CIVILNUCLEARTRADEINITIATIVE:

StrengtheningtheCompetitivenessof theU.S.CivilNuclearIndustry

December2011 DavidKincaid

U.S.CivilNuclearIndustrysCompetitiveStrengths
TheUnitedStatespioneerednuclearpowerdevelopment. Westinghousedesignedthefirstfullycommercialpressurizedwaterreactor. GEdesignedthefirstcommercialplantfortheboilingwaterreactor. TheUnitedStateshasunmatchedexperiencewithcivilnuclearenergy. 104operatingcivilnuclearreactors(thelargestfleetintheworld),generatingthemostnuclear powerwiththelargestinstalledcapacityworldwide. Overfivedecadesofexperiencewithcivilnuclearplantoperation. TheUnitedStateshastopperformingcompaniesallalongthenuclearvaluechain. 12oftheworlds25highestperformingreactors.(WorldNuclearAssociation) GEHsABWRreactorisonlyGenIIIreactorinoperation. WestinghouseAP1000reactorsbeingconstructedinChinaonschedule. 255companieswithNStampsinmid2008,upfrom120inearly2000s.(NEI) Over20,000U.S.SMEcompanies(NEI) U.S.designedreactorshaveasmallerfootprintthanthecompetitionandtheindustryisknownfor supportingthedevelopmentoflocalindustry. TheUnitedStatesnuclearregulatorysystemisrecognizedastheglobalgoldstandard.

Global Market with an estimated value of $500-740 Billion

Background:LifeofaNuclearPowerStation
PreConstruction Engineering&procurementcontract:$512bn Siting andenvironmentalanalysis,licensing applications Longleaditemsordered(e.g.reactorvessel) Construction 400,000cubicyardsofconcrete 66,000tonsofsteel 44mi.ofpipingand300mi.ofelectricwiring 130,000electricalcomponents 1,4001,800jobs(peakemploymentashighas 2,400) Operation Maintenance&refuelingoutagesevery1824mo. (onethirdoffuelassembliesreplaced;1,000 additionalworkers) 20metrictonsofuraniumfuelconsumedannually* Steamgeneratorsandreactorvesselheads upgradedwhennecessary Poweruprates occasionallyimplemented(~2%to 20%increaseinmegawattcapacity) Annually:$430millioninlocalsalesofgoodsand services;$40millionIntotallaborincome;$20 millioninstateandlocaltaxes* 400700permanentjobs* Supplieselectricityto623,000peopleeachyear (citythesizeofBostonorSeattle)* Decommissioning Radioactivecomponentsand structuresarecleanedordismantled, packaged,andshippedtostorage sites;containmentandturbine buildingsdeconstructed Usedfuelmanagement Usedfuelstoredinsteellined, concretepoolsorinmassivesteeland concretecanisters Reprocessingfacilitiesrecycleused fuelfornewfuelandtoreduce volume,heat,andtoxicity Recyclingbyproductsand/orused fuelsenttopermanentrepository

10

20

30

40

50

60

70

80

90

100

PreOperation (610years)

Operation (40-80 years)

Decommissioningand usedfuelmanagement

*Basedona1,000MWnuclear powerplant

Source:NEI

ChallengesFacingU.S.Industry
LackofFinancingOptions.
U.S.utilitieshavelimitedmarketcapitalization($1517billion).

Stateownednatureofmostoftheforeigncompetition.
Includesdirectgovernmentownershipandmanagement,favorablefinancing,industrial coordination,andsupportformanufacturers.

Needforadditionalbilateralnuclearcooperationagreements(123Agreements)
Requiredforlegalcivilnucleartrade. UnitedStatescurrentlyhas23agreementscovering47countries,plusTaiwanandtheInternational AtomicEnergyAgency. KeypotentialmarketsnotcoveredincludeVietnam,SaudiArabia,Malaysia.

Vitalbutcomplicatedexportcontrolsprocess.
Multipleagenciesresponsiblefordifferentsegmentsofsector;timeintensive,bureaucratic

Lackofaglobalnuclearliabilityregime.
Complicatescommercialarrangementsandpreventsswiftandcertainpaymentofdamagesin unlikelyeventofnuclearaccident.

ErosionofasignificantpartoftheU.S.manufacturingcapacity.
Thelackofdomesticordersisasignificantcauseofthiserosion.

ITAsCivilNuclearTradeInitiative(CNTI)
Objective: IdentifytheU.S.nuclearindustrystradepolicychallengesandcommercial opportunities.CoordinatepublicprivatesectorresponsestosupportthegrowthoftheU.S.civil nuclearindustry.
IndustryInput USGCoordination TradePolicyand PromotionActivities CivilNuclearTradePolicy andAdvocacyMissions BilateralCommercial NuclearDeclarations NuclearStandards Workshops U.S.IndustryProgramat theIAEA PublicPrivateSectorCSC PromotionMission StakeholderResources

Formally:consensus advicefromindustryvia 30memberCivilNuclear TradeAdvisory Committee(CINTAC) Informally:outreachto anddiscussionswith industryreps

ChairTradePromotion CoordinatingCommittee CivilNuclearTrade WorkingGroup CreateSubWGs on prioritymarkets Sharebiannualmarket prioritizationstudies

CivilNuclearTradeWeb Portal CivilNuclearTrade ExportersGuide SMRReport IndustryBriefings PromotionalMaterials ExportData Webinars

5

StakeholderResources
Civil Nuclear Trade Initiative Website www.trade.gov/civilnuclear

Topic Specific Reports

Export Licensing Interactive Guide

WorldwideNetworkofSupport
Centersin109 U.S. cities

and77countries

On the ground assistance through our U.S. and Foreign Commercial Service Raises awareness of commercial opportunities Relays information about civil nuclear developments Provides introductions to partner organizations, government representatives, and commercial contacts

CurrentU.S.CommercialApproach
Standards Licensing Bilateral cooperation
Foreign Policy 123 Agreements Infrastructure Nonproliferation Advocacy Trade Promotion Industry analysis Commercial Liaisons Dual Use Licensing

Financing Policy has demonstrated no support for financing nuclear projects.

Financing for reverse trade missions

Currently opposed to financing nuclear projects. Takes lead from Treasury.

R&D Fuel Cycle Licensing Nonproliferation Bilateral Cooperation

Export Credit Financing Export content constraint. Nuclear projects have 1020% U.S. content.

Owner/Operators

Political risk insurance Currently opposed to nuclear projects other than uranium mining.

Investors Designers Fuel Service Disaggregated Approach

EPC contractors

Consulting

Mining
8

U.S.OpportunityCosts:NewNuclearPowerPlants
Finland Areva $4.2bn Vietnam Rosatom $5.6bn

Brazil $15.8bn
Poland $21 bn

China $24.8bn India $50bn

UK Areva $27.5bn

UAE Kepco $20.4bn

China Westinghouse $8bn

Czech Republic $27.5 bn

Lithuania $8 bn

PastLosses

Wins

FuturePotential
9

*Sumsrepresentprojectvalue,notnecessarilyU.S.exportcontent.This is only illustrative and does not include all examples.

NeedtoIncreaseCommercialBenefitsfromNuclear CooperationwithOtherCountries
TheUnitedStatesislosinginternationalmarketshareamidtheglobalexpansionof nuclearpower. Strategicdomesticmanufacturingbaseisindecline FailuretocounterforeignstateownedcompetitioniscompromisingU.S. nonproliferationandeconomicgoals TheU.S.nuclearindustry,unlikeitscompetition,isindependentfromthe governmentandisoftendisadvantagedbecauseofthiswhencompetingabroad. ForeigncompetingnationsoffermoretopotentialcustomersthantheUnitedStates intermsoffinancing,trainingandeducationalexchanges,andGtoGcommunication insupportofnuclearprojects. ToleveltheplayingfieldforU.S.industry,theUnitedStatesshouldapproachcivil nuclearengagementabroadbyinstitutingandcommunicatingsupportinastrategic, methodical,andcoordinatedmanner:aTeamUSAapproach.

10

Drivers
GAO ReportNovember 2010
Requested by Berman & Ros-Lehtinen
CivilNuclearTradeAdvisoryCommittee(CINTAC)

Industry Consensus Advice

GovernmentWideStrategyCouldHelpIncreaseCommercial BenefitsfromU.S.NuclearCooperationAgreementswithOther Countries

GAORecommendations: 1. Identifywhatadditionalnuclearexportdataandinformationmay benecessarytobetterquantifytheexportbenefitsassociated withnuclearcooperationagreements; 2. Review,withaneyetowardstrengthening,Commercesexisting nuclearexportpromotionstrategydocumentto,amongother things,identifykeymarketopportunitiesforU.S.nuclear industry,anddevelopkeygoalsandanimplementationplanfor achievingthesegoals; 3. ConsiderwaysfortheTPCCCivilNuclearTradeWorkingGroupto obtainamorecomprehensiverangeofU.S.industryviews; 4. GAOrecommendstheabovebecauseCommerceneedsto strengtheninteragencycoordinationeffortstopromotenuclear tradeabroad.

CINTACIRecommendations: 1. CreateateamofU.S.industry,government,academia,and researchlabs whichistechnologyneutral toadvancetheU.S. nuclearindustrysinterests; 2. WorkwiththeU.S.Treasurytoencourageinternationallending institutionstoliftprohibitionsofsupportfornuclearprojects; 3. ContinuetheUSGsstrongsupportofinternationaltrademissions tofacilitateU.S.industrysentryintotheglobalcommercial nuclearmarketandincreaseitsleverageofgeopolitical relationshipstoensureopenmarketsandconsistentfairplayin commercialnucleartendersandbiddingprocesses; 4. Developaroadmap/toolkitdirectedatforeigngovernmentsand industrytohelpthemunderstandthetreaties,regulationsand processesrequiredforforeignnationsandindustrytocooperate andtradewiththeU.S.industry.

Industry and the GAO agree: Commerce needs to increase its coordination of the USGs nuclear export efforts, specifically increase its engagement with industry, provide more effective tools for stakeholders, improve data on U.S. nuclear exports, and continue its support of nuclear energy focused trade missions and events.
11

ComponentsofSuccessfulCivilNuclearTradePromotion
Components Prioritized markets Earlyengagement(upto twoyearsbeforeatenderisissued) Assessmentofacountrysnuclearinfrastructureneeds(includingtraining/education, regulatory,legal,fuelcycle,safety,andsafeguards) Responsivenesstoidentifiedneeds(involvingUSG,labs,universities,industry) USGPOCidentifiedforwhom foreigndecisionmakersliaiseoncommercialaspectsof nuclear program Sustained andconsistentnuclearrelatedpresenceincountry HighlevelUSGinvolvement USGsupportcommunicatedformallyandinformallyon aregularbasis ChampionwithintheUSGtodrivetheeffort

Package and present these components to priority countries

12

Recommendation:TeamUSA
ConveyAdministrationSupportforNuclearEnergy(andtheIndustry)
IssueapublicUSGstatementonnuclearenergythatwillincludesupportfortheU.S.nuclearindustrysparticipationinthe global expansionofnuclearpowerasanationalinterestandbeparticularlysalientintheaftermathofFukushima. HostaU.S.civilnucleartradesummittodemonstratetoanaudienceofforeigndecisionmakerstherangeofU.S.technologyand services availabletosupportnuclearenergydevelopment,includingUSGprogramstoassistcountriesdeploynuclearpowersafelyandsecurely.

EstablishaDirectorofNuclearEnergyPolicyattheWhiteHouse
RolewilldefineU.S.nuclearenergypolicy;identifypriorities;ensurealignmentofUSGprogrammaticsupportforpriorities;developand articulatetalkingpoints(tobeusedinteragencywide)onnuclearenergyissuesandprojects;anddevelopandleadacongressional outreachstrategyinsupportofnuclearenergy.

EstablishaNuclearTradeAdvisoryCenter
Centerwillactaspreferredpointofcontactforforeigngovernmentsandindustry oncommercialnucleardevelopments.Willproduce U.S.industrypromotionandexportinformationforforeigngovernments;liaisewithforeigngovernmentofficialsonbehalfof theindustry; andprovideguidancetoU.S.nuclearcompaniesontheexportprocess.HousedinDepartmentofCommerceandstaffedbyexistingcivil nuclearequitiesinITA(CivilNuclearTradeInitiativeTeam,AdvocacyCenter,etc.),aswellasdedicatedsupportfromstaff in otherrelevant USGagencies.

EstablishaPublicPrivatePartnership
TheintentionofthepartnershipistopromoteworldwidetheU.S.industryandU.S.safetyandsecuritybestpractices.Activitieswill include(A)organizingandsponsoringTeamUSA trainingandexchangesforpotentialforeigncustomersthatwouldinvolveU.S.companies, utilities,federalagencies,U.S.labs,anduniversities;(B)facilitatingTeamUSA consortiawhenbiddingonprojects,asappropriate/legal;(C) leadingTeamUSA trademissions;andD)developinganddistributingTeamUSA marketingmaterials.

These recommendations have been proposed by or developed in conjunction with the Civil Nuclear Trade Advisory Committee
13

Questions?
InternationalTradeAdministration CivilNuclearTradeContacts SarahLopp DavidKincaid sarah.lopp@trade.gov david.kincaid@trade.gov 202.482.3851 202.482.1706