Nuclear Weapons

Curious Omission in a Congressional Budget Office Report on Plutonium Reprocessing

12.13.07 | 4 min read | Text by Ivan Oelrich

On 14 November, Peter Orszag, Director of the Congressional Budget Office (CBO), testified before the Senate Energy and Natural Resources Committee about the relative costs of plutonium reprocessing and direct disposal of used nuclear fuel. The oral testimony was quite brief and, unless otherwise noted, my comments are based primarily on the longer and presumably more carefully prepared written testimony. The testimony contained many errors, not all of them trivial, but one gigantic omission discussed at the end of this essay is inexcusable and calls into question the credibility of the entire CBO report.

When Mr. Orszag writes that “Uranium-235 is relatively scarce and typically makes up less than 1 percent of mined uranium ore” it could just be poor wording—235 does not typically make up less than a percent, it is 0.71% everywhere in the world (with one fascinating exception)—but I don’t know how that ambiguity is going to affect the Committee’s decision about whether to support a national plutonium reprocessing program to separate the plutonium and other components of used fuel from commercial nuclear reactors.

When he writes that, “Under reprocessing—which is done in a few countries but not the United States—a reprocessing facility recovers the useful components of the spent fuel (uranium and certain forms of plutonium) and returns them to the fuel cycle, where they are combined with newly mined uranium to produce more reactor fuel …” I start to worry because reprocessing recovers all forms of plutonium, not certain forms, and this is an error that is starting to affect the question of whether we should reprocess the plutonium from commercial nuclear reactors.

When he writes that, “Spot prices for uranium have recently reached historical highs (adjusted for inflation), but high prices would have to persist for decades to increase the economic viability of reprocessing” and later in his testimony, “Although uranium prices are currently high by historical standards, it is not certain whether high prices will continue in the future or whether current prices will encourage additional uranium development that could lower prices,” he addresses an issue that directly affects the attractiveness of reprocessing. He should have added that, at the time he spoke, uranium spot prices had already tumbled by almost half from their summer peaks and that the surge in prices was far more likely to be a replay of the bump in the late 70s than a long term increase.

But, really, all these problems, and there are others, are small potatoes compared to the great glaring omission: The CBO study, in developing its cost estimates, used two other studies, one by a respected group of academics at Harvard and the University of Maryland—including John Holdren, the current president of the American Association for the Advancement of Science and Steve Fetter, the Dean of the School of Public Policy at Maryland—and the other by the Boston Consulting Group (BCG). Starting from the cost estimates in these two studies, CBO essentially splits the differences between their cost estimates to arrive at a “best estimate” for the economic viability of plutonium reprocessing. The authors of these two reports were not mentioned at all in the oral testimony before the committee. But the BCG report was prepared on contract for Areva, the French company, partially owned by the French government, that hopes to sell the United States a multi-billion dollar reprocessing facility. Search as I may, I could not find in the prepared text of CBO testimony any mention of the origin of this cost study. Finally, I did find a reference, in a parenthetical comment in a footnote, and then in a caption in a chart. But the CBO report did not reprint this key paragraph from the BCG report:

“This report was prepared by The Boston Consulting Group at the request of AREVA. BCG reviewed publicly available information and proprietary data provided by AREVA, but did not undertake any independent verification of the facts contained in those source materials. Changes in these facts or underlying assumptions could change the results reported in this study. Any other party using this report for any purpose, or relying on this report in any way, does so at their own risk. No representation or warranty, express or implied, is made in relation to the accuracy or completeness of the information presented herein or its suitability for any particular purpose.”

In other words, this is not some independent, disinterested report from some unheard-of “Boston Consulting Group,” this is an Areva study; Areva just hired a contractor to crunch a couple of numbers, write some narrative, and put a cover on it. Can anyone imagine that the origin and motivation for this report would not be of immense interest to the members of the Committee who are trying to judge the credibility of competing cost claims? Not that Areva’s numbers are necessarily wrong but if the Congress were deciding on purchase of, say, a new fighter plane, they would not unquestioningly use cost calculations from, say, Boeing if Boeing is hoping to win a huge government contract to manufacture it. Moreover, the difference between the two reports is not trivial. BCG estimates that reprocessing reactor waste will cost $30 more per kilogram than direct geological disposal while the Harvard study estimates that reprocessing will cost $700 more per kilogram, that is, a twenty three times greater addition.

CBO owes it to Congress to be more than clear, to be emphatic, when it is basing its reports on “analysis” carried out by clearly vested groups with the potential to make huge profits from government contracts decided by the vote of Congress.