Global Nuclear Energy Leadership

Daniel B. Poneman
Centrus President & CEO
Remarks as Delivered at the U.S. Nuclear Infrastructure Council’s
Special Summit on Global Nuclear Energy Markets
Washington, D.C.

Forty one years ago, I arrived in Washington D.C. as an idealistic young intern for my home state senator, John Glenn, a true American hero. After mastering the intricacies of the autopen in my first weeks on the job, I asked Roy Werner, one of the legislative assistants, for a research assignment. He said, “Sure, on what subject?”  I replied, “Any subject!”

So he sent me off to research the Nuclear Fuel Assurance Act of 1975.  It was introduced June 26, 1975 and sponsored by Rhode Island Senator John Pastore, the legendary chair of the Joint Atomic Energy Committee. It was, “A bill to authorize cooperative arrangements with private enterprise for the provision of facilities for the production and enrichment of uranium enriched in the isotope 235, to provide for authorization of contract authority therefor.”

Ecclesiastes was right: There is nothing new under the sun.

That experience working for Senator Glenn sparked a lifelong interest in nuclear energy and nuclear security. Over the years, I have been fortunate enough to serve three presidents from both parties. Today, I have the honor of leading a company whose history is rooted in the Manhattan Project and that remains deeply committed to American nuclear leadership and what it can accomplish around the world.

Forty years have given me a few more gray hairs, a few scars, and a sense of perspective. The good news is that I am as optimistic as I have ever been about the promise that nuclear energy offers and about the potential that nuclear energy has to bring safe, clean, reliable electricity while minimizing nuclear proliferation. The bad news is that I am more worried than ever about the ability of the United States to play its part in making that a reality.

What Does Nuclear Leadership Mean?

When I think of U.S. nuclear leadership, I think about President Eisenhower, and his legendary “Atoms for Peace” speech. He said that “this greatest of destructive forces can be developed into a great boon, for the benefit of all mankind.”

He committed the United States to ensuring that the benefits of peaceful nuclear power would be broadly shared, while insisting that other nations live up to our shared responsibility to protecting nuclear materials and technologies.

That vision has been the fountainhead of international efforts ever since, beginning with the establishment of the IAEA in 1957. It has driven American energy and national security policy for decades. But in important ways, we have fallen away from the central role we once played and other nations have filled the vacuum.

U.S. Nuclear Leadership Has Declined

Take the construction of nuclear reactors. The United States built the biggest, most efficient fleet of reactors in the world — 104 of them, in fact, operating well for many years. Operating so well in fact, and improving their performance so much, that in the 30 years that we did not build a single new reactor, we increased our effective capacity by the equivalent of 35 new 1GWe reactors just by increasing efficiency. We were the fountainhead of international sales.

Now take a look. The competition to export reactors is fierce. Westinghouse has sold four reactors, but France, Korea, and China all are selling reactors. Those reactors are based on U.S. designs, but they have all become fierce and formidable competitors. Korea won the contract to build the first four reactors for the United Arab Emirates at Barakah. Late last year, China bought a one-third share of the Hinkley Point C project in the UK and agreed to sell Argentina its fourth and fifth reactors — one heavy water reactor and one light-water reactor. And Russia now has a $300 billion order book to build 30 new reactors in 12 countries.

Now do not get me wrong. I am not critical of these other nations.  They have developed important capabilities and become formidable competitors. They should be congratulated and not resented.

As Americans, we welcome competition; we do not shrink from it. We strive for leadership, and not just because of our national pride. It is because we know what a difference American leadership can make. Our dedication to safety, our questioning attitudes, our ability to innovate, our commitment to strong security and nonproliferation standards — all this helps nuclear energy make the kind of contribution it can and should to our energy ecosystem.

Competition from others pushes us to better. Competition by us pushes them to be better too. Competition is a socially virtuous driver of human conduct.

I also know what happens when America does not lead. Let me give you an example.

Until the mid-1970s, the United States dominated the market for enriched uranium outside of the Soviet bloc, which meant that every molecule of enriched uranium carried with it the strongest nonproliferation standards in the world. It enabled us to provide assurances to other nations that they could rely on the United States to satisfy their enrichment needs, which helped keep down demand for additional uranium enrichment plants. That was good for nonproliferation. It was also good for U.S. manufacturing, American workers, and their families.

But unfortunately, we let that lead slip away.

By 1985, the United States had fallen to 47% of the international market, and we began shutting down enrichment plants. By 2013, we shut the doors on our last indigenous enrichment plant.

Here’s where the global market stands today:

Not only has the United States lost the capacity to provide assurances to the rest of the world, we cannot even assure the American people.

How can it be that our country – which has 1/4 of the world’s reactors and 1/3 of total generation in 2014 – has only 8% of the world’s enrichment?

Back in 1973, we all considered it a national security crisis when U.S. dependence on oil imports rose from 28 to 35%.  Remember Richard Nixon and “Project Independence”?

Today, even the most generous counting rules cannot reduce the figure for U.S. dependence on uranium enrichment imports below 68%. That’s 1/5 of our power and over 60% of our carbon free power.

On a percentage basis, we are vastly more dependent on imported uranium than we are on imported oil. And the trend lines are all in the wrong direction.

When it comes to growing the reactor fleet, we have a split decision.

For the first time in 30 years, we are building new commercial reactors. We all have high hopes for what is being accomplished in Georgia, South Carolina and Tennessee. It is truly impressive, and everyone is doing their part. I encourage you to watch the time lapse photography of what has happened at those sites.

At the same time, American utilities have closed or announced their intention to close 8 reactors in the last 4 years. As you all know, there are a complicated set of factors driving those decisions. But ultimately, the market simply does not account for the unique advantages that nuclear offers: always on, supremely reliable, carbon free energy.

I do believe that there are good reasons to be hopeful about this. We do not have the luxury of time, but this is a solvable problem.

Finding a genuine opportunity for bipartisan cooperation in Washington is almost as difficult as finding a parking spot on Connecticut Avenue. But I believe this issue is one that can resonate with Republicans as well as Democrats.

More than anything, we need to explain what is at stake. Let me give you an example.

The state of Illinois is about to close down two nuclear power plants, with a total of three reactors, because the Legislature has failed to act on legislation that would fairly reflect the value of the electricity they produce. The state’s Environmental Protection Agency says this will raise emissions by more than 21 million metric tons of CO2 per year, because they will have to switch back to coal¹. These plants probably could have operated at least another 25 years, so the total impact could be around 500 million metric tons of CO2.

Let’s look for a comparison. We are going to have to go back to 1991:

As you probably remember, when Saddam Hussein pulled out of Kuwait, his troops set fire to more than 600 oil wells which burned out of control for seven months. The fires consumed more than a billion barrels of oil. They created a deadly smoke plume that blocked out the sun. The rain turned black.

It was one of the greatest environmental disasters in the history of the world, including for the climate. Oak Ridge National Laboratory estimates those fires pumped 478 million metric tons of CO₂ into the atmosphere.²

Of course, there are some important differences. What is happening in Illinois – and a number of other states – is a slow motion catastrophe, but that does not make it any less catastrophic.

And here is another difference: the catastrophe in Illinois was – and still is – entirely preventable, and it does not require a military invasion. It simply requires the common sense to do what is right for the ratepayers of Illinois, for the American people and for the planet.

Restoring U.S. Leadership – 4 Steps

So how do we get there from here? I believe we need to do four things:

First, we need to show we can deliver on the basic promise of nuclear energy. Reliability. Safety. Affordability. And predictability – bringing in our projects on time and on budget.

We need to bring down the cost curve. That has been an elusive goal, but it is absolutely critical if we are going to continue growing the fleet. The “Delivering the Nuclear Promise” initiative to cut costs and boost competitiveness is exactly the direction we should be headed as an industry. We cannot get there fast enough.

I have spoken to a number of utility executives over the last few years about this problem. These are folks who have believed in the value of nuclear energy for their entire careers, and many of them started out as reactor operators. But they cannot make the case on commercial grounds for new nuclear. You see the same arithmetic of what it costs to build a combined cycle natural gas plant. It is therefore incumbent on all of us – policymakers as well as industry – to change that equation.

Second, we need to do more of what Americans do best: innovate. Small modular reactors and advanced reactor concepts offer enormous potential for the industry, and the United States is uniquely positioned to lead the way on those technologies. To be clear, while I have been self-critical of our efforts in many respects, I am absolutely certain, as certain as I am of anything, that when it comes to the quality of our scientists, the United States is still second to none. We are still the go-to player. But we need to embed that in an ecosystem that allows it to grow.

When we say innovation, we should include more than just technological innovation. We also need innovation in the way we build, finance, and regulate the current generation of reactors as well as the next. We need policies and markets that will give nuclear energy credit for the stable, always-on, zero-carbon electricity it provides. And we need to streamline the regulatory process in ways that will enhance rather than compromise safety.

Third, while we cannot overlook our domestic market – we are still the largest fleet in the world, which is a huge strength for us – we also have to look beyond it. The reality is that most of the new builds are happening overseas.

A dozen countries are planning reactors that have none today, which means they will need outside help.  That is an economic opportunity, but it’s also a responsibility to advance world-class safety standards and nonproliferation goals.  And that is what we do.

Fourth, we need to think about more than just reactors. I think SMR’s are great. But we have an urgent need today about today’s fleet and today’s fuel cycle. We need to reinvigorate America’s role in the whole nuclear value chain, including the fuel cycle.

I mentioned earlier how the United States lost its leadership in enrichment. But it is more than just enrichment. Take a look at what has happened to U.S. uranium production.

The United States viewed our leadership role in the fuel cycle as a vital national priority, but we have not lived up to that commitment in recent decades. Other countries see this as a matter of their national interest. The question we should be asking ourselves is, when it comes to supplying nuclear fuel, do we think it is important to be the leader on safety and nonproliferation, or not?

Do we care about providing thousands of good-paying jobs in a vibrant nuclear energy sector, or not?

Are we concerned about depending on foreign imports, or not?

As other nations choose nuclear energy to power their economy, do we want them looking to the United States for leadership and for fuel services? Or looking somewhere else?

As I think back to the summer of 1975 and that idealistic kid from Toledo, I think about all the things that went right, when it seemed they could go wrong:

• The London Club became the Nuclear Suppliers Group, and put in place important controls so dangerous exports did not fall into dangerous hands.
• We stopped Saddam Hussein and dismantled his nuclear weapons
• Nunn-Lugar, a radical idea when introduced, led to the dismantlement of thousands of nuclear weapons and missiles and strengthened controls over nuclear materials across  the former Soviet Union.
• Under Megatons to Megawatts, the United States purchased 500MT of HEU from the former Soviet arsenals, to be blended down into LEU commercial reactor fuel. That represented 20,000 bombs worth of HEU, effectively 3 bombs dismantled per day, 365 days a year, for 20 years, and providing 10% of America’s electricity.
• The Agreed Framework stopped the North Korean plutonium program cold for eight years.
• In 1995, the NPT was extended indefinitely.
• South Africa gave up its nuclear weapons. Libya gave up its nuclear weapons. Argentina and Brazil ended up embracing the Treaty of Tlatelolco, the NPT, and their own bilateral ABACC safeguards regime.
• And the 2015 Iran deal has made us all safer.

What did they have in common? A common set of objectives, strong alliances, some degree of bipartisanship, and leadership.

We can get that back.

This is one issue where you do get bipartisan support. I’ve seen it.

And after Paris, that may be even more the case. As Milton Friedman once said, “we are all Keynesians now.” For those who care about climate change, we all should be nuclear advocates now.

Shared objectives: how about safe, secure, reliable, clean energy, and minimizing risk of terrorism?

Strong alliances: Don’t let anyone tell you differently…the United States is still highly valued as a partner and ally around the world.

So now we need that last component: leadership. But leadership is never a solo act. Leadership is about getting others to want to go where you want to lead them. Brute force cannot do it. Only persuasion can. So I would say that the challenge here in this room, is for everyone here to leave here feeling a share of that responsibility. That is what is going to take.

And if we succeed, there may be someone out there in the audience today, a young student working for his or her own home state senator, who will still be around 41 years from now, and will be able to look back, and tell the story of how the US got its nuclear groove back, and how the world became the better for it.

Thank you.

¹ https://www.icc.illinois.gov/downloads/public/HR1146%20Report.pdf

² http://cdiac.ornl.gov/ftp/trends/emissions/kof.dat. ORNL says 130,00,000 metric tons of carbon and that to convert this into metric tons of CO2, you multiply by 3.667.  That gives a total of ~477 million metric tons of CO2.

Presentation: Global Nuclear Energy Leadership