Regulatory hurdles could jeopardize growth of nuclear energy
Since the late 1800s, fossil fuels have been the energy source of the highest economic utility in driving innovation and prosperity. However, because fossil fuel use has produced externalities such as pollution and climate change, governments have explored potential solutions to address these issues while preserving an energy source with a high economic utility. Proposed solutions varied, including government subsidization, antitrust barriers, and environmental taxation such as the carbon tax. Internationally, diplomatic efforts focused on treaties such as the Paris Agreement to reduce dependence on fossil fuels. Some believe the solution lies in costlier and less efficient energy sources like wind, solar, hydro, and bio energy. These alternatives have largely failed, but a true renewable energy source is necessary, as within the next 50 years we may risk running out of fossil fuels.
There is one alternative energy source that could solve both the externality and utility issues: nuclear energy. Nuclear energy is produced through two scientific processes, fission and fusion.
Nuclear fission is the process of splitting of a heavy atomic nucleus (typically uranium or plutonium) into two smaller nuclei, which creates a large amount of energy. This energy release can be harnessed by nuclear reactors to rapidly evaporate water into steam, which turns a turbine to generate electric power. This is how all nuclear energy is produced today. Nuclear reactors require high levels of fixed capital to function, with OECD countries spending approximately $2,000-$7,000 per electric kilowatt.
Nuclear fusion involves similar atomic activity, but rather than splitting heavy atoms, this process works by merging light hydrogen atoms together to form helium, which is how the sun produces its energy. This would effectively create unlimited energy because of the abundance of hydrogen atoms. Unfortunately, nuclear fusion is not yet a fully developed technology, though progress is being made. Like fission, it requires significant funding to advance, with more than $900 million invested in fusion research last year.
The fixed capital required to move nuclear energy development forward is being undercut by the current regulation issued at both the state and federal levels. For example, Minnesota has the longest-standing ban on nuclear energy plant construction in the US. The state government passed a nuclear moratorium in 1994 prohibiting the Public Utilities Commission from issuing a certificate of need for any new nuclear power plant in the state.
These kinds of regulations actively prevent any sort of nuclear expansion. Oftentimes they are implemented due largely to fears about radiation rooted in nuclear energy’s association with atomic bombs and past nuclear reactor malfunctions such as Three Mile Island, Chernobyl, and most recently, Fukushima in 2011. These fears continue to prevent critical regulatory reform from taking place.
The federal government has also placed onerous restrictions on nuclear energy development. While there is no law outright banning nuclear energy research or plant construction, there are still laws that hinder the nuclear energy sector. For example, the National Environmental Policy Act (NEPA) of 1969 requires federal agencies to prepare environmental impact statements for major projects, slowing the ability to build with its mandatory costly compliance and complexities. The Energy Reorganization Act of 1974, which split the Atomic Energy Commission into the Nuclear Regulatory Commission (NRC) and Energy Research Development Administration (later Department of Energy) has also led to greater regulation. The NRC’s risk averse position on regulatory policy has caused delays and uncertainty in investment in nuclear energy. The NRC also creates massive opportunity costs by charging applicants fees by the hour for license processing that takes time and capital away from businesses that could be using these resources for innovative development.
Our competitors abroad will not be limited by such regulations. China has wasted no time building new nuclear reactors, with 30 nuclear reactors currently under construction and 32 gigawatts of new capacity built in 2024. India, Egypt, and Russia are also building nuclear energy infrastructure at levels that outpace the United States. With approximately 50 years before fossil fuels deplete and a goal of limiting hazardous externalities to the environment, the urgency to lessen the restrictive regulatory barriers on safe and clean nuclear energy cannot be overstated.
The second Trump administration has taken a more proactive approach towards advancing nuclear energy. President Trump issued a series of executive orders aimed at expanding nuclear capabilities for both energy and defense, in part by challenging regulations imposed by the NRC. This is a good start, but there must be more congressional and state reform to limit these out-of-date regulations and accelerate nuclear energy development. Nuclear energy has the great potential to become the highest economic utility in the energy sector if we allow it.