Good morning. It is a great pleasure to be back here in Kyoto for three reasons. First, because it is a delightful city. Second, because I have the opportunity to discuss an important topic with a distinguished and knowledgeable audience. Third – and certainly most significant to the topic of my presentation – because Kyoto is where the international nuclear industry first came together proactively to make the case for nuclear energy as a vital element of future environmental quality worldwide.

My topic today is the environment, and more specifically the contribution advanced nuclear reactors may make to the environment. In one sense – reactor for reactor — advanced reactors can’t make any greater contribution than today’s operating reactors because today’s reactors because they do not emit greenhouse gases during production of electricity.

But in another sense, advanced reactor technologies promise to be even safer and more efficient than today’s reactors. These qualities – coupled with clean air benefits — should raise public approval for nuclear energy even higher than it is today. Public approval has played a significant role in the current renaissance of nuclear energy, and increases the likelihood of more nuclear plants being built.

And the expansion of nuclear energy will, over the next few decades, benefit the world’s environmental future.

Some of the brightest and best-informed scientists in the U.S. agree. A recent study by Harvard and the Massachusetts Institute of Technology concluded that “…the nuclear option should be retained, precisely because it is an important carbon-free source of power that can potentially make a significant contribution to future electricity supply.”

The study was co-chaired by MIT Professors John Deutch and Ernest Moniz, both former U.S. Under Secretaries of Energy. The study employed a global growth scenario of three-fold growth of nuclear capacity worldwide by mid-century, to between 1000 and 1500 gigawatts. That expansion would avoid 1.8 billion metric tons of carbon emissions annually from coal plants, about 25 percent of the increase in carbon emissions expected in a business-as-usual scenario.

Among other recommendations, the report suggests a limited production tax credit for new nuclear plants and other carbon-free energy technologies of 1.7 cents per kilowatt-hour – the same amount as the current tax credit for wind energy in the U.S.

The Harvard-MIT report is the most recent affirmation of the environmental value of nuclear energy from an authoritative source. But the value of nuclear energy as a clean fuel has long been known. In 1968, at the beginning of the U.S. commercial nuclear era, Atomic Energy Commissioner Joe Lieberman noted that, “Another advantage of nuclear energy is that it is a clean source of power…which does not contribute to the current burden of air pollution.”

In 1968, the fact that nuclear energy produces no air pollutants was just (quote) “another advantage” (unquote) – an afterthought. The U.S. had not yet become concerned as a nation about air and water quality, but the environmental movement was starting to develop. The first major environmental legislation came two years later, and the value of nuclear energy in reduction of emissions associated with electricity generation – such as sulfur dioxide and nitrogen oxide – has been increasingly recognized since then. Those so-called “criteria pollutants” in the United States are regulated under the federal Clean Air Act of 1970. These air quality restrictions have been tightened repeatedly since its initial passage.

The next set of new, tightened standards goes into effect next year. Compliance is determined on a county-by-county basis. About 100 counties in the U.S. are now out of compliance, and there will be a three-fold increase in non-compliance under the new standards, to 300. That’s one in every 10 counties in the U.S.

Nuclear energy has been a viable tool for complying with Clean Air Act restrictions over the past three decades. Between 1973 and 2001, the operation of nuclear plants reduced the amount of sulfur dioxide emitted to the atmosphere by nearly 75 million tons, and reduced nitrogen oxide by nearly 38 million tons, compared to the emissions from a similar amount of fossil-fueled generating capacity.

During the 1990s, the catastrophic potential of global warming had become widely known. The focus of environmental concern by the time of the United Nations meeting in Kyoto in 1997 had shifted from the traditional criteria pollutants to carbon dioxide and the other greenhouse gases.

And with the growing awareness of global warming, nuclear power’s emission-free quality became much more than just another advantage. It is now a critically important factor in a worldwide effort to preserve both environmental quality and economic growth in the 21st century.  
Nuclear industry representatives from all over the world – the Japan, the U.S., Europe and others, supported by electricity producers and business groups – convened in Kyoto in December of 1997 to begin an organized effort to convince the U.N. delegates that nuclear energy should be an integral part of any strategy to combat global warming.

The Japanese government, of course, had already incorporated nuclear energy into its strategy, as had Korea and Canada. As host nation, Japan’s commitment helped to make nuclear energy a frequent topic of discussion during the conference. The nuclear representatives in attendance held a number of seminars and other informational meetings, and distributed information to the U.N. delegates and other stakeholders. We also received the gracious assistance of the unknown environmental activists who vandalized NEI’s exhibit, and thereby guaranteed broad media interest.

The international nuclear industry’s communication effort since then has made progress in raising the public consciousness and recognition of nuclear energy’s environmental value. But we still have a lot of work to do.

Nuclear energy’s value is absolutely irrefutable. According to a study by CRIEPI here in Japan, and affirmed by U.S. research, nuclear power plants have the lowest life cycle CO2 emissions, 3 to 6 grams of CO2 per kilowatt-hour of electricity, compared to 5 grams for small and medium hydro, 6 grams for geothermal, 10 grams for wind and 16 grams for solar. Nuclear energy also rates favorably in a comparison of life-cycle emissions by the International Energy Agency and in several other studies done by U.S. universities.

In 1997, Hans Blix, then-outgoing director general of IAEA, urged the world to turn to nuclear energy as a way of curbing greenhouse gas emissions. “If nuclear power were adopted more widely,” he said, “it could have a significant restraining impact on CO2 emissions at costs which are not very different from those of fossil-fueled power.”

However, despite the facts, and the support of opinion leaders, the potential contribution of nuclear energy has not been formally acknowledged by international diplomatic organizations – most notably the United Nations – because self-styled environmentalists still have control of the agenda. A U.N. meeting on sustainable development last year in South Africa produced only grudging and peripheral mention of nuclear energy, despite energetic and persuasive attempts to include it.

Countries committed to the Kyoto Protocol are moving – some reluctantly – toward inclusion of nuclear energy in their planning because of one very powerful force: money. It will cost more – much more – for countries to meet the targets of the Kyoto Accords without nuclear energy than it will with nuclear energy.

Finland, for instance, is building a new nuclear plant to fill growing energy demand after candidly acknowledging that it would be impossible to achieve the targets without economic hardship unless it added nuclear capacity.

Other countries were initially resistant to include a role for nuclear energy in reducing greenhouse gases – until the economic impacts swayed their compliance strategies. Germany, for instance has been committed to a nuclear phaseout ever since the Green Party came into power.

Without nuclear energy, a recent report estimates that compliance with the Kyoto Accords would cost Germany six percent in GDP and 1.8 million jobs in 2010, and have further residual impacts through 2020. The impact would be much less if Germany maintains its nuclear energy program. We have seen recent indications that the Greens are reconsidering the advisability of the phaseout.

Sweden has come to the same conclusion. Sweden was scheduled to close all 13 of its nuclear plants by 2010, and had actually closed one. However, the Swedish government last summer changed the law to remove the deadline date for the phaseout. Now it is open-ended.

Other EU countries – such as the United Kingdom – are still dancing around the issue, and there will be one of two outcomes: either they will continue with nuclear energy as part of their generating mix…or they will come to regret that they didn’t.

The United States, of course, has not ratified the Kyoto Accords. However, the Bush Administration has mapped out a voluntary approach to greenhouse gas reduction. In February, the administration announced the Climate Vision initiative, a voluntary approach designed to reduce the greenhouse gas intensity of the U.S. economy – measured in tons of carbon equivalent per million dollars of gross domestic product.

The Climate Vision program aims to reduce greenhouse gas emissions by 2012 by more than 100 million metric tons beyond the reductions that would otherwise occur. The White House expects U.S. industry to step forward with concrete initiatives to help achieve this goal. And the nuclear energy industry has indeed stepped forward.

The White House was very pleased by NEI’s pledge that the nuclear industry can increase production from existing plants by 10,000 megawatts by the President’s deadline. NEI’s analysis shows that this additional nuclear electric production would avoid the emission of 22 million metric tons of carbon – more than one fifth of the President’s goal – by displacing fossil generating capacity. Naturally, expanded nuclear production will also reduce other emissions.

The Bush Administration also has legislation before the U.S. Congress – the Clear Skies initiative — to tighten controls on the criteria pollutants, sulfur dioxide, nitrogen oxide and mercury. Other versions of legislation would extend controls to carbon dioxide, which is not now covered by federal legislation.

Even though there are no volumetric controls on carbon dioxide, the Clean Air Act created a voluntary carbon reduction program in 1992. It asks all U.S. industries, including electricity generators, to report greenhouse gas emission reductions achieved through improved performance. Not surprisingly, nuclear energy accounts for the largest quantity reported by far – 41 percent. Overall, between 1973 and 2002, the operation of nuclear plants in the U.S. avoided emission of well over 3 billion metric tons of carbon emissions.

The Administration is currently reviewing the voluntary carbon reduction program, looking to expand it and enhance reporting accuracy and verification. One of the proposals under consideration would create “transferable credits” for carbon reductions, although it is unclear how that would work in a voluntary program.

In mandatory credit programs, sometimes known as “cap and trade” programs, a cap is established for total emissions within a certain area, and each emission source – a generating plant or an industrial facility – within the area is assigned an allowable volume of emissions, with all emissions assigned adding up to the cap. Emitters who exceed their allowable volumes buy credits from those whose emissions are below their allowable levels in order to continue operation.

The Clean Air Act established such market-based emission credit programs for sulfur dioxide and nitrogen oxide but emission-free nuclear plants are not included. Likewise, the European Union has an emission-trading program scheduled to go into effect in 2005, but again nuclear energy is excluded.

NEI believes that nuclear energy should be included in emission-credit trading plans, under the theory that “a ton is a ton is a ton” — that is, a ton of emissions avoided through use of emission-free nuclear energy is as valuable as a ton of emissions reduced from a fossil source.

We don’t believe that the existing 98,000 megawatts of nuclear capacity in the U.S. should get credits, but we do believe that capacity additions – that 10,000 megawatts of uprates I mentioned – should be included. And, of course, new capacity – the type of advanced plants we hope to see built in the U.S. starting at the end of this decade – should qualify.

That recognition in emissions trading programs is already starting to happen on the state level, as state governments grow impatient with the pace of change from Washington. The Northeastern United States is particularly active.

New Hampshire, for example, already had an emissions-trading program for nitrogen oxide, but recently revised it to include nuclear energy capacity expansions in its set-aside of credits for emission-free generation. A planned 70-megawatt uprate at Seabrook, the state’s only nuclear plant, would qualify for the program.  

There is ample evidence that increased nuclear electricity production is already benefiting the Northeast and Mid-Atlantic states.

According to an Environmental Protection Agency report issued earlier this year, nitrogen oxide emissions decreased significantly because the ratio of nuclear generation to utility retail sales increased from 28 percent in 1997-98 to 35 percent in 2000-2001.

This increase was enough to offset the decrease in fossil generation from units under the acid rain control program, and represents a 30 percent increase in utility retail sales by nuclear energy between 1997 and 2001. Clear evidence such as this of the clean air value of nuclear energy should help the industry to make the case for the value of nuclear energy to a regional or state clean air strategy.

For example, Massachusetts is implementing a requirement to limit carbon emissions from fossil generation, by means of a cap-and-trade system. The mechanism is still under development, but NEI is working with other interested parties in the state to make sure that avoided emissions, specifically an uprate at the Pilgrim nuclear plant, qualify for the trading program.

New Hampshire also has a cap on carbon dioxide from three fossil plants in the state, and New York State may try to reduce electric sector carbon dioxide emissions by 25 percent. With all the action pending, Governor Pataki of New York is trying to put together an agreement with his fellow Northeastern governors to adopt uniform clean air regulations across the region.

This movement is relatively new, and the emissions trading programs in most states contemplating action remain undefined. However, NEI regards it as a significant opportunity to ensure that nuclear energy is recognized as a clean air compliance tool, and through inclusion in any market-based programs that develop, that the environmental value of nuclear energy is reflected in the balance sheet.

That inclusion in the balance sheet of nuclear energy’s environmental value is important to getting the next generation of nuclear plants built in the U.S….which is particularly important given that the focus of this conference is on the potential contributions of that next generation.

Technically speaking, the next generation of nuclear plants, might not make any greater contribution to air quality than the present plants – as I said, it’s hard to improve on zero emissions. But some future plants may be dedicated to the production of clean hydrogen, and the desalination of water, and that will multiply their environmental contribution.

Advanced-design plants will have features that will raise safety and efficiency to even greater levels, and they will have the smallest environmental “footprint” of any choice for future electric generating capacity. Advanced reactor technologies should therefore engender even more public confidence than the plants currently in operation.

And public confidence is a key factor in the current success of the nuclear industry, and in our bright prospects for the future. Our recent public opinion polls show that nearly two-thirds of the public favor the use of nuclear energy, and that is a significant majority that resonates with opinion leaders.

The polls also show that 73 percent believe that nuclear energy should receive tangible benefits for avoiding emissions, just as fossil plants get for reducing emissions.

Inclusion in any emissions-trading program will, as I have said, improve the potential profitability of a new nuclear plant, and that will be a boost toward getting them built in the U.S.

That, in turn, will be hugely beneficial to the future environmental quality of the U.S. and the U.S. industry’s goal to add 50,000 megawatts of new nuclear capacity to the U.S. electricity grid by 2020.

The industry’s Vision 2020 goal is 50,000 megawatts of new capacity – enough to avoid the emission of more than 100 million tons of carbon equivalent each year – in addition to the 10,000 megawatt expansion from existing sources. That is an ambitious goal, but a necessary one, from an environmental standpoint.

Electricity demand growth has been somewhat slow recently, but as the economy recovers, it has started to pick up. The Department of Energy expects demand growth by 2020 of more than 400,000 megawatts –an increase of more than 40 percent. As you can see, the current percentage of emission-free generation is about 30 percent, with nuclear energy representing three quarters of it.

Hydro power, the second-largest emission-free contributor, is unlikely to expand in the U.S. Even with a doubling of renewable energy, the 50,000 megawatts of nuclear energy expansion will be only enough to increase the percentage of emission-free electricity in the national mix by one percent.

In other words, it is critical that the nuclear energy industry succeed in the Vision 2020 objective, if we are to avoid a step backward in environmental quality.

The nuclear industry is fortunate at this critical time that both the Bush administration and the Congress support nuclear energy – in no small part because the public is favorable. The Department of Energy is making progress toward the goal of its Nuclear Power 2010 program, which is to see a new plant built by the end of the decade.

The DOE has a flourishing program of research and development into new reactor technology, helped along by the willingness of the Congress to appropriate the necessary funds. And the major energy legislation now being discussed by Senate and House negotiators likely will include some form of financial incentives for the first of the new plants to be built in the U.S.

In summary, the effort that started here in Kyoto is working….the world is becoming aware that the clean air benefits of nuclear energy are not just “another advantage” of nuclear energy but imperative to the world’s environmental future. The environmental value of nuclear energy is being recognized by the public, and may soon begin to be recognized on the balance sheet.

That, in turn, will make building new nuclear plants a more attractive financial proposition, and increase the number of plants using today’s — and tomorrow’s — advanced technologies likely to be built.

That will be very good for the industry. But more important, it will be very good for the planet, and the billions of people who must sustain our environment for future generations.