<DOC> [110th Congress House Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:45218.wais] THE NEXT GENERATION NUCLEAR PLANT AND HYDROGEN PRODUCTION: A CRITICAL STATUS REPORT ======================================================================= HEARING before the SUBCOMMITTEE ON ENERGY AND RESOURCES of the COMMITTEE ON GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECOND SESSION __________ SEPTEMBER 20, 2006 __________ Serial No. 109-261 __________ Printed for the use of the Committee on Government Reform Available via the World Wide Web: http://www.gpoaccess.gov/congress/ index.html http://www.house.gov/reform ---------- U.S. GOVERNMENT PRINTING OFFICE 45-218 PDF WASHINGTON : 2008 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 COMMITTEE ON GOVERNMENT REFORM TOM DAVIS, Virginia, Chairman CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California DAN BURTON, Indiana TOM LANTOS, California ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois CHRIS CANNON, Utah WM. LACY CLAY, Missouri JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland DARRELL E. ISSA, California LINDA T. SANCHEZ, California JON C. PORTER, Nevada C.A. DUTCH RUPPERSBERGER, Maryland KENNY MARCHANT, Texas BRIAN HIGGINS, New York LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of PATRICK T. McHENRY, North Carolina Columbia CHARLES W. DENT, Pennsylvania ------ VIRGINIA FOXX, North Carolina BERNARD SANDERS, Vermont JEAN SCHMIDT, Ohio (Independent) BRIAN P. BILBRAY, California David Marin, Staff Director Lawrence Halloran, Deputy Staff Director Benjamin Chance, Chief Clerk Phil Barnett, Minority Chief of Staff/Chief Counsel Subcommittee on Energy and Resources DARRELL E. ISSA, California, Chairman LYNN A. WESTMORELAND, Georgia DIANE E. WATSON, California JOHN M. McHUGH, New York BRIAN HIGGINS, New York PATRICK T. McHENRY, North Carolina TOM LANTOS, California KENNY MARCHANT, Texas DENNIS J. KUCINICH, Ohio BRIAN P. BILBRAY, California Ex Officio TOM DAVIS, Virginia HENRY A. WAXMAN, California Lawrence J. Brady, Staff Director Dave Solan, Ph.D., Professional Staff Member Lori Gavaghan, Clerk Shaun Garrison, Minority Professional Staff Member C O N T E N T S ---------- Page Hearing held on September 20, 2006............................... 1 Statement of: Wells, Jim, Director, Natural Resources and the Environment, Government Accountability Office; Phil Hildebrandt, Idaho National Laboratory, special assistant to the Laboratory Director; and Andrew Kadak, professor, Nuclear Science and Engineering Department, Massachusetts Institute of Technology................................................. 20 Hildebrandt, Phil........................................ 40 Kadak, Andrew............................................ 47 Wells, Jim............................................... 20 Letters, statements, etc., submitted for the record by: Hildebrandt, Phil, Idaho National Laboratory, special assistant to the Laboratory Director, prepared statement of 43 Issa, Hon. Darrell E., a Representative in Congress from the State of California: Briefing memo............................................ 11 Prepared statement of.................................... 3 Kadak, Andrew, professor, Nuclear Science and Engineering Department, Massachusetts Institute of Technology, prepared statement of............................................... 49 Kucinich, Hon. Dennis J., a Representative in Congress from the State of Ohio, prepared statement of................... 17 Watson, Hon. Diane E., a Representative in Congress from the State of California, prepared statement of................. 7 Wells, Jim, Director, Natural Resources and the Environment, Government Accountability Office, prepared statement of.... 23 THE NEXT GENERATION NUCLEAR PLANT AND HYDROGEN PRODUCTION: A CRITICAL STATUS REPORT ---------- WEDNESDAY, SEPTEMBER 20, 2006 House of Representatives, Subcommittee on Energy and Resources, Committee on Government Reform, Washington, DC. The subcommittee met, pursuant to notice, at 1:29 p.m. in room 2154, Rayburn House Office Building, the Honorable Darrell Issa (chairman of the subcommittee) presiding. Present: Representatives Issa, Watson, Kucinich. Staff present: Larry Brady, staff director; Lori Gavaghan, legislative clerk; Tom Alexander, counsel; Dave Solan, Ph.D., and Ray Robbins, professional staff members; Joe Thompson, GAO detailee; Shaun Garrison, minority professional staff member; and Cecelia Morton, minority office manager. Mr. Issa. A quorum being present, this hearing of the Government Reform Subcommittee on Energy and Resources will come to order. Nuclear power is enjoying a global resurgence because of the environmental benefits and the expected growth in demand for electricity, and I might say, hydrogen. In the United States, there has also been an interest in building new plants because the current fleet of reactors is aging and the electricity demand is projected to rise 40 to 50 percent by 2030. The Next Generation Nuclear Plant is part of the Federal Government effort to advance commercial nuclear reactor design beyond the current generation that is being deployed around the world. Additionally, NGNP--although sometimes it is easier to say Next Gen--is a key component of the administration's plan to develop the ``hydrogen economy.'' An important purpose of the advanced nuclear demonstration plant is to produce hydrogen on a large scale. Congress has given the plant a ``drop-dead date'' of September 30, 2021, for construction and the beginning of operation. The Department of Energy seems to be following a schedule that will cut it close to that deadline, and I might say on the record, 2021 would have been a date far further in the future than I would have shot for. After all, it took less than 10 years to put a man on the moon. Independent advisory panels and task forces have criticized DOE's schedule as being too slow; and too slow to be used by the private sector, too slow not to die a slow death from the lack of political support. Of particular concern for Next Gen projects is the development of a number of technologies that will ensure project milestones are met and construction will be completed on schedule. Even meeting the time table does not provide a guarantee that the demonstration plant will not have been overtaken by other commercial technologies that may be developed sooner. In addition, delays in meeting milestones will call into question the continued support for the Next Gen, considering other nuclear priorities, such as the Nuclear 2010 and Global Nuclear Energy Partnership programs that require a considerable Federal financial backing. Today we will hear from the Government Accountability Office regarding an assessment that it prepared at my request. We will also hear from a representative of the Idaho National Laboratory, where much of the R&D is being done today. Last, we will hear from a professor at MIT who is a former CEO in the nuclear industry and has a great deal of knowledge regarding advanced reactor design. Last to put on the record before I yield to the ranking member, also a Californian, is that in the last few weeks our Governor in California has set an ambitious plan for reducing the carbon footprint in California. It is this Member's considered opinion that you cannot reduce the carbon footprint if we retire the nuclear reactors that today are putting out zero emissions in California, so we in California have a particular interest in Next Gen nuclear. With that, I would yield to the ranking lady for her opening remarks. [The prepared statement of Hon. Darrell E. Issa follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Ms. Watson. Mr. Chairman, thank you for convening today's hearing to discuss this very critical project that can play a major role in shaping the future of America's energy use and production. All of us are aware of the importance of nuclear energy, and I hope that our witnesses today will update us on the progress of the Next Generation Nuclear Plant project and tell us if the goals in completing the project are being met. There are several concerns as to whether or not this project is on track to meet its 2021 deadline for completion. In a recent GAO study it has come to the committee's attention that there are several technological challenges in completing the NGNP and whether the technologies developed will meet the needs of the private sector. GAO also found that the project's initial research and development results indicate that the likelihood is slim that the project will be able to stay on schedule, considering the amount of research and development that still needs to be done, and this presents a problem. This committee's job is to conduct oversight on Federal spending, and we must ensure that our projects, including this one, are conducted in an expeditious and profitable manner that benefit the American taxpayer. The public should be secure in knowing that we do meet deadlines in the Federal Government, and when we don't we have a viable explanation as to why or why not a deadline was not met. Every April 15th taxpayers are required to file their taxes or they will face a penalty unless they explain why they need an extension. Shouldn't that same accountability be held on the Government when conducting business? So, Mr. Chairman, I again want to thank you for your leadership in bringing this issue before the subcommittee, and I am confident that our discussion today will yield us some definite answers on the progress of the Next Generation Nuclear Plant. I hope that the findings of this GAO report will be of benefit to all of the researchers and scientists involved to make this endeavor a success. I yield back, Mr. Chairman. [The prepared statement of Hon. Diane E. Watson follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Issa. I thank the gentlelady, and I ask unanimous consent that the briefing memo prepared by the subcommittee staff be inserted into the record, as well as all other relevant materials. [The information referred to follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Issa. With that I would yield to the gentleman from Ohio, who is not without some familiarity on nuclear power, Mr. Kucinich. Mr. Kucinich. Thank you, Mr. Chairman. Of course, with that in mind I will be offering a slightly different perspective, but I want to thank the witnesses and I also want to thank the Chair for his dedication on energy issues. This committee has done some very important work, and it has been because of the dedication of the chairman. I just want to let you know how much we appreciate it, Mr. Chairman. A hydrogen infrastructure is a revolutionary technology. It can power our transportation, heating, and electricity needs because hydrogen is so easy to transport, store, and convert by way of fuel cells. These qualities allow renewable technologies like solar and wind to supply the majority of the energy demanded by our Nation. There is much promise in truly sustainable hydrogen energy distribution system. To achieve the benefits of less dependence on foreign oil, clean air, and a better future for our children, the hydrogen system must strive for sustainability and replace the polluting fuels we depend on today. Now, a nuclear plant designed to generate hydrogen I believe is antithetical to a sustainable energy system. The advantages of a hydrogen economy are substantial, but to reap all the advantages we desire I think that hydrogen production must come from renewable sources. Anything less and we will have spent significant taxpayer dollars, questionable gain. The notion of using nuclear power to produce hydrogen looks like an industry attempt to just take more tax dollars for nuclear subsidies. We all remember that existing nuclear power plant technology was heavily subsidized in the last century, and they are continuing to eat up those subsidies today. Between 1948 and 1998 the Federal Government spent $74 billion on nuclear power research and development, the majority of Federal dollars spent on energy supply R&D during this time. To me, this idea of connection between a hydrogen infrastructure and nuclear power amounts to kind of a greenwashing to prop up the nuclear industry. Nuclear power is not safe, and the wastes generated create an environmental challenge that this country continues not to have an honest answer to. I want to remind this committee about Davis-Besse. This is why I have a particular concern and an expertise. It is a nuclear reactor upwind from my hometown in Cleveland, Ohio. This nuclear reactor was shut down because of a large cavity the size of a football discovered in the top of the reactor wall. The utility, First Energy, unfortunately knowingly avoided mandatory inspection cleanings, would have prevented this near-miss. Instead, they chose to protect their profits and run their reactor dangerously close to disaster. Now, I am not going to confuse First Energy with the rest of the nuclear industry, but it has to be said that the NRC, instead of protecting the public, chose to protect the financial interests of First Energy. They repeatedly took minimal actions to prevent this near disaster, punish the utility for its negligence, reform its own operations, and place safety first. The NRC Inspector General found the NRC chose to protect the financial impact on First Energy rather than force compliance with safety regulations. After the shutdown of Davis-Besse the NRC released the report that documented its lessons learned. The report made a few recommendations as to how the NRC might avoid future incidents like the corrosion problems at Davis-Besse. Since the release of the final report, a draft lessons learned report surfaced that contained several far-reaching recommendations that would, in fact, make a real difference in nuclear power plant safety, because you can't talk about the relationship between nuclear power and hydrogen infrastructure unless you look at the underlying safety issues. But to avoid costly regulation on the industry, those recommendations that are mentioned didn't even make the final report. I don't have any doubt that a nuclear power plant producing hydrogen will face a similar regulatory system designed to protect industry profits, and such a plant will pose an unacceptable risk to the public. Mr. Chairman, I just want to mention that I think it would be important for this subcommittee, along with the other wonderful work it does, to examine the complete and total failure of the NRC to regulate the current reactors. The Davis- Besse incident showed a fundamental flaw in how our Nation regulates reactors. It is a failure in every rung of the bureaucratic ladder. We also must acknowledge that nuclear reactors produce highly radioactive waste the United States is attempting to bury in Yucca Mountain, Nevada. No matter how deep you bury it, no matter where you bury it, this waste is going to re-emerge. Basic geology dictates that over a million years the Earth shifts and water moves and this waste will re-enter our environment. I have no doubt the nuclear waste generated to create hydrogen will have no responsible solution, either. Mr. Chairman, the lesson we learned here is that the United States should question the taxpayers' money that is being spent for nuclear industry and should question a plan that could end up trashing our environment to prop up a dangerous industry. Hydrogen production should be moved forward from sustainable sources. It will be more cost effective, better for the environment, and safer for our citizenry. Thank you, Mr. Chairman. [The prepared statement of Hon. Dennis J. Kucinich follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Issa. Thank you, Mr. Kucinich. I would second one very important portion of what you said, and that is that I look forward to the day in which renewables represent a substantial, if not all, of our production of fuels, both for fixed and mobile through hydrogen. With that I would like to welcome today our guests. You are more than guests. We hopefully, though, will treat you as well as guests. We have Mr. Jim Wells from the Government Accountability Office; Mr. Phil Hildebrandt from INL; and Dr. Andrew Kadak from MIT. I look forward to your testimony. As all guests here, I would like to begin by asking you to rise for the administration of an oath. It is always good to have people with Ph.Ds. They know to raise their right hands without being asked. [Witnesses sworn.] Mr. Issa. The record will show all nodded yes. Mr. Wells, we will kick off with you. We normally give 5 minutes. Is that going to be sufficient for you to summarize your written testimony? Mr. Wells. Yes, sir. Mr. Issa. All of it will be placed in the record. Great. The lights will show you the time remaining, and we only ask that you respect the light, not that you stop the instant it turns red. Mr. Wells. Fair enough. Mr. Issa. Thank you. STATEMENTS OF JIM WELLS, DIRECTOR, NATURAL RESOURCES AND THE ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE; PHIL HILDEBRANDT, IDAHO NATIONAL LABORATORY, SPECIAL ASSISTANT TO THE LABORATORY DIRECTOR; AND ANDREW KADAK, PROFESSOR, NUCLEAR SCIENCE AND ENGINEERING DEPARTMENT, MASSACHUSETTS INSTITUTE OF TECHNOLOGY STATEMENT OF JIM WELLS Mr. Wells. Thank you, Mr. Chairman and members of the subcommittee. GAO is pleased to participate in this oversight hearing. We are releasing today, Mr. Chairman, as you requested, our GAO report on this particular project. It is available on the GAO Web site. You also asked us to describe the progress and the status of DOE's attempt to deliver a $2.4 billion R&D project that will build and demonstrate an advanced high- temperature nuclear reactor that DOE plans to link to a new hydrogen production plant. The report, itself, describes the project, the players, and the intended purposes. You held a hearing last year, Mr. Chairman, and heard testimony from DOE and others about where they were, their efforts, their progress to date, and their future plans. Two separate, independent groups have since reviewed the project plans and have offered suggestions and recommendations. This report gives you and the Congress a third assessment of where the NGNP project is. Here are our quick findings. DOE has budgeted $120 million so far from 2003 to 2006. This breaks down to about $80 million for the reactor, $40 million for the hydrogen product side system. Overall projections are that this would break out about $2 billion for the reactor and $300 million or so for the production of hydrogen. DOE has laid out a timeline schedule, as you can see on the graph that we give you here on the left. The chart starts in 2006, ends in 2021. It proceeds through R&D testing, proof of concepts and capabilities, NRC licensing strategy by 2008, moves into 2011 design, construction start by 2016, and startup by 2021. Among the many stakeholders in this process, Mr. Chairman, there are controversy, disagreements, significant technology organizational funding, and unknown challenges to completing this almost 20 year effort. First, let me say that the people that we encountered in this audit who were working on this project appear to believe in the goals and the need for this project, but they do share cautious skepticism as to whether it will continue to make the cut and advance to the end in 20 years. DOE's current R&D approach we would characterize as trying to advance the science of building a new Generation IV advanced reactor that has high- end, very-high-temperature capabilities to achieve superior efficiency in terms of fuel use and of heat transfer capabilities to allow magnitude improvements in the economical, commercial production of hydrogen. What we are talking about is designing something that will potentially double today's 25 percent efficiency of producing hydrogen. This effort ties closely to the administration's goal of transitioning to the future of a hydrogen economy. Early R&D results have been favorable, especially as it relates to fuel testing, but most of the important R&D remains to be done. The Idaho National Lab, which you will hear from today, who has the designated lead and the location for the building of this full-scale reactor and a hydrogen production plant, are, in fact, gung-ho and anxious to deliver the product as asked for. The program and management team that we talked to at the working level at DOE, they share, too, a passion to meet the future energy challenge driving this particular project. This is the good news, Mr. Chairman; however, there is bad news. Between the times DOE last testified before you, they reported to you they were making steady progress. The priority for funding nuclear energy has changed, resulting in this project going a little slower. Today, first priority in the Department of Energy is Nuclear Power 2010. Second is Global Nuclear Energy Partnership [GNEP], second priority. And the new generation, or Next Generation, as you refer to this project, has fallen to third place in terms of their priorities. The competition today is scarce for the existing R&D dollars. Getting the private sector, what we call the industry, the end users, the vendors, the utilities, and the people that are actually going to use the hydrogen, getting these people involved has been slow in this project, and DOE is just now beginning to get that started. Suggestions generated from the earlier two independent assessments that I referred to earlier have looked at the DOE project with some suggestions for changes. DOE has agreed to some of those changes, made some changes, but DOE has not made all the changes, particularly as they believe that the stated path is better, in their opinion. For example, you are going to hear today about the belief that the current schedule needs to be accelerated, with a quicker completion before 2021. Those that support acceleration say you stand the risk of losing commercialization and private sector buy-in. DOE says that doing so presents unacceptable risk to them and increases the technical challenges, as well as not keeping with the existing Department's current funding priorities. We are weighing in after doing this audit, Mr. Chairman, in a belief that we would agree that it may be too soon to accelerate, in our view, to support that decision today. Our rationale is based not so much on the science but more on the management concern that we have in terms of DOE's ability to get it right. To speed up the project today narrows the plan R&D and reduces the known unknowns. Moving forward could result in a re-work if future research results are not supporting the decisions that have been already made. DOE has only just now moved to get involved in the industry, which is really going to be critical to knowing what type of production facilities do they want, do they need, and what are they going to be willing to invest in. DOE doesn't have those answers yet. Finally, GAO has documented a long history within the Department of Energy regarding problems in managing large projects. Their poor management skills have been on a high-risk list for over 16 years. The risk taking this path to accelerate is further elevated by the fact that the DOE Nuclear Energy Office that has responsibility for this project has no experience in managing a project of this size and complexity. There might be a time later to make this critical path change as DOE gets further into the schedule. Mr. Chairman, I want to conclude. My time has expired here. This, to us, is the highlights and the lowlights, if you will, of what we found. I want to commend this committee in holding these hearings. As a Nation it is clear we need energy. We need more energy. We need environmentally responsible ways to meet this energy need. How we can use nuclear power in the future deserves the Congress' attention. On a personal note, Mr. Chairman, I want to say, having testified before you many times on energy issues, I am retiring from Government service after 37 years and I really appreciate your interest and your committee's interest in government reform with quality oversight. With that I will conclude and answer any questions you may have. Thank you. [The prepared statement of Mr. Wells follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Issa. Jim, I thought you were going to stay for a full career. It is just not right for a young guy like you to consider retirement. With your expertise, it is very likely to pay better than your work did, but congratulations on 37 years. Mr. Wells. Thank you, sir. Mr. Issa. That is a wonderful period of service. Mr. Wells. Thank you. Mr. Issa. Mr. Hildebrandt, I don't think you can equal that, but give it a try. STATEMENT OF PHIL HILDEBRANDT Mr. Hildebrandt. I can perhaps say I might be older. Mr. Issa. I understand that you and the Admiral---- Mr. Hildebrandt. Grossenbacher? Mr. Issa. Yes, you taught him everything he knew, right? Mr. Hildebrandt. I would never admit to that. Mr. Issa. OK. Mr. Hildebrandt. He would not, as well. Rickover did teach me much of what I know, however. I did work for him for many years. Mr. Chairman and members of the subcommittee, it is an honor to present the views of the Idaho National Laboratory regarding progress being made on the schedule for the Next Generation Nuclear Plant and plans to ensure commercial viability of the project and participation of the private sector. I am a consultant to Admiral John Grossenbacher at the laboratory. I have a title, which is in the formal testimony. It is a long one. I have worked for over 38 years in the nuclear industry, starting in the naval nuclear propulsion program for Admiral Rickover, as the chairman mentioned, subsequently in the commercial electric power generation industry, and most recently then within the Department of Energy, itself. I am and we at the laboratory are encouraged by the recent resurgence of interest in nuclear technologies by the U.S. commercial power generating industry, as indicated by announced plans to seek licenses from the NRC to construct and operate new nuclear plants. The Idaho National Laboratory, under the leadership of its director, John Grossenbacher, is playing a central role in this nuclear renaissance and in the future of nuclear energy, including the Next Generation Nuclear Plant, the subject of today's discussion, and the Global Nuclear Energy Partnership. The subject of today's hearing, the Next Generation Nuclear Plant, is an essential part of the future of nuclear energy, in our opinion. The demonstrated success of the commercial nuclear industry in reliably producing electric power using nuclear technology in the United States and throughout the world provides the foundation upon which these improved nuclear technologies can be extended to other energy sectors, not just hydrogen. I want to make sure we think of this perhaps more broadly. This is what we call in the engineering field a process heat machine. The importance is very high temperature, processed heat which can be used not only to produce hydrogen but to be used complementary with coal gassification and extracting petroleum products from oil and tar sands and for direct use in many chemical processes. In doing so, we have the important contribution to reducing the carbon footprint, if I may, of the chemical industry that exists today. So this is a very broad application, hydrogen being one of the areas of focus; however, much broader than that in total. The marketplace for the high-temperature processing and the hydrogen exists today. If we had a plant of this technology to provide to the commercial industry, they would be able to compete in an economic competition with hydrogen production by other means today, and by doing so reduce the extent of natural gas that we use for such purposes and better use the natural gas and other such products elsewhere for their unique capabilities. The key aspect of initiating a project such as the Next Generation Nuclear Plant is to obtain the commercial energy industry interest because, in fact, it is in the end a commercial venture. Rather than take the approach of asking government to bring this along to its completion, we are now taking the approach, with the facilitation of the Idaho National Lab, to bring together a public/private consortium. In doing so, that public/ private consortium shares the risk with the government in the development of these technologies. This is consistent with the Energy Policy Act of 2005 and the requests within that act. The steps that we are currently taking and have just completed--preparing a credible business strategy and project plan and beginning the development of the commercial alliance of major end users and technology developers--there is a core of those today which are traditional in the nuclear energy world in terms of equipment vendors, nuclear system suppliers, and end users. We are now going to broaden that into other sectors because this particular plant goes well beyond the use for, as I mentioned hydrogen, as well into other areas where the larger marketplace of the petroleum industry, such as the petroleum industry, fertilizer industries, and other uses for this type of energy. To address the item that Mr. Wells mentioned, which I share his concern with regards to past experience in the Department of Energy in managing such ventures. I think there is an unfortunate trail of problems in the past. We are approaching this as a commercial venture. This public/private partnership that I have described in brief will have direct involvement of major commercial end users, technology developers, nuclear system suppliers, and equipment manufactures in what we are calling the Alliance; will implement commercial contracting vehicles between the Alliance and the national and international laboratories for the research and development; will use contemporary commercial project management practices for the design, licensing, and construction of the demonstration prototype. So our emphasis is on the commercial sector, and then subsequently, upon building it, we will operate it by an experienced commercial nuclear operator. So we share the concern and we are addressing the concern from a commercial sector standpoint. Addressing the item specifically of are we proceeding down a schedule which will achieve the result that we wish in a timeframe, the commercial sector, as has been consistent with other recommendations, would like to have this prototype demonstration that supports commercialization completed sooner than 2021. The target for the technology development would be in the timeframe of 2016 to 2018. In achieving that, it is a choice of a balance between the technologies that you choose to achieve the performance that is acceptable to the commercial sector to reduce the risk of completing it in the timeframe, so there is a choice--choice of technology, choice of schedule, choice of costs. The commercial sector would drive this toward achieving success in the 2016 to 2018 timeframe. As you know, in the commercial sector such targets are not taken lightly. This is very important in the financial realities. I will stop there since the red light has gone on. I thank you for your time and attention. The Idaho National Laboratory fully supports the development of these technologies for the Next Generation Nuclear Plant, and the targeted energy needs in the United States and the world make these technologies an essential part of the overall development and strategy for nuclear energy. I thank you. [The prepared statement of Mr. Hildebrandt follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Issa. Thank you. Dr. Kadak. STATEMENT OF ANDREW KADAK Mr. Kadak. I thank you for the invitation. First of all, I want to make sure that you understand that I am speaking here as an individual, not representing MIT or the nuclear engineering department. You have already mentioned my background relative to being a past nuclear utility operator and servicing of the light water nuclear industry as we know it, but, in case I run out of time, I would like to answer your questions. First, I agree with you that we are way too far in the future with 2021. I think it can be done much earlier. Countries such as South Africa and China are doing it. There is no reason why we cannot. I agree with your moon analogy. Second, are the goals being met? Clearly not. As you saw in my testimony, the budget requests by the DOE for the NGNP are woefully inadequate, even for their 2021 date. I think they can be accelerated. I also believe that there is a way to accelerate not only the project but also the amount of R&D necessary to bring this project to fruition. As you may remember, this project was started as a Generation IV project called a very high-temperature reactor. The commercial industry and Mr. Hildebrandt headed up a commitment called the International Technical Review Team, and they had several recommendations. The technical goals set for the VHTR were way too excessive, the timing was far too in the future, and what we have done independently is look at what do we really need to do to bring the Next Generation plant to fruition, not the very-high temperature reactor to fruition. A thousand degrees centigrade is a lot different than 850 and 900 centigrade, and that is sufficient to make hydrogen, certainly on a demonstration scale. So what you will see in my testimony is, I took a thorough look at what the DOE was estimating for their cost, their R&D program, had that reviewed by people who are actually building their pebble bed reactors, and this could also apply to the General Atomics prismatic reactor, and we scrubbed those numbers and said, ``what would it cost to build this particular plant on a schedule that looks like 2015, 2017.'' We were able to cut about $1 billion off that number. It is a huge amount. For that amount of money, which basically is for NGNP and hydrogen at $1.2 billion total cost, we could get an operating plant, probably get it licensed by the NRC as a test facility that could be commercialized once demonstrated. Those are, I think, the two questions that you had. In terms of oversight, absolutely. I think what you will see in the funding profiles is it is desperately needed to make sure that the funds are provided. Relative to Mr. Kucinich's comments about renewables, I strongly suggest there is a book that just came out by William Sweet entitled, ``Kicking the Carbon Habit.'' It is a very informative, very helpful book that takes a very practical look at our energy technologies and the imminent crisis that we are facing in terms of global climate change. That has changed my opinion about the timing of projects such as this. So I think I got pretty much everybody's main concerns identified. Now to my testimony, which hopefully you all will read. The key issues I think for us is the process of getting the industry involved. Mr. Hildebrandt is working on trying to get an alliance together, which I think is a very important goal. Some time ago I proposed with industry a recommended approach, which was a funded competition to develop conceptual designs for the NGNP and also the hydrogen plant. Competing teams would participate, with ultimately a down-selection that would be based on the mission goals, the costs and schedules, and their capability to deliver the product. Then that team, whether it be a General Atomics team or Westinghouse team or AREVA team, would then be charged with building this plant, consider it an engineering project, not a science project. Clearly there is going to be some R&D that is going to be needed to get this thing done. The Idaho National Lab will play a key role, and hopefully universities, as well. But, there is a lot of R&D being done internationally in China and in South Africa that was very helpful and supportive of the kind of thing we want to try to do here. So we believe, at least I believe, that we can get this project done within 2015--let's just say within 2017, within the same time lines as Mr. Hildebrandt is talking about--but an approached that is focused and phased. I would like also to address what I could call the chicken or the egg question. Where is this industry that is supposed to rise up and support this particular NGNP? Well, the industry is very fragmented, as you know. If you start saying let's make it the utilities, utilities don't care. All they want to do is buy power stations or buy hydrogen plants and run them, so they are not going to be developers, and they are not developers. If you go to the nuclear steam suppliers like Westinghouse, General Electric, where they used to invent new technologies, but they haven't had an order in 30 years. Their resources and capabilities to put something like this together, put $1 billion on the table, is just not going to happen. Then, as you mentioned, the hydrogen producers, you know, they are quite fine with making hydrogen with steam methane reforming, but the price is very high, the supply is going to get very tight, and they don't want to do anything with nuclear. Then you get the hydrogen users and they say, I just want to buy the product. I don't want to get involved with all of this nuclear stuff or even more complicated technologies. So there is no industry there, which is why I think this Next Generation Nuclear Plant, with not only the hydrogen mission but the process heat mission, oil recovery--we have done a lot of oil sands work--ought to be a national strategic project. Stop playing the games about who is going to put up the money first. It is a national strategic project, and if you read that ``Kicking the Carbon Habit'' book, you are going to be convinced that it is vitally important for this Nation and perhaps for the world. I think I am done. Thank you very much for your time. [The prepared statement of Mr. Kadak follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Issa. Thank you. Dr. Kadak, I will kick off a little bit of the questioning. Mr. Kadak. Yes. Mr. Issa. The figures I was given that come from the Nuclear Energy Institute, existing nuclear plants cost about $0.168 cents--call it 1.7 cents--per kilowatt hour of electricity. Coal costs about 1.9. Existing nuclear plants pay 1/10th of 1 percent for the construction and maintenance of Yucca. Coal plants don't pay anything for the acid rain. They don't pay anything for any of the other damage to the environment, and certainly they don't pay for the carbon footprint. Natural gas, my favorite fuel in California--every new plant is natural gas can cost up to 5 to 7 cents, depending on the market for natural gas. Yes. We pay that in California for a big chunk of what we have, and I am very thankful that we have both nuclear and hydro to offset that, along with some of our renewables. The estimate for III-plus, what we are clearly going to be making before we make Next Gen, is that they are going to run about 4.6 cents per kilowatt hour; however, clean coal is estimated at 5.1 cents, and natural gas 10 years from now clearly ain't going to be cheaper. If the Federal Government takes the number of kilowatt hours that we expect to produce with nuclear and puts $5 billion on the table and says we want to recover at a rate of 2/10 or 3/10 of a cent on our investment, from a practical standpoint by the time that you have seven or eight reactors, aren't you going to recover that in a relatively short period of time and still be supplying for less than the cost of coal with all of its inherent damage to the environment and less than the cost of natural gas, a resource that we are presently importing at great risk because of where it comes from? Mr. Kadak. It is hard to do those numbers quickly, but I think the bottom line---- Mr. Issa. We will settle for nuclear, even if Next Gen is as expensive as III-plus, has a cost savings over fossil fuels today in our estimates. Unfortunately, you don't have the $5 billion to get to market. Mr. Kadak. Don't have the money, but part of this proposal would be a payback to the government for whatever they have put on the table for the NGNP through revenues generated by electric production or hydrogen production. So the idea is not to just make it a complete subsidy, as Mr. Kucinich suggests, but it is an investment that you have to make and can make and get paid back for. Mr. Issa. So your position, for the record, is that---- Mr. Kadak. Yes. Mr. Issa [continuing]. If the Federal Government invests it can recover its investment, either based on your assessment or based on the numbers that I flashed around hoping that you could keep them all in your head? Mr. Kadak. Yes. The investment in this technology will have a payback that the government ought to be able to get back from that particular number. Mr. Issa. Last for you, Mr. Kadak, the difference, the compromise between, let's say, an 850C and a 1,000C reactor, do we yet have an appreciation for, one, the efficiency, the 50 percent efficient utilization of the source material. And, two, how that would affect the sort of Yucca deposits, because I, for one, have been very supportive of Next Gen because of the anticipation that we are going to be dramatically reducing what we have to put into long-term storage and particularly, I know with General Atomics' system and some others, their ability to burn plutonium--actually burn it not for disposal but burn it for fuel--both of which reduce what I feel we would have to leave in for a very long period of time in, as Mr. Kucinich said, the million-year-water-will-happen situation. Mr. Kadak. Clearly the efficiency advantage of high- temperature reactors over, say, light water reactors is about 50 percent, so just on that basis, alone, you would see advantages in the repository performance. But I think the key point is really from the standpoint of, ``Can we make this thing work?'' The answer is we believe we can because there is a pebble bed reactor, as an example, operating now in China. There is a pebble bed reactor in licensing and final design in South Africa. They are not doing this without any understanding of its cost and its schedules. The thermal efficiencies that people are now talking about in terms of between 850 and 1,000 degrees relative to the hydrogen production efficiency is very small, and the material challenges are huge to be able to get materials that can withstand those temperatures, and not needed, in my opinion and the ITRG's opinion. Mr. Issa. OK. I see a head shaking, so you would say the sweet spot may very well be at 850C, not 1,000C, from a standpoint of cost/benefit? Mr. Hildebrandt. Yes, sir, that is correct. I would expect the difference in those temperatures, in terms of overall efficiencies Dr. Kadak was mentioning, was about 3 percent. That is the difference. Mr. Issa. So we are buying a moon shot instead of the X- craft? Mr. Hildebrandt. Yes, sir. Mr. Issa. I can certainly relate to the difference between Burt Rutan's cost versus benefit. He got into space for a whole lot less than we did. Mr. Hildebrandt. That is right. I think that is a good analogy for this discussion. How do we do it from a practical standpoint with the least technology development risk and yet get as close to our performance goals as we desire? Mr. Kadak. And the other advantage would be, once built, it becomes the research platform for going to more advanced fuels, higher temperatures. You can't, as you said, pick 1,000C and say if we can't build it because we can't find the materials we should stop. We should build what we can do and then develop it further. Mr. Issa. Jim, you are not getting a freebie on this. Mr. Wells. Let me jump in here and say we are talking about the DOE mission and goal as to design and construct a reactor that was tailored to develop a maximum efficiency production facility that could produce hydrogen that could make the difference for commercializing the success of the hydrogen. If they were to lower their standards and lower temperatures and reduce the efficiency gains, you may end up having to try and compete in a marketplace at $3 equivalent gallon of gasoline. If they continued at the high temperature and gained the efficiency gains that they believe the R&D would support and they are able to develop the materials that can withstand the heat for 60 years, you may be in a situation where you are developing hydrogen at $1.50 equivalent, which in turn makes it that much more attractive to the commercial industry to compete in a marketplace that everybody is trying to bring the lowest- cost product to the table. So philosophically you are looking at what they are trying to do in terms of designing high-end versus somewhere in the middle that may jeopardize commercialization in the future. Mr. Issa. So, to paraphrase you, Mr. Wells, you are totally supportive of their position if they can make it pencil out in a way that supports that position, and you are not supportive of it if they simply would like to do it but it may jeopardize the viability of replacing natural gas as a source material for hydrogen, either for petroleum cracking or for a hydrogen-based economy? Mr. Wells. That is right. That is what they are competing against. Mr. Issa. OK. Gentlemen, I am going to wrap up by asking you to tell me when and how you are going to give me the penciled numbers in a way that this committee could participate in perhaps asking for a near-Earth orbit rather than the moon shot if that is all we need. Mr. Hildebrandt. Let me suggest how we are doing that, if I may. Mr. Issa. Please. Mr. Hildebrandt. In this commercial alliance that I mentioned, at every step the test is by the commercial world. Is it competitive and will it remain competitive into the marketplace? Approximately a year downstream, perhaps by about this time next year, the Alliance will have two things. One, presumably an agreement amongst several commercial end users that allows us to work with the government for its development; two, from a technical standpoint, as we just had this discussion, and a business standpoint, we will have chosen the design, to answer your question, that would be commercially viable, commercially competitive, and the lower-risk alternative, if I may. We already have projections of that. Over this next year there is preconceptual design work that is going on, about to be started here in the month of October, where we will be able to put the numbers on the table in a more confirmed manner than we can today. We are doing it on an estimate basis, best judgment today. Mr. Issa. OK. So you estimate, and I have to get re-elected and come back if I want to see it in proof form? Mr. Hildebrandt. Yes, sir, you certainly would. Mr. Issa. You have given me a goal. Mr. Kadak. Mr. Kadak. Yes. Could I just modify your analogy just a tad? It is like going to the moon or going to Mars. We can go to the moon. We have gone to the moon. The Chinese are going to the moon shortly. Relative to the differential inefficiency versus the thousand---- Mr. Issa. But they have been celebrating the moon for a long time, so for them it is old hat. Mr. Kadak. But, relative to the differential inefficiency between 1,000 and 900 degrees, as Mr. Hildebrandt said, it is 1 to 3 percent. That is not going to be the driver for cost differential between $3 and $1 a gallon. Thank you. Mr. Issa. Very good. I could do this all day, but the ranking lady has been very patient, so with that I yield for her questions. Ms. Watson. I think my question was just answered by Mr. Kadak. The difference between efficiency with the degrees is making the difference in the time it takes, and then this goes to Mr. Wells. You are nodding your head, so that is the answer. If we don't meet the deadlines, what will the cost be? Mr. Kadak says, you know, we just don't have the resources. So what would you say, Mr. Wells? You will probably be retired. When are you retiring? Mr. Wells. Maybe before I answer this question. Ms. Watson. No, after you answer the question. Mr. Issa. Do you want to take advantage of the congressional ability to hold people on active duty indefinitely? We have done that in the past, you know. Ms. Watson. What do you think, because what I am hearing, if I can just sum it up, is that yes, we can do it. We got to the moon, we can go on to Pluto maybe, whatever it is. And the difference in the time would mean resources, money. What is your estimation? Mr. Wells. Our position and why we were not supportive of acceleration, the dangers of acceleration to us was that you increase the project risk for success. There is potential for cost overruns. Rework has been huge in previous projects where we tried to start construction and start design faster before the research was actually done to come to the right decisions about whether it was going to work or not. Even DOE still believes that the technical challenges that exist to even build this type of reactor is going to take the entire time to 2021, and they are concerned about the technical challenges. I think if you do try to accelerate, the Congress has the responsibility to hold DOE accountable for delivering what they say they can deliver and good oversight. Ms. Watson. And I think the Congress then would have the responsibility for allocating the funds, and in a period where we have reduced---- Mr. Wells. Absolutely. Ms. Watson [continuing]. The income to government by all these tax cuts, can we be realistic in our thinking that we can accomplish it within a meaningful amount of time? I heard you, Mr. Kadak, say that we don't have the money and we could do it, but it is going to take the resources. I don't see us providing that kind of priority on DOE and on the way we expend the taxpayers' funds any time soon because we have other priorities. Mr. Chairman, to you, it just kind of looks really dim for the future, at least for the tenure of Mr. Wells and probably for our tenure. Mr. Issa. I am not going to get into a malaise here, if that is what you are looking for. Ms. Watson. No, no, no. I am just making an observation because the problem is with the resources. Mr. Wells says we don't need to speed up and accelerate until we are sure it is safe, and that is going to take resources, a dedication of resources to be able to meet those goals, and I am just saying we have other priorities that we are dealing with within this era. I don't think any of us will be here by the time this project--I won't be here by the time this project reaches fruition. That is my observation. Thank you. I am going to have to leave. I have another committee going on right now. You can carry it from here. Mr. Issa. OK. I thank the gentlelady. I will just wrap up with one or two questions. I probably won't get into the 37 percent revenue increase we have experienced--no, spending increases over discretionary spending or the fact that we have a 30 percent reduction in the projected shortfall as a result of the huge rising revenues as a result of the tax cut. I will not get into that. I think that is important to stay away from for this committee. I won't mention it if you don't. You know, the one thing Republicans tend to do is they quote Kennedy on his tax cuts, and I won't do that today, either. In conclusion, I am very interested in followup and I would like the staff to be able to use the next few days to go back and forth over a couple of these items. One of them is as much base material for your projections of comparative hydrogen production cost and comparative electricity cost based on moon two versus Mars or other--yes, I am returning to the moon for less, or return to the moon for half the fuel, so to speak, versus Mars. I do also want as much new material as you can make available on where you see the technology challenges. I am a layman on this, but the difference between materials that hold up at 800-plus-C and those that hold up at 1,000C, it does not surprise me that we don't have materials to do that available for any length of time and that we need to develop those and that the thresholds could be hugely different. I would like to understand that difference. Last, the one that really gets me, is a rhetorical question, but, Mr. Wells, it includes you particularly. What if we get to 2015 and the French, the South Africans, and the Chinese are selling something that does the job and they are able to essentially take the market, the potential market, which is a 30 year or 40 year renewing market, away from us prior to that occurring, because today we are hoping to be putting in III-plus plants around the world, but, in fact, in 2016, if they have an 800C product that can acceptably produce, let's say, hydrogen to be close to our Louisiana or other ports where we do refining, will they, in fact, eclipse us in those source locations? That is a rhetorical question of, ``is there a risk?'' I know this is a difficult risk for people to assess, but I want you to go down this road if you could for a few minutes here if you have time, but then further in writing, of what is the risk to not being on a path toward that product, even if that product is not the same product we are presently funding. And I might say we are spending $8 billion a month in Iraq today, so the idea that it is $1 billion dual path a Next Gen and a high- temperature as two separate, distinct potential but parallel goals doesn't scare this particular chairman, even if the idea of writing the check would petrify me. I will give you each a chance to respond briefly, and then I would very much encourage you to respond at length. Mr. Wells. I am glad to jump in. It is clear. It is true that DOE is designing a unique product and they have set parameters and lowered the parameters from 1,000C to 950C and their goal is to generate, design, and have the capabilities to produce hydrogen at a very, very high temperature in a reactor that will allow commercialization at a price that the marketplace will pay, and it is going to take 20 years to get there. I mean, that is their stated goal and that is what they are moving forward on. There is no question about that. It is true that if the existing reactors that are available, whether it be in South Africa or China, pebble bed, or the prismatic in Japan or France, they are smaller scale. They are not of the full scale that the DOE is proceeding upon. And if they do bring to market something that would be 800C, there is that competitive environment where they will eat our lunch, so to speak, and question what are we going to do with the plant that we are bringing online 10 years later. No question about that. However, I would hang our hat a little bit on the fact that in Gen IV the stated goal is these are international partners and the United States will be a player in all the international development in terms of whatever future reactor comes online, so I am not so sure that competition is the word here if we, in fact, see the world more internationally as opposed to just within our borders. That would be a quick response to you. Mr. Issa. Thank you. Mr. Kadak. Mr. Kadak. I will always be happy to weigh in on that one. Let me just tell you a few words about China. MIT and Tsinghua University have a collaborative arrangement on the pebble bed reactor development. They have a commercial project. It is called a demonstration plan. With their demonstration plan as successful, and their scheduled commercial operation by 2011 or 2012--and this is 190 megawatts of electric, which is smaller than the 600mw reference thermal or 300mw electric of the DOE--but this plant, if it is successful, will have a site of 3,600 megawatts of power, electric power--they are not looking at hydrogen yet--with 19 modules. That is real. Mr. Issa. That is three reactors of a typical size in America today? Mr. Kadak. Exactly. Three per building, if you will. In South Africa, again, they are going to a commercial demonstration fronted by the government, in large part, but for the utility, which is about 165 megawatts electric, certainly smaller than the 1,500mw French reactors or the 1,200mw or 1,300mw American high water reactors. But the market may be such that smaller units added when the capacity is needed is better than building one big one which, if you lose, you have some serious problems. I was just in Finland looking at the EPR reactor being built there. They have to build a gas-fired power station to provide power should that reactor shut down. Think about that. It got perhaps a little bit too big for a particular nation to absorb that kind of capacity. Mr. Issa. That is a lot of peak power if you have to replace an entire nuclear plant. Mr. Kadak. But it is not the entire plant, but it is enough to keep the grid from collapsing when they lose it. So we have some very interesting issues. I do believe we are already behind. This schedule will make us further behind. Although our emphasis is on hydrogen and process heat applications, it doesn't take them long to figure out how to do that, either. Mr. Issa. You know, I don't want to add to your testimony-- I am not qualified to--but it is always interesting when Mr. Kucinich and I come to a common agreement on something. When he talks about wind-to-hydrogen, he is talking about electricity we produce and then use it with water to create hydrogen, so he is, in fact, doing what we would certainly be able to do with Next Gen nuclear equally well. I always remind that, that I believe in how we get to hydrogen with high temperature nuclear, but I also recognize that his proposal and why we get to hydrogen, if we simply get an unlimited supply of affordable electricity we still get to zero emissions hydrogen without cracking natural gas. Mr. Hildebrandt, you get the closing remark. Mr. Hildebrandt. Yes, sir. Just as an overall observation of the comments that were made earlier, nuclear power isn't the answer, alone. Coal gassification, carbon sequestration, renewables--all of it needs to be together because no one of them can handle our huge appetite for energy in the United States. These are complementary efforts that need to be part of a large, overall nuclear strategy--nuclear strategy, energy strategy more importantly. With regard to your specific questions on such things as costs, electricity, hydrogen, materials considerations, temperatures, I will refer you to a report and I will also provide it to your staff if you wish. It is called ``Design Features and Technology Uncertainties for the Next Generation Nuclear Plant.'' It was work that is referenced in the Energy Policy Act. It is the group that, as Andy mentioned, I chaired back 2 years ago. It answers most of those questions, but we will also update it for you and provide updated information based on what we know today. Regarding the risk of others getting ahead of us, if I may, in the simplest term, that is a very real risk. This is an international effort. However, at the same time we are emphasizing the need to rebuild the industrial infrastructure in the United States to handle such things as building large industrial facilities such as a nuclear power plant--not that solely, but such as that. We have lost much of that. It has gone overseas. Part of the intent of the Next Generation Nuclear Plant is to go after rebuilding those capabilities, even though it is in the international marketplace. The leveraging of the other gas-cooled reactor demonstration projects that have occurred is very important. Dr. Kadak mentioned a couple of those. He mentioned the current one with the pebble bed modular reactor in South Africa. We have also built two gas-cooled reactors here in the United States which approach the temperatures we are talking about here in Colorado and Peach Bottom. Is that Pennsylvania? I believe it is Pennsylvania. The work that has been done in Germany, as well, with a reactor called ADR, which I won't try to say the German name, and THTR, each of these demonstrations have been an important contributor to our understanding of gas-cooled reactor technology and allows us to take steps with confidence as to where we are going and how big the risk is. So our choices here are fairly well understood based on previous work that has been done and current work that is being done. I thank you. Mr. Issa. I thank you, and I would like to thank all of the witnesses for being here today. I will hold the record open for 2 weeks from this date so that you may forward your submissions and you may expand on your responses. With that, this hearing is adjourned. [Whereupon, at 2:30 p.m., the subcommittee was adjourned.] <all>