Remarks
Ellen Tauscher
Under Secretary for Arms Control and International Security
Hoover Institution, Stanford University
Stanford, CA
January 19, 2010


It’s a great pleasure to be back in the Bay Area, and be once again in the company of George Shultz, as he continues to lead us to address the most difficult questions before our nation.

We are grateful for your interest, your hard work, and your patriotism on the issues of energy and nonproliferation that threaten our economic future, our national security, and international stability.

The Obama administration is working on many fronts to solve some of our toughest problems, including health care, the economy, climate change, and terrorism. I was actually pleased not to be a member of Congress last summer, when I would have had to host a town hall meeting or two. Let me say how honored – and relieved – I am to be here today.

As you know, the demand for clean energy is growing. That means nuclear power is likely to be an important part of our low-carbon energy future, at least until my former constituents at Livermore finally deliver on the promise of fusion.

So as nuclear energy expands worldwide, we must address the two challenges that are suggested by the subjects for this session:

  • First, we must ensure that the expansion of nuclear energy does not lead to the spread of enrichment and reprocessing technologies that can be used to make nuclear materials for nuclear weapons.

  • And second, we must develop a practical plan for management of used fuel.

These two goals are interrelated in various ways. The connection I want to emphasize today is that cooperation on used fuel management can reduce global demand for indigenous enrichment and reprocessing.

President Obama addressed precisely these issues last spring in Prague when he set forth the ambitious goal of building “a new framework for civil nuclear cooperation …. so that countries can access peaceful power without increasing the risks of proliferation.”

As we at the State Department work to ensure that civil enrichment and reprocessing technologies do not contribute to weapons proliferation, the most direct approach, as is often the case in life, is not the most productive.

The previous administration proposed to ban these technologies for states that do not already posses them. The problem was that all other countries opposed this approach because they viewed it as an infringement on their sovereignty and on their Non-Proliferation Treaty rights to peaceful nuclear technology. Moreover, the very insistence that others not obtain such capabilities increased demand for them by creating the impression that we are seeking to establish a suppliers’ cartel. Instead of reassurance, this had the opposite effect.

As President Obama said in Prague, “no approach will succeed if it’s based on the denial of rights to nations that play by the rules.” So the administration is focusing on creating incentives for states considering nuclear energy to choose not to pursue sensitive fuel cycle technologies.

The primary incentive not to pursue indigenous enrichment capability is the existence of a strong, competitive commercial market. Any state or reactor operator in good standing with its nonproliferation obligations seeking uranium enrichment services may receive four bids – from URENCO, USEC, Areva, and Tenex. Many contract with all four to diversify their supply. The enrichment industry is investing heavily to upgrade technology and expand to meet projected demand. A fifth potential competitor is developing innovative laser technology.

These suppliers, which are international in character, with production facilities in six countries, have a proven track record for producing enriched uranium reliably and economically.

This international enrichment enterprise is fully integrated into a global fuel supply chain, including international providers of uranium, conversion services, and fuel fabrication, with a track record of reliable performance on long-term contracts. This competitive commercial market is the bedrock incentive to forgo costly and complex indigenous enrichment programs.

But for those who seek additional confidence beyond what the market provides, the United States is leading the international community to develop assurances of reliable fuel supply, beginning with fuel banks. As you have noticed, after forty years of discussion, the IAEA Board of Governors approved in November the first enriched uranium reserve, at Angarsk, in large measure due to a cooperative diplomatic effort of the United States and Russia.

If a country in good standing with its nonproliferation obligations encounters a supply problem and is unable to find a commercial solution, it could turn to the IAEA, which in turn could request enriched uranium from the Angarsk reserve. In a manner consistent with its national laws, Russia could transfer the material to the IAEA, which would arrange for fabrication into fuel and delivery to the country in question.

This all sounds straightforward, but there are underlying challenges that need to be reconciled, including:

  • First, the IAEA’s perceived need to determine eligibility only on the basis of the record of compliance with safeguards;

  • Second, the laws of supplier countries placing much more stringent conditions on transfers of enriched uranium, including the NSG guidelines;

  • And finally, a feeling on the part of many developing countries that fuel assurances are intended ultimately to preserve a chokehold over nuclear fuel supplies and to deny them their NPT rights to nuclear technology.

The Obama administration worked with Russia and the IAEA to reconcile these divergent considerations in a manner that won the approval of a large majority of the IAEA Board.

We are now using the precedents established by Angarsk to shape the international nuclear fuel bank put forward by the Nuclear Threat Initiative, with the objective of bringing this second and complementary fuel bank proposal to the IAEA Board in the spring.

In addition, the United States is creating a national enriched uranium reserve to support fuel supply assurances by downblending highly enriched uranium no longer needed for national security purposes.

As fuel banks have made the transition from discussion to reality, we are exploring other concepts to assure a reliable fuel supply, in particular backup arrangements between suppliers and consumers such as the enrichment bond. Under a concept put forward by our British friends, supplier governments would commit, under certain conditions, not to prevent their companies from supplying enriched uranium.

These various forms of assurance of reliable supply of nuclear fuel are designed to serve as safety nets, to enhance confidence for countries that rely on the commercial market for nuclear fuel and reduce pressure to pursue indigenous sensitive fuel cycle facilities. The Obama administration strongly supports the creation of these safety nets.

Looking to the future, a more ambitious and controversial approach would be to create internationally-controlled enrichment centers. Proponents envision international control as a way to provide reliable fuel supply services without putting sensitive enrichment technology in the hands of more countries.

But this idea has its own set of problems, including questions concerning how an international organization would manage safety regulation, make export control decisions, raise the immense funding required, gain access to competitive technology, and maintain security of enrichment technology. The disastrous loss of URENCO centrifuge technology, and onward proliferation of that knowhow, illustrates the potential problem of maintaining technology security in multinational organizations.

There are also questions of how to integrate international enrichment centers with the existing commercial market. New international suppliers could add diversity, but we do not want to disrupt the commercial market which is working well today and provides a strong incentive not to pursue indigenous enrichment.

The interrelationship between commercial enrichment enterprises and international centers could become complex if, as seems likely, commercial enterprises provide the technology and operating facilities for international centers, on a black-box basis. Whether internationally-controlled enrichment centers represent a creative idea somewhat ahead of its time remains to be seen.

In parallel with these multilateral efforts, the United States is using bilateral nuclear cooperation to build mutual confidence and to welcome decisions to abstain from indigenous enrichment and reprocessing.

We have signed bilateral Memoranda of Understanding with Jordan, the United Arab Emirates, Saudi Arabia, and Bahrain which express their intention to rely on international markets rather than enrichment and reprocessing on their territories.

As a matter of policy, we will continue to encourage states to take advantage of the international fuel market and to welcome decisions to refrain from enrichment and reprocessing by states that do not have these capabilities.

We believe there is great value in having the U.S. government and U.S. industry deeply involved in the nuclear programs of developing countries, to help create high standards for safety and security and nonproliferation. For exports of U.S. nuclear technology, this requires conclusion of Agreements for Nuclear Cooperation (so-called 123 agreements).

As an example of the importance we attach to these issues, I recently traveled to Amman to work with the government of Jordan to develop a path forward on a 123 agreement.

By law, 123 agreements are sent to Congress for review. It is therefore a joint responsibility of the administration and the Congress to take account of the particular situation of each country and region in developing agreements that enable deep involvement of U.S. industry and not leave the field entirely to others that may not share our nonproliferation standards.

Let me now turn to the second question on the agenda for this session, the disposition of used reactor fuel. In contrast to the front end of the nuclear fuel cycle, where there is a strong competitive commercial market, disposition of spent fuel is an unresolved problem for nearly all countries. This is a challenge and potential opportunity for us to advance our nonproliferation goals.

As many in this room can elaborate, no nation, with the possible exception of Sweden and Finland, has satisfactorily resolved the question of the disposition of used fuel once it is discharged from a power reactor. The United States is putting its best and brightest to work on this problem.

Today’s technology provides two unattractive choices:

  • One is isolation in a geological repository for tens of thousands of years. This is politically and technically difficult, and throws away the majority of the potential energy value, which might be needed in the future depending on the scale of expansion of nuclear energy, the availability of uranium resources, and the availability of improved technologies to extract additional energy without increasing proliferation risks, none of which is known today.

  • The other is reprocessing to recover uranium and plutonium, followed by use of the plutonium to produce MOX fuel for light-water reactors. Reprocessing with current technology is uneconomic, as MOX fuel is more expensive than LEU. Reprocessing does not significantly reduce the waste burden, but passes it on in the spent MOX. And reprocessing has resulted in large and growing stocks of separated plutonium – about 250 tons, and growing about 10 tons per year. The growing worldwide stockpiles of separated plutonium as a byproduct of reprocessing used civil reactor fuel represent one of our greatest nonproliferation problems.

So the Obama administration is focusing on research to create better options:

  • If fast neutron reactors could produce electricity as reliably and economically as today’s thermal reactors, they would open the way to a new fuel cycle without separation of plutonium. Much of today’s stockpile of separated plutonium was created in anticipation of the advent of fast reactors. Unfortunately, the 60 years of experience with fast reactors has been problematic, and commercial deployment for economical production of electricity is not in sight.

  • High-temperature reactors have potential for high burn-up of uranium and plutonium, and a proliferation-friendly once-through fuel cycle.

These and other concepts are being actively pursued with our international partners in the Generation IV International Forum, for potential deployment in future decades.

Which leads to the question of what we can do today to help countries considering nuclear energy in dealing with the back end of the fuel cycle. If we could offer a way to help relieve nuclear newcomers of the burden of disposition of used fuel, that would be attractive, and could provide an advantage as we seek to achieve our goal of strengthening nonproliferation as nuclear energy expands.

As the sponsors of this conference have presciently anticipated in the title of this session, a key part of the answer is interim storage.

Nuclear power is the only industry I know where the short term is 50 years. So what we are looking for is placement of used fuel in a storage facility for 50 to 100 years with the ability to retrieve it at any time. From a technical point of view, dry cask technology is proven and licensed and available for this purpose.

We will not know for decades the full extent of the demand for nuclear fuel due to expansion of nuclear energy. Nor will we know the availability of the uranium resource that can be recovered at reasonable cost. Nor will we know which technologies will become available to overcome the economic and proliferation drawbacks of reprocessing as practiced today.

Retrievable interim storage would preserve options for future decisions when we have the information necessary to make informed choices on what to do with used fuel.

The question becomes where to store used fuel. Part of the answer is in the same country – usually at the same site – where the fuel was irradiated. The United States and others can assist a country seeking nuclear energy in implementing a safe, secure, and economical system for interim storage on the reactor site, or elsewhere in that country.

The answer could also include international storage. Today, Russia is the only country taking back used fuel, and only from Russian-supplied reactors. There is potential for development of broader application of interim storage in Russia of fuel irradiated in other countries. But Russia has no interest in being the only destination for used fuel, and the corresponding leverage Russia would gain in the sale of fresh fuel would surely distort the market.

One can argue that it would be in the interest of the United States and other suppliers of reactor technology and fuel to take back used fuel for storage. At present, bringing to the United States used fuel irradiated in nuclear power plants abroad requires notification of Congress, which would almost certainly lead to Congressional opposition to such imports. While the odds are against us, we could work with Congress to seek an ability to offer interim storage of used fuel from abroad, for countries that do not have sensitive fuel cycle facilities.

Establishment of regional or international interim storage facilities could make an important contribution to an attractive offer for countries considering nuclear energy. Used fuel could be stored at the reactor site for a period of time, followed by storage at an international facility, followed by a decision on ultimate disposition.

Finding suitable locations that would welcome such a facility would not be easy. Resolving questions of cost, responsibility, and liability are serious challenges. The potential benefits would be substantial, and would justify a major effort.

Our goal is to cooperate with other governments to open the way for the international nuclear industry to offer the same reliable and economical services at the back end of the fuel cycle that they now provide at the front end.

Indeed, comprehensive fuel services including fuel leasing and take-back options – “cradle to grave,” in the words of my friend and colleague Deputy Secretary of Energy Dan Poneman – would be attractive to governments and operators as an alternative to the costs, complexities, and burdens of sensitive fuel cycle facilities.

Through international cooperation, we can achieve the goals President Obama set forth in Prague. Together with our international partners, we can discourage the spread of sensitive technologies, while we support expansion of peaceful nuclear energy, without calling into question the rights of countries that abide by their nonproliferation obligations.

Thank you for inviting me. I look forward to the discussion.

[This is a mobile copy of Addressing the Nuclear Fuel Cycle]