Substantially higher costs of building nuclear power plants have recently forced Scana Corp. to terminate delayed building of two reactors in South Carolina and Southern Co. to potentially end their project in Georgia. Fewer active nuclear reactors is the current trend in the U.S., from 105 in 2012 to a planned 93 by 2019. This trend contributes to the Energy Information Administration noting that U.S. electricity generated from nuclear energy in March and April this year was surpassed by a combination of other renewable energy sources for the first time since July 1984.
While this could be a short-run victory for the renewable energy portfolio, with one-time contributing weather events in California, governmental efforts to further increase electricity generation from solar and wind mask the potential of a cleaner, more scalable nuclear energy that's riddled with excessive regulation. Fortunately, President Trump's newly Senate-confirmed Federal Energy Regulatory Commission Chairman Neil Chatterjee believes that "baseload power [nuclear] plants should be recognized as an essential part of the fuel mix."
The U.S. boasts the ninth-largest known recoverable resources of uranium in the world. Yet production has steadily declined in recent years. While some decreases are attributed to EPA regulations, a largely unnoticed hindrance has been the federal government's participation in the nuclear energy market, a potentially worrisome trend.
Stagnating nuclear energy production during almost the last 20 years likely stems from a misguided negative public perception. However, 83 percent of Americans think nuclear power is important to the country's energy future, with an even higher percentage among those living next to a facility.
Additionally, a recent study by Environmental Progress finds that solar panels produce as much as 300 times the toxic waste of nuclear per unit of energy. Perhaps it's time to review the federal practices hindering a cleaner, more powerful energy future, and allow markets to react to public support.
The government's nuclear market manipulation has represented an assault on all factions of the industry—mining, enrichment, and power production.
The Department of Energy's uranium stocks reveal this phenomenon. Under federal law, it's required that government sell uranium at fair market value. Yet, several cases of federal sales of uranium below market value have essentially flooded the nuclear market with artificially-lower prices that created havoc on private miners.
Potential market manipulation will continue to be rightfully litigated. But, beyond its presence in the courts, it distorts the energy market. If uranium is relatively cheap, basic economics would dictate that, all else constant, lower input costs would lead to an increase in supply.
Why then has expanding nuclear production stalled? While resource input costs have declined, the cost of bureaucratic red tape has continued to climb.
Research by American Action Forum finds that each nuclear power plant in the U.S. operates under a regulatory burden of $8.3 million annually. This amount doesn't even include the implicit burden on companies that undergo an average of $22 million in upfront regulatory fees and 10 years of waiting to approve the construction of a new facility.
While some of these regulations are expected given the sensitivity of the materials, much of the burden is from regulatory overreach by multiple agencies, along with government mandates that private companies would likely enforce without oversight.
For example, companies spend roughly $481 million annually in compliance costs for the Nuclear Regulatory Commission's (NRC) largest oversight program, "Fitness for Duty." The fact that that the premise of the program does not sound unusual for a private business—conducting regular assessments to ensure a drug-free workforce that is not overly fatigued—is troublesome. In other words, the NRC could reduce regulatory compliance by nearly $500 million by simply allowing energy companies to conduct employee quality checks that they were likely to do anyway.
Unfortunately, such over-regulation is predictable.
Regardless of technological advancements in efficiency and safety, and regardless of cheap uranium available in the recent push for zero carbon-based energy, businesses have little to no incentive to invest in America's energy future.
Should there be a true concerted effort to continue to provide Americans with low-cost energy that can also appease those who are concerned about the controversial detriments of carbon emissions, the most effective place to start is the disentangling of the nuclear regulatory web.
Luckily, the tide may be turning as the Trump administration has been rolling back excessive regulations at a rate of 16 removed for every one added that may allow nuclear to operate in a competitive energy market. With Chairman Chatterjee now at the helm of FERC, the tide may continue to turn toward market-directed energy policy that best serves Americans.
Vance Ginn, is an economist and Elliott Raia is a research associate in the Center for Fiscal Policy at the Texas Public Policy Foundation.
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