A New Nuclear Age for the United States?

Joe Aldy: So, welcome to the HKS Energy Policy Seminar. I'm Joe Aldy, and I'll serve as the host today, really excited to have a full room and to have many friends and colleagues and alumns joining us online via Zoom. I'm really excited to have an old friend and colleague, Dan Poneman, for us today, for his talk on The New Nuclear Age. Daniel Poneman is a senior fellow at the Belfer Center. Most recently, he served as the President and CEO of Centrus Energy Corporation, restoring the company to profitability and deploying the first U.S.-technology uranium enrichment facility to begin production since 1954.

Prior to joining Centrus, Poneman was the Deputy Secretary of Energy from 2009 through 2014, including a brief stint as Acting Secretary. In his youth, he served on the staff to the National Security Council, as one does in your youth. He served for six years under both Presidents Bush and Clinton, including three as special assistant to the president and senior director for nonproliferation and export controls. He received his bachelor's and law degrees with honors from Harvard University, and it is always a pleasure to invite back an alumn to share with us his insights and experiences after leaving our campus. Dan, welcome to the Energy Policy Seminar.

Daniel Poneman: Thank you, Joe. That work? It is always great to be back, and as I'm staring at this slide here, April 14th, 2025, I actually started at what was then the Program for Science International Affairs in 1975. So, this is my 50th anniversary, and I can tell you not where I was on April 14th, but on the 18th of April of 75, I went to Lexington and Concord and the first president I laid eyes on was Gerald Ford who went to the rude bridge. Were you there? And there was a performance and Arlo Guthrie performed and Tom Watts, I think, and everyone was trying to recreate Woodstock, which was only a few years prior to that and hold hands with your brothers.

So, anyway, to come back 50 years later, and I started as a $5-an-hour work study student at the PSIA. So, it's been great, and it's always great to be back. 

The one footnote I would drop to Joe's overly generous introduction is... I'll just start with a question. How many people here have heard of Centrus Energy Corp? You don't count. You know me. Okay, how many don't know? Yeah, I thought so. 

Okay, so full disclosure. When I was offered the possibility for the job, I had not heard of it either, right? And when I was told it was the US and Richmond Corporation, I said, "No way," because I knew something about the background. The fact of the matter is, the first name of Centrus Energy Corp was the Manhattan Project, because the Manhattan Project was the U.S. enrichment enterprise going back to Oppenheimer in Oak Ridge, Tennessee. After the end of the war, the Manhattan Project became the Atomic Energy Commission, which eventually became the Department of Energy, and the United States in an equal opportunity mistake between the Bush 41 and Clinton administrations became the only country in the world to privatize the bomb-making technology known as uranium enrichment. And after Fukushima, the company went bankrupt, and therefore, there was a job opening at the top. Anyway, that will come up a little bit later in the presentation. 

So, I think it's the Museum of Fine Arts where there's a great Gauguin painting, and it says, "Where are we from? What are we and where are we going?" And for some reason, I always think of that when I think about the issues we're going to talk about today. 

This is a really distressing reality. A lot of people, including Joe, did so much work leading up to the Paris Climate Agreements, and the target was two, or ideally lower than two, ideally towards 1.5 degrees. Then all of us read with great distress the IPCC report on 1.5 degrees, and we see even at 1.5 degrees, the effects are terrible, but at two degrees, they're almost incomprehensible. Yet we've already blown past 1.5 degrees last year, officially, and now depending on the scenarios - and Joe's the one who's got the economic chops on this - but if you look at where we are going under current policies, people who are conversant in this are telling me, "We're at three degrees or higher."

And there are probabilities associated with each of these curves. All these descending curves reflect commitments countries have made and the degree to which they're going to fulfill these commitments. So, you see, it will take quite an aggressive set of steps to get down to the 1.5 degree aspirational goal, which is still something that will have terrible consequences. This shows you some of the spread of probability. So, you see, if you just continued current policies, you're up at potentially 4.5 degrees, and I think something of that dimension is truly horrific to contemplate.

As a former scuba diver, this is the one that shattered me in the 1.5 degree report. This is happening all over the world. There are parts of the Great Barrier Reef equivalent in dimension from Massachusetts to Delaware that now look like that, and according to the IPCC report, you lose well over 90% even if you hit two degrees centigrade. It's not clear to me, with all the efforts that are underway to find new forms of coral, I just don't know if you can support something of a dimension that would have to be done to repair that damage and apart from the sort of biodiversity losses and the terrible losses to what makes the planet worth living in terms of the beauty of the place. You are collapsing a whole ecosystem with, I think, perhaps a billion livelihoods put at risk just by this one metric alone.

So, what's the task before us? Well, let's see if this works. Okay, kudos to Rachel Keathley. I'll put it a little more graphically, and this is... We're just talking about power generation. If we're looking at potentially a 100% increase in the demand for electricity, if you want to decarbonize that all by 2050, it's a huge lift, and a very recent article by Peter Orszag and Dan Yergin talked about this. We always talk about energy transitions and probably many people in this room have seen the sign curves that show, "Oh, here's the age of wind," and it rises, and it falls. Then there's the age of wood, and it rises, and it falls. Then the age of coal, and it rises and falls. And then oil, it rises... There are all these sign curves, and you think it's a transition, but it's not.
These are in terms of relative share, but in reality, it's more, more, more. More wind, more wood, more oil, more coal, more natural gas. There is only one form of primary energy that I'm aware of that has actually gone down in absolute terms in the last 100 years, and I got this from Adam Sieminski who used to be the head of the Energy Information Administration. Anyone? What is the one form of oil that has actually gone down in absolute terms? One form of energy? Whale oil. That's it.

So, all by way of saying, "We're going to be needing more and more and more," and many of us - Joe, myself - in this room have worked very hard. We got like $30 billion out the door on a three-month deadline before the recovery act expired in September 2011. We put in place something that never existed before, which was grid-scale solar PV in this country, the biggest wind farm in the country. Tesla got started with this program. So, it's not just the United States. Global investments have been about $5 trillion over the last 10 years. Huge uptick in deployment of wind and solar, and let's see how we've moved the needle in the last 10 years.

So, this is what we call reality therapy, and there are true curves that show huge increases, but from a tiny base, for wind and solar. We're still primarily dependent, and will be for a long time, on fossil resources, which is for me one reason why carbon capture remains a very important technology to pursue and so forth. But I think we just have to be honest with ourselves, intellectually, to where we're going, and that's what brings me really to nuclear. You can go to the Intergovernmental Panel on Climate Change, you can go to the International Energy Agency, and all of the experts will agree that in order to get to 1.5 degrees, which I think aspirationally is still a good direction to go, you're going to just need a lot more nuclear. And that is why you have now seen, for example, in COP28 and COP29, over 30 governments overall that have committed to triple the installed base of nuclear power by 2050.

And that is no mean feat, as anyone would tell you. While aspirational, if we really put our minds to it, I think it is possible, and one of the reasons why it might become possible is that there have been secular changes in the industry, and I'll just for a moment talk about the United States. For many, many years - and people here will know exactly how many years - generally, electricity demand has been flat-ish for the last 10, 20 years. Then in the last two or three years, you've had this vertiginous increase in energy demand. The numbers are really quite staggering. Even if they turn out to be overstated, a discounted amount of this dimension would still be staggering if you take that top bullet to increase data center power consumption from 25 gigawatts in 2024 to 80 gigawatts. Adding 55 gigawatts, that's like 55 nuclear power plants by 2030.

 I've been having an ongoing dialogue with a lot of the hyperscalers for a number of years, saying, "Look, you say, 'I want to be such percent, 100% renewable by year 2030,' and I just don't see the arithmetic of how you get there." And that was before they had these incredible numbers. So, now you do see, and we'll talk a bit more about it, a lot of interest in the hyperscaler community in nuclear. 

So, for example, Microsoft has paid Constellation to reopen Three Mile Island, which has a lot of history to it, [so they can] basically buy all the power out of that. You've got Amazon Web Services that's investing in X-energy and working with X-energy and working with Energy Northwest. You've got Google investing in Cairo. So, it's now starting to happen. 

So, two things have happened, which are really drivers on this. Number one, you have this huge, massive increase in electricity demand, but also because there is a track record in terms of the cost of nuclear, you finally have companies that have a means to maybe address this, and what I'm talking about... I'm not sure where this shows up in the slides, this is still talking about the demand. 

Basically, after Three Mile Island, the United States stopped building nuclear power plants for 30 years. What happens when you stop doing anything for 30 years is your supply chain collapses and so does your talent pool. So, surprise, surprise, when they started to build these two new reactors in Georgia called Vogtle 3 and 4, it was slow, it was over budget, there were regulatory challenges. Mistakes were made, as they like to say. So, it ended up costing like $35 billion, and I haven't looked lately, but the market cap of Southern Company, which owns them, it's got to be, I don't know, $40, 50 billion. It's in the tens of billions. So, what CEO - and what CFO, for all of you joint degree people with MBAs ahead of you - are going to go to what board and get what approval for a $35 billion project.

That's two thirds of your balance sheet with a 10- to 15-year timeline and a lot of risk versus, at the time, 18 months for a gas plant at like $800 per kilowatt installed. So, it's not really feasible under those circumstances to contemplate significant investments. However, if you took all of the market caps of all the investor-owned utilities in the United States and added them up, it comes up to about $1 trillion, which is about the floor of the market caps of the hyperscalers. So, now with the hyperscalers entering the scene, you have two things that we didn't have. One is... and they didn't create this part, but they're a large driver of the huge demand for electricity going skyward, and now huge balance sheets, and they're better able to manage the kind of risk that might be entailed in new build.

And this is why nuclear is attractive. Now, it's a fact, even though these hyperscalers had a lot of ESG goals, and I don't know, candidly, the current status of these ESG goals under the new political situation, but they were very committed to them. But they have had perforce to go back to buying a lot of gas plants, which is why now gas plants are more like $2,400 per installed kilowatt, and it's not because all of their commodity prices went up, although that's some of it's because it's a choked up demand curve, and you now have to wait at least three years now to get a gas plant, and they're looking at very serious requirements for their data centers in the next five years.

So, you're talking about delay of closing coal plants, and then you do have a lot of interest in wind and solar, but wind and solar are still, as they always have been and always will be, intermittent and are dependent in many cases on a long distance transmission and on backup dispatchable firm power. So, that's not a panacea. So, that's why it's almost inevitable that they're going to be looking very hard at nuclear and not just small nuclear. It became sort of, post-Fukushima and post-Vogtle, the flavor du jour turned towards small modular reactors, which do have a lot of appeal to them, but also with the advanced reactors, and we'll talk a little bit later about this. There's a lot more risk and uncertainty, and if you have an opportunity to take an existing plant that may be just shut down recently, you can restart. It's cheaper, easier, less risk, and hence the interest in the reopening of Three Mile Island.

And this just says the grim reality. It's actually worse than this. We were up to, I think, 112 reactors at one point, and even when I was deputy secretary, I think we still had 104. For a variety of market and other reasons that Joe could probably give a whole lecture on, we ended up losing actually quite functional reactors to the point we got down to 92, and then we now have finally added two new ones at the grid, Vogtle 3 and 4, so we're at 94, and we don't have any large ones under construction. Actually, work is now happening in Wyoming on one of the advanced reactors, TerraPower, which is the Bill Gates-owned company.

So, here, you see some of the progress that has been made in recent years. In the large reactor category, you see Vogtle 3 and 4. TMI, Three Mile Island, and Palisades are restarts. The problem is when a reactor has gone to a certain level of decommissioning, it's too expensive and challenging to restart. So, there's only a handful of reactors that are likely to be able to be restarted and then as mentioned, some of these hyperscalers are now getting into the act in a good way. Dominion Energy has not only released an RFP for SMR technology, but they're also committing to fusion, which is interesting.

In the nuclear fuel supply chain area, this is actually a very encouraging story in a way because... And we'll come to the genesis of this a little later, but the Congress through two sets of legislation ended up dedicating $3.4 billion to uranium enrichment, which is a critical fuel supply element that's been missing in the U.S. market until that first little plant that we started. I was very happy about that last October 2023. The interesting thing about that Nuclear Fuel Security Act is it passed 96 to 3 in the U.S. Senate. So, I would be interested if anyone knows of any issue that has more bipartisan support than support for nuclear energy in the U.S. Congress.

Some people support it because of national security. Some people support it because of climate concerns, and as I say in my book, spoiler alert, you can agree on what to do even if you don't agree on why, and this just shows you the geographic dispersal of things nuclear. For those who say... In my other project at the Kennedy School I've dubbed, and they said it couldn't be done about cases in which the United States invented a technology, dominated the world, squandered our leadership and somehow clawed our way back, and one case is commercial space launch and one case, I hope, will be semiconductors, and the third case I really hope would be nuclear, but you see that we were building a lot of them before we weren't, and Three Mile Island obviously had a very devastating effect on public confidence. We can talk about that later.

But to build, as has been proposed, 200 gigawatts between now and 2050 is a huge lift, but I think it's not beyond the realm of human imagination. If you posit as a premise that the survival of the planet is at stake, we can do big things under duress when we need to as we have shown time and again in our history. This is just to give a very cursory overlook of the kind of flavors of advanced reactors. There has been a lot of interest probably in terms of what you're familiar with in the United States, the three... Well, maybe four categories in fission that are relevant are the sodium-cooled fast reactors.  TerraPower is the Bill Gates company. That won one of the two big advanced reactor awards from the Department of Energy. The other advanced reactor award went to a company called X-energy, which makes gas-cooled fast reactors.

These smaller reactors have intrinsic benefits that are not always available for larger reactors. So, for example, a gas-cooled reactor has very high outlet temperatures, maybe 800 degrees C, hot enough that you can support industrial processes beyond electricity generation and therefore that's why Dow Chemical is interested in doing a deal with X-energy. If they want to decarbonize industrial processes, they can do it by using high-temperature steam out of a gas-cooled reactor. The Bill Gates sodium reactor, which is known as Natrium... Nuclear reactors because they're so expensive and capital intensive, when you get them running, you want to run them 7/24.

So, what do you do when there's not electricity demand, if it's nighttime or whatever? The Natrium plan is to then heat up molten salt when they're not needing electrons for their customers on the grid. Then that molten salt becomes a de facto battery to support solar use. So, there's an integrated win-win situation in which renewables and nuclear can reinforce one another. The other one I'll just mention is micro-reactors. There's a lot. I don't know why they picked this. I didn't invent this slide, but I would not have picked project ice one, but anyway. Micro-reactors have a lot of interest in terms of micro-grids. So, DOD is very interested in micro-reactors, both in terms of making sure that if we have a military base that has to have 7/24 power, and you don't want it vulnerable to adversarial cyber attacks for example.

Or if you're trying to defend an island like Taiwan, and you want to make sure all of your bases in the Western Pacific are not dependent on diesel, that could be cut off by Chinese naval interdiction. There are military and national security dimensions that I think the micro-reactors can easily meet. There's also interest, for example, in micro-reactors in Canada, up in Alberta, the oil sands. They're filthy enough to begin with, and they use diesel to pump out that fuel, and they're actually interested in using micro-reactors to at least marginally reduce the carbon footprint from developing those oil sands.

So, you can't talk about nuclear without talking about risk and without talking about the concerns that public quite understandably has, and we could talk in Q&A about it as much as you want, but if you measure things overall in terms of deaths per terawatt hours, you'll see on this slide that nuclear is way, way down with wind and solar and obviously it's coal and the fossil fuels that are contributing so many deaths around the world, which is why I think it was actually very tragic what happened in Germany because a lot more Germans have perished because of the filthy lignite that they lit up when they shut down the nuclear power plants than ever perished from all of the nuclear accidents ever.

Waste is always an issue. I think it's always important, and this is a little out of date now. I think it's probably 40 feet or so. The nuclear waste that's been generated since the dawn of time in the United States by our... Still, China will pass it. We still have the largest fleet of nuclear reactors. It used to be when I was working 70,000 tons, now I think it's 90,000 tons, but it basically would fill one football field basically 10 meters deep. So, in terms of is it an issue? Of course, it's an issue, but it's not an issue that is without reasonable dimensions and reasonable solutions, which I'm happy to talk about in the discussion thing. 

Something that's not often talked about is land use, and if we're going to need all this energy... and what I'm about to say really is informed by people, my own concern about biodiversity. The land use issue is a huge factor. So, one uranium fuel pellet is equivalent of one ton of coal and like 1700 cubic feet of gas, 170 either gallons or barrels of oil. So, if you built a conventional like 1,000 megawatt plant in New York, you need Central Park for land use. If you build one of these small advanced ones, you can do that at a fraction of that footprint. Now, if you want to put 1,000 megawatt solar plant in New York, you're going to have to use Brooklyn, all of it, and if you want 1,000 megawatts of wind, all five boroughs. This is not a good solution for Guam, not to put too fine a point on it, if you care about biodiversity. I spent a lot of time in Africa, I don't want to see Africa covered by all that. And so the power density is a huge, not only energy advantage, but it's a huge biodiversity advantage that I think nuclear has. 

Now we're going to get to the fuel story. This is rather sad. So, in the mid-1980s, during the Reagan administration, that tall bar on the right, that's how much uranium enrichment capacity the United States had. Now, uranium enrichment is the chokiest choke point in the fuel cycle, and it's very important not only because without uranium enrichment, you can't create the fuel that now basically 400 reactors rely upon around the world, but it also can be used that technology can be used to build nuclear weapons. So, it's a very sensitive technology and we, as I said, once dominated the world. When I say we, I mean the United States. Here you see Russia's Tenex state-owned enterprise on the far left, 3000 SWU. Let's go forward.

Well, what a coincidence. Russia has 27 million SWU now, and we're a goose egg down there, right? We have zero. Now, to be honest here, there's a cross-hatched thing here, the 4,700, that is a plant in the United States in New Mexico, but it is owned by a European state-owned consortium. And therefore, while it is in the United States, its owners are in Europe and one specific issue that has to be kept in mind is the United States still needs uranium enrichment to make naval reactor fuel. We have a lot built up, but we will in time need to make high enriched uranium for our submarines and carriers, and we also need it on a continuing basis because if we're going to sustain our nuclear deterrent, you need to have tritium, and you need to have U.S. origin enriched uranium to make tritium, so that 4,700 cannot help U.S. national security.

These are all, by the way, all these bars, Russia, UK, France, China, Netherlands, Germany, they're all state-owned enterprises. The only private enrichment company in the world is the one that I led until about a year and a half ago. So, it's been challenging to get the United States back into the market. 

Here's another way of looking at the same story, and you see domestic uranium has also had a vertiginous drop. That's less of a concern from a national security standpoint in the sense that uranium has been pretty widely distributed around the world. Whereas when it comes to uranium enrichment, Russia has 44% of the world's installed capacity to enrich uranium. China has another 10-plus percent. So, between the two of them, they dominate a majority of the market, and as I said, the home market is state-owned enterprises and the United States is not a meaningful part yet, although this $3.4 billion could certainly get us back in the game.

One of the reasons why the U.S. government decided to invest in this technology that we started our new production at Centrus was because many of these advanced reactors are not the conventional so-called light water reactors. We can talk about the technology in Q&A, and those light water reactors use uranium that is enriched in the uranium 235 isotope, which is less than 1% found in nature up to 4 or 5%, and the reason why the technology is sensitive is that very same technology that takes you to 4 or 5%, if you crank it up to 90% would produce a explosion in a mushroom cloud or a very small reactor that can fit on a submarine.

So, if you want to have higher performance characteristics, higher power density out of your fuel that allows these enhanced performance attributes of the advanced reactors, but you don't want all the guards dogs and lights that come from bomb-grade material, the legal limit is 20%. So, high assay, low enriched uranium, the legal limit is 20%. So, my little company enriched up to 19.75%, one way to think about it is low enriched uranium is like beer. High enriched uranium is like grain alcohol and... like a vintage port. I thought you'd like that.

So, how do we solve this problem? This problem I'm about to describe is not unique to this aspect of the supply chain, but I think it's illustrative. Problem with advanced reactors, Bill Gates and all these other folks, really exciting reactors, is who's going to buy 10 reactors without a guaranteed fuel supply? So, it's hard to get an order book that's filled up, but then who's going to put five billion down to build a plant with no order book? I mean, it's a classic chicken and egg conundrum, but as I indicate, we have solved this problem before, and it goes back to Atoms for Peace.

We need uranium enrichment for national security purposes anyway, and then if you make that material available for the industry, it becomes a virtuous feedback loop. So, Hyman Rickover took a reactor that had been ordered, for example, for an aircraft carrier that got canceled, and he gave it to Duquesne Light Company in Pennsylvania and that became the shipping port reactor and the 112 reactors all came off of that model. So, this is like a classic public-private partnership. It's well known by the shipping port reactor. What's less well known is Eisenhower himself in 1956 made a huge amount, like 40 million kilograms, of enriched uranium available, half for domestic and half for international use, to help promote the peaceful uses of atomic energy.

So, as I was mentioning, you now have quite robust bipartisan consensus in the Congress supporting nuclear power. It's an eye strain chart, but suffice it to say that time and time again, you have whopping majorities supporting this. I mentioned the Nuclear Fuel Security Act, the ADVANCE Act, which had a lot of the NRC reforms that we've been reading out, passed 88 to 2. I would be interested to see if a law proposing that the sun rise in the east would get that kind of a majority. I'm not sure, and this just lays it out. In the interest of time, I will not dwell on this.

We have to be honest about the challenges. We have had a lot of regulatory issues. There's been a lot of law passed to improve those regulatory issues. Recently, some of you may have seen the NRC, Nuclear Regulatory Commission, which is in charge of regulating the safety of these reactors, has changed its mission statement. There's been a whole controversy over whether the origins of the NRC, which were born out of the Atomic Energy Reorganization Act of 1974, which said, "We have to split promoting nuclear energy, keep that in what became the Department of Energy, and have the safety regulation somewhere else in the Nuclear Regulatory Commission."

There are people who think that biased the NRC to just say no, and they said, "You should have thought of a model more like the FAA or the FTC in terms of organizations that had both regulatory and beneficial uses in mind for the items that they were regulating." On the high cost and barriers to entry, this is a real huge problem and there is no easy answer to this, and this is where public subsidies are not the answer. The industry, and I think this just requires doing it over and over again, has got to get better. We've got to get better in terms of the workforce, supply chain, and there's no getting around it. Long-term rates do not reward value. This is why there have been challenges facing nuclear for a long time.

There have been efforts to redress that for a long time. Electricity markets, and Joe could probably has lectured on this, have not rewarded the carbon-free aspects, have not rewarded the resilience that nuclear has had. There have been efforts to repair this through the wider application of the production tax credit and so forth. Obviously, the easiest, cleanest way would be a simple price on carbon, but we all know the challenges that that faces, and then we're going to come to a moment and the finance issue is in an important one and why I think the federal government still has an important role to play, the loan guarantee program, which provides the cheapest debt available.

These are very capital-intensive projects. They take a long time unfortunately, and therefore the carrying costs during construction are quite significant. So, anything you can do to alleviate the financial burden is helpful to the long-term economics of it, and then finally, momentum is intertwined with global demand. So, I'm going to put a pin in that because we're going to come back to that as we pivot to the proliferation question. I actually started my whole career here and for the first many, many years working on the nuclear nonproliferation side and my interest in nuclear energy was to the extent that people might be pursuing nuclear energy programs in other parts of the world as a smoke screen for a weapons program. That was what my first book was about. So, let's look at that.

We had a theory. It goes back to December 8th, 1953, and the idea was basically embedded in Atoms for Peace, which said, "If we make the benefits of the peaceful use of the atom available, we will be in a position to basically set the rules of the game." So, under Eisenhower's leadership, he called for this in December 1953. The International Atomic Energy Agency was established in 1957. The whole global system of international safeguards you're all familiar with was set up and then that was all codified and strengthened through the negotiation of the Nuclear Nonproliferation Treaty, which entered into force in 1970, and this was all reinforced by the fact that the United States was the dominant commercial player both in terms of reactors and fuel in the world, and sadly, basically over time for reasons we can discuss in Q&A, we lost that leadership.

But with this next generation of demand for nuclear, it's possible that we can recover that leadership. Here's another Harvard guy.

Audio recording of President John F. Kennedy: I see the possibility in the 1970s of the President of the United States having to face a world in which 15 or 20 or 25 nations may have these weapons. I regard that as the greatest possible danger and hazard.

Poneman: That was May 1963. So, what has happened since then? Who are the suppliers out there and who's buying from whom? So, for years, I've been quoting the number of $130 billion as the size of the Russian order book. After the Westinghouse finished building those two reactors each in Sanmen and Haiyang, four reactors, the U.S. order book was zero. Now, through the resurgence, there's a shot. The United States could get back into Poland and Bulgaria. Somebody recently asked a question, "Well, now with everything that's happened since the Ukraine invasion, what's the Russian order book now?" Well, they recently put out numbers. They're now at $200 billion, and as another Cambridge denizen, Ernie Moniz says, "No exports, no influence." So, this is not a good story if you are interested in the United States having leadership when it comes to the rules of the game in terms of either safety, security, or nonproliferation.

And as the heading says, this is a hundred-year relationship that you're getting into. Other governments treat this as a major national security imperative, and you have presidents deeply involved in this, and it just has not been the MO in the United States, and we've lost time and time again. This is pretty staggering. China built 37 reactors in the last 10 years, and they will pass the United States as the leading nuclear power in terms of number of nuclear reactors operating by 2030. So, if we want to get back in the game, we do have to get back to building.

So, what's that going to take? When it comes to this international market, which is very important for climate change, and it's very important for national security reasons, we can't keep changing our minds about what U.S. policy is, and we can talk about that in Q&A if you want. We do need, and we have, I would submit, the strongest nonproliferation controls out there, but if other suppliers don't insist to an equally high standard, it becomes a competitive disadvantage for us to do that. Other governments make huge investments, and we have the tools, but we have not maximized the use of the tools such as the Exxon Bank and the Development Finance Corporation.

And I'll tell you a little story story in terms of comprehensive offers. I'll tell you two stories. I guess I won't say the country, but when I was Deputy Secretary of Energy, I had countries who said, "We want to buy American, but we want your companies to do a build-own-operate model," because they didn't want to have the risk of building, owning, and operating. They wanted the electrons. They were willing to pay, and I went to the major U.S. vendors, and they said, "Not my business model." So, that's end of that story.

The other one is, I was actually in Russia when we were still having conversations and this person on the other side of the table says, "You want to know why Russia is beating America all over the world?" And I'm thinking like, "Not really, but you're going to tell me anyway. So, go ahead." He goes, "When the United States started our programs, we wanted to do everything ourselves. We wanted to have our own self-sufficient programs. The new countries that want nuclear, they want electrons. They don't care about what we cared about," and I go in there, and I say, "I will mine the uranium. I'll mill it. I'll convert it to gas. I'll enrich it. I'll design the fuel. I'll build the fuel factory. I'll build the fuel. I'll build, own, operate the reactor. I'll finance the whole thing, and I'll take spend fuel back. Your move."

So, what happens when that happens? They get $200 billion order book. We got zero. So, let's talk a little bit more about nonproliferation. We used to call this countries of concern, but I had to rename the slide in light of recent events. So, let's just kind of populate this thing. What has happened? So, Indian and Pakistan both publicly tested in 1998. North Korea. We can discuss this. I'm afraid I was the last one to give up, but that's a tough one to get back. At the end of the Cold War... I wish Steve Miller were here. All of us worried about four nuclear weapons states emerging from the Soviet Union, and we persuaded Ukraine, Kazakhstan, and Belarus to give up their nuclear weapons, and I think everyone knows the rest of that story.

This goes all the way back to the founding of NATO security assurances. The most unsung hero of U.S. nonproliferation policy, in my humble opinion, is the extended deterrent. The fact that these countries, all of them have the technology base and the resource base to build nuclear weapons, but because they have confidence that the United States will defend them through Article 5 of NATO and other treaty commitments, they have relied on that security assurance as opposed to building their own deterrent.

Some countries have undergone their own political transformation, which we leveraged to help persuade them to give up their nuclear programs, and then we all know the cases that external pressure produced the desired result. Well, you see who's not moved over yet? So, now, we've got red. We got green. Now, we've got to create a to-be-determined category. If you think about Iran, if Iran goes nuclear, you have to at least think about Saudi Arabia, and what's going to happen if these things start to go? Well, my worry is that the extended deterrent, which relies on confidence and credibility, will start to erode.

I was just in the Munich Security Conference in February, and I can tell you, there's a lot of conversation about the credibility of that extended deterrent. If those folks start to go, "Well, can you really take anything for granted?" We all know. I'm sorry Mariana Budjeryn is not in town. She could tell us all about Ukraine. Whether it's right or wrong how people think about it, they think about it. So, I think you have to at least be mindful that we are heading potentially into a very risky period. So, we end up where we began: where are we and where are we going? Thanks.

Aldy: So, I'll open with the first question, and then we'll take questions from the audience. Right before we started, I mentioned, Dan, that the title of your talk is one that could have been given about 20 years ago. There was a lot of talk about the nuclear power renaissance in the United States then - something that we worked on to some degree at the beginning of the Obama administration. But some things didn't come to pass, like a price on carbon. Some things did, like innovation driving down natural gas prices, and we didn't really realize that kind of nuclear power renaissance.

One thing that looks different today, as you noted, is the potential interest on the demand side of these major corporations who need power for their data centers. Could you explore a little bit more what you think that potential could be and where there might be, as you noted, public-private partnerships that could actually create the kind of market necessary for us to really scale up commercial deployment of new nuclear power units in the United States?

Poneman: Great question, Joe. A lot of the economics depends on scale. Anything you build just one of, that's why they call it first-of-a-kind cost. So, if these hyperscalers get together - and I think, frankly, it'd be well if there were some skinning down of the number of designs being supported, just in terms of market development - I think you have a chance of starting to drive down the cost by building up a supply chain and starting a repeated process. Even if they pursue different technologies, a lot of the things can translate from one to the other.

For example, the steam turbine plant, it's the same for a lot of these folks. The need for skilled operators, it's the same for a lot of these folks. So, if we can  start to build a whole industry around the advent of a huge demand gap to be filled and big balance sheets to fill it, then I think you can start the building blocks that can help do what is critical, which is to drive down the cost of the supply chain. And if you have a little assist from an NRC that now seems to be much more inclined to be helpful - and I don't mean, to be very clear, lax.

Aldy: What does an assist look like from the NRC?

Poneman: They need to, I think, be more efficient in the application of regulations. I think, like everyone else, they have to use AI. They have to use risk-based analysis, and they have to, I think, understand that their mission is - and the good news about the new mission statement is it says so - they need to be regulating the safety to enable the deployment. I think it's been a little bit imbalanced. So, I think those are the elements that can come together. Momentum is a real thing, Joe, and if we get that kind of workforce... I have spent a lot of time talking to organized labor. People are ready, but - and this is a sort of a sad footnote - I am told it would've been great if Vogtle 3 and 4 were followed by 5 and 6, but people do get other offers. So, pace matters. If this demand curve holds up, and so far, it seems to be, that promises enough demand that you start getting these things built. But we have to get on with it. 

One other thing I would say is there are different generations. So, when it comes to large plants, there's already a well-established regulatory predicate. There are approved designs. There are existing supply chains. There's existing fuel forms. Those are likelier to be easier to get going sooner, and I would not wish the promise of more advanced technologies to have us hold back on what we need to deploy today, because I think the supply chain can be sufficiently robust that it can support different generations, but the most important thing is to start.

Aldy: Let me start with some questions from the audience now.

Audience Member: Thank you, Dan, for this very insightful presentation. So, as you may know, Saudi Arabia and the United States have signed a nuclear cooperation deal just a couple of days ago. What would be the geopolitical implications of that, and will it change the slide that you had on the domino effect of the uranium risks?

Poneman: I have not seen the details of that. In my time at the Department of Energy, as you may recall, I was the co-chair of the U.S.-Saudi energy dialogue. We talked about this a lot, and I remember Minister Naimi at the time said, "We have three great assets: oil, sun, and sand." So, they were leaning in those days into not just oil but actually solar. But I would say the following, if Saudi is to follow the example of the United Arab Emirates, it's a very good sign, and what do I mean by that? The UAE, around 2005 or 2006, realized they need a lot more baseload, and they came and explained to some Americans, "Look, we either have to do coal or nuclear, and we don't have infrastructure for either." They were already thinking about Masdar and their own commitments about CO₂, so they favored nuclear.

Once they made that decision, they took a series of steps to - if I put it crudely, they did it right. They had a very thoughtful internal policy development process that produced a white paper that became codified in a law that said, "We are not going to enrich uranium or reprocess plutonium, which would be a proliferation threat and make the region and the world nervous." They put in absolutely top-drawer safety regulators. They brought in the biggest contractors with the best technologies. So, they built these four plants at Barakah, and I've visited a couple times, and Barakah 2 was faster than Barakah 1. 3 was faster than 2, 4 was faster than 3, and they did it right. They showed a learning curve and now they get 25% of electricity [from those plants].

So, this could be the way of the future. Saudi is obviously the next major player in that region. I would say if the way this is fulfilled is consistent with the way the UAE was fulfilled, it could be a great thing not only for the Kingdom of Saudi Arabia, but for the region and beyond.

Audience Member: Thank you, Dan. Thank you for your very insightful remarks. You mentioned that the United States should maintain restoring the importance of nuclear export and maintaining the nonproliferation controls. How do you think we can balance between offering comprehensive build-own-operate packages and ensuring that such offers do not undermine the global nonproliferation norms, especially when China and Russia may not insist on the same standard? Thank you.

Poneman: Yeah, great question. So, I think you have to divide it into two pieces, right? The sensitive part of commercial commerce is typically the fuel cycle, not the actual nuclear power reactor itself. It's the enriched uranium at the front end and potentially the separated plutonium at the back end. So, build-own-operate per se does not, I think, create novel challenges in terms of safeguards and that sort of thing, but what it does create in terms of risk is, as I quoted Ernie Moniz, "No export, no influence."

So, if the United States, for example, has very strong nonproliferation controls and China and Russia don't, but China and Russia win all the deals, our strong controls won't do us very much good. So, I think the import of your question is, the United States and partner countries - it's not the United States alone - the United States and its friends and allies need to work together so that even though there may be certain advantages we cannot overcome in terms of what Russia and China can offer, they have defects that we can overcome, and people still want to work with other countries other than those two countries for a variety of national security and other reasons. Just go up and down Central Europe and ask, right?

So, I think if we can partially neutralize the competitive advantage that those kinds of countries have, especially Russia, in terms of the build-own-operate model, I think that we can counteract that and then have success exporting and beating them at that game. Secondly, frankly, the sort of sclerotic view that maybe some U.S. exporters had about - I'm not going to do this or that business model. They say you have to meet your customer where are, and maybe there are build-own-operate options that might be attractive or viable, and we don't have to simply say, "Oh, we're not doing that. We're never going to."

Audience Member: Thank you so much for your talk and scholarship on the subject. I was wondering if you could talk a bit about the security of nuclear facilities as the world transitions towards using nuclear power to tackle climate change. You listed challenges of nuclear power, but the security element was missing. Especially in the wake of Zaporizhia's occupation by Russia, and as far as I know, India and Pakistan are the only two countries to have a 1988 non-attack agreement on each other's nuclear facilities, which has held the test of time for 33 years. Every 1st of January, they share the coordinates of their nuclear facilities. So, what are your views about the security aspect of facilities? Thank you.

Poneman: Well, if it's not on the slide, I need to fix that slide, because it's critically important. What I've said elsewhere is, just as Fukushima, Three Mile Island, and Chernobyl showed us, an accident anywhere is an accident everywhere. A security incident anywhere will be a security incident everywhere, and the social license for nuclear will go poof. Just like that, right? So, I accept your premise, and what I would say is the security side of the equation can, should, and to I think a large degree, has taken a page from the playbook on the safety side.

So, what we learn from all these safety incidents is what's critical is to have transparency, peer-reviewed processes. You have this through WANO, the World Association of Nuclear Operations, and INPO, the International Nuclear Power Organization, and there has been created, you probably know, something called WINS, the World Institute of Nuclear Security, that tries to take from that playbook to say, "What are the best practices in security?"

Let's have peer reviews, and I think there's nothing other than vigilance that is... I shouldn't say nothing other than vigilance. Vigilance is required, but then you also have to have modeling of specific threats and what are the most robust designs. I think you have to think about designing reactors that are less vulnerable. So, a lot of these new small reactors can be built completely underground, and so forth. So, I did not mean to shortchange the importance of that. As you mentioned, one of the things that's important is to the extent there can be legal restraints - that may be the only bilateral restraint of that character - but of course, there are lots of nuclear weapons free zones, there's a nonproliferation treaty, and we have to be careful custodians of that whole system.

Audience Member: Dan, thanks for having an oar in the water. You're moving the world in the right direction. That being said, my poster child is Hinkley Point C, 46 billion pounds, 10 years over, EDF, French technology, Chinese money, UK offtake. So, it's that type of project that I think really stalls the spread of nuclear power usage. But I want to know, when you're doing these slides, I think there needs to be more transparency also on the more and more and more thing. Jean-Baptiste Fressoz's book addresses this. 51,000 metric tons of concrete in one foundation at sea, so that's 102,000. That's the annual CO₂ output of Hungary and Greece, and that's a lot of carbon, and that doesn't get talked about here in the green space. So, that was just my comment on that.

Poneman: I would just comment that, in terms of the accounting - and again, Joe probably lectures on this - I think we have to be very careful to have what you might call 360-degree accounting. I can't remember. Joe will know. If you look at the Three Gorges Dam, and you think, "Oh, that's hydro." But then if you do your calculation, how long will it take to recover the carbon emitted, making the concrete for that? It changes the calculation a lot. So, I think we have to be honest about accounting. Again, I'm not the expert on this. Henry Lee is here, too. We have to think about building into our systems a way to have honest accounting. I've always found that this simple skinny metric of levelized cost of electricity is not a good metric because it doesn't count transmission costs and backup power costs. So, I can only agree with the methodological issue that you raise.

Audience Member: Hi, everyone. Good afternoon. My name is Marina. I work at the Belfer Center. My question mostly focuses on the competition between SMRs and light water reactors, more traditional builds. So, if we think about the market in the United States, as you identified early on in the presentation, there's huge, rapidly vertiginal demand, and imagine that you are one of the data centers, or you're one of the big tech companies, and you see this competition between SMRs that seem like they might solve the problem, but none of them are commercialized yet, and then light water reactors, which are more traditional. You have the Vogtle story in Georgia.

What are you seeing on the SMRs and different kinds of companies that make confidence that commercialization or meeting the demand need is on the horizon in the next few years? Why would a company say, "Yes, we have confidence. We can go and sign with these SMRs. They will meet our needs soon." Just curious what insights you have on the horizon in the next few years. Thank you.

Poneman: In two pieces. Number one, we truly are in an all-of-the-above moment. I mean, I think anything that is in play as an option has a line of sight, and then I think the challenges are not unique to any individual company. They're the same challenges. The question is, how well can the promoters satisfy the questions? So, one whole set of questions has been asked and answered for the legacy, the traditional reactors. As I mentioned, they all have NRC regulations in place. There's an existing supply chain. There's an existing fuel form. There's an existing fuel market, et cetera, et cetera. They have decades of operating experience behind them.

The others are going to have to retire, one by one, all of those risks that have earlier been retired in the earlier generation: the finance risk, the construction risk, the operation risk, the regulatory risk, the technical risk, et cetera, et cetera. I think the pool is open, so to speak, and I sometimes think of this period as a little bit like between 1900 and 1910 for the automobile industry. We had Stanley steamers and a bunch of different designs. I think for the health of the ecosystem that we don't want to have 100 flowers bloom, because when I was at Department of Energy, I used to say, "I would rather build 100% of one thing than 10% of 10 things," and I think there's frankly a bit of a tendency - Joe may remember, have his own perceptions - we tend to do that sometimes in government, because government isn't good at picking winners and losers and so forth. 

I think one way to deal with that, and one way we dealt with that in the loan program, was to say, "We are going to judge all of these candidates for loan approval and one of the criteria is who can bring how much equity to the table," because then they've got to prove themselves to very unsentimental investors who are putting their money and skin in the game and that's a way, if the government is probably genuinely not good at picking winners or losers, to find somebody who's better at it and who will take that risk, so to speak.

Audience Member: Hi, thank you for your presentation. I used to work with the Department of Defense very closely with energy managers, which is a very interesting job, but a lot of the issues that we came into with the Department of Defense being quoted as high as 80% of the consumers for all the federal energy. We were trying to meet previous administration's goals on decreasing energy consumption until clearly you go to nuclear options. Outside of the monetary constrictions of those because it's as low as $50 million, if you can say that's low, and as high as $4 billion to build these micro or small modular reactors, a lot of the issues that we came into was public trust, essentially. How exactly would you go about trying to build public trust in these small reactors to make the community more aware and even for taxpayers so that they understand where they're going? How exactly would you market that to make people buy in to these smaller reactors?

Poneman: I think first thing to recognize is that the zeitgeist around nuclear and hosting nuclear facilities has already changed quite a bit, not just in the United States, but globally for a variety of reasons. I think the last polling number I saw is 70% of Americans support nuclear energy. The number is higher in communities that already have nuclear facilities, which isn't that surprising because they have jobs, and they know that at least they feel that they're safe there. That's not to gainsay say that this is important.

I would note also, frankly, across Europe, which is extremely hostile after Fukushima, I think we're down to Germany and Spain and Austria, and even Germany's wobbly at least, a lot of people think it was a mistake to shut down, certainly the last three, but I think a couple things. In Wyoming, you wound up with a bunch of communities fighting for the opportunity to host a small reactor. So, how does something like that happen? Well, it happens when you do something from a grassroots level. By the way, Finland and Sweden both had communities fighting for the opportunity to host a nuclear waste repository, and they did community-based outreach education.

So, I think a combination of people, I think, warming overall to nuclear for climate change or other reasons, point one. Point two, a process that doesn't try to force something down the throats of a hostile community. Point three, starting from communities that already are familiar with and like and support it. Number four, it's interesting, and I don't think this is stuck, but there was a period of time in Japan where I spent a lot of time when, because of the anxiety provoked by Fukushima and totally understandable, big reactors were just like not on, and there were a lot of people who at that time were saying small, modular. It's almost like almost a name change has a zeitgeist change built in.

So, I think that's part of it. I guess the last thing I would say is in places that are hosting aging coal plants where again, all the balance of plant is the same, the nuclear, the steam turbines, and so forth. The people are looking for jobs to replace the ones they lost from the coal thing shutting down. So, I think that's another factor, to go to communities that for a variety of reasons are going to be perhaps more receptive and then not to try to shove it up their nose, but rather try to work with them.

Audience Member: I'd like to go back, and I think you make a really compelling case on most of the issues. The issue that still bothers me is the finance. The fact that you look at the Vogtle plants, and I think they're $11,500 a kilowatt. Yes, natural gas has gone up, but that's $3,000 a kilowatt or approximately a little under four times less than the nuclear. So, if I'm an investor, and I'm sitting in New York, why should I get enthused about this prospect? And what MIT keeps telling us is the kilowatt hour from a small reactor is going to cost about the same as from the big reactor. I don't know if that's true or not, but they keep saying it. So, make me feel more confident that Wall Street is going to get as excited as you are about this option.

Poneman: I'm not sure that excited was the vibe I was seeking to convey, and I actually tried to pin this down. I don't have this precisely, and I've reached out to the people who would know. Vogtle 4 costs about 30% less than Vogtle 3. So, there is a genuine learning curve. Barakah 2 did cost less than 1, 3 costs less than 2. So, there is a learning curve, and I think you're going to have to... A couple things. Number one, you're going to have to make that real and not only real in practice, but real as you say, as perceived as Wall Street. The second thing is, I remember from Econ 10 that when the demand goes like this, so does the price. So, the fact that... I think you just told me the gas prices are a little higher than I even thought. I heard $2800, you said $3,000.

So, the higher you go price point-wise, the more tolerance you have for more expensive power. So, it may be that between the learning curve driving nuclear costs and construction costs down and electricity demand driving prices up, maybe they intersect. There are places right now in the Pacific Islands where they're paying like 42 cents per kilowatt hour or something like that where small reactors might actually be in the ZIP code of what you need to be to be competitive. But the market is unsentimental, as you know better than anyone, Henry, and if they don't make the case, the case will not be made and you will not get the investment.

I guess one other thing I would say is... and this really worked in the Recovery Act. I remember asking a major, major investor during the time we were doing the loan program. I said, "It's not our intention to displace private capital here. Are we?" And the answer came back, "No, there is no debt available at this tenure long 30-year things for these kinds of projects." So, to the extent that even today, the loan program could make that kind of credit available, it can help reduce the costs and reduce the risks as perceived by the investing community.

So, there's no, I think, silver bullet answer to your question, but I guess the last thing I would say is if we're really up against it in terms of those early slides about what's happening to our planet, I think it needs to drive a level of effort that might help bring these forces into alignment.

Aldy: Time for one more question.

Audience Member: Let me just push on that from a different direction. I mean, there's a lot of exciting development in the grid level storage for longer durations and very, very cheap solar. There's also a lot of excitement around advanced geothermal. So, if we look ahead at the 10-year, 15-year horizon, it seems like there's a lot of potential competitors and one possible answer is, of course, all of the above and let's take risks and let's find out, but that does seem to get to Henry's point a little bit about whether there's really is going to be this potentially really large market.

Poneman: I'm a little bit stuck on the answer you already gave. So, I am bullish on geothermal. I'm bullish on hydrogen, and if those numbers... not that slide. Oh, I left out my plug for my book. Still available on Amazon. If those numbers are even close to being like 80 gigawatts by 2030, I'd be investing in all these things. I'm not, to be candid, super persuaded that fusion is going to be the be-all and end-all as people say, but the fact that $7 billion of private capital have gone into it, I don't bemoan the fact.

I mean, we are up against it in climate terms and in energy terms, and if you think in terms of the AI, if we're in a race against China, I want to try whatever I can. So, I don't mean to suggest elbowing out. I'm for direct air capture, anything and everything we can do on the climate side, but I think geothermal has got a great potential, long duration storage. I actually asked very recently. Some of you may know Varun Sivaram, wrote really good book, Taming the Sun. There have been exciting developments in storage, but I think it's still got its own challenges, but I would be investing in all these things because I think the stakes are that high.

Aldy: So, before we wrap up, let me note that we'll meet again at noon next Monday. We'll be hosting Basil Seggos, a former commissioner for the New York Department of Environmental Conservation for his perspective on state level approaches to advancing action on climate. My colleague Henry Lee will host that seminar, because unfortunately, I will be out of town. 

I want to take this moment right now to thank Liz Hanlon and Ricardo Mora, who have been fantastic, making everything go smoothly in our seminar series this year. Thank you, Liz. Thank you, Ricardo. Thanks as well to the Belfer Center, the Mossavar-Rahmani Center for Business and Government, and the Salata Institute for Climate and Sustainability at Harvard for their support of the seminar series. Thanks to all of you for coming throughout the year and contributing to such fantastic conversations. And finally, please join me in thanking Dan Poneman for a fantastic presentation today.

Poneman: Thank you.