State and Local Officials Conference Call with Charles Ferguson

IRINA A. FASKIANOS: Good afternoon and welcome to the Council on Foreign Relations State and Local Officials Conference Call Series. As many of you know, having participated in these calls, our goal is to provide a non-partisan forum for discussion of pressing international issues that affect the priorities and agendas of state and local government. Today we are pleased to have Charles Ferguson lead the discussion on nuclear energy. He is the Council's fellow for science and technology and the author of the recent Council Special Report on nuclear energy, Balancing Benefits and Risks of U.S. Nuclear Energy Policy. You all should have received a copy in the mail or gotten the link to the report via email. In addition to his position at the Council, Dr. Ferguson is an adjunct professor in the security studies program at Georgetown University. He was formerly a scientist in residence at the Washington, DC office of the Monterey Institute's Center for Nonproliferation Studies and has a long bio that you all received in advance, so I will not continue on that front. I hope you will take a look at it. Charles, thanks very much for being with us today. We are here to talk about nuclear energy. If you could begin by giving us some findings and recommendations of your Council Special Report and talk about the pros and cons of nuclear energy and how we potentially can continue and expand the use of nuclear energy without encouraging further proliferation around the world.

CHARLES FERGUSON: Thank you very much Irina and thank you for organizing this conference call and I'm looking forward to hearing comments from state and local officials because I was just saying to Irina before we had the conference, the start of the call, that it's really you that has to make these hard decisions about whether your communities will embrace continued use of nuclear energy, whether there will be new nuclear reactors built in the United States. But here, sitting in the perch of the Council on Foreign Relations, the world is our oyster and we're looking at nuclear energy from a global perspective and I know you all received copies of the special report, but let me, as Irina asked, just outline the major findings and recommendations and then we can get into discussions, whether it's on the U.S. level, international level about where nuclear energy seems to be headed.

Well, as the subtitle of the report indicates, we wanted to take a hard look at both the benefits and the risks in nuclear energy use and the two main benefits from the perspective of not just the United States but globally, involve countering climate change and strengthening energy security.

First, let's look at the climate change issue. As you know, the concerns about climate change, global warming, have been increasing and it seems that we've approached a stage, at least politically, where we're about ready to do something on both the executive and legislative branches in terms of passing some type of legislation that could put controls on greenhouse gas emissions. There might be some type of cap and trade system for the amount of carbon dioxide and other types of gases that can be released and even President Bush, who has been a skeptic about enforcing mandatory controls on greenhouse gas emissions, even he recently, leading up to the Group of Eight Summit in Germany, indicated that he wants to move ahead with a plan to deal with greenhouse gases and his recommendation is that we get the fiftteen largest emitters of greenhouse gases together and talk about what should be our goals and how we can reach those goals. So I think we are seeing some very positive developments dealing with these issues, depending on whether you believe that climate change is pretty much human induced or not, at least in terms of politics, that train has left the station and now we need to think about how does that affect our use of various energy sources and in the Special Report, I looked at how concerns about climate change, how carbon controls could affect the use of nuclear energy and first I did an analysis looking at what nuclear would need to do to make a further significant contribution to tackling climate change and so far, nuclear is doing a lot to limit the emissions of greenhouse gases. Worldwide, about one sixth of the electricity being produced comes from nuclear energy. In the United States, about one fifth or twenty percent of our electricity comes from nuclear power, so one out of five light bulbs is being powered by nuclear energy. And I don't know how many Americans actually realize that, but it's a significant energy source, and it is pretty much a zero-emissions source although, as I point out in the report, the nuclear fuel cycle as a whole does emit some greenhouse gases, but nuclear is considered essentially a zero emissions source of greenhouse gases. Now in terms of recommendations in that area, what I recommended was that we need to factor in the external costs of greenhouse gases and apply the principle that the polluter pays, so we need to asses what the price is on greenhouse gas emissions and factor that price as much as possible into the various energy sources that emit greenhouse gases. If we do that, then we could begin to level the playing field among the various energy sectors and then nuclear energy could begin to look competitive compared to coal-fired plants and natural gas plants. As I think probably many or all of you know, that the capital costs, the construction cost for nuclear energy are very high compared to the capital costs of coal plants or natural gas plants but the operating costs of nuclear compare very favorably to those of coal and natural gas. So in sum, once you get out of the hump of paying for those capital costs for nuclear, a nuclear plant can in essence be a cash cow. It could be very cost competitive compared to coal and natural gas, but the difficulty is getting nuclear over that initial large construction cost and there are different ways you can try to do that. The American way seems to be that you give various industries that you favor incentives, some would say subsidies, to try to lower those construction costs and other types of barriers like licensing barriers that have - that some believe have stalled nuclear development. And so two years ago, Congress passed the Energy Policy Act of 2005, offering various credits and incentives for nuclear as well as other low and no carbon emission energy sources and the big question is, is that the smart approach? Should we be continuing with incentives for these industries or should we favor a different approach in which you put a price on various external costs like greenhouse gas emissions to try to level the playing field, to try to factor these external costs into the internal price of an energy source? So that's one major recommendation in the report, that we move away as much as we can from subsidies and try to favor a rules-based approach for the market, so you send a signal to the market to try to set a price on these external costs like greenhouse gases.

Now turning to the question about energy security and does nuclear actually contribute to America's energy security? And yes, it does in the sense that it allows us to diversify our energy mix and that certainly increases energy security, but can nuclear further displace the import of oil from foreign countries, especially from unstable parts of the world? Well, currently we're getting about two thirds of our oil from foreign sources but only three percent of our electricity comes from oil. Most of the oil we use is used in the transportation sector to fuel cars and trucks. It's conceivable that some decades from now, if there's a huge growth in nuclear power, that nuclear could provide a fuel for the transportation sector by creating hydrogen for fuel cells or by creating electricity that can be used in plug in hybrid vehicles. So nuclear can't do that now because we don't have those fleet of vehicles available to us but we could potentially in the future. So the report concludes that at least for the next couple of decades, nuclear is not going to further wean America off of foreign sources of oil, but perhaps in other countries, like France. France might be better positioned if they develop plug in hybrid vehicles for instance and they have a huge amount of energy - nuclear energy used in electricity sector as it is, almost eighty percent of electricity from nuclear. It's conceivable if they further expand nuclear power they could fuel electric powered vehicles from nuclear and, in essence, reduce their reliance on foreign sources of oil.

Well, now let's turn to the risk side of the equation. So I've quickly covered some - two of the benefits and how we can try to promote some further growth in nuclear energy to deal with the climate change issue. Well, the risks involve nuclear proliferation; the concern that countries could develop nuclear fuel making capabilities and use that as a cover for military programs in which they would use the same technologies to make nuclear weapons material. So that's one huge risk. Another risk involves nuclear waste disposal. Where are we going to put the tens of thousands of tons of nuclear waste that we've accumulated over the last fifty years of commercial use of nuclear energy? We've already accumulated as much nuclear waste as the Yucca Mountain site has been slated to hold by law. Now a number of studies point out that the Yucca Mountain site could hold much greater amounts of waste than is currently on the books in terms of congressional law but - so we have to deal with that hurdle in terms of where do we site the nuclear waste repository? Will it be Yucca Mountain? Will it be some other place? And in dealing with that risk, in the report, what I could recommend is a dual track approach that, in which in parallel to developing the political and technical consensus on where we site a long term repository for the waste, that we can buy time by putting the spent nuclear fuel into dry storage casks in hardened locations and we can put that at reactor, existing reactor sites and we could do that safely and securely probably for upwards of one hundred years. Now I'm not recommending that we wait one hundred years to make a final decision about where to put the waste long term, but I think we can buy enough time over the next couple of decades to get both the political and scientific consensus that we would need to place the nuclear waste in a safe and secure site. And another risk is the possibility of terrorist attacks on nuclear power plants and other facilities. Now I happened to coauthor a book a few years ago, when I worked at the Monterey Institute, a book on nuclear terrorism and we had a chapter in that book in which we looked at this threat, and of the four nuclear terror threats we looked at, this was the threat that least concerned us in our analysis. I'm not saying the threat doesn't exist, but it's very difficult for a terrorist group to be able to carry out a successful attack on a nuclear power plant, especially one that's well hardened, has defense in-depth measures and has a well-trained guard force. I'm not saying it's impossible to do, but I think it's a lower risk than say a dirty bomb attack. But nonetheless, I think there are things that can be done so that new nuclear power plants can be even more secure and have inherent security features built into the plant to further provide protection against terrorist attack or sabotage and I talk a little bit about that in the report and here I recommend that industry should set aside a fund to develop best safety and security practices for their future nuclear plants and also the existing plants as well and so, now let me return to the big risk, the proliferation, and then I'll stop and take your questions and hopefully learn from you in terms of your comments.

How do we deal with this proliferation risk and how bad could it get? Well, currently there is a country that's been in the news a lot, that country is Iran, and that many in the west believe that Iran is using a civilian nuclear program as the cover for a nuclear weapons program. There is so far no "smoking gun" evidence that Iran has a nuclear weapons program, but there are a lot of compliance problems with the Iranian civilian program and the UN Security Council had passed a number of resolutions asking Iran to at least temporarily suspend its nuclear program while we're clearing up these compliance issues, and in the last two sessions of the UN Security Council, the United States has been successful in passing some sanctions resolutions. Now admittedly these sanctions on Iran are fairly weak, but they may be enough to put some pressure on Iran and then with the next round of sanctions being passed, may tip the scales, convincing Iranian leadership to at least halt their program enough that we can have negotiations with them about where we go from here. So that's the current problem we're dealing with.

In the report, I look more towards the future and ask if we have a major expansion of nuclear power usage in which we might have to increase the nuclear fuel capacities two to six times greater than what they are now, we may be dealing with a premise of such complexity in trying to keep track of all the nuclear fuel being produced that some of this material could be susceptible to insider threat in which someone could sneak out enough of this material over time and use it to build nuclear bombs. Now as long as low-enriched uranium is being produced for nuclear fuel, it can't be used for nuclear weapons. The enrichment is not right for nuclear bomb production, but you can use the same technologies to make highly enriched uranium, bomb usable material and so this leads to one of the major recommendations in the report; that we need a more effective nuclear safeguard system. Currently, we're relying on the International Atomic Energy Agency, the IAEA, to apply these safeguards or at least inspect the safeguards being applied by countries that engage in these activities, but one of the big problems is that the IAEA is under funded and under staffed. I point out in the report that the safeguards budget for the IAEA is about 125 million dollars a year and that's comparable to the annual salary level for the Washington Redskins football team. So I know, I know, we highly value sports in our country, but I think we should value nuclear safeguards as much or more, and so the major recommendation in the report in that area is that those countries who benefit the most from nuclear power should pay the most to ensure that there are adequate safeguards in place so that we have better confidence that countries are not exploiting these peaceful nuclear technologies for military purposes.

And then I also get into some other recommendations about how to create a less discriminatory nuclear nonproliferation system so that it looks like we're not picking on the bad guys or singling out bad guys from good guys because today's good guy could become tomorrow's bad guy and vice versa so we need to create a nonproliferation system that's as country neutral as possible so that we can say to countries like Iran, no, we're not purposely picking on you. The reason it looks like we're picking on you is because you have definite compliance problems with your nuclear program and any country that has these types of compliance problems should be treated equally. They should be required to suspend their suspect nuclear activities while we're dealing with the problems that we face, and I think with that, because I see we've been going on for a while, let me stop and ask if you have any questions.

IRINA A. FASKIANOS: Terrific. Thanks Charles for that overview. And to everybody's who on the call, we really welcome your comments on the issues that you're focused on and how you're using nuclear energy in your communities and what the nature of the debate is as you're thinking through these issues. So with that, why don't we open it up into comments and questions?

OPERATOR: At this time, we will open the floor for comments or questions. If you would like to ask a question or state a comment, please press the star key followed by the one key on your touch-tone phone now. Questions or comments will be taken in the order which they are received. If at any time you would like to remove yourself from the question queue, press star two. Once again, to ask a question or state a comment, please press star one now.

QUESTIONER A: Hi, good afternoon, [I'm] based in Chicago but I also do a lot in Springfield, Illinois. I also went to the Monterey Institute so it's nice to hear someone who has done significant research there. I had a question about nuclear energy. Here in Illinois, I'm not that well-versed on our efforts on nuclear energy, but I know there's such great emphasis on clean technologies and in fact, clean coal. We're now researching the possibility of receiving the Future Gen operations, which would be clean coal operations. How does nuclear energy relate as far as being environmentally friendly? Could you expand on that a little bit more please?

CHARLES FERGUSON: Sure, I'd be happy to, and you may know this, I don't know if the other listeners know this but Illinois is like France in that you get almost 80 percent of your electricity from nuclear power. It's the largest percentage usage of any state in the United States.

QUESTIONER A: Oh I wasn't aware of that.

CHARLES FERGUSON: Yeah and I think it's - and I don't know regulatory rules that well-but my understanding is it's because of Illinois' regulatory infrastructure and the way they have set things up, it's made it amenable for huge growth of nuclear energy use and yeah, I think that's a great question to look at nuclear versus coal use because coal is very abundant in the United States. As I point out in the report, the United States is like the Saudi Arabia of coal reserves. We have, it's estimated maybe upwards of 250 years worth of coal that is more or less readily available and it depends on who you talk to what you mean by available, and that has, as you know, environmental costs associated with it. One of my grandfathers was a coal miner. He died from black lung so, you know, I feel it in my family. It's a very dangerous profession and it creates environmental damage all its own, and so you kind of have to go through, you know, as I tried to indicate in my opening remarks, energy sector by energy sector, look at the good and the bad of each one; and with coal, it has a lot of bad characteristics associated with it. If you don't capture the greenhouse gas emissions, then coal is kind of the biggest proliferator in some sense of greenhouse gas because if you look at the amount of carbon content in coal, it's huge compared to oil or natural gas, and so in that sense coal is making the planet worse from the climate change perspective, unless we can get Future Gen working. And the Future Gen project is, as [the questioner] indicated, is trying to make coal cleaner -- cleaner in the sense of capturing CO2 emissions and hopefully we could sequester that CO2. This has yet to be really proven on a very large scale but there's a lot of kind of hope that in the next decade or so we can get the carbon capture from coal plants actually working, and then we'd have to monitor these places very carefully where the carbon dioxide is captured so it doesn't leak, and if it leaks, then we still have this stuff going into the atmosphere.

Other environmental concerns with coal: I mentioned the hazards of mining, the hazards associated with other - there are hazards associated with other emissions of coal. A lot of mercury emissions, hazardous elements, also acid rain was a huge problem back before the early nineties, before legislation was passed to control CO2 emissions and so one of the biggest effects of that legislation was to drive us to use coal with lower sulfur content and so a lot of the mines in Pennsylvania where I grew up that have higher sulfur content aren't being used and some of the West Virginia mines aren't being used as much because of the sulfur content, and mines in Wyoming and Montana and out in the west where they typically have lower sulfur content have been favored because of the legislation that has imposed a cap and trade system on those types of emissions to prevent acid rain. And so environmentalists who favor or politicians who favor a cap and trade system for CO2 would say, "well we do have a precedent here." We did this ten or more years ago and tried to control acid rain; can't we do something similar with CO2? Perhaps, but at least with the CO2, excuse me, emissions with acid rain, it was a lot more - it's more on a regional level within the United States and here with global warming, because it's a global problem. Somehow we're going to have to establish some carbon control system that will apply to the entire globe, and so in that sense it's an unprecedented type of control system. Nuclear also as I indicated in my opening remarks, has environmental hazards associated with it in terms of the highly radioactive fission products that are produced that will last tens of thousands or more years, and we have to find a way to safely sequester that waste so it doesn't get into the food chain and contaminate water supplies for instance. Ddoes that sort of answer your question or would you like some more discussion?

QUESTIONER A: Yes it does, and just when you talk more about carbon, we're all for the home here in Chicago and for the Chicago Climate Exchange.

CHARLES FERGUSON: Indeed.

QUESTIONER A: Which is a very unique program but it's still working out its glitches.

CHARLES FERGUSON: Right.

QUESTIONER A: Thank you for your response.

CHARLES FERGUSON: And the European Union is still working out its glitches and its cap it trade system for CO2 emissions. About a year and a half ago, I guess almost two years ago now, they established an emissions trading scheme and the first year the price on emissions was going wild and the problem was that they sent out too many permits, emission permits, and it caused the trading scheme to collapse and the price plummeted and now in the second year they're trying to do a better job and not sending out as many emission permits and you know, it's always a learning process in trying to get the kinks out.

IRINA A. FASKIANOS: Charles, thank you. Just to follow up on that, you talked about the concern with the nuclear waste and making sure it doesn't go back into our food system, but there is also a lot of political opposition to existing plants and to creating new ones. Can you talk about that tension and why you think it may be valuable to pursue the construction of new nuclear reactors? I think you began the call in a way...

CHARLES FERGUSON: Right.

IRINA A. FASKIANOS: ...in terms of global warming and the trade-offs.

CHARLES FERGUSON: Well it's interesting to look briefly at the history of the nuclear waste issue. If we go back to the 1980s, the anti nuclear groups were saying we've got to get a solution, a final solution, to nuclear waste, otherwise we shouldn't have any new nuclear reactors. It would just be criminal of us to have these new reactors producing more waste if we don't know what to do with the current waste, and what happened was that now the strongly pro nuclear groups have adopted that message in some sense. Now they are saying to the government, "we need Yucca Mountain," or "we need a permanent repository," we need to figure that out now because we see this as a stumbling block because the public won't accept new nuclear reactors if we don't have a solution to the waste problem, and so what I was trying to do in the report is kind of cut through the noise between the strongly pro and strongly anti nuclear groups and try to figure out is there some kind of compromise position to allow the construction of new nuclear reactors and not have the waste issue to be such a major barrier, and that's why I recommended that we can buy time by storing a lot of these spent nuclear fuels in these dry storage casks which can be done in a very safe and secure fashion, but we do run into liability issues. In fact, Echelon, which is a major utility, in fact, one utility that uses nuclear the most of any utility in the United States, they have already filed suit in the U.S. court system asking for the Department of Energy to pay them money for the delays in opening up the repository at Yucca Mountain because Echelon says it costs them money to store the nuclear waste on the reactor site and so why should they be liable for that when the federal government promised them years ago that they would have already opened up Yucca Mountain? So we also need to deal with the legal and financial issues as well, and I'm not a lawyer or an economist and know how to kind of cut through that issue, but I think we can, you know, find a way to - to do it at least not to hold off the construction of the next handful of nuclear reactors but I think we can't wait too long before finding a solution to where to put the waste on a permanent basis.

IRINA A. FASKIANOS: Terrific. Any other questions or comments?

OPERATOR: Yes ma'am.

QUESTIONER B: Dr. Ferguson, following up on your last comments, the perception that I have is that a lot of states would not necessarily opt for nuclear power if the perception was that the waste was going to stay on site. Most nuclear plants or all nuclear plants obviously require a fair amount of water for the cooling system and of course they are all built either on ocean front or major rivers. Do you not see the perception of interim storage on site or by reactors as a negative?

CHARLES FERGUSON: I do and there's another approach. You could have interim storage at an above ground facility. In fact I think it's the Goshute, if I am pronouncing the name correctly, Indian tribe in Utah was willing to lease part of the reservation lands to site an interim storage facility there where you could take the spent nuclear fuel in these dry storage casks I was talking about and store them above ground in that Indian reservation in Utah and then the plan is that eventually those storage casks could be transferred to Nevada or maybe some other permanent repository and I frankly I don't know exactly what the current status is in terms of that proposal but that could be a way of alleviating the public's concerns that these nuclear power plants in their communities would just become not interim sites but permanent sites for the spent nuclear fuel.

QUESTIONER B: The Utah proposal requires that the national repository is being constructed because it's only a forty-year period that the waste would be allowed to sit there.

CHARLES FERGUSON: I see, thanks for clearing that up.

IRINA A. FASKIANOS: Next question, comment?

OPERATOR: Once again, if you would like to ask a question or state a comment, please press star one now.

IRINA A. FASKIANOS: Charles, do you want to flesh out a little bit more about the level of security at nuclear power plants?

CHARLES FERGUSON: Right, in fact -

IRINA A. FASKIANOS: You know the idea that they're not secure enough.

CHARLES FERGUSON: I don't know if we have anyone - oh, I guess someone had signed up from California. I don't know if we have anyone from California on the line but I tried to get someone from California, someone else's views about how they view the court case that took place last year, around July. The Grandmothers for Peace was the group that filed suit and I think it was the San Luis Obispo Grandmothers for Peace or Mothers for Peace. They were worried about the plant at the Diablo Canyon Nuclear Power Plant, citing a spent nuclear fuel facility, and they said that they were concerned that the Nuclear Regulatory Commission and the Diablo Canyon nuclear operators were not taking into account the potential danger that terrorists could try to attack a nuclear power plant and this new nuclear waste facility that would be on the site, you know, so I guess that once again goes back to what are we going to do with this nuclear waste, is it vulnerable to terrorist attack, and they tried to file suit through the NEPA process, the National Environmental Policy Act process. And the Ninth Circuit Court, they ruled in their favor, the Grandmother's favor, and the Nuclear Regulatory Commission, what they have done is they've narrowly interpreted that ruling to say that it only applies to the Ninth Circuit Court and doesn't necessarily apply to other jurisdictions, and I've heard that other states and other regions in the United States are looking at this court case and wondering how does it apply to them, do they need to take action through the court system? So you know, kind of curious if anyone wants to respond to that if they know about this issue.

IRINA A. FASKIANOS: Anybody wants to respond, please cue the operator.

OPERATOR: Once again, if you would like to ask a question or state a comment, please press star one now.

CHARLES FERGUSON: Well, I can add that I think this case is important from the perspective of it's the first post 9/11 successful use from the perspective of you could say an anti nuclear group or a group that's concerned about terrorist attacks using the U.S. court system to raise these claims, and whether you are for or against nuclear energy, you have to ask, well, is this going to be a stumbling block for the construction of new nuclear plants?

IRINA A. FASKIANOS: Charles, my final question to you is how do you see the energy question influencing the run up to the 2008 presidential elections, and who is talking about this?

CHARLES FERGUSON: Yeah, I think it's going to play an important role especially in dealing with the climate change issue and just thinking about [the] comments earlier, being from the state of Illinois, one of the candidates, Barack Obama, he's been actually, he's taken an interesting position, a neutral position on nuclear so far, at least last I heard. He's accepted some monies from the nuclear industry but he's told them that he also accepts money from the coal industry as well, because Illinois, as I indicated, uses a lot of nuclear energy but they also have a lot of coal plants and they also have coal mining and so, you know, he doesn't want to tip his hand too much to one or the other and he said he's willing to kind of weigh the facts, look at the analysis on both use of coal and nuclear and other sources and so I think going into next year, that at least is going to be part of his campaign platform. I think you're going to see from John McCain on the Republican side, he's been towards leaning on doing something about climate change for a long time and so I think he's going to use the opportunity of the presidential campaign to at least showcase the work that he's done, maybe sort of modern day Teddy Roosevelt in terms of being a Republican but also being very concerned about the environment and trying to do something about it.

IRINA A. FASKIANOS: Terrific. Well I think we've come to the end of our time and I want to thank you very much for today's terrific call. You did a great job giving us an overview and delving into the issues and thanks to all of you for being on the call and participating. We are really trying to provide a forum for discussion of these issues and we would greatly appreciate any feedback you may have on the conference call series and topics you would like to discuss. And if you are interested in having briefings with our Fellows I am going to offer up your services Charles...

CHARLES FERGUSON: Sure.

IRINA A. FASKIANOS: ...on nuclear energy or these issues as you are sorting through them in your community, we can actually arrange that and try to work something out via teleconference or whatnot, so I hope that you will take advantage of that. The email address is [email protected] so thank you all and we are - we will recommence in September with a new slate of exciting calls, but I hope that you will send us your ideas over the next couple of months. So thanks all and thank you Charles.

CHARLES FERGUSON: Thanks Irina.