March 21, 2017 3:35 am JST

Trump budget sends mixed signals to nuclear industry

R&D cuts add to fears of decline despite restart of waste disposal project

SOICHI INAI, Nikkei staff writer

NEW YORK -- Though the U.S. nuclear industry welcomes President Donald Trump's plan to resume work on the country's sole disposal site for spent fuel, proposed cutbacks to research spending worry a sector already fretting about a dimming business prospects.

Back to Yucca Mountain

The Trump administration's proposed U.S. budget for the year ending in September 2018 would boost defense spending while cutting other areas such as foreign aid and efforts against climate change. The proposal released Thursday earmarks $120 million to resume the licensing process for a nuclear waste disposal site at Yucca Mountain in Nevada and to launch an interim storage program.

"The nuclear energy industry is encouraged by the news," said Maria Korsnick, president and CEO of the Nuclear Energy Institute, the industry's policy group.

The government chose Yucca Mountain in 1987 to serve as America's sole disposal site for high-level radioactive waste. Around $9 billion was poured into the project before President Barack Obama's administration decided in 2009 to halt the process amid strong opposition by local residents and politicians.

U.S. nuclear power plants generate more than 2,000 tons of spent fuel annually. More than 70,000 tons of such waste are said to be stored at over 100 sites nationwide, including nuclear power facilities. Energy companies and state governments vexed by this growing problem likely will welcome the revival of the Yucca Mountain project.

Security focus

Yet the president's budget proposal is not all good news for the nuclear industry. The Department of Energy's budget would be pared 5.6% to $28 billion, with spending on nuclear research and development among the cuts. Two-thirds of the department's work relates to nuclear energy, said Daniel Yergin, an authority on energy issues.

The department supported joint public-private development of nuclear technology under the Obama administration, which positioned atomic power as a "clean" energy source that does not emit greenhouse gases. The Trump administration is expected to scrap nuclear R&D budget items related to Obama-era goals such as reducing emissions from power plants.

The administration appears to be prioritizing nuclear energy's military and national security aspects. The proposed budget would boost spending by 11% on the National Nuclear Security Administration, which ensures the safety and reliability of the U.S. nuclear arsenal. The proposal cites the goals of improving the country's nuclear deployment capabilities and extending the operational lives of warheads. Resuming the Yucca Mountain project likely also serves a security purpose: preventing theft of dangerous radioactive material.

Energy Secretary Rick Perry has said the U.S. needs a new energy policy for the 21st century. How the atom will fit into this picture remains unclear.

On the wane

The financial plight of nuclear plant builder Westinghouse Electric, an American unit of Japanese industrial group Toshiba, is also causing anxiety. The industry is watching whether Westinghouse can turn itself around, Korsnick said March 9 at an energy conference in Houston, Texas.

The nuclear industry had high hopes that Westinghouse's AP1000 reactor design, said to be both safe and simple to build, could prove a winner in emerging markets with growing energy needs. AP1000 orders have been received from China, and the reactor has been marketed in India as well.

Nuclear lost ground to natural gas as an energy source in the U.S. as the shale revolution lowered gas prices. The number of nuclear reactors in operation nationwide has fallen to 99, down by 15 from the 1990 peak. Tighter safety standards enacted after the 2011 Fukushima Daiichi meltdowns in Japan sent construction costs soaring and squeezed the industry.

Foreign competition has intensified as well. Nearly half of all reactors under construction globally are being built in China or Russia. And two-thirds of new reactors are either Chinese- or Russian-made, a U.S. industry insider said. With these rivals expanding with what is widely seen as state support, the U.S. industry -- which employs 470,000 people -- faces a continued struggle. Westinghouse's crisis may prove too big of a risk for the Trump administration to ignore.

Toshiba Corp.

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