DOE’s proposal to generate power by burning mixed oxide fuel (MOX) made from plutonium in civilian reactors is, in large part, an economic issue.

Plutonium will become an economically viable energy source only when uranium prices increase.

However, the forces that might make plutonium competitive with uranium may also make all nuclear power noncompetitive with other sources of energy.

The value of plutonium is the economic return its use would generate in an open market.

DOE puts a positive value on weapon plutonium based on the cost to manufacture it--i.e., if something costs a lot, it must be worth a lot. The fallacy in this approach is obvious.

From 1946 to 1970, the federal government paid nine dollars a gram for plutonium produced in civilian reactors. (McPhee, 1973).

At present, there is no legal market for weapon-grade plutonium due to a lack of demand, plutonium’s role as a heavily controlled substance, and adverse public reaction.

An asset has more economic benefits than costs. A liability has more costs than benefits. For plutonium to be an asset, its use to generate electrical power must result in a cost savings compared to low enriched uranium (LEU).

A fuel fabricator will not accept free weapon-grade plutonium for MOX, but will, instead, pay for LEU (Garwin, 1993). This implies plutonium’s negative value exceeds the cost of LEU.

Some electric utilities will accept free MOX fuel, but only with an additional subsidy from the US government to offset the negative value of plutonium. (Numark, 1996, p. 6).

Plutonium is identical to other nuclear fuels for power reactors. It is not uniquely valuable--it yields the same energy and creates the same amount of waste (Garwin, 1992, pp. 17-20).

Whether plutonium should be treated as an asset or liability is neither subjective nor difficult to determine. All credible studies show MOX use will not be economically feasible for at least the next 50 years. The costs of MOX use are increased by:

1. Criticality issues that necessitate handling plutonium in small (non-critical) amounts.

2. Storing, safeguarding, and handling plutonium because of its potential weapon use.

3. Waste and cleanup created by additional handling and processing needed to make MOX.

4. New plants to make and burn MOX whose costs must be amortized over the life of the plant.

The French now give plutonium a zero value and Germany and Britain have zeroed out any economic value for plutonium (New Scientist, 1995). However, plutonium’s value is not zero. John Gibbons, the White House Science advisor says "plutonium has essentially a negative economic value" (Wald and Gordon, 1994).

Reactors using either MOX or LEU generate the same amounts of energy (Silvestri, 1994).

The quantity of fuel put into a reactor becomes the quantity of spent fuel generated by that reactor.

Thus, only two cost comparisons are necessary to show whether plutonium is an asset or liability:

1. Whether the cost of fabricating reactor fuel is higher or lower when plutonium is used.

2. Whether the cost of disposing of plutonium through other means (vitrification, blending with waste, etc.) and storage of the waste might be lowered by first burning plutonium in a reactor, or whether disposition costs can be reduced by disposing of plutonium without burning.

The National Academy of Science found "the cost of fabricating and safeguarding plutonium fuels makes them currently not competitive with cheap and widely available low-enriched uranium fuels, and...whatever economic value this plutonium might represent...is small by comparison to the security stakes" (1994, pp. 3, 4).

1. Increased storage of plutonium increases costs.

2. Increased amounts of waste increase costs.

3. Waste storage costs are increased by burning MOX because the volume of spent fuel increases.

4. Aqueous reprocessing causes both storage costs and waste volume to increase.

5. Costs are increased by research and development (R&D). Disposition methodologies such as gallium removal that still need R&D are likely to be more expensive than other options.

Use of MOX would obviously occur when an economic advantage accrued from burning plutonium because of increased prices due to a shortage of other fuels (von Hipple, 1995, pp. 2-3).

In the ‘high growth, high nuclear’ scenario of the 1992 International Panel on Climate Change, the world’s nuclear reactors would use 5 million tons of uranium by 2050 and 17 million tons by 2100--far less than the world’s estimated low-cost uranium resources of 21 million tons.

At current prices, there is no incentive either to increase known uranium reserves or to engage in MOX fabrication.

The costs of storing the plutonium between acquisition and its use in MOX are significant:

LEU costs about $790/kg and one metric ton of 3.1% LEU would cost about $790,000 in 1996 dollars (Fetter, 1992, pp. 144-148).

One metric ton of MOX would cost about $1 million--a loss of about $.21/gram of plutonium if plutonium is made into MOX as soon as it becomes available. However, in Europe there is an average storage time of five years before fabrication. Storage costs for five years, plus the charge to remove Americium 241 total about $20/gram. These charges alone reduce the value of plutonium to a negative $20.21/gram in 1996 dollars (Albright and Feiveson, 1988, p. 253).

Chow and Solomon estimate MOX use in commercial reactors will not be feasible for 50 years when the price of uranium yellowcake is expected to reach $110/LB in 1996 dollars (1993, pp. xvi, xvii).

The American Nuclear Society, an industry group, claims more evidence about MOX is needed before costs are competitive with fossil fuels (Protection and Management of Plutonium, p. 12).

Whether it is cheaper or more expensive to use MOX than LEU fuel in reactors been extensively researched and the answer is unambiguous--MOX is more expensive. In the early 1990’s, the costs for MOX were five to six times those for LEU (Berkhout, 1993, p. 6).

DOE’s own Report For Surplus Weapons-Usable Plutonium Disposition states that "in no case can MOX fuel complete [sic] economically with LEU fuel." (1996, p. 4-6)

Further, while competitiveness of commercial nuclear reactors with other power generators is adversely affected by increases in the price of uranium, competitiveness problems in the commercial nuclear industry actually started in 1991 when uranium was at historically low prices. Cheap natural gas and deregulation of the power industry are now forcing many reactors into retirement (Heinz, 1996, Nuclear Fuel, 1996, p. 2).

No commercial reactor operator would willingly accept MOX fuel without subsidies from the US government to compensate for the losses caused by MOX. In addition, a MOX subsidy must also make the power producer competitive with all alternative sources of energy.

However, DOE has declined to "estimat[e] incentive fees, if any, that might be paid to utilities for MOX irradiation services...in addition to the expected reimbursable costs that would be incurred by the utilities" and noted this created "a significant cost uncertainty" in cost estimates (Technical Summary Report For Surplus Weapons-Usable Plutonium Disposition, 1996, p. 4-3).

This ‘cost uncertainty’ springs from three problems that arise when a government agency intervenes in the operation of a market by subsidizing one sector:

1. The difficulty of accurately calculating an appropriate level of subsidy to exactly compensate for MOX use. Such a subsidy, if miscalculated, would create a competitive advantage for nuclear power and drive other power producers out of the market.

2. The inability of the federal government to react to day-to-day changes in market pricing.

3. The implication, given the amounts of plutonium requiring disposition, that subsidies would be guaranteed for twenty to thirty years.

The subsidies required by existing reactor MOX users--after full reimbursement for fuel displacement credits--would be:

Existing Reactors - Low Range (Govt. Financing) $1.92 billion to $3.11 billion.

Existing Reactors - High Range (Private Financing) $2.09 billion to $3.71 billion.

For evolutionary and partially completed reactors, subsidy amounts would be:

Evolutionary and Partially Completed Reactors: $7.7 billion to $11.7 billion.

As commercial reactors become less competitive, the payment to get an energy producer to use MOX is the difference between the cost of MOX and the cost of the most economically competitive fuel source.

If this subsidy was actually delivered to a nuclear power producer, MOX would be economically viable in a market where no form of nuclear energy is competitive. Such subsidies could "save" nuclear power producers who cannot compete in a deregulated environment.

MOX is a ceramic. Gallium must be removed from surplus weapon plutonium before it can be used in MOX because it affects the behavior of ceramics and chemically attacks zirconium, a metal used in cladding nuclear fuel (Toevs and Beard, 1996).

Gallium removal uses either aqueous reprocessing--which creates large quantities of liquid wastes--or removal after plutonium is in an oxide form. It could increase costs of MOX fabrication by about $200 million (Report For Surplus Weapons-Usable Plutonium Disposition, 1996, p. 6-3).

MOX is limited to about 1/3 of the core in existing light water reactors while LEU fuel is used in the remaining 2/3. Of 20 kg of plutonium loaded into MOX fuel assemblies, about 15 will remain after irradiation.

Depending on the composition of MOX, LWRs consume about the same amount of MOX-based plutonium that they create from the rest of the uranium reactor fuel (Rougeau, 1996).

Plutonium from the spent LEU fuel could still be chemically separated and similar plutonium was used to make a simple bombs in the 1960’s (von Hippel et al., 1993, p. 47).

This process also creates 150 tons of spent fuel that must be handled, treated and disposed of at costs that all decrease the economic benefit of reactor use.

Disposal through vitrification would create 100-500 tons of steel-encased glass logs (von Hippel et al., 1993, pp. 48-49) and it only costs about $1.8 billion to dispose of all surplus weapons plutonium (Report For Surplus Weapons-Usable Plutonium Disposition, 1996, p. 4-10).

1. Using weapon plutonium in existing fast reactors without reprocessing would cost $19,500/kg.

2. Using weapon plutonium in LWR's with partial MOX fuel would cost $8,300/kg.

3. Using weapon plutonium in LWR's with full MOX fuel loads would cost $6,000/kg.

4. Storing weapon plutonium for 20 or more years would cost: $4,100/kg.

5. Mixing weapon plutonium with waste and disposing as waste would cost: $1,080/kg in marginal costs over storing the waste alone for total costs of about $5,200/kg (Chow and Solomon, 1993, pp. xxi, xxii).

The National Academy of Sciences estimates a MOX fabrication facility would cost from $425-$1300 million and take ten years to complete (Management and Disposition of Excess Weapons Plutonium, pp. 159-160). These costs must be added to the costs of disposal and subsidies in the following table: