Almost since its founding, the Army Corps of Engineers has had a major domestic, peace-time function in civilian civil works projects. So there is a precedent for having the military run such projects.
I got to thinking about that precedent when I read Bradford Plumer's TNR post, which notes that:
Obama wasn't kidding when he gave all those shout-outs to nuclear power in his State of the Union address on Wednesday. According to Bloomberg, Obama's 2011 budget will request $54 billion in loan guarantees for new nuclear reactors—triple the previous amount.
I'm inclined to agree with Andrew Sullivan that "There's no way to tackle our carbon addiction without nuclear energy as part of the solution." But I also appreciate Plumer's observation that "the case against comes from the Union of Concerned Scientists, which argues that big nuclear projects have historically been very risky—prone to delays and cost overruns—and that the default rate on these loans can be quite high, sticking taxpayers with the bill. Instead, says UCS, it'd be better to direct that money toward cheaper, more reliable options for reducing emissions—efficiency or waste-heat capture or even wind power."
I've got a better idea. The WSJ reported in September of last year that:
Babcock & Wilcox, a unit of McDermott International, has designed a small 125-megawatt reactor that would be built at its U.S. factories and then delivered to power-plant sites by rail or barge. This would eliminate a bottleneck and the associated higher costs for ultra-heavy forgings that are required for large reactors. Small reactors could be built at a number of domestic heavy-manufacturing sites. The Lynchburg, Va., company has been building small reactors and other key components for Navy ships for decades, at plants in Indiana and Ohio.
Another plus of small reactors: They're designed to be refueled less frequently, reducing the number of refueling outages. Instead of every 18 months to two years, they could go four or five years, reaping a saving from having less down time. Another feature of some reactors is the ability to do more maintenance while plants are running, again reducing idle time.
... critics say that the economics of small plants simply don't work: The licensing costs are so great for nuclear plants, somewhere between $50 million and $100 million per site, and security and construction costs are so high that the economics work only for big plants, with lots of output, so costs can be spread over many kilowatt-hours of electricity.
So here's where my idea comes into play. The Navy already operates dozens of small nuclear reactors in aircraft carriers and submarines, with an outstanding record of safety and reliability. They have an established training program that churns out nuclear-capable officers.
By analogy to the Army Corps of Engineering, we could create a Navy Corps of Nuclear Engineering. It would build and operate dozens of small nuclear power plants around the country. To address security concerns, the first plants would be built on military bases, where the garrison can provide security. Licensing costs would be cut because the government would own and operate the plants.
The proposal should not offend small government sensibilities. Nuclear power is rife with market failures (and government failures). Huge research and development costs associated with traditional large scale nuclear power plants may be beyond the ability of private firms to finance. In addition, we know that private firms tend to underproduce the sort of basic R&D necessary to develop new generations of power plants. But the Navy already spends money to develop new naval reactors, which presumably could be scaled up at reasonable costs. Since the Navy need not worry about earning market competitive rates of return on its investment in R&D, moreover, there's no economic disincentive to conducting that sort of R&D in the Navy.
Private utilities are subject to state utility regulators who notoriously meddle, typically to "protect" consumers from rate increases, but usually with the outcome of making plants nonprofitable. A federal Naval Corps of Nuclear Engineering presumably would be outside the scope of state regulation.
Private utilities used cost-plus contracting when building nuclear power plants--with all its notorious problems--because there were serious problems of incomplete information when dealing with large scale, non-standardized plants. Smaller, standardized plants should be amenable to fixed price contracts.
Private parties have a hard time adequately insuring against very low probability but very high magnitude events. Since the taxpayer likely would ultimately be on the hook anyway, why not have the government own the plant and self-insure? And profit from selling electricity?
Another advantage of my proposal is that lots of military bases are brown field sites that would require mega-investments in environmental cleanup before being converted to civilian use. So why not build a nuclear plant there?
So I'd say Obama's half right. Oddly, however, this time I think his problem is that he's leaning too much on the private sector. The Navy knows how to run small nuclear reactors. Small nuclear reactors are the future of the industry. Why not put them together?
*****
Glenn Reynolds has had several relevant posts. #1:
MARK WHITTINGTON: “To paraphrase a line often made by Instapundit’s Glenn Reynolds, they told me that if I voted for John McCain we would see a massive push for nuclear power—and they were right! It seems that President Obama has embraced nuclear energy.”
#2:
WILL COLLIER: When It Comes To Nuclear Power, Companies Should Think Small.
The latter is especially relevant to the discussion here, as Collier argues small scale reactors are cheaper and safer than the traditional mega-monsters.
