Rebuilding U.S. Nuclear Industry
By: Jack Spencer and Nick Loris
The Heritage Foundation | Tuesday, November 11, 2008
over global warming, energy dependence, and rising fuel prices are
leading many to seek out alternatives to fossil fuels. Nuclear power is
one available alternative that could help reduce dependence on foreign
energy sourcesthat is both emissions-free and affordable. Aside from
the regulatory hurdles, one difficulty with employing nuclear
technology is that the U.S. no longer has the industrial infrastructure
to support a broad expansion of nuclear power. Some Members of Congress
have suggested that federal government handouts, using the euphemism
"incentives," are necessary to get the nuclear industry up and running
again. This is simply not the case. The nuclear industry has already
begun its expansion. Instead, Congress should concentrate on
guaranteeing regulatory stability, opening foreign commercial nuclear
markets, and developing a sustainable, free-market approach to nuclear
Nuclear Expansion Can Reduce Costs of CO2 Reductions
Lieberman–Warner climate-change bill (S. 3036, originally introduced as
S. 2191 in 2007) introduced in Congress earlier this year would have
mandated drastic reductions in America's CO2
Although the bill died a quick and justified death, a new version of
the bill will most certainly be introduced in the coming year. emissions. A
recent Heritage Foundation analysis estimated that the bill would have
cost the U.S. economy between $1.8 trillion and $4.8 trillion by 2030,
along with lost manufacturing jobs exceeding 2 million in certain
the Heritage analysis shows the economic impact of the Lieberman–Warner
bill under a likely mix of energy sources based on today's policies,
other analyses study how alternative energy mixes can mitigate the
costs of CO2 reductions. While these analyses differ, they all point to the same result: Nuclear power is critical to reducing CO2
emissions affordably. Not only does the U.S. need nuclear power, but an
enormous amount of nuclear power is needed quickly. An Environmental
Protection Agency (EPA) analysis assumes a 150 percent increase in
nuclear power by 2050 to meet Lieberman-Warner CO2 reduction targets.
While meeting this demand would require a substantial industrial
effort, it is minuscule in comparison to an Energy Information Agency
(EIA) analysis that suggests that the U.S. must increase its nuclear
capacity by 268 gigawatts of new nuclear power by 2030 in order to meet
the same objectives.
the U.S. has 104 operating nuclear reactors with atotal capacity of
approximately 100 gigawatts. New reactors would likely be larger on
average than existing reactors. Assuming that the average new reactor
would produce about 1.3 gigawatts of electric power, the EPA analysis
would require nearly 50 new reactors, while the EIA's analysis would
require about 200 over the next 25 years.
The problem is that
the United States has not ordered the construction of a new reactor
since the mid-1970s, and today does not have the industrial
infrastructure to build even a single reactor with all-domestic
components. The U.S. industrial and intellectual base atrophied as the
nuclear industry declined over the past three decades. Large forging
production, heavy manufacturing, specialized piping, mining, fuel
services, and skilled labor all must be reconstituted. Simply expanding
domestic capabilities will not be enough, however, to support a broad
nuclear expansion. The U.S. will also need to maximize its access to
foreign capabilities and human resources to achieve CO2 reductions with nuclear energy.
Washington Help Is Not Necessary
recognized the discrepancy between the capacity required to support a
broad nuclear expansion and what exists today, many in Congress have
sought to take action to grow America's nuclear industrial base.
Unfortunately, many of their proposals are little more than industry
handouts. They largely consist of taxpayer-subsidized workforce
programs and manufacturing-expansion tax breaks.
programs are not necessary. The potential market for new nuclear
reactors and the services necessary to keep them running is so large
that the private sector is already beginning to expand. Those that
invest wisely today will be the ones best positioned to take advantage
of the emerging nuclear markets in the future. Federal government
intervention only distorts the risk of these companies, causing them
to either make investments that they would not have otherwise, or
discounting the costs for investments that they would have made anyway.
Either case leads to an inefficient marketplace that would ultimately
lead to a weaker overall industry.
Instead, Congress should take
steps that free industry to pursue nuclear energy (and other energy)
projects. A stable regulatory environment is far more important to the
long-term health of the nuclear industry than any short-term government
subsidies. Congress should take steps that promote industrial
independence, not create the kind of dependency that is inherently
incompatible with long-term business planning. The Heritage Foundation
released a list of 10 steps that the federal government could take to
create such an environment.
most critical of these steps is to transfer nuclear waste management
responsibility to the private sector. The current
government-controlled system does not work and is obsolete in today's
nuclear renaissance. The nuclear industry is best positioned to develop
economically rational, sustainable approaches to spent-fuel management.
In addition, Congress and the Administration need to be much more
effective in opening international markets to U.S. suppliers. While
America's leaders bicker about the virtues of nuclear power, other
countries, such as Russia and France, are busy developing business
opportunities around the world, situating themselves in positions of
authority as new rules for nuclear commerce and nonproliferation
emerge. Finally, Congress should undertake a series of pro-market initiatives, such as removing commodity tariffs and increasing H1-B visa quotas. These would help lower costs and increase access to the resources required to support a broad nuclear expansion.
Jobs, Jobs Everywhere
and educational sectors are already positioning themselves for
additional nuclear business. Although there is not a good deal of
quantitative data available to date, there is ample evidence to
demonstrate that private companies are expanding their workforce,
enrichment and manufacturing facilities are expanding capacity,
universities are increasing the size of their nuclear engineering
programs, and the private-sector is implementing craft-labor workforce
programs. Most important, all this is in response to market demand for
safe nuclear power—without a single federal government incentive
program specifically for nuclear power.
The growing opportunities in the nuclear business are widely recognized. U.S. News & World Report
recently called nuclear engineering the new hot job; the industry also
needs "tradesmen and mechanical, electrical, chemical, and civil
engineers with the know-how to run and build nuclear facilities." Companies in the United States are responding accordingly.
instance, AREVA, one of the world's leaders in nuclear energy, is
expanding its headquarters in Lynchburg, Virginia, by 500 jobs, a 25
Nine hundred technical jobs will come to Wilmington, North Carolina,
which pay roughly $50,000 more than the average annual salary in North
Carolina's New Hanover County.
URS Corporation, a company that provides a wide variety of nuclear
services from design and engineering to construction, recently opened a
nuclear energy center in South Carolina and plans to hire 400 nuclear
experts over the next few years. And
in 2006, General Electric built a technology center in North Carolina
that "will serve as GE's nerve center for advanced reactor technology."
expansion is filtering throughout the nuclear supply chain. For
example, Columbiana Hi Tech, which provides the nuclear industry with
transportation and storage equipment, is planning to add up to 40
people to its staff of 75.
Pennsylvania Governor Ed Rendell commended the Curtiss–Wright
Corporation for its $62 million expansion to build nuclear reactor
coolant pumps that will create 80 new jobs. Curtiss–Wright will also
explore and test new products to produce nuclear energy.
private-sector investment has been taking place for a few years now.
Another integral player in the nuclear industry, Westinghouse, expanded
its labor supply by 3,000 people over the past five years, including
1,300 last year alone, and intends to hire several hundred more in the
Westinghouse also recently announced, along with The Shaw Group, that
it will build the first commercial nuclear module fabrication and
assembly facility in the United States. The facility will manufacture
components for new and modified reactors and will bring 2,900 jobs to
the state of Louisiana.
the federal government is preparing for a nuclear renaissance. The
Nuclear Regulatory Commission (NRC) processes nuclear facility license
applications and sets regulations that are meant to ensure safe
commercial nuclear operations. Being prepared to efficiently process
new applications to provide effective oversight will require
significant manpower increases. The NRC has hired over 400 employees
over the past two years to handle new plant licensing and plans to hire
about 200 per year for the next few years to support new plant
activities as well as to fulfill other obligations.
The Industrial Renaissance Has Begun
investment in nuclear manufacturing and infrastructure is critical for
a rapid expansion, and it has already begun. In 2007, Alstom, a global
leader in power generation, invested $200 million in a new facility in
Chattanooga, Tennessee, that will significantly expand manufacturing
and engineering capacity.
new nuclear plants will need to be fueled with enriched uranium and the
U.S. has very limited uranium enrichment capabilities. But that is
about to change. While America's limited domestic enrichment is
currently provided by USEC's plant in Paducah, Kentucky, the company is
building a new $3.5 billion plant in Piketon, Ohio. USEC estimates that
the American Centrifuge Project will create 3,300 jobs in Ohio as well
as an additional 3,000 direct and indirect jobs for USEC's suppliers to
expand appropriately to manufacture the centrifuge machine parts.
AREVA recently selected Idaho Falls, Idaho, to build its $2 billion
enrichment facility. It hopes to begin operations by 2014 and to
operate at full capacity by 2019.
GE-Hitachi plans to build a Global Laser Enrichment facility in
Wilmington, North Carolina, with construction beginning in 2009.
Finally, Louisiana Energy Service's (LES) $1.5 billion National
Enrichment Facility in Eunice, New Mexico, began construction in 2006
to start operations by 2009 and reach full capacity by 2013.
New nuclear plants are built with very large, often called "heavy," nuclear components. Although
U.S. companies once led the world in the manufacture of these
components, domestic capacity was not maintained as the construction of
new nuclear plants was halted. This, however, has begun to turn around.
In 2006, the Babcock & Wilcox Companies acquired its N-Stamp
certification, which allows it to provide these components to the
In October, AREVA and Northrop Grumman Shipbuilding announced plans to
build a heavy manufacturing facility in Newport News, Virginia, that
will supply newly constructed AREVA-designed nuclear power plants. The
$363 million investment is expected to create 540 jobs.
acting without federal government funding may sound risky to some, the
companies that make good investments today will be better positioned
as nuclear energy leaders tomorrow. The bottom line is that companies
do not need the federal government to tell them where to invest.
Indeed, the private sector is already organizing itself to identify
investment opportunities. The Edison Welding Institute recently put
together a consortium of nuclear companies to identify supply-chain
weaknesses, to prioritize objectives, and to improve quality.
Similarly, the Nuclear Energy Institute has implemented a comprehensive
nuclear-suppliers program that is achieving similar goals. These
associations are how industry will determine—without interference from
Washington—where capabilities must be strengthened.
A Nuclear Awakening
universities and local community colleges are expanding to meet
industry's demands for more engineers and skilled laborers. According
to the Nuclear Engineering Enrollments and Degrees Survey of 2006, the
most recent study available, "The number of B.S. degrees granted in
2006 by nuclear engineering programs increased by almost 30% over 2005,
reflecting the substantial increases in enrollments reported in recent
years. The number of B.S. degrees in 2006 is the highest reported in
the last ten years."
is no wonder that major universities are ramping up their nuclear
engineering programs. The nuclear industry's high demand for engineers
begets higher salary offers, which in turn, result in greater
enrollment in nuclear engineering. Purdue University, a school
historically known for its nuclear engineering program, has almost
tripled its enrollment in this program since the year 2000 to 135
Texas A&M has one of the fastest-growing nuclear engineering
departments in the country, the University of Florida has continued
increased enrollment as well as an increase in its research grant
awards, and a total of 31 schools continue to offer a degree in nuclear
Other schools, such as the University of Virginia, are re-establishing
their nuclear engineering programs and expect to generate a great deal
of interest. The upward trend in the number of nuclear engineering students is also generating a high demand for quality professors.
addition to large university nuclear program expansions, community
colleges are beginning to collaborate with private companies to offer
education and training in skilled and craft labor. Duke Energy
recently donated $1.25 million to North Carolina State University's
College of Engineering, which will create a professorship in
engineering and advocate the teaching of engineering in grade schools
and high schools.
Energy, a utility, recently awarded a $60,000 grant to
Florence-Darlington Technical College's Advanced Welding and Cutting
Center to meet the increased demand for pipe welders, who have critical
skills for nuclear plant construction.
The New Jersey-based Public Service Enterprise Group(PSEG) piloted an
entry-level technical-trade program at Mercer County Community College
that provides training and education for specific technical jobs.
Additionally, PSEG is reaching out to high school students to discuss
opportunities in the nuclear and electric power industry.
these investments may seem inadequate relative to the enormous
industrial expansion required for a broad nuclear renaissance, it is
important to put them into context. Despite all of the talk in recent
years about expanding nuclear power, no construction on new plants has
begun to date. So at least until now, investment appears to be staying
ahead of market demand. In other words, lack of resources is not the
culprit for the lack of new nuclear plants.
If nuclear power
expands significantly, however, there may indeed be some lag time
before delivery of certain capabilities and components. That should be
expected as the industry rebuilds itself. Suppliers will respond, as
they have already begun to do, and the industry will stabilize over
time as orders are placed and backlogs grow. This will allow the
industry to grow at a rational and deliberate pace that is consistent
with market realities. This is the type of growth that will ensure the
long-term health and sustainability of the nuclear industry.
An International Expansion
competition to become the global leader in commercial nuclear
technology is emerging. AREVA, a French company, is not only
expanding in other countries, such as the United States, but also in
France, where the nation has long received 80 percent of its
electricity from nuclear power. In fact, AREVA recently proposed to
hire 100 retired engineers per year in France while the company trains
Royce in the United Kingdom, which already has 2,000 workers in the
nuclear industry, is planning to significantly increase its role; chief
executive Sir John Rose said, "The expansion of the civil nuclear
market represents an exciting opportunity which builds on our extensive
Steel Works, the world's sole supplier of the ultra-heavy large
forgings, which most commercial reactors require, is also preparing to
meet global demand. These forgings, which can weigh over 600 tons, are
what are used to manufacture the large reactor pressure vessels, steam
generators, and other components needed for a reactor.
Japan Steel Works invested $400 million to increase its capacity from
the ability to produce about five pressure vessels a year to reach
eight and a half by 2010.
Other companies are considering entering this market as well. The
Indian manufacturer Larsen & Toubro may expand its domestic large
forging capability to help meet the growing international demand.
Most foreign governments subsidize their national nuclear industries. However, this should not
be used as a reason to justify federal government subsidies in the U.S.
Indeed, it will be other countries' government support and the
inefficiency that ultimately comes with it that will allow a leaner,
more efficient U.S. industry to compete around the world. For that to
happen, however, America's companies must have access to those foreign
markets. That is why, instead of distorting investment risk through
incentive programs, Congress and the Administration should be focusing
on tough problems, such as how to ensure that U.S. companies can gain
access to foreign markets.
desire to help re-establish the United States as a leader in commercial
nuclear power is commendable, it is critical that congressional action
not do more harm than good. That is why Congress should not provide
handouts in an attempt to spur investments in nuclear energy. Congress
can best ensure the sustainability of a strong U.S. nuclear industry by
simply providing a stableregulatory environment, authorizing industry
to handle its own spent nuclear fuel, and opening foreign markets. As
is already becoming the trend, the private sector will take action.
Rendell Says Curtiss–Wright Boosting PA's Manufacturing Industry with
$62 Million Expansion in Allegheny County: Project Will Create 80 Jobs
in Cheswick, Retain 700 Jobs Statewide," State of Pennsylvania,
November 5, 2007, at http://www.state.pa.us/papower/cwp/view.asp?A=11&Q=469059 (November 4, 2008).
 John Delano, "Westinghouse: Nuclear Energy in Renaissance" May 28, 2008, at http://kdka.com/local/Westinghouse.nuclear.power.2.735210.html (November 4, 2008), and Bonnie Pfister, "Westinghouse Signs Contract to Build Nuclear Plants," Pittsburgh Tribune-Review, May 28, 2008, at http://www.pittsburghlive.com/x/
pittsburghtrib/business/s_569626.html (November 4, 2008).
 Chris Flores and Hugh Lessig, "540 Jobs, $363 Million in Nuclear Reactor Deal," Dailypress.com, October 24, 2008, at http://www.dailypress.com/news/dp-loca
l_announcement_1024oct24,0,328059,print.story (November 5, 2008).
 Angela Neville, "Generation Next: Strategies for Recruiting Younger Workers," Power, Vol. 152, No. 7 (July 2008).
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