Report

A Nuke-Out Punch

A court ruling in Japan could freeze Tokyo's plans to restart nuclear reactors after Fukushima.

While the world watched one huge energy breakthrough in Asia this week, another potentially big energy development slipped by with little notice: a Japanese court nixed the long-awaited restart of the country's nuclear reactors.

That could pose a huge headache for the government of Shinzo Abe, which is committed to a nuclear restart as a way to stanch the bleeding in an economy battered over the last two years by high bills for imported energy. And it could further push Japan toward Russia in a quest to find fuel to keep one of the world's biggest economies humming.

The Fukui District Court in Japan ruled this week that safety concerns should preempt a restart of a pair of nuclear reactors run by Kansai Electric Power Co., which were the first out of the gate as the country began to ramp back up atomic power after the 2011 Fukushima accident, but which were taken offline last year for maintenance.

The court essentially argued that avoiding catastrophe is more important than avoiding high power bills, and suggested that the Japanese nuclear industry had not really learned the lessons of Fukushima, especially when it comes to protecting against earthquakes and tsunamis.

The court said that it had doubts whether the "safety technology and equipment" at the Kepco reactors would be sufficient to guard against a similar disaster. "To the contrary, it forces us to admit that this is a fragile notion without a firm basis, predicated on an optimistic outlook," the court ruled, according to Reuters.

The court dismissed the utility's argument that power bills will be higher without nuclear energy, arguing that, as the Japan Times put it, "the real loss of national wealth is when people become unable to live stable lives on their land." Nearly 100,000 people remain displaced from the area around Fukushima because of radioactive soil.

In Japan these days, in other words, Godzilla is not the only big scary thing unleashed by nuclear power.

The district's court ruling by itself doesn't legally kneecap the nuclear restart; earlier this month, an anti-nuclear advocacy group lost a similar legal effort to halt the restart of Kepco's Ohi reactors, and higher courts have tended to side with power companies thus far. Still, it certainly makes it a much tougher political push than before. Public opinion has been consistently antinuclear since Fukushima. The latest poll this spring showed 59% opposed to any nuclear restart, with only 28% in favor.

"This is definitely bad news for the Abe cabinet, which has been trying to regain confidence" in the nuclear restart, said Jane Nakano, an expert on Asian energy at the Center for Strategic and International Studies.

Indeed, the Abe government is committed to putting nuclear power back in the energy mix, after three years with virtually no contribution from atomic power, and after the previous government had advocated phasing out nuclear power altogether.

This spring, the government unveiled its latest energy plan, which called nuclear energy an important source of baseload power, even if the government acknowledged that it will be difficult after Fukushima to again rely on nuclear energy for one-third of Japan's electricity generation.

The Japanese press seized on the court ruling to criticize the government's love affair with nuclear power. "The ruling was intended as a strong warning against a headlong rush to bring reactors back online based only on limited scientific knowledge," chided the Asahi Shimbun on Thursday. "The Abe administration and the power companies need to stop and reflect" on the ruling, the Japan Times said.

Industry Minister Toshemitsu Motegi said that the court ruling would not affect the safety review currently being carried out by Japan's Nuclear Regulation Authority, which is charged with making sure that the country's 48 reactors comply with a new, more stringent set of post-Fukushima safety regulations. The NRA is currently inspecting 18 reactors at 11 different plants to see if they can be restarted. The utility immediately appealed the district court ruling, which it called "regrettable."

So what does this mean for Japan's energy future? In the short term, regardless of what happens with the legal wrangling over the Ohi plants, there's little prospect of an immediate nuclear ramp up: delays in interpreting the new NRA rules have kept almost all the country's reactors offline.

That will leave expensive, imported natural gas as the country's main fallback. And it is fantastically expensive: the latest Japanese trade figures show cargoes of liquefied natural gas cost $18.3 per million British thermal units, a standard measure--or more than four times the cost of natural gas in the U.S.

Importing all that fuel is devastating Japan's trade balance, which for thirty-odd years before Fukushima had always been in the black. Since then, the deficit has steadily widened. In 2013, Japan's trade deficit ballooned to about $112 billion. This year, things actually look worse: data through the first four months show a trade deficit of about $56 billion.

One option that Japan has been pursuing since Fukushima is closer energy ties with Russia, which is making its own push to Asia. Even after Russia's annexation of the Crimean peninsula, Russian officials flew to Tokyo to talk up the prospect of big energy deals between the two countries.

Lingering question marks about the pace and scale of the nuclear restart will only make Japan more eager to line up long-term natural gas contracts with Russia, which is working hard to elbow its way into the global LNG trade. One important side effect for Japan (and South Korea, another big gas importer) from Russia's energy deal with China this week: it should put downward pressure on Asian LNG prices, which could ease some of Japan's economic woes. But that won't likely happen until the beginning of the next decade.

By then, with any luck, Japan's own investment in "burning ice," or methane hydrates may start to pay dividends. But one thing is now abundantly clear: the road to Japan's nuclear restart will not be quick or easy.

Buddhika Weerasinghe - Getty

Report

Into Thin Air

Congress and Obama are planning Reagan-era expenditures to modernize U.S. nuclear weapons under sequestration-era budgets. What could possibly go wrong?

The House has passed the fiscal 2015 National Defense Authorization Act. Like last year and the year before that, the bill constrains the Pentagon's ability to implement the New START agreement with Russia -- which limits both sides to 1,550 deployed strategic warheads -- while simultaneously making budget decisions that will result in much deeper cuts than that. 

I have already written at length about the perverse state of affairs afflicting the U.S. nuclear deterrent. President Barack Obama and Congress are arguing at knife point over relatively minor cuts, when the ugly truth is this: The budget cuts they have imposed will bring the number of U.S. deployed strategic nuclear warheads well below 1,000 by about 2030. Neither the president's budget nor the House's version of the National Defense Authorization Act (NDAA) include any hint that Obama or his opponents have come to grips with this reality. 

The problem is that, in 2010, the president, in order to get New START through the Senate, committed to meet the treaty's limits by deploying 60 nuclear-capable bombers, 400 intercontinental ballistic missiles, and 240 submarine-launched ballistic missiles. And he promised to invest significantly in replacing all three legs of the nuclear triad, committing to spend about $200 billion over 10 years to sustain and modernize the nuclear deterrent. But then the 2011 Budget Control Act resulted in significant across-the-board cuts through "sequestration." How the United States is going to spend more on nuclear weapons while drastically cutting defense spending has never been addressed.

To make matters worse, the first 10 years of investment tell only part of the story. Over the next 30 years -- the amount of time it will take to replace the triad -- the United States will spend about $1 trillion to sustain and modernize its nuclear forces.

One can argue about whether $1 trillion over 30 years is a lot of money. (I find the argument that it's not works better inside Washington than out.) We can argue whether the current nuclear forces provide that sort of value, what sort of nuclear relationship Washington is likely to have with Moscow and Beijing, and whether those resources might be better spent on conventional capabilities. At some level, however, these discussions are academic because the United States simply doesn't have the cash.

The problem is not finding a trillion dollars over 30 years. The problem is that the United States is now facing what a Defense Department official called a "modernization mountain" -- a period of very high expenditures on nuclear weapons in the 2020s. Although the official in question was strapping on his crampons, this story is going end like Jon Krakauer's Into Thin Air. (Spoiler alert: Lots of climbers die.) Reports and studies that account for nuclear spending tend to make 10-year estimates, stopping just before the modernization mountain gets steep in about 2024 and creating the illusion that the expenditures are feasible. In truth, things are going to get really, really ugly.

The reason for this sorry state of affairs is political: No one in Washington wants to take responsibility for the scale of the coming reductions. In 2013, the president made a rather timid proposal in Berlin to reduce deployed forces by one-third, despite the fact that deeper reductions are imminent. His political opponents, some of whom want more nuclear weapons, so categorically oppose Obama and his signature call for a world without nuclear weapons that many would probably happily sacrifice the triad for a chance to accuse the president of unilateral disarmament. The result is that Obama is trudging up the modernization mountain, egged on by preposterously bellicose opponents, in total denial about the brewing budget storm that will sweep them all off the mountain and bury the triad in ice. 

To get a sense of the problem, it helps to look comprehensively at the plans to replace all three legs of the triad during the 2020s. Here are the three major programs, along with current plans for new nuclear warheads. The following cost estimates are not ones I made up. All I have done is curate existing estimates and timelines, providing a few comparisons:

  • A new ballistic missile submarine, also known as SSBN(X). Government cost estimates for building 12 boats are $77 billion to $102 billion through 2042. The Navy needs to bring one boat into service each year after 2030. (Because you pay for each boat before it is built, procurement ranges over 2019 to 2033.) Any slippage, even by one year, will reduce the total number of boats. Right now, the plan is to drop to 10 boats, before going back up to 12 after a number of years. If you believe that, I have some oceanfront real estate in Albuquerque where we can base the last two.
  • A new heavy bomber, also known as LRS-B. The most common estimate is $55 billion for 80 to 100 aircraft, though that number does not include research and development costs. The bomber is dual-capable, but the Air Force plans to delay certifying it to carry nuclear weapons. (The Air Force promises to get around to certifying the aircraft for nuclear missions eventually. We can base any nuclear-capable LRS-Bs at the new naval base in Albuquerque.) The new bomber also needs a new cruise missile, which goes by the abbreviation LRSO. The LRSO program is reportedly in disarray with cost estimates between $20 billion and $30 billion -- though some of that cost includes a new warhead.
  • A new intercontinental ballistic missile (ICBM). According to the Air Force, the existing Minuteman ICBM force will become "unsustainable" after 2030. Rand Corp. estimates that a replacement ICBM might cost between $84 billion and $124 billion. (Extending the life of the current system is nearly as expensive: $60 billion to $90 billion.) Making the new missiles mobile -- as some Air Force officials have advocated -- would cost tens of billions of dollars more, based on similar U.S. programs from the 1980s. Exotic schemes like basing the new ICBM in tunnels are no cheaper.
  • Nuclear warheads. Of course all these missiles need nuclear warheads -- and the infrastructure to make them. The Obama administration has this crazy plan called "3+2" that envisions three warheads for the intercontinental/submarine-launched ballistic missile force plus two warheads for delivery by aircraft. This program starts with the $10 billion to $12 billion program to develop a bomb called the B61 Mod 12. It is worth noting that the Government Accountability Office has already said that this program cannot be executed with anticipated resources. The National Nuclear Security Administration, which is responsible for building the warhead, more or less says, "we'll figure it out," which, based on its track record, is laughable.

By 2030, the United States needs to buy nine of the 12 SSBN(X) boats, 80 to 100 LRS-B bombers, a new nuclear-armed cruise missile, and 400 new ICBMs, all the while working on replacements for three of the warheads in the "3+2" concept. Upgrades to command-and-control systems, as well as new facilities to handle plutonium and uranium, are extra. Most of the procurement spending will occur between 2024 and 2030. At its peak, the United States will spend about $15 billion on procurement each year for six years to keep this modernization on track.

(If you are interested, there is a longer discussion of these costs in a new monograph from the Center for Nonproliferation Studies: "The Trillion Dollar Nuclear Triad: US Strategic Modernization over the Next Thirty Years.")

As a share of the defense budget, that's comparable to what Ronald Reagan's administration spent during the last great modernization of the triad. Whether or not one believes that Russia or China poses a similar threat as did the Soviet Union of the early 1980s -- and I am pretty down on Mr. Putin at the moment -- the cultural zeitgeist is simply in a different place. When we remade Red Dawn, it was for laughs. It is very hard to imagine devoting a Reagan-like portion of the defense budget to procuring nuclear weapons delivery systems today. It is also important to keep in mind that the Reagan administration wasn't able to fully realize its plans, either. Congress significantly cut the purchase of Peacekeeper ICBMs, B-2 bombers, and Ohio-class SSBNs.

Whether or not you think rebuying the nuclear deterrent is a good idea, it should not be controversial to note that many defense programs go over budget and fall behind schedule. So, is it likely that the new submarine, bomber, and ICBM programs will experience no further cost growth or schedule delays? No, it is not bloody likely. 

More likely are cost overruns and schedule delays that result in deep reductions in the number of forces -- reductions that will lack any strategic rationale and that will kill off what remains of the bilateral arms control process with the Russians.

Consider the following scenario: The Navy and the Air Force are going to do everything possible to save the new submarine and the new bomber. But these programs are already stretched thin. The Navy currently plans to procure 10 new ballistic missile submarines. Any further delay of even a year or two will drop that number further, to only eight boats. (Again, no one believes the United States will replace the lost boats on the back end, absent a dramatically different security environment.) Navy officials are already winging about the impact of the SSBN(X) on the shipbuilding budget. Keeping this program on track will be a challenge.

The Air Force is in worse shape. As one colleague said about Air Force priorities, "They will throw everything else out to protect 'the Father, the Son, and the Holy Spirit' -- the tanker, the F-35, and the LRS-B. If you're not on that list, you're on the table. Guess what's not on that list?" That means the Air Force may well cannibalize the funds for modernizing its ICBMs to make sure it can buy large numbers of new aircraft. In a funding crunch, the ICBM force is on the outside looking in. The Air Force is not going to spend $60 billion to $90 billion to preserve the ICBM force at the same time that its precious F-35 and LRS-B programs are at their most expensive.

There are also signs that the Air Force will try to avoid spending the funds necessary to certify the LRS-B (as well as the F-35) to carry nuclear weapons, which is more expensive than one might think. That would allow it to cancel the new cruise missile too. It's not a stretch to imagine that we wind up with lots of new conventional-only bombers, with the Air Force having cannibalized the nuclear mission. As the B-52 bomber eases into retirement, only the B-2 (good through 2058) retains a niche capability for delivering nuclear gravity bombs, though its days are numbered unless the LRSO gets built.

The United States could easily end up with a force sometime after 2030 that comprises eight ballistic missile submarines and some number of B-2s. Do the math: The submarines have 16 launch tubes each, meaning about 400 warheads deployed at sea at any given time, assuming no change in operational practices. The B-2 might retain a nuclear mission, though probably not without a new cruise missile. Each can carry 16 gravity bombs, meaning another 160 or so warheads deployed at any one time. I actually think this is a pretty rosy scenario, given that we are starting from the premise that the SSBN(X) and LRS-B must be fully funded, starving legacy programs to do it. But, basically, the United States would have a slightly larger version of France's nuclear arsenal.

The president is not in favor of unilateral disarmament. But if he were, my advice to him would be: KEEP TRYING TO REBUY THE ENTIRE FORCE.

Now, 500 or 600 deployed nuclear weapons is nothing to sneeze at. The world would not come to a crashing end. Although smaller than the Russian force, the U.S. arsenal would still be larger than China's. But the process of getting there would be ugly. Messy cuts with little or no strategic rationale would surely alarm America's allies, especially those that share borders with Russia. And it's a little hard to imagine sustaining political support for a bilateral arms reduction process with the Russians, who by the way are investing heavily in a new generation of land-based missiles.

So, other than undermining deterrence, alarming allies, and destroying what remains of the bilateral arms control process, the current U.S. path is a wonderful model of bipartisan cooperation on national security.

The alternative, of course, is a process of managed reductions, with careful attention to phasing and efforts to negotiate with the Russians. (It's worth noting that I am much more hawkish on Russia than most, but arms control is founded on the notion that sometimes it makes sense to cooperate with an enemy like Mr. Putin.)

The first step in managing the inevitable reductions would be for Congress to ask for a full cost estimate of both existing systems and new systems through the end of their lifetimes. This estimate needs to be presented in a year-by-year format so policymakers can see choke points in the schedule and identify unrealistic plans. (The NDAA requires a report on nuclear modernization from the Congressional Budget Office, but like other such reports, it too will look out only 10 years.)

My sense is that such a study would make clear the core problem: Replacing the entire fleet of ballistic missile submarines and bombers at the same time is really expensive. Current plans to replace the Minuteman ICBM and develop a new generation of nuclear warheads before 2030 are not realistic, given the huge expenditures required by the new submarine and bomber. Trying to do everything at once is not the answer. Proposing a schedule of investments that do not pile up into an insurmountable modernization mountain might be, but the president and Congress need realistic cost estimates over the entire lifetime of each system to do it.

Better planning won't preserve the size of America's nuclear force. It may not even preserve the triad. But the U.S. nuclear deterrent would stand a much better chance of getting off the modernization mountain alive.

Bennie J. Davis III/U.S. Air Force via Getty Images