News & Events

Introduction
Good afternoon. It’s a pleasure and a privilege to be here with you today. Given last month’s enactment of the first comprehensive energy legislation in 13 years, this is a particularly opportune time to join you to discuss energy policy and the strategic importance of nuclear energy in our nation’s energy future.

I want to cover four major areas with you this afternoon:

1. First, I’d like to discuss the issues and factors that made passage of energy legislation such a critical national imperative.
2. Second, I want to take a few moments to sketch why and how the Energy Policy Act of 2005 will jumpstart new nuclear plant construction in the United States, just in time to meet an urgent national need for new baseload generating capacity that does not produce greenhouse gases.
3. Third, I want to suggest a few thoughts about the importance of nuclear energy in California.
4. And finally, I want to leave you with a perspective on the unique value of nuclear energy, and the energy and environmental challenges we face in the United States and around the world.

The Need for Energy Policy Legislation
I feel strongly that our national security is tied inextricably to our energy security. My current job leading the Nuclear Energy Institute is simply a continuation of my 38 years in the U.S. Navy. I also believe that the energy legislation, signed by the president in August, was an important step forward for America’s energy security. It is the result of many years of hard work by many people, and it is critical to our national security.

Why do I feel this legislation was so important? What was the imperative? What was broken? What problems were we trying to solve?

I do not believe the United States was, or is, facing an imminent energy crisis. This nation is blessed with an abundance of energy resources, a robust portfolio of energy technologies and the most ingenious and innovative people on the planet.

No: We do not have a shortage of resources or technology. We have a shortage of investment.

We are not facing an energy crisis. We are facing an energy investment crisis.

America’s energy infrastructure and, in particular, the electricity infrastructure, has been starved for investment for more than a decade. The new energy policy legislation is designed to address that issue—to ensure that investment capital flows to where it is needed; to provide investment stimulus for advanced, more efficient, more economic, cleaner electric generation technologies.

There’s ample evidence of our energy investment crisis.

In electricity generation, America clearly faces a growing need for new baseload generating capacity able to meet 24/7 electricity demand. The Energy Department predicts a 45 to 50 percent increase in electricity demand between now and 2025. And we rightly want this new demand to be met by environmentally-friendly generating capacity. Since 1992, when the United States last enacted major energy policy legislation, the industry has built approximately 270,000 megawatts of new gas-fired electric generating capacity. By contrast, only 14,000 megawatts of new nuclear and coal-fired capacity have entered service.

Coal and nuclear energy together represent approximately 70 percent of U.S. electricity supply. They provide the highest degree of price stability, but investment in new nuclear and coal-fired power plants has virtually disappeared in the last 10 to 15 years.

While new gas-fired capacity was a reasonable decision when gas was $2 to $3 per million Btu and the country needed peaking and intermediate generation capacity, gas is now the most volatile of our electricity fuels, now pushing $11 per million Btu. The country needs baseload capacity now, and we want the new baseload generation that doesn’t contribute to air-quality problems. Gas is not the answer for baseload generation for tomorrow, and it is driving the wild fluctuation in prices today.

We also see unmistakable signs of underinvestment in other areas, including electricity transmission and natural gas supply.

We must reverse this trend. We’re living off energy investments made by our parents, not making the investments necessary to serve our own needs, and that is a sorry legacy for our children and grandchildren.

The Energy Policy Act of 2005 Recognizes the Need for Investment Stimulus
That’s the bad news. That’s the imperative. That’s what’s broken. Those are some of the energy investment challenges we face.

Those are the trends and factors that persuaded our leaders in Congress to enact legislation that provides significant incentives for new technology deployment and infrastructure development. The Energy Policy Act of 2005 provides much-needed stimulus for investment in energy efficiency, renewable energy, advanced coal technologies and next-generation nuclear power.

Some people have characterized the legislation as a subsidy for the energy industry. That is irresponsible nonsense. The law is an investment in the safety and security of the American people and the global environment. I am not concerned that the investment stimulus provided by this legislation is too large. I am concerned that it may not be enough to fully address the challenges we face.

The new energy legislation reestablishes nuclear energy as a cornerstone of U.S. energy policy.

For the nuclear energy sector, the legislation provides two building blocks.

It provides investment stimulus for new nuclear power plants to offset the higher cost of the first new plant designs that we build. That investment stimulus includes a combination of limited tax credits and loan guarantees for a limited number of plants for a limited time.

And second, the legislation provides investment protection for the first six reactors to contain the risk of federal licensing delays that are beyond the industry’s control. To look at it another way: Congress is holding the Nuclear Regulatory Commission accountable for a full, but disciplined, licensing review.

The policy initiatives in the energy legislation provide a powerful impetus for new nuclear plant construction. Two consortia are developing applications for Nuclear Regulatory Commission approval for construction and operating licenses, and other companies are seriously considering new plants.

Three companies are now seeking site permits from the NRC, with others waiting in the wings. Three advanced reactor designs are in varying stages of the NRC’s safety certification process.

We expect companies to break ground on new nuclear plants in the United States around 2010, with commercial operations beginning as early as 2014. Once those first plants are built and operating, and as companies and investors gain confidence in the new federal licensing process, we expect construction of significant numbers of new reactors after 2015.

Of course, none of this would be possible or plausible unless the industry had a strong foundation on which to build. We have, over the last decade, built that foundation of safe, reliable and economic performance.

The 103 nuclear plants that produce 20 percent of U.S. electricity—about the same percentage, by the way, as here in California—are performing at world-class levels of safety, reliability and efficiency. America’s nuclear reactors are operating at capacity factors around 90 percent, and the top nuclear plants (those in the first quartile) are operating at just above 95 percent.

This sustained excellence has increased electricity production from nuclear power plants over the last decade by the equivalent of 18 1,000-megawatt power plants.

The Importance of Nuclear Energy in California
U.S. nuclear plants—indeed, nuclear plants around the world—have an obvious value in meeting clean-air requirements and reducing emissions of greenhouse gases. To the extent we build emission-free generating capacity like new nuclear power plants to meet growing electricity demand, we reduce the clean-air compliance burden and costs that would otherwise fall on other types of generating capacity that do produce emissions. We create room underneath emissions caps for the industrial sector and for transportation, and to allow continued economic growth.

In 2004, the 103 U.S. reactors prevented 697 million metric tons of carbon dioxide, and 3.4 million tons of sulfur dioxide and 1.1 million tons of nitrogen oxides—the two pollutants that contribute most to acid rain and smog.

Those are large numbers, and it’s tough to relate them to day-to-day experience. Let me put it this way: Without nuclear power, carbon emissions from the U.S. electric sector would be about 30 percent higher. If we shut down all U.S. nuclear plants for a day and wanted to hold carbon emissions constant, the vast majority of Americans would have to park their cars for that day.

Here in California, replacing the San Onofre and Diablo Canyon nuclear power plants with alternate fossil electricity sources would mean an additional 16.5 million tons of carbon dioxide, by our analysis. That’s the equivalent of emissions from one-sixth of all the cars in the state.

These four reactors also helped prevent the emission of more than 9,500 tons of nitrogen oxides. To get the same impact, you would have to pull more than 500,000 cars off the road.

Both the San Onofre and Diablo Canyon nuclear power plants plan major capital investment projects to replace their steam generators. These are large and costly projects, but well worth it—without question. As you may know, the California Public Utilities Commission already has issued an interim order approving the new steam generators at Diablo Canyon. We trust that the Commission will ultimately approve both projects, and I see evidence that the Commission is performing a realistic and clear-eyed assessment of these projects.

Without new steam generators, both plants will close down prematurely—perhaps as early as 2009 for San Onofre, and 2013 for Diablo Canyon.

That would obviously be bad for electricity consumers and the environment in California. There may be grounds for debate over new nuclear plant construction in California, but there is surely much less dispute over the wisdom of maintaining the nuclear energy capacity already in place.

Why forego a source of emission-free electricity that operates at high levels of reliability and provides power at stable prices with none of the volatility associated with fuels like natural gas?

As I read through the Environmental Impact Report prepared by the California PUC on the San Onofre project, the wisdom of steam generator replacement became more and more clear and compelling.

For example, replacing more than 2,000 megawatts of capacity at San Onofre with combined-cycle gas-fired capacity would require construction of four to five new gas-fired plants, the Commission said in its analysis of alternatives. In addition, the new gas-fired plants would require new gas pipeline capacity to bring in the fuel, as well as new transmission lines and new or upgraded substations to carry the electricity to market.

The California PUC’s environmental report also evaluated renewable energy alternatives to San Onofre. The PUC said that although these technologies “do not rely on a finite supply of fossil fuel, consume little water and generate either zero or reduced levels of air pollutants and hazardous wastes ... these technologies do cause environmental impacts.”

The PUC concluded that all the renewable alternatives “have unique technical feasibility limitations. High costs and, in some cases, limited dispatchability, inhibit their market penetration.”

I bring the PUC environmental report to your attention. It evaluates solar thermal, solar photovoltaics, wind, geothermal, hydro, biomass, fuel cells and demand-side management as alternatives to the San Onofre and Diablo Canyon nuclear plants. It notes the attractive features of each technology. But the Commission’s environmental report concludes that none of these technologies can realistically replace the 24/7 baseload power currently being met by San Onofre and Diablo Canyon.

Before I leave the issue of nuclear energy in California, I want to address one other issue—the elephant in the room, if you will: Management of used nuclear fuel.

Twenty-eight years ago, California imposed a moratorium on new nuclear plant construction unless and until the United States has policies and technologies in place to manage the used nuclear fuel rods. A lot has changed since then—in this area and many others.

In 1977, we did not have the Nuclear Waste Policy Act of 1982.

We did not have the 1987 amendments to the Nuclear Waste Policy Act, which designated the Yucca Mountain site in Nevada as the single site to undergo comprehensive scientific investigation.

We did not have 20 years and $6 billion of scientific investigation that demonstrated that the site is suitable for long-term isolation and management of used nuclear fuel.

We did not have a presidential finding, and affirmation by both houses of Congress, that the Yucca Mountain site is suitable and that the Department of Energy should develop the application necessary to obtain a Nuclear Regulatory Commission license to build and operate the facility.

So, a lot has changed, and it may be appropriate for California to reconsider its policy on this issue. At the very least, an unemotional analysis of the facts is called for.

Let me also clarify one other point: In my discussions with people about used nuclear fuel management, I find many who believe that the Department of Energy is simply going to bury the used nuclear fuel at Yucca Mountain and walk away, trusting in the site’s natural geological characteristics and the engineered safety features of the containers to contain the waste by-products.

That’s not the plan.

It has never been the plan.

Instead, the facility will remain open and closely monitored for 100 to 300 years. The law requires an unspecified period of retrievability. And the Department of Energy’s Final Environmental Impact Statement describes this plan.

Properly explained, this period of monitoring should provide assurance and greater confidence among the citizens of Nevada, and among all our nation's citizens, that the repository will perform as designed, that public safety will be assured, and that the environment is being protected.

Extended monitoring and the ability to retrieve the casks will also allow us to recover the energy content in the fuel if it becomes cost-effective to do so, or if technology is developed that would allow reprocessing in order to reduce the volume of the waste.

Indeed, I believe that we will develop technologies to process the waste by-products well beyond mere separation of the valuable uranium and plutonium from the rest of the waste, reducing a 10,000-year disposal challenge to something much shorter and more manageable.

The Unique Value of Nuclear Energy
In closing, let me offer a perspective on the strategic value of nuclear energy, and the moral imperatives associated with energy supply.

Nuclear power plants have three distinguishing characteristics. First, they produce large volumes of low-cost electricity around the clock at extremely high levels of safety and reliability. Second, they produce electricity at a stable price, without the punishing volatility we see with gas-fired generating capacity. Third, nuclear plants help maintain our air quality.

Three attributes: Reliable, affordable electricity at low cost. Forward price stability. Clean air.

Other sources of electricity have one or two of these attributes, but only nuclear plants have all three. That is what makes nuclear energy a unique value proposition, and that is why America needs more nuclear energy now.

Finally, it seems to me that those of us fortunate enough to live in the richest countries in the world have a moral obligation to think more broadly about energy and environmental issues than we often do.

As we plan and implement energy and environmental policies for California, for America, we should do so against the larger backdrop of the world’s energy and environmental needs, mindful of the pressures and imperatives that exist globally.

Wealthy as we are, we are not insulated from energy and environmental trends elsewhere in the world. Oil prices soared past $50 a barrel this year in large part because of China’s growing appetite for oil—mostly for electric power production—to drive its double-digit economic growth.

And your efforts in California to reduce greenhouse gas emissions will be overwhelmed by increases in greenhouse gas emissions from countries like China and India as they burn vast quantities of coal to fuel economic growth, to meet their people’s legitimate desire to enjoy the standard of living and quality of life that we take for granted.

So it’s not just America that needs more nuclear power plants. The world needs massive deployment of carbon-free technologies like nuclear energy.

We know there is a direct correlation between a country’s per capita income and its people’s access to electricity, between that access to electricity and infant mortality rates, and between that access to electricity and life expectancy.

I believe the world is approaching a crossroads—two possible futures—in terms of energy supply, as our global population increases from 6 billion today to 9 billion by the middle of this century, with the majority of this growth in impoverished areas—areas without access to electricity.

Down one path lies a future I do not care to contemplate: A world in which we fail to supply the energy needed to ensure that most of the world’s people are fed and sheltered, educated and employed—a world in which children yet unborn are condemned to a life of poverty and misery and sickness.

But down the second path lies a brighter world: A world in which energy development is managed in a sustainable way, a world in which we no longer fight wars with guns and bullets, a world instead in which we use science and technology—including nuclear energy technology—to fight poverty and sickness and environmental insult.

I have children and grandchildren. They will have friends around the globe. I want them all to live in that second world. I hope you share that vision.

Thank you.