The low cost and abundance of natural gas is rapidly causing utility companies to replace coal plants and aging nuclear power plants with gas-fired power plants. The widespread transition to natural gas highlights a need for the nuclear industry to focus on innovation as a means of regaining its competitiveness. Yet innovation requires long-term investment, and the nuclear sector faces structural difficulties in procuring the necessary funds to develop promising technologies.
Republicans, who now control both houses of Congress, draw a strong distinction between basic research, which they generally accept as a federal responsibility, and applied research, which they believe lies strictly in the province of industry. Absent a change in congressional control, the prospect for significant federal support of any long-term applied research, including nuclear technologies is poor.
At the same time, changes in the tax code and securities trading costs and rules over the years have had a significant impact on the ability of the private sector to fund long-term research, applied or basic. In 1960, the average holding time for a share of stock was eight years. Now, it is only four months. Today, Wall Street’s demands for next-quarter earnings, coupled with executive compensation based on stock performance, have all but eliminated long-term investment in industrial research. For the nuclear industry, an outdated regulatory framework only exacerbates the problem, lengthening time to market and requiring even more patience from investors than is true in other industries. Applied research central to the development of small modular and thorium reactors, for example, require patient capital that is simply hard to find today.
Innovations that will enable nuclear energy to compete with natural gas in the short term and deliver on the promise of carbon-free electricity generation in the long term will require changes in: (1) private sector behavior (on Wall Street or in corporate board rooms); or (2) in acceptance of public financing of long-term applied research; or (3) both.