The End of the Nuclear Industry as We Know It

Toward a 21st-Century Model of Nuclear Innovation

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March 27, 2017 | Ted Nordhaus

News last month that Westinghouse is facing crippling losses due to cost overruns and delays at four new nuclear reactors under construction in the US are but the latest evidence that the nuclear power industry in developed economies is in deep trouble. China, South Korea, and Russia continue to build new nuclear plants. But in the United States, Western Europe, and Japan, the nuclear industry, as we have known it for over a half-century, is coming to an end.

As in the US, new plants in France and Finland are behind schedule and over budget. Fears of nuclear accidents led Japan and Germany to shutter their nuclear fleets after Fukushima. Meanwhile, stagnant demand, liberalized electricity markets, cheap natural gas, and competition from heavily subsidized renewable energy have led Vermont, California, and a half-dozen other states to take existing plants offline rather than operate them at a loss.

Policy hasn’t helped. Neither states nor the federal government have been willing to properly value the zero-carbon electricity that nuclear plants produce. Nuclear is excluded from state renewable energy standards and has limited access to the federal tax credits that have underwritten the expansion of renewable energy over the last several decades. Regulators, meanwhile, hold nuclear power to environmental and health standards that no other energy source must meet.

But it is also true that the nuclear industry today is an artifact of the Cold War and the geopolitics of the oil crises of the 1970s. Reactors developed to power submarines and aircraft carriers were modified to serve civilian needs. Faced with energy insecurity and high prices, publicly controlled utilities and state-owned enterprises in nations like France and Sweden build out a nuclear reactor fleet in the same way that they built publicly funded highways and rail systems. In the United States, publicly regulated utilities teamed up with large incumbent firms like General Electric and Westinghouse to build public works projects—a typical reactor could power 1 million homes—at a time when fossil fuels were believed to be scarce and electricity demand was expected to grow exponentially.

The old model had its benefits. France and Sweden succeeded in weaning their power sectors almost entirely off of fossil fuels while the United States built out the largest nuclear fleet in the world, over 100 reactors providing roughly 20% of the nation’s electricity.

But in a world in which fossil fuels are abundant and industrial planning long ago fell out of fashion, the old top-down and state-led model of nuclear development has not fared well. The cost of large public works projects of all sorts has risen precipitously in recent decades. Few utilities or investors are willing to make $10 billion, 60-year bets on large light-water reactors when electricity demand is growing slowly and energy technology—from solar panels to natural gas extraction technologies—is evolving rapidly.

If there is going to be a future for nuclear energy outside of a few state-led Asian and Middle Eastern economies, both nuclear technologies and the nuclear industry will need to evolve. In a new Breakthrough Institute report, How to Make Nuclear Innovative, we consider the ways that the nuclear industry and nuclear policy will need to be transformed in order to develop and deploy commercial nuclear reactors that are smaller, cheaper, and easier to build and operate, and consider case studies from other complex, highly regulated technology sectors that might provide models for how the nuclear sector will need to change.

What will be necessary is not new physics. The basic physics of virtually all nuclear fission technologies has been well understood and demonstrated since the late 1950s. Rather, radical nuclear innovation must be informed by markets, end users, and modern fabrication and manufacturing methods. This is centrally a job for entrepreneurial engineers, not scientists at national laboratories, technocrats at the Department of Energy, or division heads at Westinghouse or General Electric.

Bottom-up innovation, led by start-ups, not large incumbents, will need to define a revived nuclear sector. Such a shift would not be unprecedented. The era of cheap genetic decoding became a reality when decades of federal research and development was handed off to Craig Ventor, an entrepreneur who used technologies and basic science pioneered by federal scientists to develop a better and cheaper way to decode the human genome. Space flight, once the sole province of NASA and its large contractors, has undergone a similar transformation.

Radically reorganizing the nuclear sector in this way will require important changes in federal policies. The modern biotech sector was made possible by changes in the way that the FDA licensed and tested new drugs, and by changes to the federal tax code and to patent law that incentivized public institutions to get research out of their laboratories and into the hands of entrepreneurs and venture capitalists. NASA gave birth to a diverse and growing commercial space industry by allowing private firms access to the agency’s decades of technical expertise and by creating incentives and competition among firms for contracts to carry federal payloads into orbit.

An innovative 21st-century advanced nuclear sector will require similar changes. A regulator committed by statute to the development of new reactors that are both safe and cheap. A staged licensing process similar to that at FDA that is better suited to the development and finance needs of small firms and venture capital as opposed to the large incumbent firms that the NRC’s current licensing rules are designed to accommodate. National laboratories and Department of Energy programs designed to support engineers and start-ups, not direct them. And competitive grants and advanced market commitments designed to eliminate the need for technocrats at the Department of Energy or elsewhere to pick technological winners too early.

Technological advance, of course, is never certain and none of these measures guarantee that a globally competitive advanced nuclear sector will rise from the ashes of today’s dying industry. But significant progress toward a clean energy future will be difficult without a new generation of advanced nuclear reactors in the mix. That, in turn, will require a 21st-century nuclear industry.


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Ted Nordhaus is a leading global thinker on energy, environment, climate, human development, and politics. He is the co-founder and executive director of the Breakthough Institute and a co-author of An Ecomodernist Manifesto.


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FURTHER READING

 

"Twenty-First Century Nuclear Innovation"

 

"Frequently Asked Questions About Nuclear Power"

 

"Moderate Environmentalists Go Nuclear"

 

"Top Climate Scientists Urge Support of Nuclear Power"