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Michael Hewitt's avatar

This is an excellent article. I appreciate that the article is about a detail that may seem arcane, but on which achieving an actual policy objective hinges. There are many such examples with government policy related to nuclear. HALEU is a very clear one. Understanding why requires going into detail. 9 of the 10 ARDP awardees selected by DOE NE for US taxpayer funding have designs requiring HALEU fuel. And only Russia makes HALEU fuel. DOE NE has spent years trying to get out an RFP to stimulate HALEU production outside of Russia. And yet the way it has been structured--with DOE buying HALEU offtake--will all but assure the policy objective of stimulating HALEU production will not be achieved. Why? Because most of the funds will go to buying the feed stock (LEU) which is then enriched to make HALEU, leaving insufficient money going towards the actual critical path--building a HALEU enrichment facility. To explain, imagine there is a new design for a car that gets 10,000 miles to the gallon. But it needs a very special type of new gas that can be refined from crude oil. None of the oil refineries have the crackers to make this special fuel. It would cost them a $500 million to build the special cracker to refine this new type of fuel. The refinery doesn’t want to make the investment in a new cracker until the demand is real. The cars haven’t been built yet or tested. Maybe they won't even work. In steps the USG to help bridge the risk gap. USG says, "We will stimulate production of the new gasoline by signing up to buy it. When the cars are ready, we will sell the fuel to the car makers." Now imagine it takes A LOT of crude oil to make 1 gallon of the new fuel. The DOE has $500MM to spend. It says to the refiners: "we are ready to buy $500MM worth of the new fuel. Go build the special cracker. Oh, but this $500MM has to also cover your purchases of all the crude oil you need to feed to make one gallon of the new fuel." So, the vast majority of the money is going to the crude oil market. There is nothing wrong with that market. There are plenty of producers and buyers of crude oil. If someone really wants more crude oil, they can give an offtake contract to an existing crude oil producer on the back of which the producer can explore and pump more crude. There is no need for govt intervention. This is exactly what is happening with the HALEU nuclear fuel discussion. All the money will go to the LEU feed market, a market which is functioning and doesn't require intervention by taxpayer. The leftover funds after buying the LEU feed won't be nearly enough to cover the risk of building new HALEU production. In the end, the policy goal of trying to stimulate advanced nuclear will have failed with billions going into ARDP demo reactors that won't even have fuel. All because of details...

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