On Feb. 9, the Nuclear Regulatory Commission (NRC) granted the first license in three decades for construction of a new nuclear electric power plant in the U.S. This development presents an important policy question: if the country is at the start of a renaissance of nuclear power as a baseload source of electricity or if this event is unique and will not be replicated for litigation, economic or safety reasons.

Nuclear plants are far more expensive (an estimated $7 billion) than other electricity-generating facilities of comparable capacities, and the siting, regulatory approvals and construction can take up to a decade. Modern reactors have useful lives of 60-70 years, during which the relative costs of fuels for power generation will shift dramatically, both up and down. Public opinion also is subject to significant swings about the safety of nuclear power. The meltdowns of three reactors at the Fukushima plant in Japan and the recent earthquake on a previously undetected fault that knocked out a nuclear plant in central Virginia have reinforced public awareness of these risks. As a result, the business decisions utilities face when deciding whether to invest in new nuclear plants are unusually difficult.

The U.S. currently has 104 operating nuclear plants that generate approximately 20 percent of its electricity (significantly less than in France and Japan). The last construction permit for a new reactor was issued in 1978. The Three Mile Island nuclear meltdown in 1979 brought new construction to a halt for an indefinite period. As Daniel Yergen describes in “The Quest”, despite the doubling of demand for electricity since the early 1980s and the hiatus on new construction, nuclear power’s share of the electricity market has not declined significantly over this 30-year period due to increases in operational efficiencies in existing plants.

In response to growing concerns over global warming, and reflecting the excellent safety record of American nuclear plants over the last 30 years, both the electric utility industry and elite public opinion have been willing to give renewed consideration to nuclear energy as a fuel choice. Nuclear power presents substitution effects in their starkest form. The plants do not produce carbon emissions. On the other hand, the spent fuel will present a health risk for thousands of years, and the risk of a nuclear accident is a constant low-probability-of-occurrence/high impact concern. Political stalemate has produced a schizophrenic outcome concerning radiation risk. The government has abandoned efforts for long-term disposal of nuclear wastes in Yucca Mountain, Nevada. Thus, spent fuel rods will remain stored in cooling ponds at nuclear facilities located near urban areas.

In 2010, the Obama administration announced conditional loan guarantees of $8.3 billion to allow a Georgia utility to build two new reactors at an existing nuclear facility. The new reactor design is a substantial improvement over the 40-year-old technology in existing plants. Importantly, that technology incorporates passive safety systems that are designed to cool the reactors automatically during an emergency. The NRC approved the construction permit for these facilities by a vote of 4 to 1, based on disagreement about the adequacy of the safety mechanisms. Those concerns will feature prominently in the legal challenge announced by nine anti-nuclear groups.

Rational regulatory planning for the electricity industry calls for diversifying fuel choices among a broad range of sources, with careful attention to the full range of health and safety risks each approach presents and careful balancing among the various alternatives. The NRC approval signals the start of a renewed campaign for the hearts and minds of the American people about the risks of nuclear power.