Perry: How Michigan can secure its energy future

It will be a tragic failure of vision and leadership if, because of an abundance of cheap natural gas, America spurns the single most important source of emission-free energy that will help keep the air clean and reduce greenhouse-gas emissions. Natural gas has a history of price volatility, and it would be foolhardy to rely too heavily on gas for something so important as our everyday power needs.

Nuclear-generated electricity — produced from the nation’s fleet of nearly 100 nuclear plants — would do much to enable the U.S. to meet a commitment it made more than a year ago at the Paris climate conference.

Nuclear plants such as Fermi 2 and Cook 1 and 2 here in Michigan produce nearly two-thirds of the nation’s zero-carbon electricity, and operate safely and reliably. The availability of low-cost gas has led to the shutdown of many power plants, with others at high risk of being closed.

The cost of electricity produced at natural gas plants could rise significantly. Besides, gas accounts for a quarter of U.S. greenhouse-gas emissions. As a source of clean energy, gas cannot begin to compare with nuclear power and renewables like solar and wind power. To its credit, Detroit Edison has obtained approval from the Nuclear Regulatory Commission to renew Fermi 2’s operating license for another 20 years. But other nuclear plants such as the Palisades nuclear plant in western Michigan are slated to close, and action is needed now to provide replacement power.

Building a new generation of advanced nuclear plants would go a long way toward re-establishing U.S. leadership in nuclear technology. More than 30 advanced reactor development projects have been launched in recent years. Rapid scale-up of nuclear power will be needed to help reduce emissions just as much of the reactor fleet is being phased out.

When it comes to safety, the U.S. Nuclear Regulatory Commission sets the gold standard. But NRC certification of new reactor designs is lengthy and costlier than the process in other countries. Would-be developers of new technologies face the prospect of having to spend a billion dollars or more for an open-ended, all-or-nothing licensing process without any certainty that a reactor will be certified.

A case in point: NuScale, an Oregon-based nuclear start-up company, recently applied to the NRC for safety certification of its design for a small modular reactor. NuScale expects the NRC’s certification process to take at least 40 months. The upshot is that another U.S. nuclear company, a firm based in Seattle and financed largely by Microsoft founder Bill Gates, has decided to bypass the NRC in order to get its advanced reactor certified and built in China.

Significant reform of the NRC licensing process is needed for the U.S. to commercialize new reactor technologies. Companies shouldn’t have to wait years for the NRC to complete its review. And Michigan should consider updating its renewable portfolio standard to include nuclear power, to level the playing field for clean energy technologies instead of preferring one over the other. But there is no mistaking the fact that new reactor technologies hold great promise, raising the possibility that nuclear power may yet play a central role in addressing our nation’s energy and environmental challenges.

Mark J. Perry is a professor of economics at the University of Michigan-Flint and a scholar at the American Enterprise Institute.