Good afternoon…and thank you for the opportunity to participate in this discussion on the future of nuclear energy and the environment.

I'm delighted to be in Fort Lauderdale—or anywhere in Florida—as winter begins its descent on the northeast. It isn't quite beach weather, but I'll take it!

By way of introduction, I thought I would tell you a little bit about my organization…the Nuclear Energy Institute.

NEI develops public policy for its more than 270 national and international members of the nuclear industry.

In addition to representing every U.S. utility that operates a nuclear power plant, NEI's membership includes nuclear fuel cycle companies…suppliers…engineering and consulting firms…national research laboratories…universities…labor unions and law firms …and manufacturers of radiopharmaceuticals.

Our role is to focus the collective strength of our membership—about 18 percent of which are international companies—in order to help shape policies in the U.S. and globally that foster the use of a wide range of nuclear technologies.

In short, our role is to provide the policy direction and leadership to advance this remarkable industry...

And help provide a strategic direction to what we feel is a renaissance for these technologies.

This afternoon I will talk about nuclear energy mainly from a U.S. perception and its role in establishing U.S. energy diversity…

I'll also address its historical and ongoing role in helping to mitigate the impact of air pollution in the United States-particularly in the areas around our most densely populated and economically vital urban areas.

Areas that need bulk supplies of electricity with limited environmental impact—because all generation types have some environmental impact.

I will also discuss the growing awareness that nuclear energy is critical to meeting future electrical demand.

Nuclear energy is a vital component of any viable strategy to foster economic progress and improve the environment.

In short, that nuclear energy has an important role to play in the future.

And my organization is truly optimistic about the future.

We need only to take a look at the state of the nuclear energy industry in the United States to see why.

Last year, for example, U.S. nuclear plants set a performance record by generating 728 billion kilowatt-hours of electricity.

That is 54 billion kilowatt-hours more than the previous year…and 152 billion kilowatt-hours more than in 1990.

To put that in perspective, that is 20 percent of U.S. electrical demand…or approximately the equivalent of the combined nuclear generation of France, Japan and Belgium.

It is also equal to all of the electricity demand of France and the United Kingdom combined.

The pace of generation remains very high this year, as well. From January through July, U.S. nuclear power plants generated 442 billion kilowatt-hours of electricity... which is 6.8 percent above the same point last year.

Nuclear plants in the U.S also operated extremely efficiently last year.

Capacity factors—the measure of the amount of electricity produced by each plant compared with the maximum possible—for the 103 nuclear generating units…averaged 86.8 percent in 1999.

That is the highest average capacity factor in the world.

By contrast, in 1980 U.S. nuclear units had a net capacity factor of 57.6 percent and in 1990, 67.5 percent.

The dramatic increase in the efficiency of America's nuclear stations should be viewed as one the most successful energy efficiency programs of the last decade.

In fact, it was equivalent to adding nineteen 1,000-megawatt emission-free power plants to our nation's electricity grid.

Re: "so when you hear U.S. not building any new plants…"

U.S. plants are also operating more economically.

Total costs are averaging 2.0-2.5 cents per kilowatt-hour.

By comparison, the average costs for a new gas-fired combined cycle plant are 3.0-3.5 cents per kilowatt-hour.

And that was before gas prices recently reached their all-time highs of well over $4 per million BTU.

Equally important, as the electric utility industry restructures to prepare for competition, U.S. industry leaders decided that it makes great business sense to re-license their nuclear units…

Five units have received Nuclear Regulatory Commission approval for another 20 years of operation…this is beyond their original 40-year license, for a total of 60 years.

Five units have formal applications under NRC review, and 28 other units have informed the NRC of their intent to pursue license renewal.

That means, to date, the owners of 32 percent of the U.S. reactor fleet have decided that license renewal make competitive sense in a restructured market—and this is just the beginning.

Where do we go from here? Perhaps one of the most exciting areas for the industry is exploring the conditions for new nuclear plant construction.

A key driver of this effort is electricity demand growth—and a need for new generation—far beyond what anyone thought it would be a few short years ago.

Actual demand growth in the first six months of 2000 was almost double what was projected last year. Overall energy prices and the doubling of natural gas prices have also have a major effect on the potential for new nuclear generation.

Other factors driving the new plant discussions include the emergence of large nuclear generation companies and groups capable of making large capital investments—plus increasing clean air requirements.

In addition to its proven economic performance, nuclear energy's intrinsic emission-free nature continues to help mitigate air pollution and the potential for climate change.

In 1999, nuclear energy avoided emissions of 168 million metric tons of carbon…4 million tons of sulfur dioxide…and 2 million tons of nitrogen oxide.

That means from 1973-1999, nuclear energy avoided 2.6 billion metric tons of carbon, 62 million tons of sulfur dioxide and 32 million tons of nitrogen oxide…

In short, the increased number of plants and their enhanced performance avoided the environmental disruptions and impacts that would have occurred had companies brought equivalent conventional generation on line to meet energy needs.

By supplanting more traditional and price sensitive fossil generation…

Nuclear energy added enormously to U.S. energy security and fuel diversity.

At the time of the first OPEC oil embargo in 1973, approximately 20 percent of U.S. electricity supply came from oil-fired power plants and just five percent came from nuclear power.

In the subsequent decades, 89 new nuclear units began operating…effectively replacing oil as a fuel source for electricity…in the U.S.

Today, nuclear power continues to provide a reliable hedge against volatile fuel prices and other energy supply disruptions…

Providing American businesses, homes, hospitals and schools with a reliable supply of electricity and protection from fluctuating fuel costs.

What is less well appreciated is that nuclear energy plants—from their first operation—were also seen as a vital hedge against a growing air pollution problem in the United States.

In 1968, before a subcommittee of the U.S. House Committee on Science [and Astronautics], Dr. Joseph Lieberman, assistant director for nuclear safety at the Atomic Energy Commission had this to say about nuclear energy:

Another advantage of nuclear power plants is that there has been a growing awareness of their advantages as clean energy sources of power, which do not contribute to the current burden of air pollution…In fact, some utilities have chosen nuclear power and have indicated that in so doing, they wish to reduce air pollution.

Further confirmation of this notion comes from an interview with Phillip Fleger, the former chairman of Duquesne Light Company who presided over the company's construction and operation of the first U.S. nuclear plant in 1955…near Pittsburgh, Pennsylvania.

According to Fleger, his company wanted to build a coal-fired plant to help power Pittsburgh's urban redevelopment.

The only problem was that the city's past as the center for iron and steel production in the U.S. had earned it the title of "Smokey City."

Consequently, strict air quality controls—and strong public objection to more smoke—made the decision to pursue nuclear power an easy one.

As Fleger said…the basic reason his company opted for nuclear power was pollution control.

In other words, from their inception, nuclear power plants were high technology investments in the future integrity of the environment.

A similar situation exists today.

In the U.S., the principal federal statute addressing air quality and man-made emissions is the Clean Air Act.

The act sets pollution concentration levels allowable in the ambient air for sulfur dioxide, ozone, nitrogen oxide and particulate matter…

Not unlike the European Union's 1999 Gothenburg Protocol on air pollution reduction.

Regulations then prescribe various limitations on emissions required to meet these ambient air quality standards…

And individual states take appropriate actions to limit overall emission levels to comply.

The emission caps and permit restrictions represent a finite level of pollution permitted for a range of industrial activities in a defined area—including electricity production.

Naturally, the permissible levels of emissions have decreased over time…as restrictions have become tighter…

While the total amount of electricity needed to satisfy demand has increased.

Much of the burden for reducing concentrations of harmful air pollutants to meet Clean Air Act requirements has been focused on the electric utility industry because of the ease and cost effectiveness of controlling large, stationary sources of emissions.

But reducing emissions is not the only method employed to achieve compliance with increasingly stringent Clean Air Act limitations.

Avoiding the emissions in the first place—while meeting increased electricity demand—has also been an important compliance tool.

For example, between 1970 and 1990, the increased use of nuclear energy eliminated more nitrogen oxide emissions than all other actions taken to comply with Clean Air Act requirements.

Nuclear energy, by avoiding additional emissions as electricity output grows, acts as a vital partner in Clean Air Act compliance.

So at the same time the United States was responding to the oil and gas shocks of the 1970s by re-balancing its energy supply portfolio to include nuclear energy, it as also aiding in the implementation of Clean Air Act requirements in states where nuclear plants operated.

But the Clean Air Act doesn't just impact the power generation business.

All industrial activities that emit controlled pollutants are captured under the Act's provisions.

That means that a state out of compliance with Clean Air Act regulations is constrained when it comes to building new conventional power plants as well as other industrial and manufacturing facilities…the building blocks of economic development.

States are even suing one another over the transport of air pollution because such pollution has both environmental and economic consequences.

States simply object to paying twice for another state's pollution…

First, in terms of the cost of cleanup caused by transported air emissions…

And then again, because of opportunities lost because the polluting state's added air emissions constrained economic development in the down wind state.

How does this pertain to nuclear energy?

It pertains to nuclear energy because the high technology investment in environmental integrity that nuclear power plants represent…

Incorporates the cost of environmental compliance from the outset.

In other words…the entire environmental cost of generating electricity with nuclear power—and every generation type has an environmental cost—is and always has been…factored into the cost of doing business.

By making a greater investment in fission technology that avoided harmful air pollutants…

By internalizing the cost of safely storing, monitoring and managing the small volume of solid waste generated by nuclear plants in the form of used nuclear fuel…

And by pre-funding plant decommissioning and site restoration requirements, and providing for liability insurance…

The nuclear industry has made an investment in the environment and the future.

In this regard, it is important to note that the commercial nuclear industry's waste management efforts over the past 40 years have worked so well that they have set a standard that other industries seek to match…

As they struggle to manage disposal and clean-up of hazardous materials.

I ask you…what other industry…what other technology…can honestly say that it knows precisely where—and in what amounts—its entire inventory of hazardous waste is safely located?

Only the commercial nuclear energy industry.

But my point remains the same…

By internalizing its external environmental costs…the nuclear energy industry made a market savvy investment…

An investment that merits recognition and participation in market based plans designed to better the environment.

This is particularly true when it comes to international efforts to limit greenhouse gas emissions to forestall the possibly negative effect of global climate change.

As the Chairman of the Intergovernmental Panel on Climate Change Robert Watson has said:

You have to internalize the environmental externalities into the price of energy. …It is bad economics not to internalize an externality when that is the true social cost…

And that is precisely what the U.S. nuclear energy industry has done…it has internalized the environmental externalities into he price of energy.

Lessons learned about the role nuclear energy plays in meeting Clean Air Act requirements during the last 20 years are part of the long-term…technology-based solutions that will be needed to control man-made greenhouse gases…such as carbon dioxide or methane.

As with pollutants controlled under the Clean Air Act…climate change policies generally focus on sources that emit greenhouse gases or on technologies that reduce them.

This narrow view fails to recognize the embedded reliance on non-emitting technology for emissions control.

When carbon reduction targets were set…nuclear energy's generation—and its emission free nature—were simply assumed as part of the mix.

According to the IAEA, nuclear power annually avoids 8 percent of the global emission of carbon dioxide from energy production.

Not only would global carbon dioxide emissions be that much higher without that embedded nuclear energy emission avoidance…

The only suitable replacement for that lost generation are large-scale fossil plants that produce significant amounts of additional greenhouse gases.

That is why NEI believes firmly that a ton of carbon avoided is as valuable as a ton of carbon reduced…

That is why NEI believes that efforts to exclude nuclear energy from international credit trading and technology transfer programs under the Kyoto Protocol's Clean Development Mechanism are arbitrary and discriminatory.

And that is why NEI believes denying nuclear energy access to incentives under the Kyoto Protocol undermines the credibility of the international effort…

And could actually foster an increase in greenhouse gas emissions.

That is why the European Commissioner for Energy Loyola de Palacio recently said that if Europe decommissions its nuclear units, it could forget about meeting the greenhouse gas emission reductions envisioned in the Kyoto Protocol

As an American sports legend once remarked…there is nothing so hard to predict as the future..

But we can be fairly certain about some broad trends.

First, the world's population will continue to grow…one estimate is by more than 50 percent by 2050.

Second, that population will increasingly be concentrated in intensive energy consuming urban areas…

Third, as the world's population grows…so too will its appetite and need for energy…and electricity in particular.

Otherwise, continued social and economic development on a global scale will be impossible.

Is there any one energy source that can meet rising demand?

Of course not.

All source of electricity…nuclear…fossil…hydro…and renewables are needed to power and protect the future.

Are some sources more suitable than others for certain applications?

Absolutely…

There is no either/or option.

The only option is to develop—in a thoughtful manner—the various energy sources that in combination can work together for the future.

And nuclear energy must continue to be a part of that mix…and must be part of the future.

Thank you.