to be reduced drastically in order to begin to address global warming. Local and regional air pollution induced by burning coal and using petroleum has reached unprecedented levels in many countries. The depletion rate of natural resources, such as oil and gas, needs to be controlled for the sake of future generations. At the same time, the access and price of electricity for the most vulnerable of the world needs to be kept at a level compatible with the overall reduction of poverty and the achievement universally held development goals. Lifting the poorer nations up economically will take energy a lot of it. Our obligation to our children and their children is to address the challenges of energy security and sustainability today. This requires advancement, and more importantly innovation, on many fronts: policy design and implementation, effective regulation that reserves competition and advancement, and ensuring the security of supply. Clearly, the development of low carbon or carbon-free energy sources is an essential prerequisite for the achievement of sustainable energy policies. Nuclear energy should be a significant part of our better energy future; but only if we can reconcile its development with social and environmental concerns. There are no other viable options. Cleaner, carbon-free sources are essential to responding to a dramatically growing energy demand. Projections suggest that by 2030 energy demand in the world will increase by forty-five percent and electricity consumption will increase by seventyfive percent. Nuclear energy has the potential to meet a significant part of that future demand, while reducing tensions on hydrocarbon markets and alleviating the risk of global climate change. India and China, which alone constitute forty percent of humanity, are sustaining double digit economic growth. In fact, the Wall Street Journal reported today that China has

eclipsed the United States in the amount of energy consumed. Both India and China have vast quantities of coal but also a technologically sophisticated nuclear energy industry that has begun to grow at an accelerating rate. No question belongs higher on the world agenda than how these and other developing countries will meet their rapidly intensifying energy needs. Our global future may be at stake. A burgeoning world population will require vast amounts of energy to sustain economic growth and lift living standards. Over the next twenty five years global electricity demand is expected to double. By the middle of the 21st century that demand could be three or four times larger than that of today. Growth is inevitable and necessary, as the world economy evolves and countries seek to improve the quality of life of their citizens. Meeting these needs requires energy from all sources, but that energy mix must evolve away from the indiscriminate use of fossil fuels, conserving the environment and irreplaceable resources for future generations. Today, worldwide, sixty-five percent of our energy comes from fossil fuels, fifteen percent from nuclear and nineteen percent from hydro. Just maintaining the nuclear share of this mix will be challenging, but we will need to do a lot more. Stabilizing the accumulation of atmospheric greenhouse gases requires that worldwide emissions be cut by fifty percent. The challenge is made even greater by the need to raise living standards in poorer countries. Even if developing countries embrace conservation and clean-energy technologies; their enormous populations will soon emit more greenhouse gases than the existing industrialized world. Some international experts believe that in order to accommodate for these increased emissions while decreasing the global total industrialized countries will have to cut emissions by seventy-five percent. It is not hard to understand that to curb emissions while expanding energy supplies the world will need a massive introduction of lowemissions energy technologies. Nuclear should lead the way, but the technology may not be ready. At the request of the Group of Eight industrialized nations the International Energy Agency recently produced a road map for the potential of nuclear energy in a world that reduces its carbon dioxide emissions by fifty percent by 2050. They concluded that with corrective action to produce a stable international policy regime and an adequate industrial base by 2020, nuclear power could grow by three hundred and twenty percent before 2050. Achieving this would mean completing about 20 large reactors each year, doubling the rate of construction starts from its present level by 2020. With the increased recognition of the need for carbon-free energy to fuel sustainable economic growth, governmental perceptions of nuclear energy are changing. Nuclear power is currently used by over 30 countries around the world. More than twenty additional countries are actively considering the use of nuclear energy in the future. Even Sweden, one of the most socially responsible, peaceful and environmentally conscious governments in Europe recently changed course. In 1980, partly in response to Three

Mile Island, they voted to phase-out nuclear power. The Swedish parliament recently reversed the countrys decades long anti-nuclear policy. Although the Swedes had originally voted for a switch from nuclear power to renewable energy, they were unable to deliver on the promise they had made to themselves. Water, solar, and wind energy never succeeded in replacing nuclear power, which still accounts for almost half the electricity generated in Sweden. Public opinion on the issue had also changed, with nuclear power supported by four out of five Swedes. Parliaments decision to lift the ban on new nuclear plants was only the formal recognition of a policy reversal that had begum much earlier. And they are not alone. There is the beginning of a nuclear renaissance in across Europe. The UK wants to replace its aging plants. In Finland, work is underway to build what could be the worlds largest nuclear plant, and parliament there just approved two more new nuclear plants with widespread cross-party support. After the Chernobyl disaster, many countries in the region turned away from nuclear energy and now they are turning back. Poland is again turning to nuclear energy and the Baltic states of Estonia, Latvia and Lithuania want to build a new nuclear plant. The Czech Republic and Slovakia plan to expand their existing facilities. Bulgaria is looking to reestablish its nuclear industry and Romania has plans for two new reactors near the Black Sea. Even in Germany, with its strong environmental lobby, opinion polls show two-thirds of the population support the use of nuclear energy. Reversal of its nuclear ban is surely to come. However, despite growing global understanding about the critical role of nuclear in our economic futures, the nuclear fuel cycle still presents significant challenges; not the least of which is waste. Progress towards the construction, commissioning and operation of repositories for all types of radioactive wastes in a manner that enhances public confidence is essential. And technologies should be pursued that reduce the amount of waste to be stored. Proliferation concerns only seem to worsen. Proliferation resistance should be an essential element of future nuclear deployment, particularly in the developing world. We also need to keep a long term view of nuclear fuel supplies. Currently identified uranium resources are sufficient to fuel nuclear power plants for a few decades. Looking beyond, advanced nuclear systems capable of breeding fissile nuclear material could become commercially available. Fast neutron reactors under development can reuse fissile and fertile materials retrieved from spent fuel and could multiply by 50 or more the lifetime of uranium resources and eventually bring nuclear energy into the family of renewable sources. The cost of nuclear power is also a challenge. While current nuclear generation may be said to be economically competitive with other forms of base load generation, financing new plants is another story.

Nuclear reactors are very capital intensive, take a long time to build, and have a miserable track record of cost overruns and regulatory uncertainty. A package of risks that is difficult for private investors to accept, particularly in the wake of the current economic crisis. However, the financing of carbon-free energy facilities will bring along opportunities to create new businesses, new industries and millions of new jobs. Governments can facilitate investments by ensuring a stable regulatory regime and avoiding undue licensing delays. Specific measures, like loan guarantees, public-private partnerships and other ways governments can mitigate risks for the development of new technologies can be effective. Ensuring adequate financing for the development of such innovative technologies should be a priority, particularly in the emerging faster growing economies like India and China. We should be reminded that today only three countries France, Japan, and the United States have fifty-seven percent of the worlds nuclear generating capacity, and that nearly seventy-four percent of the increase in global primary energy needs between 2005 and 2030 will happen in developing countries. Progress Over The Last Eight Years What progress has the U.S. nuclear energy industry made over the last eight years? In preparing to speak to you, I looked into just what has changed in the last eight years while I was out of the industry. Taking a quick look at what we have accomplished can help us assess whether the rate of progress over the last eight years puts us on a trajectory to meet the challenges that lie ahead? Here is what I found. Growing recognition of the need for nuclear power. Concern with avoiding the adverse consequences of climate change has increased significantly in the last eight years. Interest in using electricity for plug-in hybrids and electric cars has increased placing an even greater importance on carbon-free electricity generation. Little progress has been made demonstrating the viability of carbon capture and sequestration for fossil fuel plants placing even more attention on the nuclear energy option. New nuclear plant construction is slow. Only one shut down reactor has been refurbished and restarted and one previously ordered reactor is now being completed. No new nuclear units have started construction. However, 22 new reactor applications are under federal review and workers are preparing the site for the Vogel plant in Georgia. For most of these future plants financing and firm construction commitments lie ahead. Performance and safety have been excellent. The capacity factor for the 104 nuclear plants has been ninety percent and all plants have enjoyed an excellent safety record. Without this solid operations track record we would not even be able to discuss future nuclear expansion.

The economic life of existing plants is getting longer. License extensions have continued with over 50 granted to date and the expectation that licenses for all U.S. plants will be extended for 20 years. Nuclear plants have become more expensive to build. Significant uncertainty remains about capital costs and the cost of financing. Construction costs have increased at a rate of fifteen percent per year. High risk premiums will be assessed on new plants based on the past track record of cost overruns, construction delays and regulatory changes. Little progress has been made in knowing if standardization can bring down costs or if the new NRC licensing process will function. The first few new plants will be a critical test for financial markets. Loan guarantees provided by the Energy Policy Act appear poised to help the first few plants over the risk premium hurdle. Government renewable energy incentives have largely not helped nuclear. Caronfree and renewable technologies have been encouraged through state adopted renewable portfolio standards. Most programs exclude nuclear power. Nuclear industry appears to becoming increasingly dependent on subsidies. Facing higher costs the nuclear industry increasingly argues for more government assistance to demonstrate the viability of nuclear energy expansion. Nuclear waste storage options are fewer than they were eight years ago. No federal away-from-reactor spent fuel storage has been opened and the federal government has recently abandoned the Yucca Mountain program after spending $11 billion. Dry cask storage has increased at reactor sites but there is currently no confidence that off site waste storage will be available to nuclear plants in the future. Non-proliferation concerns only seem to worsen. Worldwide, nuclear technology remains dependent upon enrichment and reprocessing, the most proliferation sensitive elements of the fuel cycle. Proposals have been made by the U.S. and others in the G8 to offer fuel cycle services to new user states on attractive terms in order to slow the building of new enrichment and reprocessing facilities. However, this has so far not been successful. Enrichment plans in Iran and Brazil and reprocessing plans in India are examples of the lost opportunity for a positive international response. All in all, only moderate progress has been made in eight years. And in the critical areas of cost, waste and proliferation there appear to be set backs. The conditions for the expansion of nuclear power have dramatically improved and the future need for nuclear power as a major part of world energy mix has become undeniable. Yet, at the same time I see little, if any, acceleration in the trajectory for the development of increased nuclear energy capacity in the U.S. Loan guarantees and NRC changes will help, but alone are not sufficient. This is important because the U.S. was once a world leader in the development of nuclear energy technologies.

A Paradigm Shift for Nuclear Technology If we are going to meet the goals for sustainable growth in 2020 and beyond we will need to pick up the pace of innovation and deployment. Maybe in a few places around the world this is starting to happen. Raymond Kurzweil wrote in a 2001 essay The Law of Accelerating Returns about the exponential growth of technological progress. He extended the principle commonly known as Moores Law, which has to do with the complexity of semiconductors, to technological evolution. According to his theory, whenever a technology approaches some kind of a barrier a new technology will be invented to allow us to cross that barrier. Kurzweil argues that such paradigm shifts have and will continue to become increasingly common, leading to rapid technological change. I believe this is true. If you look at the rate of technological change over the last 200 years you can plainly see that it has not been linear, but rather exponential. In the case of nuclear power we have not seen Moores Law at work. We have been basically refining the same technology for the past 50 years, far from exponential change. Some significant refinements have been made for sure, but some significant problems remain. Proliferation, waste, cost, safety, and long term fuel supplies all remain important challenges. In many ways the nuclear industry seems structurally resistant to change rather than ready to embrace it. This is understandable. The utility industry is mature, cautious, and, in most cases, regulated. The important work being done at the national labs is still government research, which is not prone to breakthroughs. Worse, government research funding is often directed to where it will do the most political good and not where it will stimulate the most innovation. So how can we bring innovation, real paradigm shifts, to the nuclear energy industry? I believe an example of just how that can be done is right here in Seattle. And since you have brought your meeting to Seattle, I should tell you a little about it. TerraPower LLC is a company located in Bellevue, Washington, just on the other side of Lake Washington from Seattle. I live half way there on Mercer Island and I am only ten minutes away by car. They are a small company pursuing an advanced reactor technology in a way that just might represent the type of paradigm shift Kurzweil was talking about. TerraPower is a product of Intellectual Ventures, a company founded by Nathan Myhrvold. He was the former Chief Technology Officer for Microsoft. Intellectual Ventures is dedicated to creating conditions and incentives for innovation and invention.

The company is filing 500 patent applications a year and has a backlog of three thousand ideas. One of the ways Intellectual Ventures looks for technology advancing paradigm shifts is through what they call invention sessions where an interdisciplinary group of smart people are assembled to discuss possible solutions to important problems. TerraPower grew out of just such an invention session where a number of very smart people from diverse disciplines got together to brainstorm about how to address the need for sustainable energy. It didnt take long for the group to get to nuclear power as the only viable answer as they addressed the inherent limitations of other renewables; but what about those issues that have held nuclear power back waste, proliferation, and safety. One of the participants was Lowell Wood, who had worked with Edward Teller, and he recalled Tellers work with fast breeder reactor ideas. After several sessions the group landed on the sodium cooled, fast reactor technology. The TerraPower version has become known as the Traveling Wave Reactor or TWR. I am not involved with TerraPower or Intellectual Ventures, I am just fascinated and encouraged by what they are doing. They gave an excellent paper at the recent ANS meeting in San Diego and I encourage those of you who are interested to get a hold of it. Fast reactors have been around for a long time. As I mentioned, I stood inside the Monju reactor in 1992 before it was loaded with fuel. Monju started up in 1994 and was shut down in 1995 because of a sodium leak and fire. Just this year Monju was restarted. But the TWR is not Monju, even though it may end up utilizing the Monju containment vessel and cooling system design. The TWR is a breed-and-burn fast reactor operating with a once-through fuel cycle that can be deployed in large power applications in the range of 1000 MW. The TWR requires only a small amount of enriched uranium to start, can be fueled with natural or depleted uranium and can achieve fuel utilization efficiencies in the range of 40 times that of the LWR. Once loaded, the reactors will produce energy for 40 to 50 years without refueling, reducing greatly nuclear plant safety concerns usually associated with refueling. This dramatic increase in fuel efficiency has important implications for the sustainability of global uranium resources. Someday, TWRs could actually be competitively operated on uranium extracted from seawater making nuclear a truly renewable energy technology. The current spent fuel stockpile is also a source of fuel for the TWR. And once this technology has taken hold, very little and eventually no enrichment would be needed. Reprocessing is not part of the TWR equation.

Has TerraPower found a breakthrough that will provide a truly renewable nuclear energy that reduces the cost of nuclear fuel cycle infrastructure, helps reduce stockpiles of nuclear waste and eliminates proliferation concerns related to enrichment and reprocessing? We may find out soon. Beginning in 2006 the folks at TerraPower set their efforts toward the practical engineering embodiment of the TWR. By 2008 they had determined that the TWR could economically compete with the LWR. Today they are working on the conceptual design and hope to have that completed by the end of this year. TerraPower will soon be ready to take on partners that are appropriately sized for the development task. They plan to begin construction on the first TWR, called TP-1, by 2015 and be operating by 2020. This all seems a long way off but by nuclear industry standards it is very fast, particularly for a paradigm shift. It is significant that TerraPower is using only private funding because, in their view, relying on government funding could potentially slow them down. They are also combining R&D with commercialization, which shortens the development process. In addition, the first plant is not likely to be built in the U.S. because the NRC is simply not nimble enough to license the technology in any reasonable timeframe. What is more likely is that the TWR finds its first home in a country like Japan, India or China where there is experience with sodium cooled reactors and a less burdened regulatory regime. I think they have it right. When you look at the TerrraPower approach you can sense the urgency. It is an urgency we should all share as we face up to the challenge of global economic sustainability. If the TWR is a technologically advancing paradigm shift we might see exponential growth in nuclear energy from 2020 and beyond. I think we can all learn something from TerraPower and Intellectual Ventures about creating opportunities for breakthrough innovation. Their approach has real potential to produce the technology paradigm shifts we need to meet the challenge of sustainable economic growth. In conclusion, there is a large need for nuclear energy and a growing acceptance of the technology as a result, but only through technological advancement can we nuclear energy help us obtain sustainable economic growth. Ideas and institutions that slow the pace of nuclear technology innovation could cause us to fail. We need more opportunities for open information sharing and multidisciplinary approaches to our energy problems that can create fertile ground for technology advancing paradigm shifts. There will surely be no single solution to providing abundant, clean and affordable energy to meet the challenge of sustainable economic growth in the future. Expanding nuclear energy, as part of the energy mix for future generations, requires collective action by governments, researchers, and an active, creative private sector. This is not only a

challenge but also an opportunity to revive the global economy and lift living standards in poorer nations. Our success will depend on our capacity to address technical challenges head on, to invest in nuclear science and R&D, and to find new ways to work, plan and design in a more open, cooperative and innovative manner. Thank you.

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