Geopolitics and Nuclear Energy: The View from the State Department
Acting Under Secretary for Arms Control and International Security
Thank you for that introduction and thank you for having me here today. It is a pleasure to talk to the principal nuclear industry organization in the United States. Your involvement in all parts of the nuclear energy sector, as well as your work with universities, research laboratories, and labor unions is so important to our energy future. Congratulations on the 60th anniversary of the founding of the Atomic Industrial Forum, your predecessor organization. It is sometimes hard to believe that nuclear energy is over a half century old.
I am sure that most of you are familiar with the Obama Administration’s “all of the above” energy strategy – and that it unequivocally includes nuclear energy – but it bears repeating. President Obama has stated clearly that “we must harness the power of nuclear energy on behalf of our efforts to combat climate change and advance peace and opportunity for all people.”
Since taking office in 2009, the President has worked continuously to improve our nation’s energy security, efficiency, and sustainability. With his recently proposed FY2014 budget, the President has made it clear that he will not back down from energy issues and has proposed significant targets – and budgetary resources – to dramatically improve our economy’s energy productivity, lessen our oil imports, and deploy clean power generation technologies.
Energy and Geopolitics
There are three fundamental reasons that energy issues matter to American foreign policy.
First, energy rests at the core of geopolitics – an issue of both wealth and power, which means it can be both a source of conflict and a basis for international cooperation. It is in the interest of the United States to resolve disputes over energy peacefully. We must keep energy supplies and markets stable during global crises and ensure that countries don’t use their energy resources to force others to bend to their will or forgive their bad behavior.
Second, energy is essential to how we will power our economy and manage our environment in the 21st century. We will work to promote new technologies and sources of energy to reduce pollution, to diversify the global energy supply, to create jobs, and to address the threat of climate change. Nuclear energy can play a role in each of these efforts.
Third, energy is the key to development and political stability. There are 1.3 billion people worldwide who don’t have access to energy. That is unacceptable in economic terms and security terms.
Our nuclear exports are a key strategic asset- a mature energy technology that does not emit greenhouse gases, while also providing a source of base-load electric power. Nuclear energy has an important role to play in pursuing our foreign policy objectives. Our top priority, though, is to make sure that U.S. access to energy is secure, reliable, affordable, and sustainable.
The Administration is working hard to make sure that countries are using nuclear energy safely. In comparison to other energy sources, nuclear power presents a unique set of challenges, most notably those related to safety, security, and nonproliferation.
Of course, when another country buys a U.S. reactor, both of us be confident that the design is safe because it has been certified by the U.S. Nuclear Regulatory Commission (NRC). U.S. nuclear exports also increase the transparency of the importing country’s nuclear programs, thus indirectly supporting our nonproliferation policies. When we export U.S. technology, we are also exporting our safety and security cultures.
The future of nuclear exports cannot be discussed without considering the future of nuclear energy, in general. It is well known that, following the incident at Fukushima, Japan in 2011, some major economies decided to decrease, and eventually eliminate, their reliance on nuclear power. Despite these shifts, there is still a considerable market for nuclear energy.
The International Atomic Energy Agency Nuclear Technology Review (NTR) for 2012 concluded that, “globally the [Fukushima] accident is expected to slow or delay the growth of nuclear power, but not to reverse it.” In fact, the NTR projects significant growth in the use of nuclear energy worldwide, between 35% and 100% by 2030.
The International Energy Agency (IEA) has reached similar conclusions. In its World Energy Outlook for 2012, the IEA concluded that while nuclear power would expand more slowly due to Fukushima and lower prices for fossil fuels, by 2035 nuclear generating capacity could increase to 580 gigawatts of electricity, compared to 371 gigawatts in 2010.
The U.S. Department of Commerce estimates the international marketplace for civil nuclear technology at $500 to $740 billion over the next ten years, with the potential to generate more than $100 billion in U.S. exports and thousands of new jobs.
This growth is welcome, as electricity demand is growing rapidly, particularly in emerging economies. By 2035, as much as 80 percent of this growth will take place in China, India and other non-OECD countries. These are the markets of the future. We see nuclear energy playing a critical role in meeting this increasing demand in a way that helps to provide efficient, low-cost power that also mitigates CO2 emissions.
Support for Industry
As we approach these new markets, we know that American nuclear exporters continue to face obstacles in the international market. That said, the U.S. nuclear industry has a number of assets that allow it to remain competitive, and I never bet against American ingenuity.
Our edge in technology is our greatest asset. American reactor designs on the market today are among the most advanced in the world, and some of them include passive safety features that would have been helpful at Fukushima.
The United States has unmatched experience with civil nuclear energy, operating the largest number of nuclear reactors in the world and generating the most nuclear power with the largest installed capacity worldwide.
The United States has top-performing companies all along the nuclear value chain. According to the World Nuclear Association, 12 of the world’s 25 highest-performing reactors are in the United States.
Further, while the NRC is careful not to engage in the promotion of nuclear power or exports, its very existence gives U.S. exporters an advantage. The NRC is widely regarded as the most effective and independent nuclear regulator in the world. By setting the bar for such safety standards we are also working to raise standards for nuclear safety around the world.
Some of the challenges of financing a nuclear power plant can be eased by the Export-Import Bank, the official U.S. export credit agency. While the Bank cannot engage in equity investing, it does offer direct loans and loan guarantees to support U.S. exports, including nuclear exports. This past fall, for the first time in decades, the Ex-Im Bank approved a two billion dollar loan to support a nuclear-related export.
It may not be the first impulse of export firm executives to think of the U.S. Government as a business asset, but there is much that we can do to help. We are developing what we call a “Team USA” approach to civil nuclear engagement abroad. In January 2012, the White House created a new position - Director of Nuclear Energy Policy – to lead this effort. Going forward, this will help us present a unified U.S. message on these issues and increase our presence in the civil nuclear commercial spaces.
Another service that the government can provide is advocacy. Once a potential nuclear project is approved for advocacy by the Department of Commerce’s Advocacy Center, the State Department and other U.S. government agencies can, through active diplomacy with the host country, put U.S. Government support behind the American bidder. Even when more than one American firm is bidding on a nuclear power plant, we may be able to engage in generic advocacy, expressing to the host government our support for a U.S. firm winning the contract.
We also try to ensure that a foreign government’s decisions are being made in a transparent manner on a “level playing field.” Our diplomatic posts are sensitive to any evidence that undue influence is affecting a host government’s decision, and those posts are prepared to protest unwarranted discrimination against U.S sellers.
There are a number of other steps that the Administration has taken to ensure that our nuclear exports receive the attention they deserve. The Department of Commerce has established a Civil Nuclear Trade Initiative, the goal of which is to identify the U.S. nuclear industry’s trade policy challenges and commercial opportunities and coordinate public-private sector responses to support the growth of the U.S. civil nuclear industry.
There are important initiatives we are undertaking to significantly reduce the proliferation side-effects of the spread of nuclear energy. For example, in the field of radiopharmaceuticals, the United States plays an active role on several fronts. The Department of Energy is engaged in four cooperative agreements to support the development of domestic production of medical isotopes (in particular molybdenum-99) without the use of highly enriched uranium (HEU).
Last June, the White House established a policy that includes steps to further minimize the export of HEU where possible and preferentially procure non-HEU-based isotopes. The "American Medical Isotopes Production Act," passed in January, further supports these efforts by providing for a complete phase-out of HEU exports for such isotopes by 2020.
Let me close by reaffirming the Administration’s support for American nuclear exports. You all face stiff competition on the international market, but you also have strong resources to draw upon. I want to avoid the cliché, but we are here to help, and I hope we continue to work closely together in the future.
Thank you. I am happy to take a few questions and also eager to hear some thoughts and suggestions from you.