Tuesday, September 4, 2012

A cost-free way to open up nuclear investment

Late last week, the Atomic Safety and Licensing Board (ASLB) rejected a license application for the proposed Calvert Cliffs Unit 3 (an AREVA EPR) build in Southern Maryland. The reason? It was against the law.

Specifically, when the build was originally proposed, it was to be a 50/50 joint ownership stake by Constellation Energy and Electricite de France (EDF, the state-owned French utility giant). However, in November 2010, Constellation sold its 50% stake in the reactor to EDF, making it the sole potential owner of the unit.

According to Federal law (10 CFR 50.38), foreign investors are ineligible to apply for a license to operate a nuclear facility in the U.S. While Unistar was still the nominal applicant, the ASLB determined that the venture was solely owned by EDF and thus EDF was the effective applicant - and thus, ineligible. (The lawsuit, incidentally, was filed by the anti-nuclear activist group NIRS, indicating that anti-nuclear groups will not hesitate use every tool at their disposal to block or shut down any nuclear power facility - and to hell with the cost to the environment as a result.)

If this seems entirely backward in a world of global production and investment, that's because it is. The current regulation is an artifact of the Atomic Energy Act of 1954, which first authorized private ownership of nuclear facilities. (Prior to this - per the Atomic Energy Act of 1946, all nuclear technology was considered a state secret, during the short time in which the U.S. enjoyed a monopoly on the technology.)

Is there any real compelling reason for restrictions on foreign ownership and investment in nuclear facilities to exist at a time when the U.S. holding a monopoly on the technology has long since passed? Issues of safety here of course are irrelevant - the facilities would be licensed and regulated by the NRC, just as any other nuclear facility is now. About the only salient objection is the political one - i.e., the implications of a foreign entity maintaining controlling ownership in key infrastructure. (Although it's hard to see anyone getting particularly upset about the reverse - U.S. entities owning a controlling stake in infrastructure in other nations.)

For those who have a bit of a longer memory, the controversy should ring familiar - i.e., it's the same arguments which were played out during the Dubai Ports World deal, in which DP World, a UAE-based company, would take over management contracts for six U.S. ports already under foreign management.

EDF as Philip J. Fry: Shut up and take my money
Meanwhile, an issue to consider is the fact that bringing together capital to complete a construction bid like Calvert Cliffs 3 is no mean feat (particularly in an economy where investors seem all too skittish about long-term investments in energy infrastructure). Given the difficulty then, it seems positively insane for any political leadership to turn away large investments in long-term energy infrastructure (especially non-emitting baseload like nuclear, which has a long expected operational lifetime).

Setting aside the politics of free trade for a moment, if Republicans have any seriousness behind their twin rhetoric of advocating for expanded use of nuclear energy and in relying on the free market to sort out our energy mix, then this one should be a no-brainer: let companies like EDF put up the investment and apply for a license. The same is true for Democrats as well - if they're serious about both jobs (nuclear construction has them in spades) and especially about creating clean energy sources for the future, investors like EDF should be welcomed with open arms, not turned away at the door.

Again, the best part of this? This costs nothing. Investors like EDF wish to voluntarily invest their money in a vital public good (carbon-free electricity) - all that needs to happen is for leaders to be willing to say, "Oui."


  1. While changing a McCarthy era law is logical, I wonder if trying to change it might increase the risk of a more screwed up regulatory structure via political nonsense. A cap on the percentage of foreign investment (49.9%?) is probably a good idea for infrastructure security, but saying none at all is a little ridiculous.


    1. @Riley: Well, that actually is the situation right now; i.e., EDF formerly had a 49.9% share, but because Constellation had the "controlling" interest, they were good to apply for the license. When it became 100% EDF with Constellation being the "face only" on the application, then it ran into a problem.

      But again, I understand the reflexive nod toward "infrastructure security," but when it boils down to it, what is fundamentally the basis for this concern? That the foreign operator would one day decide to shut it down over an international dispute? The reactor itself is still located here. Given that it's built to NRC spec, I'm not really sure what else they could reasonably do other than shoot themselves in the foot by turning it off. Which, in the end, would hurt them just as much, as this is a multi-billion dollar asset. (Not to mention that I suspect in this case, I doubt relevant legal authorities would have many reservations about employing eminent domain...)

  2. If there is a process enacted that caters for the theoretical possibility of a "hostile" shutdown (or other action) by a foreign owner (of a US company), there is every reason to extend that to any hostile shutdown etc. that threatens to close infrastructure, no matter what the nationality of the controlling entity.

    However in reality there is no reason to expect any such action from anyone who has operating plant on the ground. Having US nationals in charge of operations and having the NRC on site means that there really isn't any way to use (or close) such infrastructure maliciously in any meaningful way.

    Unfortunately, far more likely than problems with foreign owners is a government-imposed pointless shutdown. As seen far too often around the world, and currently affecting San Onofre #2.

  3. Would proliferation risks be a concern with foreign ownership? Probably unlikely, given the security of plants in general, and because foreign ownership does not necessarily mean foreign operation.

    Perhaps a good idea would be to set up an international consortium of investors from a select group of countries for ownership of nuclear power plants in the U.S.

    Possible list off the top of my head (as a start):

    - Japan
    - India
    - Australia
    - The UK
    - Canada
    - South Korea

    Maybe we could even hire some of the Japanese nuclear engineers and operators that have lost their jobs . . .?

    1. @M.: I don't think proliferation risks are that significant for reactors themselves; beyond the issues you point out of decoupling ownership from operation, I'd say reactor technology itself isn't the most significant proliferation concern (rather, enrichment and reprocessing technology are of far greater concern).

      Regardless, generally institutions in place including IAEA safeguards, and the Nuclear Suppliers' Group would address many of the issues you bring up. (Incidentally, the NSG looks quite similar to the list you present - add in France and Russia and that's the core of it). The NSG generally covers voluntary export controls on nuclear technology for the reasons you list; so I think the situation you describe could likely be handled through such a similar fashion.

    2. Actually, I meant proliferation of radioactive material for use in dirty bombs. I apologize, I should have been clearer.

      Thanks for the NSG reference. I agree; from what I've seen on their website, it looks like a tight ship.