News & Events

Thank you President Ault, I very much appreciate your kind introduction [and your remarks supporting nuclear energy]. 

First, let me join you in celebrating the 100th Anniversary of the AFL-CIO Metal Trades Department.  What a great record and what a grand achievement! 

I had lots of firsthand experience with the Metal Trades during my Navy career.  I was on the crew that built the Los Angeles class submarine USS BREMERTON at Electric Boat in Groton in the late seventies and was very much involved in building submarines in my last Navy job, Naval Reactors, from 1996 to 2004.  I know the quality workmanship this organization brings to the table and have always been impressed.

In my present job I have watched a powerful relationship between organized labor and the commercial nuclear industry develop and grow strong and trusting. 

President Ault, and many other of labor’s leaders here today (Mark Ayers), are the reasons why.  In particular, when it comes to our cooperation on Capitol Hill, we are a damn tough team.

Today I want to talk to you about a major problem facing our country.  I am not talking about the financial mess we are in, although the financial mess has a bearing on the problem I do want to discuss.  To introduce this problem I want to talk about meeting our country’s increasing demand for electricity while reducing CO2 and other greenhouse gas emissions.

There are a stack of studies that conclude nuclear energy must be a part of the solution to that issue—these studies conclude that nuclear energy—the only baseload source of electricity with no carbon emissions during production, must be a major part of tomorrow’s energy portfolio.

The problem we have is that we are in grave danger of missing the boat and not building these new nuclear plants in the numbers needed because of short-sighted approaches by some in government to meeting the financing requirements for these multi-billion dollar plants.  But I will also propose a solution and suggest ways you can help.

Analysis by the Department of Energy’s statistical arm, the Energy Information Administration, projects that baseload electricity demand in the United States will increase by at least 25 percent between today and 2030 due to increasing population and our country’s continued economic growth.

It is clear we must meet this increasing demand while simultaneously addressing climate change, partly because both parties and both candidates for President (and now most Americans) believe it is a major environmental concern, but mostly because climate change has major implications for national security.  So we need answers that provide vast amounts of baseload electricity without emitting GHG/CO2 in the process. 

Recently I participated in a year-long exercise sponsored by the CNA Corporation.  CNA organized a Military Advisory Board – a group of a dozen retired 3- and 4-star flag and general officers from all services – to evaluate the national security implications of climate change. 

We concluded that, even if catastrophic climate change is a low-probability event, the consequences are so staggering that America’s national security demands that we must take steps now to reduce the growth rate in CO2 emissions.

For example – we reported concern over famine, flooding and drought contributing to more instability in some of the most unstable parts of the world, resulting in unrest and additional calls for U.S. military assistance.  We worried about the predicted rising sea levels threatening our bases.  We were convinced that climate changes will negatively impact our national security.

So while meeting increasing demand for electricity, I believe we must reduce greenhouse gas emissions, especially reducing the concentration of CO2 in the atmosphere.

Let’s talk about ways we can meet increasing demand, starting with what you and I have come to expect at home and at work.  Our nation must begin conserving in all phases of American life.  When gasoline prices soared, we cut back significantly on driving.  We need to do the same with our personal electricity usage at home and at work.  But I do not believe we can conserve our way out of this rising demand.

As a next step then, we should employ wind, solar, geothermal, and hydroelectric generation to the fullest extent possible.  But the wind doesn’t always blow and the sun doesn’t always shine – and where we have wind and sun we frequently don’t have transmission lines.  So, even pushing renewables to the max, we will still be faced with a gap between demand and supply.

The immediate default answer to this gap is, unfortunately, burning natural gas for electricity production.  Given the length of time required to bring new nuclear plants into service, the environmental and regulatory uncertainty hanging over new coal-fired generating capacity, and the fact that carbon capture and storage necessary to clean up coal has not been demonstrated at the scale necessary, it is virtually certain our U.S. electric sector dependence on natural gas will increase between now and 2020.

This fact has negative implications for our energy and national security and the economy.  Over the past 10 or 15 years we took the easy road of gas-fired electricity too often.

We now know that this gas-fired capacity placed unsustainable demand on natural gas supply.  It exposed consumers to recurring periods of price volatility both in electricity bills and home heating bills.  Just this year, we’ve seen natural gas prices swing between $7 per million BTU to $13 and back again.  This situation has done enormous damage to industries that depend on natural gas as feedstock and fuel.  We’ve lost overseas nearly 120,000 jobs in the chemical industry since 2000.  About 40 percent of U.S. fertilizer manufacturing is shut down because of high natural gas prices. 

The American Gas Association just reported that gas-generated electricity represents the largest use of natural gas in our country – more than home heating, more than feedstock for the plastics, fertilizer, and chemical industries.  This is a wrong-minded use of natural gas.

So given a rising demand for electricity, a need to reduce GHG/CO2 emissions, the sure knowledge that conservation and renewables won’t feed the dog, that coal is uncertain in the immediate future, and taking the easy answer of natural gas is wrong, what can we do?  Well, there is one proven baseload generation technology available, deployed or deployable on a large scale, 24 x 7, with no air pollutants or greenhouse gas emissions during production, and it is nuclear energy, an American technology, with fuel from the United States and reliable trading partners.

Just last week, the Organization for Economic Cooperation and Development issued a report describing nuclear power as one of the greenest energy sources available. 

In June, the U.S. National Academy of Sciences along with the scientific academies of the 13 leading industrial and developing nations issued a statement urging world leaders to act now to limit the threat posed by climate change.  Among other actions the academies recommended the adoption of new energy technologies, including increased investment in nuclear energy.

What’s more, analyses of the various Congressional proposals to reduce greenhouse gases – including modeling conducted by the Environmental Protection Agency and the Energy Information Administration – show that nuclear energy must be significantly expanded in a carbon-constrained world. 

In the Energy Information Administration’s analysis of legislation to limit greenhouse gases that was considered earlier this year by the U.S. Senate, their model results in more new nuclear capacity than could realistically be built during the forecast period. 

This analysis and others I’ve mentioned conclude we simply can’t address the challenge of meeting increasing baseload electrical requirements while reducing greenhouse gas emissions without nuclear energy.

So let’s talk about nuclear energy, beginning with the 104 operating plants that provide 20 percent of America’s electricity supply today.  They are the platform from which we are launching the nuclear resurgence, and it is a solid platform indeed.

Performance is outstanding.  Nuclear power plants operate at rated power nearly all the time, 24 x 7.  Coal plants operate about 70% of the time, natural gas about 40%, wind and hydro 30% and solar 20%.  Technically, this measure is called capacity factor.  U.S. nuclear plants achieved a record-setting average capacity factor of 92% in 2007, and we have been operating near this level on a sustained basis for the last 10 years.  This performance reflects excellence in plant management and maintenance and an industry-wide commitment to safety.

Our production cost last year was 1.76 cents per kilowatt-hour – cheaper than coal and one-quarter the cost of gas-fired generation.

Output was an all-time record, over 800 billion kilowatt-hours – mostly the result of the industry’s record-high capacity factor, but also due to more capacity being available, because of power uprates and the restart of Browns Ferry Unit 1 – a five year, $1.8 billion project in northern Alabama.  That project demonstrated that the nuclear industry can complete projects as complex as building a new plant on budget and on schedule.  And important to all of us in this room, this was a project completed by a union workforce.

So how about some facts now on new nuclear construction?  The Nuclear Regulatory Commission in the last year has received seventeen applications for construction and operating licenses for 26 new reactors.  And my organization, the Nuclear Energy Institute, is the only association that has endorsed an expansion of Davis Bacon prevailing wages, specifically for these new plants (pause).  I personally endorsed prevailing wages in a letter to the key Members of Congress (pause).

Working with your brother and sister labor unions (and others including federal and state governments), the nuclear industry is also addressing our workforce challenge.

This is a challenge I’m happy to talk about, especially with you.  Here’s the good news, each new plant construction will generate thousands of high paying jobs for several years.  Peak construction employment could be as many as 3000 or even 4000 jobs for each new reactor plant. 

After it’s built, operating a nuclear plant produces 400 to 700 permanent jobs for three generations of workers.  These are high-paying jobs with great pension and healthcare benefits that cannot be sent overseas.

On top of all of this, each plant will require an equal number of new jobs in the surrounding community, providing goods and services necessary to support that workforce. 

Preparing to build new nuclear plants is already creating jobs in the nuclear manufacturing sector, as supply and service companies gear up to meet growing demand for the equipment, components and commodities that go into a nuclear plant. 

* Alstom is investing over $200 million in a turbine manufacturing facility in Chattanooga – and creating 350 new jobs in the process. 
* Holtec is doubling the size of its fabrication and manufacturing facility for nuclear components in Turtle Creek, Pennsylvania, adding more than 500 jobs over the next five years. 
* Curtiss-Wright is building a new facility in Allegheny County, Pennsylvania, and Shaw and Westinghouse are building a new construction facility in Louisiana.
* Nuclear navy suppliers such as Babcock and Wilcox are getting back into the commercial nuclear business.

And there’s more good news. 

Our labor-nuclear partnership, along with people willing to reconsider long-held technically incorrect positions, has contributed to record levels of public support.  Our latest tracking poll shows a record-high 74 percent of Americans favor nuclear energy, with only 24 percent opposed.  That favorability mark is 11 percentage points higher, and the unfavorability level nine percentage points lower, than was the case just five months ago. 

The new survey also found that 69 percent of Americans believe the United States should definitely build more nuclear power plants in the future – a 10 percentage point gain from April.

By any measure we have made astonishing progress in starting down the path toward new nuclear plants.  And yes, the trends are in the right direction.  But … now let me talk about that problem that could upend all of this – financing these new nuclear plants. 

All new baseload power plants are expensive – in 2008 dollars, $3-4 billion for 600-megawatt-scale coal-fired power plants, $6-8 billion for average 1400 megawatt new nuclear plants.  The U.S. electric power sector consists of many relatively small companies that do not have the size or financial strength to finance power projects of this scale on their own, in the numbers required.  These projects require financing support – government backing, not government dollars – loan guarantees from the federal government or assurance of investment recovery from state governments, or both.  We do not require Federal Government or taxpayer money, but Federal Government assurance that loans will be repaid.  This is not a capital injection like we read about in the Wall Street “bailout.”

It’s like you and I deciding to go into farming together but finding we can’t get a loan from the bank for that $7M farm.  But if we could get the U.S. government to back that loan, to guarantee to repay the bank if we default, the bank certainly would go for it and give us a lower interest rate.  Put simply, this is what we’re talking about when we talk loan guarantees for utility companies wanting to build new nuclear plants.
 
The loan guarantee program authorized in law three years ago was a step in the right direction, but the good intentions have been gutted through short-sighted tinkering by Executive Branch officials and some in Congress.  Congress unilaterally imposed a loan guarantee cap that would guarantee loans for only three or four new nuclear plants.  Now the current Administration has agreed with the cap.

This capped loan guarantee program does not represent a sufficient response to the urgent need to meet the challenge of building new, baseload, non-emitting nuclear plants in the numbers needed over the next 10 years and does not meet the spirit or intent of the law.

Limits imposed by the House Appropriators have resulted in a loan guarantee cap of $38.5 billion in total for all clean technologies, with only $18.5 billion for new nuclear.  This amount will not begin to cover the project costs.  Although these dollar figures are large, remember that the government is not appropriating $18.5 billion of taxpayer money.  These are loan guarantee programs.  The industry pays substantial fees and all the costs associated with administering the loan guarantees.  If workers like you can build these new plants on time – and I’m confident you can and will just like you did with Brown’s Ferry – then none of these projects will default and nuclear loan guarantees will not cost taxpayers one dime!

I believe a new Administration and a new Congress might be up to the financing challenge, and the loan guarantee program as envisioned by the Energy Policy Act of 2005 can work.  But it will require a new mindset.  Congress needs to re-read the Loan Guarantee law and admit that loan guarantees are not taxpayer subsidies.  The artificially imposed volume caps must be lifted.  Our energy security and environment depend on it.

On a separate path, Senators Domenici and Landrieu proposed creation of a Clean Energy Development Bank, a government corporation equipped with at least $100 billion in loan guarantee authority.  This new institution would be modeled on the Export-Import Bank and the Overseas Private Investment Corporation, and is designed to ensure that capital flows to critical infrastructure deployment in the electric sector. 

In a perfect world we would make the loan guarantee program work and establish the Clean Energy Development Bank for all clean energy sources that our country needs.

I also mentioned state incentives for new nuclear.  Many states are supporting new nuclear build, including Florida, Louisiana, North Carolina, South Carolina, Texas, Virginia, and Mississippi.  Just last Tuesday, Florida approved plans to allow the state's two largest utilities to collect more than $600 million starting next year for new nuclear plant development.

So how can you help?  Think through what I’ve suggested today.

1.The country faces an electricity crisis, with baseload demand rising rapidly.
2. We must meet this demand in an environmentally correct way.
3. We would like for conservation and renewables to meet this rising demand but they won’t.
4. We need a baseload source that is reliable, safe, clean – that creates jobs and spurs the economy – that source is nuclear.
5. Mainstream studies agree. 
6. All signs are in the right direction.  States are supportive and helping.
7. BUT ... Congress and some in this Administration have gutted the intent of the loan guarantee program and without financing support in the form of government assured loans, we will be unable to build new nuclear plants in the numbers required.

Write or visit your Congressmen, Senators, state officials.  Tell them that you believe the United States is facing a huge problem of rising electricity demand and increasing concern over environment.  And that you know nuclear must be a large part of the answer – but you also know the major hurdle is financing.  Demand a fix.  Demand that the loan guarantee program reflects the reality of what we are facing.  Demand that the loan guarantee caps be lifted to a dollar amount that will work.

I hope that you will join me in this effort.  Thank you again for your invitation.