It’s been quite a while since my last smoking gun post on Atomic Insights. It may be time to revive the series to remind nuclear energy advocates to follow the money and know their opponents.
In the battle for hearts, minds and market share it is always useful to know why vocal opposition exists, but it is also worth investing a little time to understand why there may be a knife in the hand of that backslapper who appears to be your friend.
I came across an Atomic Energy Commission report titled Civilian Nuclear Power: A Report to the President. It had been archived by my good friends at Energy From Thorium. The document cover letter from Glenn T. Seaborg, Chairman of the AEC, was dated November 20, 1962, so the “Mr. President” addressed was John F. Kennedy.
Aside: It is worth noting that Chairman Seaborg was almost 3 months late in turning in his homework assignment. In his letter dated March 20, 1962, President Kennedy had asked for the report to be delivered by September 1, 1962. End Aside.
Other than a few very small output AEC demonstration reactors (generally less than 30 MWe), the only nuclear plants that had been commissioned by its publication date were the demonstration reactor at Shippingport (PWR 60 MWe at the time), Dresden (BWR – 250 MWe), and Yankee Rowe (PWR – 250 MWe). Big Rock Point (BWR – 67 MWe) and Humbolt Bay (BWR – 63 MWe) were nearly complete and being tested. The nuclear vendor order books were virtually empty.
In other words, the industry was barely past the crawling stage. In order to move forward, the AEC proposed the following statement of objectives.
The overall objective of the Commission’s nuclear power program should be to foster and support the growing use of nuclear energy and, importantly, to guide the program in such directions as to make possible the exploitation of the vast energy resources latent in the fertile materials, uranium-238 and thorium.
More specific objectives may be summarized as follows:
- The demonstration of economic nuclear power by assuring the construction of plants incorporating the presently most competitive reactor types;
- The early establishment of a self-sufficient and growing nuclear power industry that will assume an increasing share of the development costs;
- The development of improved converter and, later, breeder reactors to convert the fertile isotopes to fissionable ones, thus making available the full potential of the nuclear fuels.
- The maintenance of U. S. technological leadership in the world by means of a vigorous domestic nuclear power program and appropriate cooperation with, and assistance to, our friends abroad.
The role of the Commission in achieving these objectives must be one of positive and vigorous leadership both to achieve the technical goals and to assure growing participation by the equipment and utility industry as nuclear power becomes economic in increasing areas of this country and the world at large.
(AEC, Civilian Nuclear Power, A Report to the President — 1962 P. 48)
Near the end of the report, starting on page 61, there is a section titled “Possible Industrial Impacts of the Nuclear Power Program.” It begins with the following statement:
An important consideration in a transition such as that herein proposed is its possible impact on various segments of industry. We have already mentioned the fear that the existing nuclear equipment industry might suffer severely if construction of full-scale nuclear power plants does not accelerate at least somewhat. The strengthening of this industry through such an acceleration would not only improve the prospects for nuclear power but it would add strength to our general technological and industrial base and in particular would give added flexibility and capability for the construction of reactors needed for other purposes such as defense and the space program.
(AEC, CNP p. 61)
Then comes the part that made me classify this as a smoking gun.
Concern has been expressed lest conversion to nuclear power might cause severe dislocations in the coal industry and hence on transportation, especially the railroads. This is definitely not the case.
(AEC, CNP p. 61)
The report does not detail who expressed the concerns or how they expressed the concerns. It is important to recognize that the AEC — which had laid out an aggressive, subsidized growth program in 60 pages worth of material — realized that the President had either heard the concerns or would hear them as soon as the report was made public. It is also worth noting that the AEC authors recognized the close linkage between the coal industry’s interests and those of the railroad industry that moves most of the nation’s coal.
The authors attempted to defuse the concerns so that they would not derail the program that they wanted the President to approve and promote.
…even absorption of the total power industry by nuclear installations would still leave no dearth of markets for fossil fuels. Only a miraculous switch to nuclear energy by other industries as well could slow a rapid growth in those markets. Furthermore, the electric industry itself is growing at such a rapid rate that no possible growth of nuclear installations could prevent power generation from consuming greatly increased amounts of fossil fuels for several decades — not, indeed, until the absolute rate of growth of nuclear power equals that of total power.
(AEC, CNP p. 61)
The people writing, reviewing and approving the report exposed the fact that they were probably bureaucrats, scientists and engineers, not businessmen. They were out of their area of expertise and unaware of the importance that businesses place on continued annual sales growth. They demonstrated little understanding of market dynamics, the need to raise barriers to entry, or the importance of sales growth projections to encourage the infrastructure investments that enable scale-based cost reductions.
Here is another interesting excerpt:
The concern of the coal industry has been brought about primarily by two factors. During the first decades of this century, marked increases in efficiency, especially in power generation, reduced the consumption required to carry out a given task. Although there is still room for improvement, this effect can never be so great again.
More recently the major factor in the decline of coal consumption has been a loss of markets to other forms of fossil fuels. During the past 15 years, annual consumption of coal decreased from 550 million tons to 375 million tons, in spite of an increase from 86 million to 180 million tons used for electric power generation.
(AEC, CNP p. 63)
Read that again. The AEC wass recommending a multi-billion dollar (in 1960s dollars) program designed to encourage electric utilities to begin building significantly more nuclear power plants. Based on its own numbers, the AEC should have seen that the coal industry already had legitimate reasons for feeling that its survival was threatened. It was losing sales every year, with a 32% decline over a 15 year period.
There was only one bright spot in the industry’s numbers, the sales growth in the electric utility sector, which was 109% over that same 15 year period. My guess is that utility sales growth was a prominent part of the industry’s recovery plans. It should have dawned on the AEC that they were aiming at the foundation of the coal industry’s future hopes.
The decrease (in annual sales) was brought about by an essentially total loss of the railroad market and other heavy losses in manufacturing and home heating. The result is that, whereas in 1947 the electric utilities consumed only about 16 percent of all the coal, in 1961 they accounted for almost half. Even though the other losses should continue (many have shrunk so far there is no much more to lose), the growth in power installations will inevitably more than offset the loss.
(AEC, CNP p. 63)
So that was the AEC’s political pitch. Even though electric utilities were the only customers purchasing more coal each year, and even though the coal industry had some barely healed battle scars from recently losing two of its most important markets — locomotives and home heating — the AEC believed there was enough growth in electrical power generation to support a large, subsidized program to encourage nuclear power plants and also encourage new coal capacity that would burn sufficient quantities of coal so that their annual sales could, perhaps, approach the level achieved 15 years earlier.
Just getting back to the 550 million tons per year sold in 1947, the coal industry needed to sell another 175 million tons per year to utilities manufacturing electricity, again doubling its annual sales into that market. Think about this as if you were employed as a coal salesman. The last doubling, from a base of half the size, took 15 years of hard work.
Why would anyone in the industry have been willing to accept a strong competitor in that challenging task under the assumption that power company demand growth would be fast enough for both fuels? If you were a coal person at that time, wouldn’t you have used whatever political clout you could muster to hamstring the development plans. Think about the other option – most of the earlier losses were to the multinational oil and gas industry. Which target, the infant nuclear energy industry or the well established oil and gas industry, would be easier to hit?
I’m pretty sure this is the earliest documented instance in the series that discusses why the established energy industry had good motives for opposing nuclear energy developments, especially those financed by their tax dollars. It also shows that it was taking some political action to slow nuclear energy’s growth plans.
The coal production and transportation industry’s opposition was entirely rational and should be simple to understand. After all, what large taxpaying and influential commodity business would be happy about its money being used to finance an industry aimed directly at its strongest markets?
This report is also worth reading and comparing to the historical decisions that followed its submittal. Not only did the AEC inform the President that the program they proposed would have an effect on the coal and rail industries, but the AEC also provided those industries with details about ways to hinder nuclear energy success.
None of the strategy courses I took during my military career advised anyone to arm their opponents with specific knowledge about vulnerabilities or potential attack vectors. Neither have any of the business books I’ve read over the years.
If this topic really interests you, I recommend reading Smoking gun part 26 – Coal lobbies versus National Reactor Testing Station.
Fox News (March 29, 2011) U.S. Coal Companies Poised to Benefit Due to Nuclear Energy Concerns