beginning to end. we should take this opportunity to accept his assurance that we use fuel is not creating any problem where it is. let's get this albatross away from around our neck. no other country is floating such a monstrosity. $100 billion for a hole in the ground, for pete's sake? we have to get people to stop that nothing new clear. the nuclear people themselves talk about a new plant and say, of course, we have to make them safer. we have to get a solution to this terrible waste problem. these problems are not hurting anybody. you do not hear that kind of talk from coal. >> thank you very much. mr. guith?

>> thank you. i am the vice-president for the -- the chamber is the largest business federation. we represent over 3 million businesses of every size, sector, and region. how we meet the projected increases in energy demand is a serious issue. if you factor in the desired produce as much energy as possible, the issue becomes more daunting. the most recent energy outlook predicted it would increase by 20% by 2013. non-electric grenoble's are expected to triple. this tremendous growth should be welcome and encourage. these sources will soon only account for 8% of the total portfolio. other sources must be significantly expanded. only one source of diesel power

is emissions-free, and that is nuclear power. i draw your attention to the issue of scale ability. some sources of electricity generation have become cheaper, but they have not become directly competitive with traditional generating sources in most circumstances. when a generation only yields and 8% increase, we must look at other sources. increases in efficiency will be needed, but it is clear that growth and efficiency will not keep the lights on alone. once you factor in a greenhouse gas emissions targets, this becomes clear. to meet the midterm goal to reduce emissions levels by 14% would require the production of one gigaton of emissions. this would require that being

replaced by emissions-resources. i listed a few requirements in my written testimony. one solution would be to build 90 new nuclear reactors. build 170,000 wind turbines, which is a tenfold increase. or we would have to grow a new forest the size of the state of washington. meeting all of these goals are technologically achievable, but most would necessitate a precipitous increase in the price of energy, damaging economic growth. the obvious question as -- -- is nuclear achievable? the simple question is yes. as we sit here today, we have

not build a new reactor in 30 years. there have been significant commitments to support expansion in countries like china, japan, russia, the republic of korea, and other countries. our industrial infrastructure has as efficiently atrophied. the past five years have seen some progress, but there is a tremendous lack of capacity. we are seeing signs of changing this. westinghouse has committed hundreds of millions of dollars to create manufacturing facilities as well as to assemble reactors. with these facilities scheduled to come on line in 2009, the u.s. nuclear infrastructure rebirth is about to commence. while it is true facilities will not produce the largest components of new plants, at least as planned, it is not unreasonable to expect them to

pass domestically. two years ago, the steel works was the only option for manufacturers requiring the largest heavy 14. over the next few years, it is expected manufacturers in europe and around the world will join that status. it will build or expand to support nuclear stanchion in their own countries. with these facilities producing 40% of the vessels, the will be capacity to support new reactors elsewhere, including the united states. this is an economic question largely dependent on the continued progress and licensing of construction in the coming years. on the capital side of the question, we of steady progress of the last five years with growth expected to increase. a recent report found that

continued expansion -- most important, it showed sustained increases every year over the previous year. as for the industrial infrastructure, the rapid growth showed that market signals on in the united states work. as more and more show varying levels of commitment to build reactors, support is coming on line. if you build it, they will come. the evidence supports this. we have yet to see a single board decide to build a reactor. some of the obstacles though. well we have seen progress on many fronts, there has -- while we have seen progress on many fronts, no one has made the decision to build a reactor. we have an approved, but untested licensing regime. until the first licence is issued, not many utility boards

will commit more than a quarter of the company's value on the project. the one policy that appears to address this issue is the program applicable to new nuclear reactors. progress has been slow since it was enacted four years ago, is not possible to overstate how crucial this -- it is not possible to overstate how crucial this program is for new construction. this program must be expanded and modified, as was done a comprehensive energy legislation that was favorably reported by the senate natural resources committee several -- several of you are members of -- last week. it is advisable for the government to support any such project. we find it advisable and the most efficient use of private capital to meet energy needs. inherent market inefficiencies limit federal involvement.

the deployment of new technologies is one such example. the issues of loan to -- long technology should not be considered a subsidy. a properly-functioning program will not result in the expenditure of any taxpayer dollars, and this is especially accurate for new nuclear reactors. the united states faces many challenges. nuclear power is one of the primary technologies that can have measurable impact on the increase in our energy security through a portable, base level electricity while improving the environmental impact of no greenhouse gas emissions. certain guarantees our program to foster expansion. i would note, however, the nuclear power alone will not solve our energy problems. a balanced portfolio is essential to securing the future and the environment. thank you. >> thank you very much.

>> thank you, mr. chairman, members of this panel for contributing to your panel. i have to correct one mistake in my biography. i am not a lawyer. i went to the school of law and diplomacy which prepares one to be neither a lawyer, nor a diplomat. i am an economist. >> a different accreditation. >> the point of my testimony is largely this tillable from 17 pages, down to about three points. energy is a commodity and price is what matters. expectations said at a moment economic weakness are unlikely to be valid when things return to normal. the question of what comes next depends on realistic expectations of cost.

the most expensive energy sources today could be the cheapest later in a different cost environment. this is a sensitive topic, even though i have made my living making models. i think is important to know they are approximations and not guarantees. a tense to now dynamic principles using static assumptions of historical data will always be imperfect. there are lots of announce. one example -- the idea of when firms will pass on the cost. we do not know. sometimes when your customer is doing badly, that is a lousy time to raise the price. when everyone is doing well, that might be a time to pass the price inflation for the last 10 years. idiosyncratic decisions of the firm can be difficult to model. these are constraints we have to keep in mind.

we also have to keep changing our models. that's sad, i want to talk about the three points. -- that said, and want to talk about the three points. coal is most of our electricity. the share of coal has fallen by 2.5%. it is not a static quantity. we are dynamic. we change our generation mix in our fleet based on fixed costs, this sort of things private firms worry about. renewals are still 3% of the hole and fossil fuels are 72%. that means you'll have higher prices with a greenhouse gas surcharge on this. there are different ways to look at what this means. for those of you who dared to

read my testimony, on page it, we talk about cochran leverage. what that is is what share of your disposable income gets eaten up for the price of carbon dioxide. small numbers can look like small numbers when they are small, but they are averages. in kentucky, $10 per metric ton it's up 66 basis points of disposable income. it does not sound like much, but it matters a lot if you are well below the average income in the state. the other thing is if you look at the national average on the page. $145 a person, direct to the consumer. that is not dissimilar to what cpo's numbers are. if you look at that over time, that becomes part of the whole economy. it becomes 0.8% when you look at the whole economy defect.

look through your 2030, and you have a cumulative cost nominally of $25 trillion. if you make the assumption that gdp will grow at 3% -- and it may not grow at 3%. that is not a guarantee either. you may have a green economy that generates so much value that the 0.8% is outweighed by something else. i think this is an important point. the other area that think we have to remember is that we are the yo-yo dieters when it comes to energy in the u.s. weekend, we crash, we start, we've been again. the problem is if you binge long enough, it is harder to get lean. energy companies are doing the right now. that leaves the energy infrastructure vulnerable to greater costs of imported energy

sources. the very price signals we are talking about encourage leaner growth to spend the money that we need to build energy muscle. 2009 looks like it is going to be year no. 5 and that is going to be a doozy. basically this is a yo-yo dieter buying a swimsuit for win -- when you are thinnest. i do not think we should build our policies at the time when we are our sixth guest. if you look a figure eight on page 10, and it shows a picture of what you get for free allowances. there is a trend line that goes up a little bit and down and falls historic the at the end. there are two scenarios and one from iaea.

no matter what, there is a price. which we know. the second car -- if we look at page 12, the chart shows what would happen if you bought every offset you were allowed to buy, in a best case economy the way i am looking at it, you have to change your infrastructure. 2026, if things are gramm, in all likelihood. something has to change to have that much flexibility. i will just quickly summarize -- we see this $100 per metric ton carbon dioxide figure bandied about as though it changes the behavior price of carbon dioxide. yes, that will change behavior. the u.s. economy cannot grow with that price based on our current usage patterns. that is not possible today.

you also see nuclear power as three times as expensive as coal when you compare it to apples to apples, but if you look at it, at some of those apples are not apples. some of the apples are oranges. the cost of electricity are lower than a look at the outset of the project. if you compare that to natural gas prices, which right now blow away by far the price of any other source of energy generation evening get from conventional sources, those change. natural gas prices could easily be on a very low carbon prize, and historically, it would be much more expensive. that concludes my testimony. i look forward to any questions. thank you. >> thank you very much. thank you to all of you. this has been a most fascinating spectrum of opinion and expertise.

it has been my experience, one of the driving forces behind america's economic growth for the last 100 years has been our access to what we call cheap energy. without the ability to tap into sources of energy that have been relatively cheap, we would not have achieved the rate of productivity we have achieved, and without being the most productive nation in the world over the last 100 years, we would not have become the richest nation in the world in that time. looking ahead, if you look at demographic trends, there are only two countries in the next 50 years will have increasing populations among what we consider the developed or truly developing countries. those countries would be the united states of america and

india. every other country is going to see their population decrease because their birth rate is below the replacement rate and their populations are going to get older and they are going to get smaller. our birth rate is below replacement levels, but the reason we will continue growing is because of our emigration rate. the american population will continue to grow. the indian population will continue to grow the cause of their birth rate. everyone else will shrink. this demographic trends suggest that we are going to need energy in america and and and -- and india perhaps more than any other place. you have talked about the availability and cost of energy. as i say, i think we have to say -- we have to have continued

access to cheap energy. while we have been focusing much of our conversation on nuclear, with each of you or any of you have comments as to this whole question about the american economy needing continued access to cheap energy and where you think that cheap energy should come from? ok? quacks i think the important thing is weak -- >> i think the important thing is we have placed too much emphasis on having a broad spectrum of energy sources. i think for the base load that we talked about, day in and day out, there is nothing in the same class with nuclear. we are used to comparing things a few percent apart. the density of nuclear compared

to anything non-nuclear -- it is a question of tens of millions. your non-nuclear system will be using huge quantities of material that has to be gathered up, transported, processed, and dealt with. that is a tremendous burden on the earth, and it is also a tremendous cost that you should not be having to run into. nuclear does its job making no impact on the earth whatsoever. i think the idea we should have a mix just because it is nice to have a mix, i think the kind of prices that we are going to pay to develop solar or biofuels is going to be a large, wasteful

process and we will not have much to show for it at the end. >> mr. rockwell, i have been in the plants in france where they used the spent fuel rods, and that has convinced me of the same position you have, that we can read process -- reprocess the energy. i remember asking the guy who ran the plant what he does with the energy, and he said they store it in the green building outback. i looked at the green building and i asked what they would do if it fell. he said they would build another one. there is no underground activity. it is very small impact. however, the reprocessing plant itself is not cheap.

there are those who said that it is fairly heavily government subsidized to achieve that goal. can you give us something about the -- or any of you -- about the economics of the reprocessing that goes on where you take the spent fuel rods and put them back through, if you will, and get an enormous amount of energy the second time? and then it ends up with small globules that you put in the green building. that is a very significance capital investment -- significanct capital investment. we will need several of those across the united states. how do we get there? >> i think that is a very important question, and i think there are many people who are pushing to get the reprocessing

situation builds and say, see, we have handled the waste problem. i do not think that is right. i think there is no question we can do this. for the reasons that you are talking about, i think is important that we do it right. we have stumbled on and a lot of bad habits in this process. there is no hurry to get to it. we could go a long time on the once-through process. i think it is in poor to get the right process so that it will be economical and take whatever time it takes to get there. i am convinced we can get there. i think it would be a mistake to hurry too fast to get it and end up with a bomb process. we have done that a couple times already. >> any of the rest of you want to comments on his comment that nuclear can do it all? >> yes, senator. first, i would note that it is

french law that they must build a repository, and we may take solace in the fact they have had as low luck doing that as we have. -- as will love doing that as we have. at the end of the day, in any regime, whether it is france, japan, the united states, you ultimately need a repository. it may very well have been -- may be a poor choice to follow right now. it remains to be seen what the future holds. as far as your question about cost, two years ago, a consortium came in to the department of energy and estimated they could build a facility on the order of $20 billion. that is a lot of money. there are various ways to finance that. obviously, there are several questions surrounding the waste fund that have yet to be,

frankly, even address, let alone answered as far as where that money should be telling. one of the points that we have made in the chamber is that perhaps restructuring the management mechanism and taking it away from the day-to-day at the department of energy and importing of -- and imploring the corporation to deal with contracts whereby it could finance the construction of a processing/recycling facility -- it could be economical. at the end of the day, it comes down to how many reactors we have. our policy was set 30 years ago. a lot has changed. i do think we need to take a step back and figure out where we are going and figure out if we have a waste policy that fits with that.

before i and, i would say that diversification for diversification's sake would be faulty policy, but i think history has demonstrated diversification is important to stabilize interruptions, whether they be international or domestic. is important we utilize the resources we have at home, whether it is coal, natural gas -- we have upwards of a third more natural gas in reserves that we had one year ago, at least as far as what was projected. these resources need to be harnessed. especially if you look at the transportation sector. we rely on fossil fuels for 90% of our transportation. if you were to magically make that go way, which perhaps some wish, that is going to have a catastrophic effect on the macro economy in this country. >> yes? >> i think the point that mr.

guith just made is extremely important, about the abundance of natural gas. this is a function of fixed and variable costs. a lot of people get hung up on the fixed costs, and what the point i try to make is if you run this long enough at a controlled price, it is pretty cheap. right now, natural gas is so cheap that it makes all the renewable green sources that are much beloved to some of the strong proponents that you see every day so expensive back in paris, and they do not make sense. some of them do not make sense anyway because we have a down year for electricity demand. they also do not make anything else make sense either in terms of price. we do have an immense amount of natural gas. we have an immense amount of coal. we have an immense amount of

oil shed. we have uranium deposits. we have many natural resources that any given price will make these numbers work. the question as well they all land on demand at the same point in time. diversification does take some of the price pressure away. if natural gas became the solution to everything, it would not stay cheap. >> mr. lieberman? >> you are absolutely correct that affordable energy is very important. our model showed that higher energy costs river raised trout the economy. -- raise costs throughout the of economy. the whole theme, the whole purpose of capital in trade is to send a market signal. obviously if independent of that

there are regulatory restrictions, that is not a market signal. conversely, as we have heard with natural gas stemming from the colorado school of mining, there is much more natural gas than we thought. that cannot be accessed, that is not going to happen anyway, regardless of the market signal that said it might encourage natural gas or nuclear power. it is absolutely vital that we make these energy sources available. that means streamlining regulatory barriers. >> senator alexander? >> thank you, senator bennett. this has been very helpful. i thank the four of you for your comments. mr. rockwell, you said you would speak from the engineering point of view. is it possible to build 100 new nuclear power plants of