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HEARING OF THE ENERGY SUBCOMMITTEE OF THE SENATE APPROPRIATIONS COMMITTEE SUBJECT: GLOBAL NUCLEAR ENERGY PARTNERSHIP CHAIRED BY: SENATOR PETE DOMENICI (R-NM) WITNESS: CLAY SELL, DEPUTY SECRETARY OF ENERGY LOCATION: 124 DIRKSEN SENATE OFFICE BUILDING, WASHINGTON, D.C. TIME: 2:30 P.M. EST DATE: THURSDAY, MARCH 2, 2006
[March 03, 2006]

HEARING OF THE ENERGY SUBCOMMITTEE OF THE SENATE APPROPRIATIONS COMMITTEE SUBJECT: GLOBAL NUCLEAR ENERGY PARTNERSHIP CHAIRED BY: SENATOR PETE DOMENICI (R-NM) WITNESS: CLAY SELL, DEPUTY SECRETARY OF ENERGY LOCATION: 124 DIRKSEN SENATE OFFICE BUILDING, WASHINGTON, D.C. TIME: 2:30 P.M. EST DATE: THURSDAY, MARCH 2, 2006

(Federal News Service (Middle East) Via Thomson Dialog NewsEdge)

SEN. DOMENICI: (Sounds gavel.) Hearing please come to order.

Senator Reed has indicated that I should start. He may or may
not be able to come, but we're going to proceed.

Good morning to you, Mr. Secretary.

First of all, as many of you may know, Clay is returning to this
subcommittee where he served as clerk for four years. I'm not sure
that he wanted me to brag or comment about that, but it's a reality,
so we might as well say it.

I'm very pleased to have you here today, and to have you where
you are. I'm sure you're going to do an excellent job in this very
difficult arena, and I compliment you on the subject matter that
you're going to present to us today.

This is one of many of the president's new programs to break
America's dependence on foreign oil and build America's competitive
edge, and DOE is the focal point for these initiatives.

Good afternoon, Senator Craig.

First, I commend the secretary and the deputy secretary for
setting forth a comprehensive global nuclear strategy that promotes
nuclear nonproliferation, the goals of that, and helps to resolve our
nuclear waste issues at the same time.

In the '70s the United States decided to abandon its leadership
on nuclear recycling and let the rest of the world pass us by. With
the creation of this new global nuclear energy program we are going to
get back into the ballgame.

Now it's not so easy to play catchup from such a far long
distance behind. It means you've got a lot of hard work. It means
you've got to have a big vision. It means you've got to be willing to
put up some resources. And then you've got to decide that what you're
trying to do is really worth it, that it is -- it has the potential
for solving some big, big problems in the future.

So based on the current projections, global energy demand is
expected to double by the year 2050. We must act now to ensure that
we have a reliable energy source without increasing air pollution and
without increasing greenhouse gases.

Passage of the energy bill last year created a new future for
nuclear power in this country, and it's interesting to note that the
rest of the world is aware of the same thing that we are aware of. We
finally changed our policy, but they, the rest of the world, has
finally decided to change their modus operandi, and they are also
moving rather quickly into nuclear power reactors as sources of energy
for their countries -- and that's China and many others, Larry, as we
know.

In the year 2006 energy outlook, the Energy Information Agency
has included in its estimates, believe it or not, a growth in nuclear
power as part of the domestic energy picture. Now that's a simple
statement to make and, for many, it doesn't mean much. But when the
Energy Information Agency looks out there and assesses what is going
on, they usually come up with some pretty objective findings. And
they have made a decision, a determination, that nuclear power is
going to come on board in the United States by way of nuclear power
plants.

With the GNEP, we began to close the cycle on nuclear waste in
ways that prevent proliferation and reduce both the volume and the
toxicity of waste. By recycling the spent nuclear fuel, we can reuse
the uranium, which is 96 percent of the spent fuel, and we can
separate the most toxic radioactive material to be burned in advanced
burner reactors. By reusing the fuel and burning the transuranic
material, we can reduce the amount of waste that would be placed in a
Yucca Mountain by 100 times. In other words, a Yucca Mountain will
hold the waste from 100 times as many -- as much nuclear power as it
will today putting the spent fuel rods in as we would put them in
under current law and current policy.

So I'm pleased that the president has focused on the importance
of solving the energy needs. I don't want to lose sight of the
importance of implementing the Energy Policy Act, which contains many
important incentives that will support deployment of clean-coal
technology, advanced nuclear power plants, biomass and other renewable
products.

Mr. Secretary, it is my pleasure to welcome you back. And then,
after yielding to Senator Craig, I'd ask you to summarize your
statements. Your statement, it'll be made a part of the record.

Senator Craig.

SEN. LARRY CRAIG (R-ID): Well, Mr. Chairman, thank you very
much.

Clay, welcome before the committee.

I'm sitting here listening to you, Mr. Chairman, and saying, gee
whiz, a year ago this time we didn't know if we were going to get an
energy bill. There were no incentives for new nuclear plants -- no
risk insurance, no tax credits, no loan guarantees. A year ago there
were no real plans for any new nuclear plants to be built in the
United States. A lot of need, a lot of concern, utility industry was
looking in the out-years to base load, wanting to do nuclear.

But today we believe there are 19 new reactors on the drawing
boards of America's industries. So it is a phenomenal transition, Mr.
Chairman, from where we were to where we are, and how we keep that
going is going to be awfully important not only for the future of our
country, but literally for the future of the world.

The president, with his India nuclear deal of 14 reactors just in
the last 24 hours, is a big deal. It's an important deal as it
relates to proliferation and our ability to get our collective and the
world's collective arms around spent fuels and all of that type of
thing.

And I applaud you, Clay, for the work you've done on GNEP, or the
Global Nuclear Energy Partnership. It is a very important component
in where we head as a world into resolving the waste stream issue, and

a concern that may exist still by some, as there is legitimacy to it,
of proliferation.

As you know, I and others have worked awfully close on, and with
you, on a new generation concept beyond GNEP, and we actually
legislated it into the policy.

And these are policies that fit well together, and should be looked
at in that context I would hope.

And I say that because clearly the technology is there not only
for nuclear, but the president's initiative is a bold step, very early
on the administration, to link hydrogen to the ability of the nuclear
industry; led me this past week to go downtown to NEI R&D summit and
challenge them and say, why don't you get outside this big new box
you're in. It's an exciting box: building new reactors, building new
base load, bringing in the efficiencies of clean non-emitting energy.
At the same time you're still thinking of it in the context of nuclear
generation alone. Maybe we ought to think beyond that, to not only
nuclear generation but hydrogen production, not unlike what the folks
in the coal industry are doing with FutureGen. And so it's not that I
coin a phrase, but I said, why don't we talk about FreedomGen? Why
don't we get this country up off its knees and start running?

You know, I was one of those, and Pete and I -- the problem we've
got in this committee is that we think we know so much about energy --
and we collectively do, thanks to people like you who used to be with
us and other great staff people -- and when somebody says, you know,
this nation could be energy independent, we all step back and say,
whoa, whoa, whoa; I don't think we could ever get there.

I think how exciting it is for this president -- and we almost
got him there in the State of the Union -- to challenge this country
to get well beyond where it ever thought it could go. It's those
kinds of challenges that really have made this country great.

It is not impossible from an electric standpoint with coal, new
technology, nuclear, new technology, to be independent there, that's
for sure, and then to start adding other components to it. The energy
bill that we passed in July that was signed in August does just that.

And because many of us were concerned about where we went with
other world initiatives out there that related to climate change, we
challenged this president. You all met the challenge. He went out
and started talking about an Asia-Pacific initiative. It makes an
awful lot of sense, and fits into the GNEP concept beautifully well.

So there are an awful lot of exciting things happening out there,
and I think this committee has done what oftentimes in Congress we

really don't get done. We've actually created -- thanks to your
leadership, Mr. Chairman -- a significant and powerful new national
policy that is now moving and driving. And we need to strengthen it
where we can; we need to add new to it where we will. Your leadership
at the Department of Energy with this secretary will help us a great
deal. So I'm anxious to hear your presentation as it relates to the
Global Nuclear Energy Partnership, and then let's see how we can blend
it with other initiatives under way to see if there is an economy of
scale and a value that can be created by all of these things
converging together into our budgets and into the technology and
capability of America's mind-set.

Thank you, Mr. Chairman.

SEN. DOMENICI: Mr. Allard, first let me say -- (comes on mike)
-- Mr. Allard, first let me say I'm very pleased that you're with us.
You're not brand new; I didn't mean that. But you know, haven't had
you around very long, and you're going to find this is a very fun
subcommittee with lots of work to do, and some of the things that you
have been working on are here, and you will have a lot
opportunity to work on them because you fund them here. So if you'd
like to make a few opening remarks, I will let you.

SEN. WAYNE ALLARD (R-CO): Well, I'd love to, Mr. Chairman.

SEN. DOMENICI: Make them as brief as you can because of the 3:00
o'clock vote.

SEN. ALLARD: I'll do that, Mr. Chairman.

First of all, I'm absolutely thrilled to be a part of this
committee, and was glad I had the opportunity to serve on it, because
you've been such a leader on meeting our energy needs of this country,
and I want to join you in that effort.

You know, there's no doubt in my mind that we need to have an
ample source of energy to meet the security needs of this country,
primarily but also just to meet consumer needs also, and for us to be
competitive throughout the world.

I have a couple of pages here of comments. I'm just going to ask
that they be inserted into the record, in addition to what I've just
stated. And I look forward to working with you, Secretary Sell,
because I do want to give my colleagues an opportunity to say a few
remarks also.

Thank you, Mr. Chairman.

SEN. DOMENICI: Before I call on Senator Murray, let me say to
the senators that are here, I understand we have a 3:00 -- two votes
at 3:00, and the energy committee, just the two of us, we have a 3:30
meeting.

Senator Allard, is there any -- by any chance could you use part
of your afternoon to wrap up these hearings if we have to?

SEN. ALLARD: I believe I can, but let me check my schedule.
Hang on. I'll get back to you in just a minute.

SEN. DOMENICI: Would you, please?

Senator Murray, would you like to make a few opening remarks?

SEN. PATTY MURRAY (D-WA): I would, Mr. Chairman, thank you. And
I understand the time limitations.

But I did want to say, Secretary Sell, first, thank you and good
afternoon. It's good to see you back on the Hill.

I do have significant reservations, I have to say, about the
department's GNEP. Energy security in our nation is a top priority
for me like everyone, and we have to do to wean ourselves off
foreign imports of energy sources and replace them with some secure
domestic sources. But I strong question whether GNEP is the answer.

I'm not opposed to nuclear energy. All sources of energy have to
be explored and utilized if we're to find the best mix for the U.S. to
achieve energy independence. That requires taking a very hard look at
possible sources and considering several factors, including
availability, technical feasibility, environmental impact, and the
economics of developing that new resource. And we also have to look
for solutions to our energy problems now in using those criteria.
That's why I think this proposal falls short.

From what I can tell it has not gone through the necessary peer
review, it's without strong economic cost analysis, and it does
nothing to address our energy needs in the near or mid-term.

But before we go further, I have to point out that this proposal
seems to gloss over the difficulty this country has in managing our
nuclear waste. And I want revisit quickly another proposal on cleanup
offered by DOE. Accelerated cleanup was sold as a plan to focus on
one contaminated site, and once that site was cleaned up and focused,
the funds would then be redirected to other sites to accelerate
cleanup.

The good news, of course, is Rocky Flats was closed this year.
But the bad news is is the EM budget request is cut by 762 million
(dollars) 2007. DOE broke that deal with the states and the Congress,
and rather than addressing the nuclear waste legacy, DOE has shifted
focus to other areas and left our communities holding the bag.

I'm particularly disturbed by comments made by Undersecretary
Garman when he spoke to the Energy Facility Contractors Group last
month. He called for us to get honest about the cleanup projects left
around the country. The context of those comments is the cleanup

agreements between the government and the states. The government --
(audio break) -- back, and DOE officials are telling our states to get
on it. DOE signed these agreements, and should be not -- not be
looking to break them.

It's another example of the mixed messages that DOE sends on its
cleanup responsibilities. Last year I had to fight very hard for
funding for the vit plant on the Hanford site. I was told by
Secretary Bodman and by you that DOE stood behind the project. I
found that hard to believe when the only DOE funds offered up for
rescission was the 100 million (dollars) from the vit plant.

In the president's 2007 budget proposal there is 690 million
(dollars) for the vit plant, and I'm relieved the budget request is
finally where it should be. But the funds for the tank farm
activities are down by $52 million, which includes a zeroing out of
both vit plant. That was proposed by the administration as the way to
get the (tank waste ?) treated faster, and now the request is zero.
So let's get honest: DOE has a poor record when it comes to managing
nuclear waste. GNEP will add the waste inventory, while doing nothing
in the near term to help achieve energy independence.

Today there is no place to permanently store spent nuclear fuel.
The request for GNEP is $250 million, while the request for EM funds
is down. It's striking to me that DOE has proposed a project that
will create the same type of waste that we are struggling to retrieve
and treat at the Hanford tank farm. I have many concerns, and I am
eager to hear your presentation and to address them during the
appropriations cycle.

Thank you, Mr. Chairman.

SEN. DOMENICI: Thank you very much.

Mr. Secretary, please proceed.

MR. SELL: Thank you very much, Mr. --

SEN. DOMENICI: Don't worry about that.

MR. SELL: Well, I don't want to lose my audience too quickly.
(Laughs.)

Mr. Chairman, Ranking Member Reed, Senator Craig, Senator Allard,
Senator Murray, it is truly an honor and a great pleasure for me to
have this opportunity to come back before this subcommittee to discuss
the administration's proposed Global Nuclear Energy Partnership, or
what we call GNEP.

Thank you for allowing my written statement to go into the
record, and I would like to make some summary comments. And I will
try to do that in five or seven minutes.

In many respects I believe it is appropriate that the first
public hearing on GNEP occur here, before this subcommittee. From
Chairman Domenici's 1997 Harvard speech, calling for a broad
reconsideration of nuclear policy and reprocessing, to this
committee's role in funding plutonium disposition, to this committee's
role in funding a great breadth of nonproliferation initiatives, even
to the creation of the Advanced Fuel Cycle Initiative under the
chairmanship of then-Chairman Reed in 2002, this committee, along with
your counterparts in the House, has always provided great bipartisan
leadership on nuclear matters within our government. So it is a
pleasure to be here today to discuss GNEP.

I would like to tell you today why we are proposing GNEP. I'd
like to elaborate on what it exactly is and how we propose, with the
support of this subcommittee, to get started.

The president has stated a policy goal of promoting a great
expansion of nuclear power here in the United States and around the
world. The reasons for this are obvious. As the chairman said, the
Department of Energy projects that total world energy demand will
increase -- will double by 2050. And looking only at electricity,
projections indicate an increase of over 75 percent in the next 20
years -- 75 percent increase in electricity demand over the next 20
years. Nuclear power --

SEN. DOMENICI: That's worldwide?

MR. SELL: That's worldwide.

SEN. DOMENICI: Worldwide.

MR. SELL: Nuclear power is the only mature technology of
significant potential to provide large amounts of completely
emissions-free base load power to meet this need. It will result in
significant benefits for clean development around the globe, reduced
world greenhouse gas intensities, pollution abatement, and the
security that comes from greater energy diversity.

But nuclear power, with all of its potential for mankind, carries
with it two significant challenges. The first: What do we do with
the nuclear waste? And the second one: How can we prevent the
proliferation of fuel cycle technologies that lead to weaponization?

GNEP seeks to address and minimize these two challenges by
developing technologies to recycle the spent fuel in a proliferation-
resistant manner, and support a reordering of the global nuclear
enterprise to encourage the leasing of fuel from what we'll call fuel-
cycle states in a way that presents strong commercial incentives
against new states building their own enrichment and reprocessing
capabilities.

Regarding our own policy on spent nuclear fuel, the United States
stopped the old form of reprocessing in the 1970s, principally because
it could be used to produce plutonium. But the rest of the major
nuclear economies -- in France, in Great Britain, in Russia, in Japan,
and in others -- continued on without us.

The world today has a buildup of over 250 metric tons of
separated civilian plutonium. It has vast amounts of spent fuel, and
we risk the continued spread of fuel-cycle technologies.

If we look only for a moment at the United States, we are on the
verge of a U.S. nuclear renaissance, in many respects due to the
provisions enacted in the Energy Policy Act of 2005. New plants will
be built. But if we want many built -- and we need them -- I
believe the United States must rethink the wisdom of our once-through
spent fuel policy. We must move to recycling.

This administration remains confident that Yucca Mountain is the
best location for the United -- for a permanent geologic repository.
And getting that facility licensed and opens -- opened remains a top
priority. Whether we recycle or not, we must have Yucca Mountain.
But the capacity of Yucca Mountain as currently configured will be
oversubscribed by 2010. If nuclear power remains only at 20 percent
for the balance of the century, we will have to build the equivalent
of nine Yucca Mountains to contain once-through spent fuel.

The administration believes --

SEN. DOMENICI: Could you make that statement again?

MR. SELL: If we continue to have nuclear generation at 20
percent for the balance of the century, because of our once-through
spent fuel policy, we will have to build the equivalent of nine Yucca
Mountains.

The administration believes that the wiser course is to recycle
the used fuel coming out of the reactors, reducing its quantity and
its radiotoxicity, so that only one Yucca Mountain will be required by
the balance of this century.

So what exactly is, then, GNEP? GNEP really is --

SEN. DOMENICI: May I interrupt you?

MR. SELL: Yes, sir.

SEN. DOMENICI: And that one Yucca Mountain, under that scenario,
would not be filled with the kind of waste we plan on putting in it
now, right?

MR. SELL: It would be filled. We still have a significant
amount of defense waste in Senator Murray's home state and in Senator
Craig's home state that will go to Yucca Mountain.

SEN. DOMENICI: I'm speaking of the domestic side.

MR. SELL: And on the commercial spent fuel, we believe that up
to 90 percent of commercial spent fuel could be recycled before going
to Yucca Mountain.

SEN. DOMENICI: Which means it would be a different spent fuel.

MR. SELL: It would be in a condition with a very low -- with a
peak dose occurring in year 1,000 versus year 1 million.

It would be in a stable glacious form, and it's the
radiotoxicity of the waste which really drives capacity size. And by
reducing the radiotoxicity you could fill Yucca Mountain with this
glacious stable waste, and that would -- we think would be enough for
this century.

SEN. DOMENICI: Excuse me for interrupting. Thank you.

MR. SELL: GNEP is really about identifying the policies,
developing the technologies, and building the international regimes
that would manage and promote such a growth in nuclear generation in a
way that enhances -- in a way that enhances our waste management and
nonproliferation objectives. The program in its full detail is laid
out in my prepared statement, but I would like to focus on a few of
the key engineering and development efforts that are key to GNEP's
success.

First, the Department of Energy seeks to greatly accelerate its
work in the demonstration of advanced recycling. This effort builds
on the advanced fuel cycle initiative initiated by this -- or by
Congress, and specifically this committee, several years ago.

We have developed in the laboratory recycling technology that
does not separate plutonium like the current reprocessing technologies
that are used around the globe. Rather, it keeps the actinides
together, including plutonium, so that they can be made into fuel to
be consumed in fast reactors that will also produce electricity. By
not separating plutonium and building in the most advanced safeguard
technologies, recycling can be done in a way that greatly reduces
proliferation concerns.

Another key objective of GNEP would be to demonstrate at
engineering scale an advanced burner reactor that can be used to
consume plutonium and other actinides, extracting energy potential out
of recycled fuel, reducing the radiotoxicity of the waste in repeated
cycles so that the waste that comes out of the reactor requires
dramatically less geologic repository space.

These technologies come together in the reliable fuel services
framework. GNEP will build and strengthen a reliable international
fuel-service consortium under which fuel supplier nations which choose
to operate both nuclear power plants and fuel production and handling

facilities, while providing reliable fuel services to user nations
that choose to only operate nuclear power plants. This international
consortium is a critical component of the nonproliferation benefits of
the GNEP initiative.

The notion is, in exchange -- as indicated on the first chart
over here, in exchange for assured fuel supply on attractive
commercial terms, user nations that are interested in bringing the
benefits of nuclear power to their economies would suspend any
investments in enrichment and recycling. Under the Non-Proliferation
Treaty they have a right to do that. They have a sovereign right.
And what we are trying to provide is attractive commercial incentives
that would discourage them from acting on those rights.

There are two other key elements of GNEP from a technology
development standpoint. We would hope to work in partnership with
other nations to develop small, proliferation-resistant, perhaps
modular or factory-built reactors that are appropriate for the grids
of the developing world. And in fact, many of the technologies,
Senator Craig, being developed as part of the next generation nuclear
plant are appropriate -- particular the gas reactor technology -- are
appropriate candidates for these types of small-scale reactors. And
in all cases we will work to develop and incorporate in the most
advanced safeguards technologies, and ensure and emphasize best
practices for handling of nuclear materials worldwide.

So how do we hope to begin? In fiscal year 2006 and 2007, the
department proposes to concentrate its efforts on technology
development to support a 2008 decision on whether to proceed with
these demonstrations. In general terms, our $250 million request for
'07 funding is to initiate work on separations and advanced fuels
technology development, transmutation engineering, systems analyses
and planning functions to support the demonstration of a UREX plus
recycling plant, and to support over a 10-year period the
demonstration of an advanced burner reactor.

In conclusion, we need to pursue all energy technologies to
address the anticipated growth in demand for energy. But clearly the
growth of nuclear energy is vitally important for the United States
and for the world. Our country can choose to continue down the
current path, or we can lead the transformation to a new, safer and
secure approach to nuclear energy -- an approach that brings the
benefits of nuclear energy to the world while reducing vulnerabilities
from proliferation and from nuclear waste.

We believe that we are in a stronger position to shape the future
if we are part of it, and if we are leading it. And in many respects,
as it relates to the fuel cycle, the United States has yielded our
leadership position over the last 30 years. We think we need to
reclaim it.

Challenges remain in demonstrating the GNEP technologies. But
without GNEP there will be plutonium throughout the world for

generations to come. There will be spent fuel. There will be
greater proliferation risk. There will be greenhouse gases
emitted into the environment, and less energy here at home and abroad.

The Global Nuclear Energy Partnership is not a silver bullet, but
it is part of a broad strategy that, when combined with advancements
in renewables, clean coal and other technology developments, can and
will make a difference in the security, environmental and energy
challenges that we face. I ask and I seek the committee's support for
this initiative.

I look forward to your questions, and I look forward to working
with you as the year progresses. I'm pleased to take any questions
you have.

SEN. DOMENICI: Thank you very much, Mr. Secretary. That's a
very succinct and understandable presentation. We're going to have to
learn to use some words that I'm going to start with today and see if
I can get them fixed in my own mind.

Europe recycles or reprocesses now, do they not?

MR. SELL: That's correct.

SEN. DOMENICI: And they use a rather well-known process called
PUREX?

MR. SELL: They do.

SEN. DOMENICI: Tell me -- let me ask. That process -- we're
going to go one step further or one step better if our -- if this
program is adopted and carried out because the PUREX process doesn't
-- separates out plutonium in a liquid form as it proceeds through its
process. Is that correct?

MR. SELL: Yes, that is correct.

SEN. DOMENICI: Therefore, it is -- go ahead and get some water
--

MR. SELL: Thanks.

SEN. DOMENICI: Therefore, it has some proliferation problems
that are pretty obvious. Is that not correct?

MR. SELL: That's correct.

SEN. DOMENICI: Now, the president in his proposal has chosen to
go to next technology, which is UREX-plus. I think you've stated to
us the difference, but let me just put in the context of the
difference between what's going on in the world now and what we would
be doing.

In our process, as it proceeded, what would come out when you run
the spent fuel through would not be pure plutonium. It would never
separate out. It would come out in a compound attached and never be
liquid and never be separate. Is that correct?

MR. SELL: That's correct.

SEN. DOMENICI: And then that -- what you get as a result of that
is reused -- is that correct? -- and re-burned, so that you make
energy and use up the energy we were going to throw away when we were
going to lock it up in Yucca Mountain?

MR. SELL: The products streams out of the UREX-plus process
produce uranium. They produced an actinide stream, which is plutonium
bound with the other actinides, and then a fission product stream.

The fission product stream would be disposed of, the actinides would
be made into fuel that would burned in the advanced burner reactor,
and the uranium could be either re-enriched or used in a light-water
reactor or it could be disposed of as low-level waste.

SEN. DOMENICI: Now, where are these processes at this point?
And what will the $250-plus million that you're asking for of this
committee be used for?

MR. SELL: The UREX-plus technology has been demonstrated at a
laboratory scale.

SEN. DOMENICI: Where?

MR. SELL: In Argonne National Lab.

SEN. DOMENICI: Right.

MR. SELL: And it is our intent, and we think it is important, to
move to demonstrate that technology on an engineering scale. It is
our hope and it our expectation in order for an approach like GNEP to
work, that technologies need to be commercialized. But there is
significant engineering and development work that needs to be done.
And so a great majority of the amount of money that we are requesting
for fiscal year '07 would be used to support the design work, the
environmental work and other development work that needs to be done to
support a decision to construct a demonstration facility in 2008.

And if I could go back, you mentioned PUREX. You know, PUREX was
actually developed here in the United States --

SEN. DOMENICI: Correct.

MR. SELL: -- as part of our weapons program, so that we could
produce plutonium for use in nuclear weapons. And it was -- we used
it here in the United States on the commercial side, and it was in the
mid-'70s that we decided for proliferation reasons -- and I think
perhaps correctly -- we decided that we should stop doing that. We
hoped when we made that decision -- when President Carter made that
decision in 1977 -- that the rest of the world would follow, but they
did not. And the rest of the world has deployed PUREX on a commercial
scale, resulting 250 metric tons of plutonium that is now in commerce

around the world today. And that presents, in our judgment, a
significant generational proliferation concern. And we want to
develop technologies that will stop the production of plutonium, and
also technologies that can be used to burn down plutonium stockpiles,
plutonium inventories, over the coming decades.

SEN. DOMENICI: Thank you for that explanation. That -- I failed
to mention that is our technology. We did do it, we did use it, and
then it was commercialized.

I'm going to yield now to Senator Craig. And the vote's not yet
up, incidentally.

SEN. CRAIG: Mr. Chairman, let me go for a few moments, but my
guess is that we ought to get out of here in five, hadn't we, if we're
going to catch that vote.

SEN. DOMENICI: Is it up now, the vote?

SEN. CRAIG: The vote is on now.

SEN. DOMENICI: I'm very sorry. I didn't see it. Yes, we
should.

SEN. : Yeah, the vote is on now.

SEN. DOMENICI: Senator, why don't you proceed and then, Senator
Allard, you want to go vote and come back?

SEN. ALLARD: Yeah, that's what I plan to do.

SEN. : Well, we have two votes, Mr. Chairman.

SEN. DOMENICI: Right, and we'll just remind the secretary to
wait just a while while we have two votes. He's going to come back
and complete the meeting. I'm going to wait until the last minute
here.

SEN. CRAIG: Okay.

Secretary, in GNEP, the initial phase that you're talking about,
the engineering scale demonstration phase, proliferation-resistant
spent fuel processing, how long -- you said construction by '08. When
do you think that plays out? And we're looking at a price tag for
totality of upwards of --

MR. SELL: Just for the UREX-plus plus demonstration facility, we
would anticipate, even though it would be sized somewhere probably in
the 10 to 25 metric ton per year size -- so relatively small -- but on
order, we would expect that facility -- our best estimates on the cost
would be between 700 million (dollars) and one-and-a-half billion
(dollars). And we would hope to begin construction in 2008 and have
construction complete in four years thereafter to go into operations.

SEN. CRAIG: And then the next phase is what, the advanced fuel
cycle?

MR. SELL: The next phase would be the -- within 10 years we
would like to build a demonstration advanced burner reactor.

SEN. CRAIG: Burner reactor, okay.

MR. SELL: There are a number of potential technologies that
could be used for that, and we want to do a substantial amount of work
in conjunction with our international partners in determining the
appropriate technology. But we would hope to build, to construct and
operate that within 10 years. The key R&D challenge -- the biggest
R&D challenge -- we've done UREX-plus in the lab. We've built
certainly fast reactors can that be modified for a burner role. The
biggest challenge is in developing and qualifying an actinide-based
fuel. And so that will require significant laboratory work to develop
that fuel.

As today, we are doing small-scale actinide fuel tests in
partnership with France and their fast reactor, as well as in
partnership with Japan. But that's going to require a significant
amount of development work over the next five to 10 years.

SEN. CRAIG: And in this whole concept, the exportable modular
reactor is the last phase. Is that where the effort to contain -- to
offer up but contain?

MR. SELL: That is -- Undersecretary Bob Joseph and I, we went to
a number of capitals in the United Kingdom, France. We saw Dr.
ElBaradei in Vienna, Moscow, Beijing and Tokyo to talk about this
idea. And the ideas were well-received and the objectives of GNEP
were well-received. But there was a tremendous amount of interest in
not just those countries, but other countries -- South Korea and
others, Canada perhaps -- joining together with us in developing
advanced reactors for deployment in the developing world. And so that
is something that we would seek to move in parallel with the other
technology development efforts, and it is something that we would hope
to have significant international participation in as well.

SEN. CRAIG: Okay.

I suspect, Mr. Chairman, we ought to --

SEN. DOMENICI: Could I just follow up on your last one and you
wait on it?

The one thing I keep hearing, and I want to stress it a little
bit in the context of Larry's last question, we talk about the
internalization of this issue and the partnershipping. I hope that as
you talk about the costs for these various demonstrations and moving
from a small one to the next level, that you are talking about the

possibility or even the probability that we can get our partnership
countries to come into that ballgame, too, of helping develop those
kinds of experimental projects because they will be costly.

I'm not sitting up here saying I'm against things of this type
because they are costly. I'm excited that America might be
considering a major new program of this type. This is what we used to
be about, but we've gotten so fearful we won't do anything like this.
So I'm on board.

But it seems to me the benefits are not going to be just to us,
right?

MR. SELL: That's correct. There is -- when we think about it in
the international context, I mean, on the first order, as I said
earlier, in some ways we have yielded our leadership role in the fuel
cycle. The French, the British, the Japanese and the Russians have
gone on without us for 30 years, and they have significant
capabilities, in some cases, that are better than ours.

SEN. DOMENICI: Right.

MR. SELL: And so we are seeking to work in partnership with them
to accelerate -- to take advantage of the advances we have each made,
to accelerate the development, the demonstration and the deployment of
these technologies as quickly as possible. So they bring talent and
expertise to the table.

But one of the other things that has been quite encouraging is
that they also seek full partnership, which means in-kind
contributions and, we would expect, significant financial
contributions. This is -- we really seek to pursue these technologies
in partnership.

And that has -- in addition to the benefits that I've laid out,
we think it also has other significant benefits in that it will allow
us to accelerate, working in partnership with these other countries,
the phaseout of the current PUREX technologies that are used around
the world today, and the phase in of advanced proliferation-
resistant recycling technologies.

SEN. DOMENICI: That's why I asked. It would seem to me that the
benefits are for them, too. Indeed, the benefit to the world is that
we might all be engaged in the most nonproliferation-active
formulation of machinery, rather than what we've got now. And they
ought to be beneficiaries and ought to help pay for it.

MR. SELL: Mr. Chairman, we really believe that through these
technological advancements, we can make it commercially attractive to
recover the economic value of spent fuel. And once we can do that,
then that allows a(n) international fuel-leasing regime to work.

SEN. DOMENICI: I'm going to just close by saying, when we talk
about the dollar numbers, we have never talked about how much value
added there is going to be in this process. And that might be the
subject matter of maybe your doing some research and submitting to us,
if this works, what is all that extra energy that we're going to have
for sale, what is its value going to be? Because it's going to be
somewhere, isn't it?

MR. SELL: There will be a tremendous value to the electricity
produced, and a tremendous savings by avoiding the cost of building
nine Yucca Mountains over the course of the century. And quite
frankly, the engineering and the packaging required to dispose of hot
spent fuel is much greater than that that would be required to dispose
of the stable, glacious waste form.

SEN. DOMENICI: We get a whole lot fuel to burn.

MR. SELL: That's correct.

SEN. DOMENICI: That's the kind of value added that this process
is going to yield, right?

MR. SELL: That's correct, and right now --

SEN. DOMENICI: It's going to be very, very large, huge amount.

MR. SELL: It's a significant amount. Right now, spent fuel that
is headed towards Yucca Mountain still has over 90 percent of its
energy value. And by developing recycling technologies, we think we
can recover a great portion of that energy value and produce
electricity with it.

SEN. DOMENICI: (Sounds gavel.) We're going to be in recess.
The secretary is going to wait. Probably going to finish at 4:00 or a
little after 4:00, if that's all right with you. But I won't be
coming back, Mr. Secretary. The senator from Colorado will preside.
Thank you very much.

MR. SELL: Thank you.

(Recess.)

SEN. ALLARD: (Sounds gavel.) I call the committee to order.

And just for the record, I'm Senator Allard that's now presiding
at the request of the chairman, Senator Domenici.

And I'd like to again welcome you, Mr. Secretary. And we were
starting into the question part of the committee, and I left early to
go down to vote, and have now returned to wrap up our deliberations
here on the committee.

I've had an opportunity to go and tour facilities in France, as
well as in England, and what they do to reprocess nuclear fuel, which
you indicated in your opening remarks, is that it is technology we had
here in the United States, and then they adopted that technology. And
frankly, I'm excited about the prospects of moving to UREX-plus
instead of PUREX. They use the PUREX technology. Am I correct on
that?

MR. SELL: That's correct.

SEN. ALLARD: And so I'm excited about the PUREX-plus (sic)
policy.

And it's my understanding also that with that now -- I just
wanted to make that show on the record -- is that it does take away
the proliferation risks with that completely if we process that, or is
there still some proliferation risk?

MR. SELL: I think from a public policy standpoint, Senator
Allard, we must always be mindful of the proliferation risk anytime we
are dealing with nuclear materials and nuclear technologies. And so I
would be reluctant to suggest that any technology removes all risk.

But we --

SEN. ALLARD: But this lessens the risk, then. Is that your
understanding?

MR. SELL: The UREX-plus technology prevents -- it increases
substantially the proliferation resistance of the material to a point
where this government should be quite comfortable.

And we would also build in the most sophisticated safeguards
technologies into the UREX-plus point plant. So not only do we have a
much proliferation-resistant stream of material coming out, but
it would be -- have the most advanced safeguards. And all of these
plants would only be built under our conception in existing fuel-cycle
states. So we think this is -- offers substantial nonproliferation
benefits.

And there are two other nonproliferation benefits. By developing
and deploying advanced burner reactors, and developing and deploying
UREX-plus, we can begin to slow the accumulation worldwide of
inventories of separated civilian plutonium, and we can build the
capability that allows us to burn down and dispose of that plutonium.

And then, thirdly, we can develop, we believe, an international
regime -- or we would seek to develop an international regime -- that
would discourage the investment and construction of enrichment and
recycling facilities in countries that do not have them today. So the
--

SEN. ALLARD: Now -- go ahead.

MR. SELL: So in sum, we think there are -- from a systems
standpoint, there are substantial nonproliferation benefits and
substantial nonproliferation enhancements that would flow from the
GNEP proposal.

SEN. ALLARD: And I understand that right now, under UREX-plus
technology, we are working with two other countries, and that's France
and Japan. Is that correct?

MR. SELL: We have -- through existing relationships that the
United States has, we have been conducting tests and experiments and
development work through funding provided by this committee. And we
would seek to broaden the work to also include Russia, the United
Kingdom if they choose, Japan and China. Those are the nations were
well in excess -- or around 70 percent of the world's nuclear reactors
exist.

Those are the nuclear economies of sufficient scale to justify
significant investments in advanced fuel-cycle technologies, and we
would look to work with those countries in developing these
technologies on an accelerated time scale.

SEN. ALLARD: Now Iran is on everyone's mind because they have
decided to build and operate a uranium enrichment plant in direct
violation, actually, of the nuclear proliferation treaty. And with
this capability they could not only produce fuel for civilian
purposes, but also weapons activity as well.

And you have a plan that calls for a uranium fuel leasing plan
that would provide fuel to countries interested in developing a
civilian nuclear program. Do you believe that other countries --
we've already kind of -- it sounds like you've already begun to kind
of form a coalition, but do you believe that these countries would be
willing to contract for enrichment services instead of developing
their own domestic capabilities?

MR. SELL: We do, Senator Allard. And this is occurring now on a
-- on a smaller scale around the globe. Many countries with
significant nuclear power investments, like South Korea, have not made
their own investments in enrichment and recycling.

And the hope is -- I mean, really from a world energy supply
standpoint and if we really want to address environmental concerns,
pollution concerns, with nuclear power, the world is going to need a
significant expansion of nuclear power, and that's going to occur in
many countries. And we think we could -- a system could work where
states that have already made, or have economies that would justify
significant investments in enrichment and reprocessing technologies,
that we could lease fuel -- so a country like the United States could
lease fuel to a country and that fuel would then -- would be burned in
a reactor, but then taken back to be recycled and disposed of in the
fuel-cycle country.

We think that can be offered on attractive -- we would propose
that we could offer that on attractive commercial terms, so there is a
real incentive for a country who is only interested in bringing the
benefits of nuclear power to their economy of leasing the fuel. And
only those countries that are really seeking to -- we would suggest
that countries that choose not to go the economic route, and

instead choose to make investments in their own enrichment or
recycling or reprocessing capability, it would suggest that perhaps
they have other motivations.

SEN. ALLARD: And so that's basically your plan. You're going to
try to incentivize them with some economic alternatives you hope that
they will not be able to refuse because we would then have the
original reprocessing plants constructed here. We'd do that for them
at a reasonable price so that they'll use our facilities.

MR. SELL: And it wouldn't just be here. It would also be in
France or Japan or China or elsewhere. And it's -- that diversity of
suppliers to potential consumer nations would also give them the
security, which I think countries would seek, in having a diversity of
enrichment services suppliers.

SEN. ALLARD: And have you gotten any firm commitments from any
of these countries willing to come on with this program at this point?
Or are you aware of real strong support for that way?

MR. SELL: A few weeks ago I, with Undersecretary Bob Joseph from
the State Department, traveled to London and to Paris, to Moscow,
Beijing, Tokyo, and we also stopped to see Dr. ElBaradei at the
International Atomic Energy Agency in Vienna. And we laid out our
ideas and sought their consultation. And there was broad agreement on
the objectives that the world needed a dramatic increase in nuclear
power; that we should work together to develop advanced recycling
technologies that did not separate plutonium; that we should do this
in international partnership; and that we should work to facilitate an
international regime of fuel leasing so that we could discourage the
proliferation of enrichment and reprocessing technologies. There was
broad agreement on all of those issues, and a great interest expressed
by those governments in continuing to discuss with us how we could
further the partnership.

SEN. ALLARD: Now the GNEP program is a very comprehensive
research and development program that includes work on advanced
reactor technology, fuel recycling, waste reduction and global nuclear
fuel services, small reactors and enhanced nuclear safeguards. And
when we look at the budget, it seems to focus on large-scale
engineering demonstrations of fuel recycling capability with minimal
involvement outside the Office of Nuclear Energy. And it's unclear,
at least to me, from this budget, when the department will undertake
research reliable fuel services, small scale reactors, the enhanced
nuclear safeguards and basic research and development that could
address a number of concerns related to our national security,
particularly in the earlier phases of the program.

My question is, why has the department elected to minimize the
direct and immediate engagement of the NNSA and the Department of
State at the onset of GNEP?

MR. SELL: With the greatest level of respect, Senator Allard, I
have to disagree with the premise of your question. The National
Nuclear Security Administration has been heavily involved, as has the
State Department, as have other elements of the interagency policy
formulating bureaus within the administration. They -- so they have
been involved. I think we have their -- I know for a fact we have
their strong support in moving forward on this.

There is an emphasis in our budget request for 2007 on moving
forward on the first key demonstration facility, which is the
demonstration of the UREX-plus. That has been demonstrated at a
laboratory scale. We think it is important, as quickly as possible,
to demonstrate it on an engineering scale. And so that is -- that
does receive a significant portion of our -- of the $250 million
budget request for fiscal year 2007.

SEN. ALLARD: I'd like to move on to the MOX program. When I was
chairman of the strategic subcommittee of Armed Services, we had some
discussion with the MOX program, where we have the recycling
facilities in Savannah, Georgia. And you know, it's -- like was
mentioned earlier, it's basically American technology that's been
modified some, perhaps, by both the French and the Germans. But it
basically was originally American technology.

I'm concerned about some reported overruns on the efforts down
there. The AG did a report that said that cost increases may amount
to 3.5 billion where we were planning on $1 billion in the budget.
Can you address that? It seems to me we need to have somebody riding
herd a little closer over the operation down there and I'm wondering
if perhaps maybe you could give us some insight on what's happening
with the MOX Facility in Savannah, Georgia.

MR. SELL: Several years ago, after our country had made an
agreement with the Russians to dispose of plutonium, we did make a
decision to build facilities, MOX Fuel Fabrication Facilities as well
as other processing facilities at the Savannah River site. And early
on it was suggested at the time that the cost of those facilities
would be in total of, I mean I have the numbers exactly right but in
rough order, $2 billion. That was not a very good number obviously.
And it is old, commodity prices have increased significantly since
that estimate was made. There was a failure by the department and its
contractor team to fully appreciate the cost that would be required to
build that French MOX technology here in the United States. And there
were other problems with the estimates. The department is working to
correct those. I take seriously your counsel to keep a tighter reign
on activities down there, but the Plutonium Disposition Program
remains an important U.S. objective and we intend to move forward and
accomplish that in as economically feasible way as possible.

Mar 03, 2006 18:09 ET

SEN. ALLARD: I do, I think that is very important and you know,
I -- you indicated it was the cost of commodities was one of the
factors in you know, what goes into the construction of it was one of
the -- what other factors did we have that might have added to the
cost of it and the rest of this question is did we have an incentive
driven, do we have incentive driven contracts with the contractor down
there?

MR. SELL: We -- if I may, let me, I would like to give a
complete answer on exactly what the contract provisions that we have.
I believe as a general statement that the contract does have
significant incentives in it for contractor performance, but I would
like to answer, give you a complete answer on the record, if I
may.

SEN. ALLARD: Yeah, that'd be fine.

ME. SELL: The other elements of the cost growth, and part of it
was commodity, the increase price of commodities, part of it was
simply that the $2 billion number was a 2000 year number, not a 2005
number. And there was also a failure quite frankly of the department
and our contractors to fully appreciate how costly it would be to
build the French technology plant here in the United States. We made
assumptions that we shouldn't have made and those are costing us now.

SEN. ALLARD: What, what specific assumptions -- how did you -- I
mean, where were you wrong in your assumptions? I'm going to press
you a little bit here.

MR. SELL: I will -- I can't, unfortunately, I'm not prepared
today or I don't have in my mind today, Senator Allard, the exact
things that we missed on this.

SEN. ALLARD: Maybe you can get a memo to the committee on that.

MR. SELL: But we will follow-up --

SEN. ALLARD: Yeah.

MR. SELL: -- in written detail on that issue, if I may do that.

SEN. ALLARD: Yeah, we'd appreciate that so we fully understand
the issues down there and I'm one that would like to see these things
carried forward in a timely manner because I think when you start
running into delay problems and accelerated costs, you tend to lose
support within the Congress and this is an important program, I hate
to lose that support.

MR. SELL: The --

SEN. ALLARD: Go ahead.

MR. SELL: The delays, you know, even though this, the agreement
was made to do this many years ago, it has taken a number of years to
get the appropriate agreements in place with the Russians. And when
Secretary Bodman got to the department about a year ago and realized
that we still did not have the agreements that we'd been trying to get
with the Russians that would allow this project to move forward, he
and Secretary Rice engaged the Russians and we were able to make
significant progress on resolving issues as to liability, which had
prevented, which had really left this project in a stall for several
years. So we feel like we have finally made progress on that. The
department broke ground finally on the facility last fall, and we look
forward to moving forward with it, but it unfortunately will be at a
higher cost.

SEN. ALLARD: Let me move on to our transportation fuels. I
think we're all quite aware of, that the transportation sector's a
huge consumer of energy in this country and there's some concern about
the high temperature reactors that are effecting and producing
hydrogen for transportation. And where are we in the efforts by the
department to produce these kinds of reactors that will allow for the
production of hydrogen or is it just assuming that we're not far along
on nuclear hydrogen research to, at this point in time to be funding
it, you have dropped, reduced your '06 funding levels, and that's
what's prompting this question.

MR. SELL: It is our judgment at the department that over the
long term, the president's hydrogen fuel initiative that he laid out
in his State of the Union of three years ago offers significant
promise for getting our transportation sector off of the internal
combustion engine and on to electricity based fuel cells. And we are,
we have a broad program to develop those technologies, the storage
technologies, the fuel cell technologies, the automotive technologies,
as well as the question of how will we produce all of this hydrogen.
Today the only economical way to produce hydrogen or the principle
economical way of producing it is through reforming natural gas. But
we think in the future as hydrogen demands increase significantly, we
can produce it with coal and we can, and other technologies, and we
think hydrogen will be -- I mean, nuclear hydrogen will be -- nuclear
power plants will be a significant technology for producing hydrogen.

It is our judgment, I believe and I will leave my statement to be
revised by the technical experts, that the most promising nuclear
technology for producing hydrogen is a very high temperature gas
reactor. And a technology such as that I believe was authorized in
the Energy Policy Act Of 2005, it's referred to as the next generation
nuclear plant, and we have requested $23 million as part of our Fiscal
Year 2007 budget to continue developing that reactor so that it can be
demonstrated, built and demonstrated on a timescale consistent with
that called for by the Energy Policy Act. We think that technology
can still be developed and is moving along consistently with other
portions of the Hydrogen Fuel Initiative.

SEN. ALLARD: So why was there a reduction in your funding level
for '06?

MR. SELL: If I may, that's another question I'll need to --

SEN. ALLARD: Okay.

MR. SELL: -- take to the record.

SEN. ALLARD: Very good.

I don't have any other questions. I have another committee
meeting I've got to get to, and so I'm going to request that the
record remain open until close of business Friday for member
statements and questions. And I also hope the department will respond
to these questions that were left open in a timely manner. Most
committees I've been a part of have asked to response within 10 days,
if that's a balance of time period, if you can get your responses back
to us within 10 days, we'd appreciate it --

MR. SELL: We will do so.

SEN. ALLARD: -- so we can move forward with our deliberations.
And without any questions, I now declare the committee in recess.

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