ARTICLE
26 November 2024

New Nuclear Power Commitments At COP29 And Nuclear Uncertainty In The US

SJ
Steptoe LLP

Contributor

In more than 100 years of practice, Steptoe has earned an international reputation for vigorous representation of clients before governmental agencies, successful advocacy in litigation and arbitration, and creative and practical advice in structuring business transactions. Steptoe has more than 500 lawyers and professional staff across the US, Europe and Asia.
Nuclear energy commitments have been on show at the UN Climate Change Conference in Baku this past week, with six additional countries endorsing the Declaration to Triple Nuclear Energy.
United States Energy and Natural Resources

Today's Deep Dive is 1,168 words and a 7-minute read.

Nuclear energy commitments have been on show at the UN Climate Change Conference in Baku this past week, with six additional countries endorsing the Declaration to Triple Nuclear Energy. There has been considerable criticism of this agreement, which is now endorsed by 31 countries, as being aspirational without realistic pathways for attainment. When the Declaration was launched in 2023, experts estimated that tripling capacity meant an addition of 740 GW of nuclear capacity would need to be added to the existing 370 GW by 2050. To this end, a number of countries have new reactors under construction, plus more reactors in planning or proposal stages. The US brought online two new reactors in 2023 and 2024, Vogtle 3 and Vogtle 4, and at COP29 rolled out a domestic framework for action, setting nuclear energy deployment targets to triple nuclear capacity by 2050. With the Biden administration transitioning out in January, however, the ambitious plan has little chance of being adopted. That said, the 2024 GOP platform from the Republican National Convention promises that Republicans will "unleash" energy production from all sources, including nuclear power, to provide Americans with affordable energy.

Global Stocktaking

According to the World Nuclear Association, there are currently 440 nuclear reactors operating in 32 countries, plus Taiwan, with a combined capacity of about 390 GW. There are around 65 reactors under construction, with another 90 being planned (with approvals, funding or commitment in place and expectations to be operational within the next 15 years). A further 300 are proposed (specific proposals with timing uncertain).

China is the global leader by a long shot, with 30 reactors under construction and another 36 planned, and 158 proposed. Nuclear power makes up only about 5% of China's cumulative power generation, with estimates that it will reach 10% by 2035.

The International Atomic Energy Agency (IAEA) revised its annual projection in a report released in September, assessing that global nuclear capacity could jump by 2.5 times its current capacity by 2050, given increased interest in in small modular reactors (SMRs) to target both electric and non-electric applications to meet climate goals and sustainable development. While this represents the high-case scenario, with nuclear electrical generating capacity increasing to 950 GW by 2050, the low-case project would be a 40% increase from today, about 514 GW global capacity in 2050. That is still a significant capacity increase, albeit short of the triple target.

US Pathway: Biden's Framework

The Biden administration's new framework for nuclear power seeks to deploy 200 GW of net new nuclear energy capacity by 2050, at least tripling current US capacity. The net new capacity gains are anticipated to come from multiple sources, including building new nuclear power plants, uprating existing reactors, and restarting reactors that have retired for economic reasons. The framework aims to restore and exceed the US nuclear energy industry's deployment capacity decades ago, ensuring health and safety, environmental protection, energy affordability, generating good paying jobs and reinforcing American leadership and global competitiveness in nuclear energy technology and innovation.

The framework includes building new large, gigawatt-scale reactors, SMRs, microreactors, extending and expanding existing reactors, restarting recently retired reactors, streamlining licensing and permitting and developing the component and fuel supply chain, including managing spent nuclear fuel. The plan is to add 35 GW of new capacity by 2035 and achieve a sustained pace of 15 GW per year by 2040 to keep on track toward the ultimate goal. Acknowledging the history of cost overruns and schedule delays, the framework envisions standardization of reactor designs, along with the integration of modern design, project management, construction techniques and lessons learned from past deployments.

The 37-page document offers many recommendations for action, including adding new units to existing large scale reactors to reduce costs and construction times and leverage existing workforce, security and community support. SMRs have a significant role in the plan, betting this emerging technology will deliver on early promises, providing smaller sized reactors at lower capital costs, suitable for more diverse commercial and industrial applications. The framework proposes siting SMRs at coal-fired power plant sites that have recently retired or will soon retire, leveraging existing transmission water and land-based infrastructure to reduce costs and provide jobs for the existing workforce in their communities. Furthermore, the framework recommends reducing costs to developers for new construction as well as power uprates and reactor restarts through tax credits under the Inflation Reduction Act (IRA) and offering attractive financing through the Energy Department's Loan Program Office.

Nuclear Power under the Trump Administration

While there has been a lot of focus on President Trump's strong support for the oil and gas sector, the incoming president's campaign statements and leadership selection suggests that nuclear power will continue to have a growing role in the US energy mix. Nuclear power currently delivers about 20% of the nation's electricity and half of America's carbon-free power. Trump is clearly thinking about how to meet expected new demand for electricity at affordable prices.

Beyond having been included in the GOP platform as one of the sources of energy Republicans support, President Trump has commented that "from day one," he "will approve new drilling, new pipelines, new refineries, new power plants, new reactors and we will slash the red tape. We will get the job done. We will create more electricity, also for these new industries that can only function with massive electricity."

That said, in an interview just prior to the November election, Trump spoke about large reactors as risking cost overruns and being too complex. He pointed to SMRs as potential alternatives, as they are built in controlled environments (factories), avoiding some of these complexities.

Trump has selected Chris Wright to lead the Department of Energy. Wright is the CEO of Liberty Energy, an oilfield services company, and a pioneer of developing shale oil for exploitation. He also sits on the board of Oklo, a nuclear power startup that is developing micro reactors. Oklo is developing next-generation fission power reactors to produce clean energy at a global scale – starting with the Aurora powerhouse, which can produce 15 MW of electrical power, scalable to 50 MWe, and operate for 10 years or longer before refueling, according to the company website. Oklo's board members include leading names from energy, defense, utilities, capital markets and AI markets and has signed Letters of Intent with a number of companies and agencies, including in the defense, energy and technology sectors (data centers).

Future financing is less clear under the new administration. President Trump opposes the IRA and may seek to repeal it, or parts of it. During his first term, Trump supported loan guarantees to facilitate the construction of Vogtle Unit 3 and signed the Nuclear Energy Innovation and Modernization Act into law. Nuclear energy enjoys bipartisan support in Congress, and it is possible that the Trump administration would support some financial incentives to help industry mitigate risks in developing new nuclear reactor technologies to meet growing demand for electricity, particularly from sectors links to US national and economic security.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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