The U.S. commercial nuclear sector is in trouble. Absent significant policy changes, the near-term closure of a number of reactors appears increasingly inevitable. Much has been written about the impact of cheap shale gas on the economics of nuclear power, but poorly structured, deregulated markets and market distortions – mainly in the form of subsidies and mandates for other kinds of power generation – severely undermine the competitiveness of the existing U.S. nuclear fleet, particularly smaller reactor units. At the same time, foreign competitors, which are mostly state-run enterprises, are capturing a greater share of the export market for nuclear technology and services. The problems that U.S nuclear vendors face are compounded by a burdensome export regulatory regime and a nonproliferation policy that both fail to take into full consideration the current political realities and dynamics in the global market. Moreover, the United States no longer enriches uranium with its own technology, which increases U.S. dependence on nuclear fuel imports and foreign technology.
But the longer-term outlook for a true nuclear renaissance in the United States remains positive, provided that is determined largely by the likelihood of increased regulation of greenhouse gases, traditional pollutants and hydraulic fracturing. This regulatory scenario will play out slowly and it may take decades before the economic case for new nuclear builds can be justified in many parts of the country. Unfortunately, in the meantime, the United States is at risk of losing much of its domestic manufacturing capacity for a technology that is indispensable to promoting U.S. national and energy security interests.
Many energy analysts compare nuclear power to other forms of generation, using the cost of producing electricity as a deciding standard. But nuclear power’s inherent link to national security concerns, including defense needs and the nation’s ability to help shape global safety and nonproliferation standards, render straight comparisons to natural gas, coal or renewables inadequate. For example, the U.S. Navy relies heavily on the domestic commercial sector for its nuclear needs, not only for supply chain reasons but also to aid in recruitment, which would be hurt by reduced employment opportunities in the private sector. Thus, in addition to diversity of electricity production and climate change mitigation, there are a number of other significant public policy interests that policymakers should consider when determining whether and how to protect the existing fleet of nuclear reactors and to promote U.S. nuclear manufacturing.
The window for making a positive, meaningful impact to reverse or slow the decline of the U.S. nuclear sector is narrowing. Legislators, policymakers and thought leaders must act now. This paper examines a suite of near-term policies and measures that promote a more rational approach to electricity, trade and non-proliferation issues in the nuclear sector. Taken together, effective implementation of these measures would bolster the U.S. civil nuclear sector until the economics for new builds improves substantially. For nuclear power to succeed, it does not need subsidies or mandates, but it does need its contribution to grid reliability and security to be recognized by government and the markets.