Today the Nuclear Regulatory Commission (NRC) published an advance notice of proposed rulemaking and request for comment on categorical exclusions under the National Environmental Policy Act (NEPA). NEPA requires that federal agencies conduct environmental reviews for any “major Federal action” that significantly affects “the quality of the human environment.”

As a background to NEPA, for major federal actions that may impact the quality of the human environment, an environmental review is conducted either in the form of an Environmental Analysis (EA), when it is unclear if a project will have a significant environmental impact or as an Environmental Impact Statement (EIS) when it is evident the environment will be significantly impacted. An EA can either necessitate an EIS, which is a longer, more exhaustive analysis of environmental impacts, or it can conclude in a Finding of No Significance. This latter result means an environmental analysis in the form of an EIS is not necessary.

However, neither an EA nor an EIS is required if that action is listed under a Categorical Exclusion (CE). The 1978 regulations implementing NEPA allow for agencies to determine which class of actions can be exempt from an environmental review when that agency finds there is no significant effect with that type of action. As the most utilized option under NEPA, CEs are popular mechanisms amongst agencies and more than 2,000 CEs have been developed over the past forty years. According to the NRC notice and comment publication, CEs “streamline the NEPA process, saving time, effort, and resources.” NRC’s review of CEs is an important endeavor as EISs (and even some EAs) often pose overly cumbersome requirements at the front-end of projects, resulting in smaller companies bleeding out their resources at this early stage and never achieving project deployment. It is imperative that environmental impact is considered but in an efficient and effective way.

For additional information on potential project development roadblocks under NEPA, please review Partner Amy Roma’s written testimony before the Senate Committee on Environment and Public Works hearing on the American Nuclear Infrastructure Act of 2020, and a paper issued by the Nuclear Innovation Alliance, Nuclear Innovation and NEPA, which the blog authors supported.

The NRC is seeking comment on a variety of areas it proposes to be categorically excluded from the NEPA process.  Most of the NRC’s focus for this effort is on decommissioning and back-end fuel cycle activities, but advanced reactor vendors should also explore where the NRC may want to consider CEs that could benefit their licensing activities.  The NRC is also taking comment generally on other areas it should consider.  To list a few areas the NRC mentioned in their notice that could have an impact on new reactor activities (or could be expanded upon to have an impact):

  • Actions authorizing licensees to delay implementation of certain new NRC requirements, for example, where the new requirements were previously found to not result in an environmental impact.
  • Approval of relief and alternative requests under 10 CFR 50.55a, “Codes and standards.”
  • Authorizations to revise emergency plans for administrative changes such as reduction in staffing.

The NRC is receiving input on additional actions to be considered as a CE. NRC is also considering revision of and seeking comments on various components in current CEs.

For more information on what areas NRC is seeking comment, please reference the advance notice of proposed rulemaking.

Comments are due roughly 75 days from today, and we recommend our blog community consider submitting their input on this important rulemaking.

For additional guidance, please contact blog authors.

On April 22, 2021, the U.S. Department of Energy’s Idaho National Laboratory (INL) announced it is soliciting Expressions of Interest (EOI) from industry stakeholders and technical experts on innovative uses of nuclear energy. The EOI should be for a multi-phase demonstration program in partnership with the National Reactor Innovation Center (NRIC) and the Crosscutting Technology Development Integrated Energy Systems (CTD IES) program in the U.S. Department of Energy’s Office of Nuclear Energy. This prospective effort demonstrates a public-private sector opportunity to advance carbon-free initiatives through nuclear innovation.

INL stated the potential demonstration program should begin in 2021 with a four-phased approach:

  • They outline that the program should begin with a “pre-phase” designated for planning and analysis.
  • Following the pre-phase, Phase 1 would utilize existing test bed capabilities to emulate integration of a nuclear reactor with thermal energy storage or high-temperature electrolysis for hydrogen production.
  • Next, Phase 2 would leverage a microreactor test bed, currently under development, to demonstrate integrated energy use concepts on a small scale.
  • And finally, Phase 3 set to integrate innovative systems with advanced nuclear reactors being planned for larger sites over the next several years.

While funding sources for this program have not been identified, the responses to the EOI will inform future planning for the NRIC and CTD IES program.

INL invites industry to provide expertise and inputs on technical requirements for this multi-phase demonstration program, or stakeholder level of interest in participating in this program by supporting equipment or processes during any of the phases.

Responses are due by May 21, 2021 05:00 p.m. MDT.

For additional questions, please contact one of the blog authors.

The White House demonstrates its continued support for fossil fuel communities during the  current clean energy transition by standing up the Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization (“Working Group”). The Working Group aims to deliver federal resources to revive the local economics of coal, oil and gas areas, particularly in the Appalachian Region. On April 28th, the Atlantic Council Global Energy Center hosted a “fireside chat” on an equitable low carbon energy transition in the Appalachian region. One of the panelists, the Honorable Joe Manchin, U.S. Senator from West Virginia, emphasized the significance of supporting former coal towns. He stated “coal miners have made this country what is today” and he wants to ensure the wages and jobs associated with the clean energy transition are comparable. In response to the idea of the Appalachian Region housing Small Modular Reactors (SMRs), Sen. Machin said the best manufacturing sites in West Virginia are situated by water and tied to the existing grid system, making the transition to advanced nuclear technologies a quicker than manufacturing wind mills or solar panels.

The more the U.S. relies on advanced nuclear technologies as a clean energy source, the more jobs the nuclear industry creates. This is particularly critical in communities where fossil fuels traditionally consume the economic footprint. In 2019, nearly 1.7 million people worked in fossil fuel industries to include extraction activities, mining, utility construction, pipelines, and related manufacturing. And while the coal industry is declining, these jobs tend to cluster across metropolitan cities like Los Angeles and Houston, to mountainous counties in Wyoming and Pennsylvania, and expansive locations in West Texas, Oklahoma, and North Dakota. Fortunately, many current fossil fuel hubs are ideal locations for advanced nuclear reactor siting and clean energy production.

Why Former Coal Hubs Are Suitable for Advanced Nuclear Siting

A critical aspect for expanding the use of nuclear energy is the availability of suitable sites for new plants. For example, optimal factors for the use of current light-water reactors include the need for adequate water supply and a reasonable distance from population centers to mitigate accident risk. As coal plants around the country close, these facilities could be retrofitted to site advanced nuclear reactors, keeping costs down, using existing infrastructure, and supporting the same community otherwise negatively impacted by the coal plant closure.  Coal plants are typically built next to water and the transmission structures are often still in place.

In contrast, with new advanced reactor technologies, the need for large supplies of water is often minimized due to their design. This makes counties in states with closing fossil fuel production facilities, like in West Texas, Oklahoma, Wyoming, and North Dakota, viable options for revamping clean energy initiatives. It is also easier with advanced reactors to line up the lost megawatts from coal with the replaced megawatts from advanced nuclear due to their smaller size and scalability.

Additionally, with a much lower risk of accidental release, the emergency planning boundaries (known as emergency planning zones) for a plant could be significantly reduced. This is especially true for SMR designs (both light-water and nonlight water) which have a lower fuel loading and lower potential core damage frequency. These designs in turn may allow siting opportunities closer to population centers—perhaps as replacements for existing coal and gas generating plants.

Siting Advanced Nuclear Reactors in Former Coal Towns Will Alleviate the Job Market Pressure in those Communities

Training former coal plant workers to operate an advanced nuclear or small modular reactor presents efficient and natural transitions. President Biden stated that reaching 100% carbon pollution-free electricity by 2035 means “good-paying jobs.” The clean energy commitments and programs announced at the Climate Summit will require personnel support across the entire manufacturing, fuel cycle, operation, and oversight spectrum. This spectrum includes opportunities “deploying carbon pollution-free electricity generating resources, transmission, and energy storage, and leveraging the carbon pollution-free energy potential of power plants retrofitted with carbon capture and existing nuclear.”

While the clean energy revolution will create “good-paying, union jobs,” the initiatives made at the Climate Summit included projects that could involve former coal communities converting workers to clean jobs, transitioning to clean energy, and utilizing traditional ecological knowledge. For instance, the Working Group identified nearly $38 billion in existing federal funding that could be accessed by energy-viable communities for infrastructure, environmental remediation, union job creation, and community revitalization efforts. This funding includes support for abandoned mine land predominantly in Appalachia where communities have experienced job loss from coal power plant closures. This is also where some of the most competitive counties in wind and solar are concentrated.  And according to a White House report following the Climate Summit, funding designated for clean energy options, to include advanced nuclear technology, will be strengthened when tied to the historic energy relations within the Appalachia, as is also described in the American Jobs Plan. As discussed in a previous Hogan Lovells blog, the U.S. government investment in advanced nuclear technologies, through the American Jobs Plan supports, “high quality jobs.”

For more information, please contact one of the blog authors.

On April 22 and 23, President Biden hosted forty world leaders virtually at the Leaders Summit on Climate (“Climate Summit”) to employ a “whole of government” approach in the fight against climate change. The world leaders announced a variety of commitments to include creating global partnerships, setting financial benchmarks, and transforming current energy supply schemes, as discussed in a recent Hogan Lovells Client Alert.

Among the domestic and international commitments, President Biden pledged that the U.S. would cut its emissions by 50-52% below 2005 levels by 2030. This announcement dovetails into his larger promise to make the U.S. electricity sector carbon neutral by 2035 and the U.S. economy net zero by 2050. President Biden also assured that fighting climate change is an economic opportunity and coupled each proposed energy initiative with the confidence of good jobs.

These goals will be virtually impossible to achieve without the use of nuclear energy, a technology already proven to produce vast amounts of energy with zero emissions. With the nuclear ban lifted by the Development Finance Corporation for investment in innovation projects, the U.S. government acknowledged the importance of nuclear in the transition to clean energy in developing economies.

In supporting the U.S. “whole of government” approach to combat climate change, commitments made at the Climate Summit shined the spotlight on advanced nuclear technologies. For example, the Department of State announced the launch of its Foundational Infrastructure for the Responsible Use of Small Modular Reactor Technology (FIRST) Program. Through an initial $5.3 million investment, this program will strengthen international collaboration between the U.S. and partner countries seeking to deploy nuclear energy in their clear energy initiatives. This cooperation includes supporting the deployment of advanced nuclear technologies, including small modular reactors (SMRs), in a manner consistent with the International Atomic Energy Agency’s Milestones Approach for implementing a responsible nuclear power program. While the Department of State did not identify any potential partner countries or funding criteria, it stated the program would engage government, industry, national laboratories and academic institutions.

Consistent across all initiatives announced at the Climate Summit, by both the U.S. government and international leaders, was the need to address carbon pollution from industrial processes generally through the production of and reliance on renewable and nuclear energy.

For more information, please contact one of the blog authors.

Today, we issued a Client Alert summarizing the White House Climate Change Summit from last week.  We are replicating it below for the benefit of our blog readers.


President Biden hosted the Leaders Summit on Climate (Climate Summit) on 22-23 April. The Climate Summit is a next step in the President’s plan to employ a “whole of government” approach to combat climate change. The Climate Summit, which was attended by 40 world leaders, also shows that the United States intends to become a global leader in the fight against climate change, both at home and abroad. During the meeting, the U.S., the other invited governments, and key stakeholders set ambitious goals for investing in climate solutions, supporting innovation, and creating new economic opportunities in climate action.

President Biden’s desire to take an aggressive stance on climate change has been evident since his campaign. Since taking office, the U.S. has rejoined the Paris Agreement; memorialized the President’s commitments on decarbonization, including his pledge to make the U.S. electricity sector carbon neutral by 2035 and the U.S. economy net zero by no later than 2050; and re-established the Social Cost of Carbon metric, as discussed in a previous Hogan Lovells client alert. During the first day of the Climate Summit, President Biden announced a new commitment: that the U.S. would cut its emissions by 50-52 percent below 2005 levels by 2030, in support of his view that tackling the climate change problem as a “moral [and] economic imperative.”

A number of other world leaders announced climate change related commitments during the Climate Summit. The summit is expected to set off a flurry of U.S. initiatives before the United Nations Climate Change Conference (COP26) in Glasgow, Scotland, set for 1-12 November, 2021. The COP26 will engage government leaders, climate experts, and environmentalists in a discussion on tacking climate change. We walk through some of the key take-aways and announcements from the summit below.

Announcement of new U.S. government initiatives, programs, and goals during the Climate Summit

Underscoring the “whole of government” approach to climate change, the White House used the Climate Summit as a forum for various key Cabinet members to discuss their agency’s objectives in the area, making it clear that while the White House is setting the framework, the President is counting on individual government agencies to implement his policies. Key government speakers at the Summit included the Secretaries of State, Energy, Commerce, Interior, Treasury, Agriculture, Homeland Security, Defense, and Transportation, as well as the Director of National Intelligence, the Environmental Protection Agency Administrator, the U.S. Trade Representative, and the National Climate Advisor and Special Envoy to the President on Climate.

Some of the new announcements during the Climate Summit included the following:

New initiatives

  • Launching a Global Climate Ambition Initiative. The Department of State and the U.S. Agency for International Development (USAID), working with other agencies, will coordinate U.S. government efforts to support developing countries in establishing net-zero strategies.
  • Setting ambitious benchmarks for climate investments at the U.S. International Development Finance Corporation (DFC).The DFC committed both to a net zero investment portfolio by 2040 and to ensuring that at least one-third of all its new investments have a climate nexus beginning in FY 2023. The DFC has also established a US$50 million climate technical assistance facility.
  • Committing to climate investments at the Millennium Challenge Corporation (MCC).The MCC will expand and deepen work to address climate change challenges across its investment portfolio and business operations—investing in climate-smart development and sustainable infrastructure. The MCC committed that more than 50 percent of its program funding will go to climate-related investments over the next five years.

Using financing to accelerate the transition 

  • Scaling up international financing to address climate. By 2024, the U.S. intends to double U.S. annual public climate financing to developing countries (relative to the Obama-Administration). The White House intends to work closely with Congress to meet these goals.
  • Issuing the first U.S. International Climate Finance Plan. The U.S. is publishing its first U.S. international climate finance plan, which lays out how federal agencies and departments responsible for international climate finance will work together to deliver financing more efficiently and with greater impact.

Transforming energy systems 

  • Establishing a Net-Zero Producers Forum. In support of efforts to achieve net-zero emissions by midcentury, the U.S., together with the energy ministries from Canada, Norway, Qatar, and Saudi Arabia, established a cooperative forum that will create pragmatic net-zero strategies, including methane abatement, advancing the circular carbon economy, development and deployment of clean-energy and carbon capture and storage technologies, economic diversification to reduce reliance on hydrocarbon revenues, and other measures in line with each country’s national circumstances.
  • Establishing a U.S.-India Climate and Clean Energy Agenda 2030 Partnership. The partnership will elevate climate action as a core theme of U.S.-India collaboration.
  • Supporting ambitious renewable energy goals and pathways in Latin America and the Caribbean. The Department of State announced scaled-up technical assistance to countries participating in the Renewable Energy for Latin America and the Caribbean (RELAC) initiative, a regional effort led by Colombia, Chile, and Costa Rica to increase renewable energy capacity to at least 70 percent by 2030.

Revitalizing the transport sector

  • Sparking the zero-emission transportation revolution at home and abroadThe Department of Transportation will provide funding for lower-emission buses, expand access to electric vehicle charging stations, and use public rights of way in climate-supportive ways. The U.S. will also join the Zero Emission Vehicle Transition Council, a coalition of governments dedicated to accelerating the global transition to zero emission vehicles.

Supporting U.S. opportunities abroad

  • Launching a Global Partnership for Climate-Smart Infrastructure. The U.S. Trade and Development Agency will launch the Global Partnership to connect U.S. industry to major energy and transportation infrastructure investments in emerging markets.
  • Creating the U.S. Export-Import Bank (EXIM) Chairman’s Council on Climate. EXIM will create a Chairman’s Council on Climate, a sub-committee of EXIM’s Advisory Committee dedicated to advising EXIM on how to better support U.S. exporters in clean energy, foster the transition to a low-carbon economy, and create clean U.S. jobs at home.

Promoting innovation to bring clean technologies to scale 

  • Clean energy innovation and manufacturing. The U.S. Department of Energy (DOE) will define a series of performance targets and leverage the diverse expertise and talent at American universities, businesses, and national laboratories to accelerate research and development in linchpin technologies, beginning with hydrogen, carbon capture, industrial fuels, and energy storage. The targets and roadmaps will look beyond incremental advances and aim instead at the game-changing breakthroughs that will secure American leadership in the manufacture of net-zero carbon technologies and support sustainable development around the world. In the coming weeks, the DOE will convene experts from American academia, business, and the national laboratories to announce the first of these moonshot-style ventures and catalyze the breakthroughs that will grow new businesses and new jobs domestically and export these net-zero carbon technologies all around the world.
  • Reinvigorating leadership and participation in Mission Innovation. The Administration announced plans to quadruple clean energy innovation funding over the next four years, and the U.S. intends to play a key role at COP26 in advancing international collaboration on innovation and supporting the launch of Mission Innovation 2.0, including launching, and leading together with international partners, a major Mission Innovation international technology mission focused on carbon dioxide removal.
  • Leading the Agriculture Innovation Mission for Climate. The U.S. will lead the creation of the Agriculture Innovation Mission for Climate, along with the United Arab Emirates, to accelerate innovation and research and development in agricultural and food systems in order to spur low-carbon growth and enhance food security.
  • Launching the Foundational Infrastructure for the Responsible Use of Small Modular Reactor Technology Program (FIRST).The Department of State is launching the FIRST Program with an initial US$5.3 million investment. FIRST provides capacity-building support to enable partner countries to benefit from advanced nuclear technologies and meet their clean energy goals under the highest standards of nuclear security, safety, and nonproliferation.

Climate Summit commitments across the globe

  • During the Climate Summit, representatives from Japan, Canada, Britain, and the European Union also agreed to make drastic cuts to emissions. The pledges made include the following:
  • Japan promised to cut emissions by 44 percent below 2005 levels by 2030.
  • Canada announced it would cut emissions 40-45 percent from 2005 levels by 2030.
  • Britain promised to cut emissions 78 percent below 1990 levels by 2035.
  • The European Commission pledged to meet the European Green Deal goal of making Europe climate-neutral by 2050, following a new law between member states and the EU parliament to cut emissions by at least 55 percent by the end of the decade.
  • China, while only making the vague promise of decreasing emissions to net zero by 2060, vowed to “strictly limit increasing coal consumption” over the next five years.
  • Brazil agreed to play a role in climate goals by putting a stop to illegal deforestation by 2030. It should be noted, however, that in an interview earlier this month, Brazil’s environment minister voiced concern that Brazil lacked the resources necessary to reduce deforestation and make such drastic cuts to emissions, and has asked for US$10 billion annually in foreign aid to bolster these efforts. At the Climate Summit, Brazil asked the Biden Administration for US$1 billion in exchange for reducing deforestation by 40 percent. The international community is wary that Brazil will not actually make the promised changes even if provided the requested funds. Under current President Jair Bolsonaro’s regime, the Amazon rainforest has experienced the largest deforestation in more than a decade.

Notably, Russia and India, also major carbon emitting countries, did not make new promises on cutting emissions.

What’s next?

President Biden’s pledges at the Climate Summit reinvigorate the U.S.’s commitment to fighting climate change and underscore the U.S.’s desire to be a world leader in this effort. The pledges can be expected to lead to further domestic and international efforts that will widely impact and create opportunities for a broad range of businesses.

The recent U.S. absence from climate leadership had been noted by the global community, and these new efforts by the Biden Administration to take on a strong leadership role appear to be welcome.

The ambitious goals set by the White House during the Climate Summit will need support from Congress, federal agencies, and the private sector in order to realize their full potential. We expect that many of these initiatives will be further developed in the coming weeks and months as the “whole of government” approach is applied to the challenge of climate change.

For additional information, please contact a member of our team on this alert.

On March 31st, President Biden unveiled a massive $2 trillion infrastructure and clean energy plan called the American Jobs Plan that aims, in part, to tackle what the White House calls two of the greatest challenges of our time: the climate crisis and competition with China.  Among the proposed investments, the American Jobs Plan calls for funding for the development of advanced nuclear reactors and for a clean electricity standard that can potentially support operating plants. Other provisions of the plan include clean energy tax credits, investments for upgrades to the electric grid, and plans to clean up abandoned mines and cap orphan oil and gas wells. In line with his focus on environmental justice, President Biden asks that 40% of the benefits from investment in clean energy go to disadvantaged communities.

Along with the American Jobs Plan, President Biden is releasing a Made in America Tax Plan to increase corporate tax payments, which are intended to pay for the American jobs plan.

Shortly after the American Jobs Plan was announced, White House National Climate Advisor and former EPA Administrator Gina McCarthy told reporters that nuclear energy should be one of the power sources eligible for a national clean energy mandate sought by the White House as part of its infrastructure and clean energy plan.

Based on an initial review, provisions in the American Jobs Plan that impact the advanced nuclear industry include the following:

  • President Biden proposes a 10-year extension and phase down of investment tax credits and production tax credits for clean energy storage and generation. The Administration will also support private investment and state and local programs like “clean energy block grants” that provide grant money to help reduce fossil fuel emissions. It also plans on making federal buildings run on clean power 100% of the time and aims to establish an Energy Efficiency and Clean Energy Standard to cut electricity bills and pollution. In doing so it will incentivize use of “carbon pollution-free energy” like nuclear.
  • The American Jobs Plan calls on Congress to invest $35 billion in a “full range” of technological solutions to address climate change. Of the $35 billion requested, $15 billion would go to demonstration projects for climate R&D priorities, which include advanced nuclear and rare earth element recovery technologies. In February 2021, President Biden established a new Climate Innovation Working Group as part of the National Climate Task Force, to advance his commitment to launching an Advanced Research Projects Agency-Climate (ARPA-C). The working group will help coordinate and strengthen federal government-wide efforts to foster affordable, innovative technologies that can help America achieve the President’s goal of net zero economy-wide emissions by 2050. It will also protect the American people from the impacts of droughts and floods, larger and more frequent wildfires, and stronger hurricanes. ARPA-C would help “develop new methods for reducing emissions and building climate resilience, as well as expanding across-the-board funding for climate research.”
  • The plan proposes to utilize the federal government’s purchasing power (currently measured at over a half trillion dollars) for clean energy production and supporting “high quality jobs.” To reach the net-zero emissions goal, Congress is asked to enable manufacture of critical technologies like advanced nuclear reactors and fuel. The plan calls for an investment by Congress of $46 billion in federal purchasing power to meet these goals.
  • The plan calls for job training in clean energy and other high demand sectors as part of a $40 billion Dislocated Workers Program and other training programs. The Dislocated Workers Program aims to provide support for Americans who lost their jobs “through no fault of their own.” This program may apply to those that lose their jobs in the energy transition, but only time will tell as additional details of the plan are revealed. Moreover, the plan proposes that underserved communities (presumably communities of color and economically disadvantaged communities) will be prioritized for new clean energy jobs.

What’s next?

The American Jobs Plan has already grabbed the attention and backing of organizations that support the use of nuclear power for clean energy, with the Nuclear Innovation Alliance issuing a statement of support as the plan “incorporates advanced nuclear energy as eligible for funding for demonstration projects, building on ongoing activities by the Department of Energy and industry to demonstrate the commercial viability of next generation nuclear power.” The Atlantic Council also applauded the plan, remarking that increased R&D funding “will develop and demonstrate technologies, such as . . . advanced nuclear innovation” which will “help maintain US global leadership.” In another statement of support, the American Nuclear Society highlighted that “a growing world market for small modular and advanced reactor designs promise[s] job growth for communities across the U.S.” The plan was lauded as the “most ambitious climate and clean energy plan undertaken by any US administration” by the think tank Third Way.

However, for the plan to come to fruition, the President will need the support of Congress, and the plan is already experiencing some backlash from both sides of the political aisle. Republicans do not generally support the tax increases, and Democrats argue that the plan falls short of expectations. While Senate Majority Leader Chuck Schumer (D-NY) supports the plan, Democrats hold a razor-thin majority in Congress and not all Congressional Democrats appear to support the plan (the parties are tied in the Senate with the Vice President casting the tie-breaking vote, and Democrats hold only a seven-person majority in the House). For example, Representative Alexandria Ocasio-Cortez (D-NY) has criticized the plan for not going far enough. Senate Minority Leader Mitch McConnell (R-KY) admitted that even if the plan could help support Kentucky infrastructure, he would still vote against it due to its method of funding.

For more information, please contact blog authors.

 

On March 25, the U.S. Senate Committee on Energy and Natural Resources held a hearing entitled “The Latest Developments in the Nuclear Energy Sector with a Focus on Ways to Maintain and Expand the Use of Nuclear Energy in the United States and Abroad.” A recording of the hearing is available here.  This full Committee hearing included testimonies from experts in nuclear, including blog contributor and Hogan Lovells Partner Amy Roma, whose testimony can be found here. Her testimony discusses the important benefits nuclear power offers for this country’s national security, economic interests, and climate change goals.

Amy draws on a paper she co-wrote, along with blog author Sachin Desai, and well-known utility executive Mike Wallace, Back from the Brink: A Threatened Nuclear Energy Industry Compromises National Security, to tell the story of this country’s long relationship with commercial nuclear power.  As she explained in her testimony, commercial nuclear power has always served as an important tool to achieve U.S. national security objectives and U.S. economic interests, and it is important for the U.S. to maintain global leadership in nuclear power.  The global market opportunity for new nuclear projects is huge and growing, with the current market already in the hundreds of billions of dollars. If carbon mitigation measures are deployed, the global nuclear market would be in the trillions of dollars.

While the U.S. has lost out on the global nuclear market over recent years, the U.S. has a significant innovation edge in next generation technologies. In particular, the U.S. leads the world in the development of advanced fission reactors, as well as the nascent fusion industry. These advanced technologies are diverse but share common design features, such as they are designed to be affordable, scalable, and safe, and can be used for both power and non-power applications, such as hydrogen production, water desalination, and process heat for industrial uses.

U.S. innovation, when properly supported, can stand up to state backed competitors from foreign competitors. We saw this recently in the aerospace market. In 2013, Russia controlled about half of the launch industry. Due in large part to the success of SpaceX, shepherded by NASA’s COTS program, Russia is now estimated to capture only 10 percent of the market. Amy argued that we can likewise re-emerge as a global leader in nuclear power, with U.S. government support to help these technologies get off the ground. The opportunity is there, we have the innovation, and the stakes are worth it, she argued.

The following witnesses also testified at the hearing:

  • Jeffrey J. Lyash, President & Chief Executive Officer, Tennessee Valley Authority (testimony can be found here).
  • Chris Levesque, President & CEO, TerraPower (testimony can be found here).
  • Scott Melbye, President, Uranium Producers of America (testimony can be found here).
  • J. Clay Sell, Chief Executive Officer, X-energy (testimony can be found here).

For more information, please contact blog authors.

On Friday, February 26, the Biden Administration’s newly-resurrected Interagency Working Group on Social Cost of Greenhouse Gases (IWG) announced new values for three specific metrics that seek to monetize the environmental impacts of greenhouse gases:  the Social Cost of Carbon, Social Cost of Nitrous Oxide, and Social Cost of Methane.  Collectively these are known as the Social Costs of Greenhouse Gases, or SC-GHG.

Using 2020 as a baseline and a 3% average discount rate (explained further below), the IWG calculated the Social Cost of Carbon at $51/metric ton (mt), the Social Cost of Methane at $1,500/mt, and the Social Cost of Nitrous Oxide at $18,000/mt.  This represents a dramatic reversal in the federal government’s valuation of the impacts of climate change, as under the prior Administration these social costs were set at essentially insignificant levels.

The revised SC-GHG valuations, and the revised calculation of the Social Cost of Carbon (SCC, also SC-CO2) in particular, will have far-reaching impacts on both federal and state-level regulatory actions, including the crucial cost-benefit analyses that government agencies undertake as part of permitting and rulemakings, among other things. The above values are interim measures and further evaluation is expected this year, including the opportunity for public comment, leading to a more comprehensive update to be issued by January 2022.

A return to a higher value for the SCC in particular would make it easier for federal agencies and states to pass regulations and implement programs that help achieve President Biden’s zero-carbon plan for the electricity sector by 2035.  This is because the climate value of clean energy sources—like nuclear—would now receive a significant quantitative value, something that has long been difficult to achieve. As explained further below, the SCC has already been used by states to support the nuclear industry to the tune of hundreds of millions of dollars a year—by compensating at-risk nuclear plants for their zero-emissions benefits based on a value derived in part from the SCC. A return and reinvigoration of the SCC has the potential to similarly incentivize large investments into nuclear energy through credit programs that rely on the use of the SCC.

The Social Cost of Carbon Explained

Although the recent Biden Administration Announcement addresses the entire SC-GHG—and puts prices on emissions of carbon dioxide, methane, and nitrous oxide—this alert focuses primarily on the SCC.  The SCC, as explained below, was created in 2008 and has been used in a variety of agency rulemakings and other actions. The Social Cost of Methane and Social Cost of Nitrous Oxide metrics were formulated in 2016 under the Obama Administration, and created a broader SC-GHG framework.  However, most of the discussion historically and today centers on the SCC, which addresses carbon dioxide, the most prevalent greenhouse gas in our atmosphere today that is linked to human activity.

The SCC is an estimate that attempts to quantify the long-term economic damage that results from a 1 metric ton increase in carbon dioxide in a year, and is established by the IWG. It monetizes the future cost of carbon dioxide and other greenhouse gas emissions, discounted to today’s value, to aid regulatory agencies in their cost-benefit analyses. The SCC has historically been used by both federal and state regulatory agencies to evaluate regulatory options and aid decision-making. Key IWG issuances are the “Technical Support Documents” that set forth the costs of various greenhouse gases under certain discount rates and other factors. The Biden Administration’s recently issued February 26, 2021 Technical Support Document can be found here.

The initial valuation of the SCC came in response to a 2008 Ninth Circuit decision that upheld challenges to the National Highway Traffic Safety Administration’s (NHTSA) fuel economy standards. The Petitioners in that case argued that NHTSA failed to properly assess the costs and benefits of its new standards by failing to consider carbon emissions in its rulemaking. The Ninth Circuit held that, while it may be difficult to place a value on the cost of carbon, there does exist an associated cost and that cost is “certainly not zero.” Ctr. for Biological Diversity v. NHTSA, 538 F.3d 1172 (9th Cir. 2008). This case established the regulatory need for, and prompted the development of, the initial SCC valuations.

The Obama Administration established the IWG, which uses various models and data to develop a new methodology to estimate the SCC. The estimate for the SCC was updated three times over the course of the Obama Administration, and was given at roughly $36 per metric ton by the end of his Presidency, presuming a 3% average discount rate.

The estimate itself can vary depending on the parameters used in the models, including, for example, whether the impact of carbon dioxide emissions is considered on a global scale or only domestically, what average discount rate is used, and whether intergenerational impacts are taken into account.

The SCC Dismantled under Trump and Reinstated Under Biden

Soon after former President Trump assumed office, he dismantled the IWG and the SCC plummeted to between $1 to $6/mt under his Administration, which meant that it was not a significant factor in agency regulatory activities. The Trump Administration’s analysis focused on domestic climate change implications, largely ignoring effects outside the United States as well as certain effects on future generations. Furthermore, the Trump Administration used a discount rate as high as 7%. The higher the discount rate used, the less society would pay today to avoid future harm associated with carbon emissions.

In one of many Executive Orders issued on his first day in office, President Biden reinstated the IWG. The IWG then published a Technical Support Document on February 26, 2021 that provides justification for using the Obama-era SCC—as well as the Social Cost of Methane and Social Cost of Nitrous Oxide—calculation methodology. Using the Obama-era SCC today results in a $51 per metric ton estimate after inflation adjustments (when using a 3% average discount rate and 2020 dollars, although the reinstated IWG indicated that a 3% discount rate may be too high). The Biden Administration plans to again consider the global implications of federal actions on greenhouse gas emissions and use a lower discount rate than that adopted by the Trump Administration.

How is the SCC Used?

The SCC is a powerful tool that can be used to shape regulatory decision-making for federal and state agencies or to challenge the cost-benefit analyses used to support regulatory actions. It has been used to justify actions across the federal government, including by the Environmental Protection Agency (EPA), the Department of Energy (DOE), and the White House Council on Environmental Quality (CEQ). Some examples of federal rulemaking that have used the SCC estimate include national emission standards for hazardous air pollutants, light-duty vehicle emission standards and Corporate Average Fuel Economy standards, and DOE efficiency standards.

The SCC was also used to justify both the Clean Power Plan (CPP) and its replacement, the Affordable Clean Energy (ACE) Rule. The CPP was a 2015 rule that placed limits on carbon pollution from U.S. power plants, with a goal of cutting 30% of carbon pollution from the power sector by 2030. While the cost of the plan was as much as $8.8 billion annually, the CPP was estimated to provide climate and health benefits of up to $93 billion per year in 2030. To justify the CPP, the EPA used SCC estimates from the IWG to value the benefits of carbon reduction from the plan. However, the Trump Administration repealed this rule and instead enacted the ACE Rule, which relied on the much lower Trump-era CPP estimate. The lower CPP lessened the monetary value of the reduction of carbon pollution and justified a more lenient rule regulating power plant pollution. The U.S. Court of Appeals for the District of Columbia recently vacated Trump’s ACE Rule.

However, the SCC is not just a tool for federal rulemaking, as many states have also applied the estimate to their cost-benefit analyses and regulatory actions. According to a 2019 study by the Government Accountability Office that analyzed states’ use of the SCC, nine states were identified as using the Obama-era SCC estimates, with no states identified as using an alternative valuation. Examples of ways in which states have used the SCC include the California Air Resources Board’s use of the metric when evaluating policy options related to its 2030 CO2 emissions target, and the Minnesota Public Utility Commission’s adoption of a mandate that utilities use an SCC estimate in their integrated resource plans.

The significance of the SCC for states is illustrated by the New York Public Service Commission (NYPSC) Clean Energy Standard (CES) that created a market for carbon dioxide reductions. The CES was established in 2016, as part of setting the goal of obtaining 50 percent of New York State’s electricity generation from renewable sources by 2030. One component of the CES is the Zero-Emissions Credit (ZEC) program, which provides credits to certain nuclear power plants in the state for a period of twelve years to help prevent their shutdown and the resulting increase in carbon emissions. The program recognized the role nuclear generation plays in combating climate change and used the SCC to help determine the credit value of the ZECs. For one nuclear plant, the ZEC program was estimated to pay about $125 million annually, but this figure pales in comparison to the potential benefit of nuclear plants in reducing future carbon emissions when measured using the SCC.

By using the SCC to place a monetary value on carbon dioxide emissions, the NYPSC was able to quantify the value of carbon emissions avoided by nuclear plants. This program was challenged and upheld by the U.S. Court of Appeals for the Second Circuit in 2018. A similar program in Illinois was also upheld in 2018 by the Seventh Circuit.

And this is just the start. Under the new Administration, the SCC is expected to be an important factor in every agency action that requires a cost-benefit analysis and involves an environmental impact. As the SCC becomes a routine part of federal decision-making, courts and states will likely turn to it more in evaluating environmental impacts of planned actions and in evaluating climate programs.

What Can We Expect Next?

When the Obama IWG first developed the SCC, some argued that the integrated assessment models the IWG relied upon were flawed and based on too many uncertainties. They argued that changing certain assumptions (e.g., discount rate, climate sensitivity, time horizon, etc.) in the models would result in drastically different results, demonstrating excessive malleability in the SCC determination. Additionally, there was concern that the IWG failed to follow the OMB discount rate guidelines for the cost benefit analysis.

On the other hand, some argued that Obama’s SCC metric did not go far enough and failed to consider the full range of effects of climate change, including impacts related to extreme weather such as forced migration. The New York State Department of Environmental Conservation issued guidance last year that set the SCC at $125 per metric ton. These same arguments, and others, are likely to resurface as the Biden Administration considers its next steps and as federal agencies begin to promulgate rules and regulations using the SCC.

We can expect litigation challenges from both those who believe the SCC has been set too high and those who believe it has been set too low. These challenges will likely arise in disputes over the validity of regulations that rely on the SCC in their cost-benefit analyses. It may be difficult for the courts to displace the judgments of the experts as to exactly where the SCC should be set, but the IWG is both engaging climate experts and inviting public comment.

Since the SCC will likely be used in shaping a wide range of regulatory actions across different agencies and sectors, interested stakeholders should consider providing input. We can expect that all aspects of the SCC—as well as the Social Costs of Methane and Nitrous Oxide—will be on the table for the January 2022 update, including discount rate, methodologies for calculating the cost, and how the estimates should be used by agencies and other stakeholders. The notice detailing requests for public comment will be published in the Federal Register soon.

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For more information, please contact the blog authors.

On February 16, the Nuclear Innovation Alliance (NIA) and the Partnership for Global Security (PGS) issued a report to help guide the Biden Administration in its support of nuclear amidst the President’s ambitious climate agenda. The report, U.S. Advanced Nuclear Energy Strategy for Domestic Prosperity, Climate Protection, National Security, and Global Leadership, provides detailed recommendations to promote advanced reactor development that could garner bipartisan support if implemented. It discusses federal, state-level, and international goals for advancing nuclear.

The next day, February 17, the American Nuclear Society (ANS) published a report on Public Investment in Nuclear Research and Development that requests an additional $10.3B by 2030 in funding for demonstration reactors and projects aimed to streamline commercialization of advanced nuclear. While the NIA and PGS report establishes a roadmap for advanced reactor development, the purpose of the ANS report is to make a case for increased federal investment in nuclear.

Here are some of the recommendations from the NIA/PGS report:

  • The executive and legislative branches should coordinate to prioritize advanced reactors. Legislative action should ensure sufficient appropriations for U.S. Department of Energy (DOE) activities, fund demonstration projects with the goal of commercialization, provide incentives for first-of-a-kind nuclear plants (e.g. tax credits, grants, loan guarantees), prioritize research and development (R&D) funding, and support university research.
  • Industry should develop business models applicable to nuclear energy (e.g. direct power sales, project financing, etc.), strengthen the workforce through diversity and inclusion and create attractive job positions, work on providing lower costs for consumers, and ensure that reactors follow global security requirements.
  • The U.S. Nuclear Regulatory Commission (NRC) should aim to develop a final rule for Part 53 by October 2024 and in doing so, ensure that licensing for advanced reactors is affordable and timely. The NRC should also address challenges for certain non-electric applications.
  • Congress and regulating agencies should provide support of High-Assay Low-Enriched Uranium (HALEU) fuel and its associated commercial capabilities, while addressing impacts of uranium mining.
  • States can include advanced nuclear energy in their renewable portfolio standards and eliminate restrictions that prevent advanced nuclear power plant construction.
  • The U.S. should engage with the international community to coordinate multinational deals and develop an export control framework that ensures non-proliferation commitments. It should also assess Russia and China’s nuclear portfolios in order to identify challenges and lessons learned.
  • Congress should eliminate the foreign ownership, control, or domination (FOCD) provision in the Atomic Energy Act for U.S. allies to encourage foreign investment in American nuclear energy.

The following are some highlights from the ANS report:

  • The report recommended doubling of nuclear R&D funding to enable advanced reactor development. It noted that the recommended funding ($10.3B over 9 years) requested  is only 0.6% of President Biden’s climate plan.
  • Nuclear should receive further funding for its promise of clean energy, national security, and job creation. Nuclear power plants generate 54.8% of carbon free-electricity and prevent 505.8 metric tons of CO2 emissions. Nuclear also adds $60 billion to the GDP and contributes $42.4B a year to the U.S. national security.
  • Federal funding is necessary to lower costs, speed up deployment, and further encourage private investment, which has already increased due to a market demand for zero-carbon energy. Nuclear power is the only energy source that can fit in utility companies’ energy portfolios and still maintain grid reliability and affordability.
  • Market opportunities for advanced nuclear energy is growing. For example, nuclear reactors can be a source of hydrogen production and DOE is currently exploring this option.
  • The U.S. would fall behind countries like Russia and China if there is a lack of appropriate funding. Russia and China are leading in nuclear reactor exports and the U.S. has no foreign orders in a market valued at $500-740 billion over the next decade. Without additional funding that capitalizes on U.S. private-public partnerships, the U.S. risks losing its voice in global nuclear safety and nonproliferation norms.
  • Nuclear energy also drives a number of other industry sectors like the medical industry that relies on radioisotopes to treat cancer, and NASA which uses microreactors in space exploration.
  • Every phase of nuclear R&D must be funded, including innovation (e.g. advances in technology, research on economics and societal acceptance of nuclear, etc.), development (e.g. providing necessary data for fuels to be used commercially), demonstration (e.g. identifying opportunities for cost reductions, answering regulatory questions, etc.), and deployment (e.g. providing support for HALEU).

Both of these reports highlight the important role nuclear plays in today’s energy sector, which thrives on diversification of sources, grid reliability, and the goal of a zero-carbon future.

For more information, please contact the blog authors.

President Biden ran on an energy and environmental platform calling for a carbon-free power sector by 2035 and net-zero carbon emissions by 2050. In pursuit of this clean energy plan, he also called for a modernized energy infrastructure that supports advanced nuclear commercialization. Advanced nuclear technology is capable of generating power with net-zero emissions and can help the new Administration achieve its goals concerning climate change.

On January 27th, the Biden Administration has hit the ground running on climate initiatives with the following Executive Orders and other measures to address climate change and scientific integrity.

  1. Executive Order on tackling the climate crisis at home and abroad

This Executive Order (EO) takes a number of steps to place climate change at the forefront of U.S. policymaking, embolden domestic energy sources, and grow American jobs.

  • Focus on climate change: The EO aims to ensure that climate change is a central element of U.S. foreign policy and national security. It takes a “whole-of-government” approach, creating the White House Climate Policy Office to coordinate domestic climate policy. The EO also establishes a National Climate Task Force (Task Force), chaired by National Climate Advisor Gina McCarthy and comprising representatives from 21 federal agencies and departments (including the Energy, Interior, Transportation, Defense, and Treasury Departments and the Environmental Protection Agency). The Task Force’s broad objectives include helping to increase U.S. climate resilience and promoting conservation, environmental justice, and job creation.

The EO also directs the creation of a plan within 90 days to use existing government procurement authorities to develop a carbon pollution-free electricity sector by 2035 and provide clean and zero-emission vehicles for government use.

Promises made by President Biden on his first day in office are carried through by the EO, such as rejoining the Paris Agreement and reviewing the rollback of certain Trump Administration air and water standards. It also directs the United States to develop its emissions reduction target under the Paris Agreement prior to the Leaders’ Climate Summit in April, which the President will host.

The EO also takes various national security-related actions, such as creating a Special Presidential Envoy for Climate on the National Security Council and ordering a National Intelligence Estimate on the security implications of climate change.

On environmental justice, the EO establishes the White House Environmental Justice Interagency Council to provide recommendations for reform, as well as establishes an EPA advisory council to monitor and enforce environmental justice issues. It also calls for the establishment of environmental justice offices at the Department of Justice and Health and Human Services.

  • Emphasis on clean energy: On January 20, 2021, the Department of Interior (DOI) issued an order that placed a 60-day moratorium on new fossil fuel permits. The EO effectively extends this timeline and pauses any new oil and natural gas leases on public land and offshore water until a review can be conducted of all existing leases. This review will include consideration of climate impacts and a review of the current oil and gas permitting practices and royalty rates. The EO also eliminates federal fossil fuel subsidies and directs the Office of Management and Budget to eliminate these subsidies from the FY2022 budget request.

The EO also requires that DOI conduct a review to increase renewables on public lands and offshore, including a target of doubling offshore wind by 2030. It sets ambitious land and water conservation goals of conserving 30 percent of public lands and waters by 2030, referred to as the “30 x 30” initiative.

  • Creation of jobs and opportunities in the new clean energy economy: During his campaign, President Biden announced his intention to create over 10 million well-paying jobs in the clean energy sector. In recognition of the potential adverse impact on jobs in the fossil fuel sector, this EO directs the establishment of a plan to counter those job losses with an offsetting program of job creation.

The EO directs DOI and the Department of Agriculture to create a Civilian Climate Corps Initiative for conservation jobs and training opportunities. DOI is further tasked with reviewing permitting on public lands and offshore waters and developing potential steps to create new jobs in this area. The order also aims to create “clean energy” jobs in certain sectors (such as manufacturing and engineering) for a broad range of demographics.

The EO also identifies infrastructure development as an area for job growth. On the other hand, the EO emphasizes that federal investments and permitting reviews must consider greenhouse gas emissions and climate impacts.

Finally, the executive order establishes an interagency working group to coordinate the delivery of federal resources to “revitalize” communities that are economically dependent on fossil fuels, in part by creating jobs that can help revitalize brownfield properties, curb carbon emissions, and generally improve air and water quality in various ways.

  1. EO on the President’s Council of Advisors on Science and Technology

This EO reestablishes the President’s Council of Advisors on Science and Technology (PCAST), which was originally established by President George W. Bush and reestablished by President Obama. The PCAST is co-chaired by the White House Science Advisor and brings together various presidentially-appointed experts in science, technology, and innovation from outside the federal government.

The PCAST will assume an advisory role and inform the President on a wide range of policy issues touching on science and technology. The PCAST is instructed to solicit information from stakeholders in the private sector, universities, national labs, non-federal governments, and nonprofits. The Department of Energy is tasked with providing funding and support to the group, as needed.

  1. Memorandum on restoring trust in government through scientific integrity and evidence-based policymaking

This memorandum directs federal agencies to prioritize evidence-based policymaking using best-available science and data. The Director of the Office of Science and Technology Policy is tasked with ensuring scientific integrity across federal agencies in part by preventing “[i]mproper political interference” and “suppression or distortion” of scientific or technological data and findings.

The memorandum directs agencies involved in research to designate a Chief Science Officer and requires that all agencies employ a Scientific Integrity Official to implement science-integrity processes. The memorandum establishes a Task Force on Scientific Integrity to review relevant policies across agencies developed since the 2009 Memorandum for the Heads of Executive Departments and Agencies.

What’s next?

President Biden’s climate change-focused EO and related actions are a sharp contrast from the previous Administration, both in terms of their immediate national objectives and active international engagement. At the same time, they set the tone for an Administration that continues the trend of using executive authority to achieve policy and regulatory goals. Whether far-reaching legislation can be passed, particularly given the razor-thin Democratic majority in the Senate, will be a major factor in determining whether the President will achieve long-lasting success in these areas.

The fossil fuel industry will face several regulatory and other hurdles, including regulatory rollbacks of Trump Administration initiatives, possible future legislation, and other executive actions. Litigation challenging certain Biden initiatives is already underway. In contrast, the renewables industry and advanced nuclear will see new opportunities for industry growth, so long as that growth is consistent with the Administration’s increased emphasis on environmental and wildlife protection and climate change.