This is long, but reveals some of the things happening in Washington D. C.

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Summary and Introduction

By the end of the next decade, demand for electricity in the United States is expected to increase by about 20 percent, according to the Energy Information Administration (EIA). That projected increase—coupled with concerns about the effects of greenhouse-gas emissions on the environment—has encouraged policymakers to reassess the role that nuclear power might play both in expanding the capacity to generate electricity and in limiting the amount of greenhouse gases produced by the combustion of fossil fuels. Because nuclear power uses an abundant fuel source to generate electricity without emitting such gases, prospects that new nuclear power plants will be planned and financed in the next decade are greater than at any time since the 1970s, when cost overruns and concerns about public safety halted investment in such facilities.

This reappraisal of nuclear power is motivated in large part by the expectation that market-based approaches to limit greenhouse-gas emissions could be put in place in the near future. Several options currently being considered by the Congress—including "cap-and-trade" programs—would impose a price on emissions of carbon dioxide, the most common greenhouse gas.¹ If implemented, such limits would encourage the use of nuclear technology by increasing the cost of generating electricity with conventional fossil-fuel technologies. The prospect that such legislation will be enacted is probably already reducing investment in conventional coal-fired power plants.

Current energy policy, especially as established and expanded under the Energy Policy Act of 2005 (EPAct), provides incentives for building additional capacity to generate electricity using innovative fossil-fuel technologies and an advanced generation of nuclear reactor designs that are intended to decrease costs and improve safety.² Among the provisions of EPAct that specifically apply to newly built nuclear power plants are funding for research and development; investment incentives, such as loan guarantees and insurance against regulatory delays; and production incentives, including a tax credit. Since the enactment of EPAct, about a dozen utilities have announced their intention to license about 30 nuclear plants.

This study assesses the commercial viability of advanced nuclear technology as a means of meeting future demand for electricity by comparing the costs of producing electricity from different sources under varying circumstances. The Congressional Budget Office (CBO) estimated the cost of producing electricity using a new generation of nuclear reactors and other base-load technologies under a variety of assumptions about prospective carbon dioxide charges, EPAct incentives, and future market conditions.³ This study compares the cost of advanced nuclear technology with that of other major sources of base-load capacity that are available throughout the country—including both conventional and innovative fossil-fuel technologies. Because the study focuses only on technologies that can be used as base-load capacity in most parts of the country, it does not address renewable energy technologies that are intermittent (such as wind and solar power) or technologies that use resources readily available only in certain areas (such as geothermal or hydroelectric power).

In the long run, carbon dioxide charges would increase the competitiveness of nuclear technology and could make it the least expensive source of new base-load capacity. More immediately, EPAct incentives by themselves could make advanced nuclear reactors a competitive technology for limited additions to base-load capacity. However, under some plausible assumptions that differ from those CBO adopted for its reference scenario—in particular, those that project higher future construction costs for nuclear plants or lower natural gas prices—nuclear technology would be a relatively expensive source of capacity, regardless of EPAct incentives. CBO’s analysis yields the following conclusions:

Background on Electricity-Generating Technologies

Electricity is produced using a variety of technologies powered by different sources of fuel, but the sources that predominate are coal, natural gas, and uranium. Coal-burning technologies emit the most carbon dioxide per unit of electricity; natural gas technologies emit carbon dioxide at about half that rate; and nuclear power, a "zero emissions technology," emits no carbon dioxide at all.⁴ (See Box 1-1 for details on power plant technologies.)

Box 1-1. 

Technologies for Adding to Base-Load Capacity over the Next Decade