Center for a New American Security

Last week the Department of Energy (DOE) announced its decision to award the first company to receive government funding in support of commercializing Small Modular Reactors (SMR), a new generation of nuclear power plants. Funds were awarded to a consortium of companies responding to a funding announcement in March 2012; the consortium is led by Babcock & Wilcox (B&W) in conjunction with the Tennessee Valley Authority and Bechtel. The Department of Energy established the Small Modular Reactor Licensing Technical Support Program to provide federal support of up to $450 million to expedite the licensing process of SMRs Originally, two projects would receive funding; so far only one has, leaving other initiatives such as Westinghouse, NuScale and the Holtec HI-SMUR out of luck for now.

The SMR initiative is part of the Obama administration’s efforts to have low-carbon nuclear energy play an important part of America’s energy future. SMRs are defined as having power outputs of up to 300 megawatts of electricity, according to the International Atomic Energy Agency. They are touted for their compact scalable designs that offer a host of safety, construction and economic benefits. According to Energy Secretary Steven Chu, SMRs have the potential to create new export and job opportunities for many Americans as the world is increasingly demanding nuclear energy to fulfill its energy needs, despite recent retreat from nuclear power by some countries. Developing countries that do not have the capacity or expertise are looking for more modular and cost effective power sources and SMRs may be an increasingly attractive option.

SMRs also present a unique opportunity for the United States to restore leadership in the global nuclear energy market. As U.S. SMR businesses grow the share of the market, the United States is positioned to play a leading role in future negotiations on nuclear reprocessing and spent fuel. More countries will be eager to reinstate 1-2-3 negotiations and the United States will have subsequently more leverage in these discussions. U.S. leadership in the nuclear energy markets can go a long way in ensuring safeguards can go in place of nuclear stockpiles which are critical to non-proliferation goals.

While SMRs could usher in a new wave of nuclear renaissance, many hurdles still lie ahead. First, the Nuclear Regulation Commission (NRC) still has to approve all of the design certifications before any nuclear reactor becomes operational. The NRC hasn’t issued a license for a full-scale nuclear reactor since 1976, which is in part a reason the U.S. influence in the nuclear energy market has eroded. The NRC has more experience and familiarity with large light water reactors and has thus taken a more cautious role in studying the safety of SMRs. This presents a problem for manufacturers because the uncertainties of NRC regulations make it so they won’t invest in SMR production. Whether the Small Modular Reactor Program established by the DOE will be able to overcome NRC licensing costs is still unclear as negotiations for the exact cost of its partnership with B&W is still being negotiated.

Some have argued that the Department of Defense (DOD) would be a unique testing ground for an SMR demonstration. While this might be true, there does not appear to be enough political will for using the DOD as a site for energy experimentation. A DOD SMR program might also entail high political costs due to the larger defense cut negotiations that are taking place in Congress as part of the fiscal cliff.

The bottom line: the administration’s recent moves are a sign that SMRs are poised to play a large role in any nuclear energy future. 

Higher average temperatures in the United States continue to take a toll on U.S. energy infrastructure, raising concerns about the impact of long-term climate trends and U.S. energy security.

In June, the journal Nature Climate Change published a study that found that energy production from thermoelectric power plants (such as nuclear power stations) could become increasingly constrained as a result of climate change, largely from higher average temperatures warming rivers and other water resources that these facilities rely on for cooling. “During recent warm, dry summers in 2003, 2006 and 2009 several thermoelectric power plants in Europe were forced to reduce production, because of restricted availability of cooling water,” the study found. “In the US a similar event in 2007–2008 caused several power plants to reduce production, or shut down for several days owing to a lack of surface water for cooling and environmental restrictions on thermal discharges.”

That trend is continuing, according to a recent report in The New York Times. On Monday, the Times reported that a nuclear reactor at the Millstone nuclear plant in Waterford, Connecticut was shut down because that water in Long Island Sound was too warm to cool one of the reactors. “Under the reactor’s safety rules, the cooling water can be no higher than 75 degrees. On Sunday afternoon, the water’s temperature soared to 76.7 degrees, prompting the operator, Dominion Power, to order the shutdown of the 880-megawatt reactor,”  according to the report.

Iran has renewed negotiations with other world powers in Moscow over its nuclear ambitions after recent talks in Baghdad failed to produce any significant progress. The negotiations, which began today, include the five permanent members of the United Nations Security Council – the United States, Russia, China, Britain and France – Germany, the European Union and Iran.

The Moscow talks come on the heels of poor economic news for Iran and just two weeks before European sanctions against Iranian oil exports go into full force on July 1. According to The Washington Post, Iran’s currency – the rial – has lost 50 percent of its value in just 10 months; oil exports have declined by 40 percent from a year ago, contributing to a loss of about $4.5 billion a month in revenue; and targeted financial sanctions against Iranian banks and industries are constricting economic flow.

Meanwhile, Iran’s oil production is outpacing the available storage, which could force the industry to scale back production. “A report last week by the International Energy Agency said Iran was storing tens of millions of barrels of unsold oil in offshore tankers and would probably soon run out of space, forcing it to drastically cut production,” The Washington Post reported.  

Japan’s Prime Minister Yoshihiko Noda cautioned on Friday that Japan could not afford to keep its nuclear reactors offline. “Cheap and stable electricity is vital. If all the reactors that previously provided 30% of Japan's electricity supply are halted, or kept idle, Japanese society cannot survive,” Noda said in a televised address.

During the 10-minute speech, Prime Minister Noda emphasized the national security concerns of relying more on imported energy to compensate for the decline of domestic power generated from its nuclear reactors. Noda said that, “Japan needed nuclear power to avoid relying too heavily on oil and natural gas from the politically volatile Middle East,” The New York Times reported.

Since last year’s Fukushima Dai-ichi nuclear accident, Japan has burned about 135.5 percent more oil, the International Energy Agency reports. The increased oil consumption has likely contributed to a greater dependence on Middle East petroleum – although imports may also be coming from Southeast Asia neighbors, like Brunei.

Reuters Iran bureau @ReutersIran: “Iran talks with world powers hit snag over sanctions reut.rs/Jt8ztA.”

Reuters reports on the international negotiations in Baghdad between Western and Iranian officials over Iran’s nuclear program. According to the report, negotiations appeared to be hindered by Western sanctions against Iranian oil exports. “Iran had served notice that it wanted immediate relief from economic sanctions as part of any deal to stop higher-grade uranium enrichment, a pathway to nuclear arms, whereas Western powers insisted Tehran must first shut it down,” the report says.

Sara Sorcher of the National Journal @SaraSorcherNJ: “Law of the Sea Treaty (#LOST) likely subject of another lame-duck fight: nationaljournal.com/member/congres…”

The National Journal reports on Wednesday’s Senate Foreign Relations Committee hearing on the national security case for ratifying the Law of the Sea Convention. Senator John Kerry, chairman of the Senate Foreign Relations Committee, said that he would hold off on a vote until after the November elections, suggesting that Congress could have a heated debate on the treaty during the lame-duck session. 

Andrew North of the BBC @NorthAndrew: “Another step towards trans-Afghan pipeline, India+Pakistan to sign gas deal w/Turkmenistan online.wsj.com/article/SB1000…”

The Wall Street Journal reports that on Wednesday Turkmenistan agreed to supply natural gas to both Pakistan and India, a necessary step toward realizing the trans-Afghan pipeline that has been twenty years in the making. Instability in Afghanistan and billions of dollars in investments are the two major roadblocks facing pipeline construction through Afghanistan.

Japanese officials shutdown the last of 50 nuclear reactors late Saturday evening, taking the country off of nuclear power for the first time in more than four decades. Most of Japan’s nuclear reactors will remain idle for the foreseeable future as they undergo stress tests to determine their ability to stand up against a major disaster, a measure introduced after the March 2011 triple disaster that crippled the Fukushima Dai-ichi nuclear power plant and left the country’s nuclear-power future in a tailspin.  

Japanese officials remain concerned that the country could experience electricity shortages during the peak summer months without nuclear power, which previously provided approximately 30 percent of Japan’s total electricity demand. A panel of experts reported to Japanese policymakers in April that nine utilities could see electricity shortfalls in August. As a result, Japanese officials may power up two reactors during the summer in order to meet electricity demand. The Japanese Times reports that “Last month, Prime Minister Yoshihiko Noda and key members of his Cabinet decided that firing up the No. 3 and 4 reactors at the Oi power station is essential to ensure a stable supply of electricity in the Kansai region in summertime,” even as the country continues to reduce its reliance on nuclear power. It is not clear if those two reactors will be back online by the summer.

This is a new feature to highlight the top tweets of the week to hit my Twitter feed (@wmrogers).

From The Hill’s Energy and Environment Blog @E2Wire: “News bites: White House to promote ‘bioeconomy’ bit.ly/JXftuf.”

The Hill’s Energy and Environment Blog discusses the White House’s announced release of a new National Bioeconomy Blueprint on Thursday that is expected to make a broad push for investments in biotechnology, including renewable biofuels.

From Circle of Blue @circleofblue: “Soon, water may be more important that oil to #China @Forbessu.pr/1mAIOg #water

Circle of Blue links to a report in Forbes that discusses the growing strategic importance of water in China, driven in part by increasing demand as well as mismanagement of existing resources. According to the report, “The country’s water supply is smaller than that of the U.S., yet it must meet the needs of a population nearly five times as large. Industrialization has taken its toll on this already limited resource. Industrial and biological pollution has contaminated almost 90 percent of the underground water in Chinese cities.”

This is a new feature to highlight the top tweets of the week to hit my Twitter feed (@wmrogers). The list is completely subjective, of course, but I hope it is helpful to readers interested in following natural security news a little bit closer.

From Reuters’ @alertnetclimate: “Private funding for humanitarian response on the rise, as government budgets squeezed - report ow.ly/aeinB #aid#disasters.”

This is an interesting story to follow given the potential increase in demand for governments to support humanitarian assistance and disaster relief missions due to climate-related and other natural disasters. Institutions like the U.S. military may be called on to support HA/DR missions in order to help dampen the impact of these natural disasters, which can have knock-on effects for security and stability.

From The Hill’s Energy and Environment Blog @E2Wire: “News bites: Study questions natural gas climate benefits, pump prices may have peaked, and morebit.ly/IrIEVM.”

The Hill’s Energy and Environment Blog links to a Wall Street Journal report on a new study by the Proceedings of the National Academy of Sciences that challenges that assumption the natural gas reduces greenhouse gas emissions compared to other fossil fuels. The study notesthat methane (CH4) leakages throughout the lifecycle production process could offset the greenhouse gas benefits. The study is very important given the recent attention to natural gas production in the United States, largely from shale rock.

On March 25-26, 2012, the second Nuclear Security Summit (NSS), an international conference on global nuclear issues, will take place in Seoul, South Korea. The guest list has been finalized at 58, which includes representatives from 53 countries, and five representatives from four international organizations. In a post-Fukushima era and one in which the threat of terrorists obtaining and employing a nuclear device is viable, the 2012 summit will explore the issues of nuclear safety, security and terrorism. The summit is an avenue for the international community to collectively consider and learn from the mistakes of Fukushima in order to develop measures to prevent future nuclear disasters, the event of nuclear terrorism and restore public confidence in the peaceful uses of nuclear energy.  

Enhancing Nuclear Security and Safety

There will be various meetings preceding the March 25-26 event. The two most significant are the 2012 Seoul Nuclear Industry Summit, on March 23-24, when roughly 150 nuclear industry CEOs will discuss the role of the nuclear industry in enhancing nuclear security and safety, and the Nuclear Security Experts Symposium, on March 23, when over 250 representatives from NGOs, nuclear research institutions and nuclear security experts will convene for discussions on innovating nuclear security governance.

U.S. President Barack Obama inaugurated the NSS in Washington on April 12-13, 2010. The first summit addressed preventing nuclear terrorism, or the event of terrorist organizations using a nuclear weapon or one comprised of radioactive materials – “a dirty bomb” – on civilian populations. In the summit communiqué, a document that participating nations signed at the summit’s conclusion, leaders succeeded in defining the current parameters of nuclear security and particular nations, for example Ukraine, agreed to relinquish their stockpiles of highly enriched uranium. However, while the first summit did bring high-level attention to the issue of nuclear terrorism, it neglected to produce collective agreements requiring nations to secure their own domestic nuclear weapons material and facilities. As nations were largely responsible for setting their own goals, naturally these states set the bar low as to ensure positive results. Accordingly, the second summit has the opportunity to set a more ambitious agenda and introduce higher standards for participants.

Yesterday, The Wall Street Journal reported that the Obama administration has decided to withdraw its demand for countries pursuing nuclear energy development to relinquish their right to produce nuclear fuel domestically. This is a significant shift from a 2009 agreement between the United States and the United Arab Emirates (UAE) that prohibits the UAE from enriching uranium domestically or reprocessing spent nuclear fuel.

According to The Wall Street Journal report, administration officials cited concerns that U.S. nuclear plant developers could lose a share of the market with a stringent requirement attached to nuclear-cooperation agreements that bound countries from developing domestic sources of nuclear fuel. “U.S. companies once controlled at least 50% of the world market for building nuclear reactors,” The Wall Street Journal reported. “This share has dwindled to around 20%, U.S. officials say, with Russian, French and South Korean companies gaining dominance,” and officials have cautioned that “Washington risked losing business for American companies seeking to build nuclear reactors overseas” if the United States continued to push the nuclear-cooperation agreement requirement.

Moreover, U.S. officials cited concerns that losing nuclear plant development to non-U.S. developers could weaken U.S. efforts to encourage countries to promote stronger nonproliferation safeguards and policies. “To the extent we lose market share, we lose nonproliferation controls and hurt national security,” a senior U.S. official told The Wall Street Journal.