Congress should create a new federal tax credit to step up the United States' production of carbon-free nuclear power to help reduce global greenhouse gas emissions over the next 50 years, a new report from the Massachusetts Institute of Technology recommends.

Among the policy actions the government should undertake within the next decade, the report's advisory committee said, is to create a production tax credit for nuclear power. A credit of 1.7 cents per kilowatt hour (kWe-hr) extended to 10 "first-mover" nuclear plants would result in carbon-emissions reductions for about 50 years, according to the report's authors.

The report, entitled "The Future of Nuclear Power," was informed by an advisory committee including two former White House chiefs of staff, John Podesta and John Sununu.

By enacting a tax credit, the government would help boost nuclear power to a 19 percent share of the nation's total energy supply by 2050, the authors contend. At this level, the report assumes that the United States would produce 300 gigawatts of the world's projected 1,000-gigawatt capacity in 2050, reducing 1.8 billion tons of carbon emissions annually from coal plants. While the report supports the use of other options to reduce carbon emissions, such as renewable energy sources, carbon sequestration and increased energy efficiency, its analysis focused on nuclear energy only.

"Over the next 50 years, unless patterns change dramatically, energy production and use will contribute to global warming through large-scale greenhouse gas emissions," concluded the report, titled "The Future of Nuclear Power." "Nuclear power could be one option for reducing carbon emissions. At present, however, this is unlikely: Nuclear power faces stagnation and decline."

The recommendation is based on the assumption that nuclear power is not now cost-competitive with coal and natural gas, despite market deregulation. However, federal carbon emission credits, in concert with cost reductions for operation, maintenance and construction time could close the gap, said MIT physics professor Ernest Moniz, who presented the report at a recent World Resources Institute forum.

"If the United States doesn't play, it's very hard to get there," Moniz cautioned.

Moniz's comments came just days after congressional leadership cut from its comprehensive energy bill about $17 billion, including a provision that would give nuclear power producers a 1.8 cents per kWe-hr tax credit for eight years. With near-term congressional outlook for a re-emergence of the tax language hazy, nuclear industry officials say the report's recommendations bolster the nuclear industry's case for federal aid.

"We're supportive of it because it levels the playing field," said Mitch Singer, a spokesman for the Nuclear Energy Institute (NEI), a major industry lobby group. "You need to incentivize industry in many ways."

A similar provision that survived cuts in the $14 billion energy bill would renew a wind tax credit that offers energy companies 1.8 cents per kWe-hr over three years. Congress has renewed the credit incrementally since 1995, but it expired at the end of 2003 amid partisan grid lock on the energy bill.

The report also recommends that:

The government should share the cost for site-banking for new plants, certification of new plant designs by the Nuclear Regulatory Commission and combined construction and operating licenses for plants built in the near future. The Energy Department should broaden its long-term research and development program to include improved engineered barriers, investigation of alternative geological environments and deep bore-hole disposal. The DOE research and development program would be realigned to focus on the open, once-through fuel cycle, and conduct an international uranium resource assessment. On the safety front, the report concluded that modern reactor designs can achieve a very low risk of serious accidents, but "best practices" in construction and operation are essential. While no nuclear power plants have been built in the United States in at least a decade, the report assumed that future plants could be built using the most modern safety technology at a cost of $2,000 per kilowatt hour.

NEI officials, however, disputed the cost analysis, pointing to plants that have been built at a lower cost overseas using U.S. technologies. Using the same technologies, plants could be built domestically at a cost of less than $1,200 per kilowatt hour in a similar time period, contended NEI adviser Jack Brons.

"We see no reason new plants can't be built in the United States without it being considered a remarkable time achievement," Brons said.

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