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Estimated Budgetary Effects of Alternatives for Producing Tritium 1 (August 1998)

handle is hein.congrec/cbo06413 and id is 1 raw text is: 'Estimated Budgetary Effects of Alternatives for Producing Tritium ESTIMATED BUDGETARY EFFECTS OF ALTERNATIVES FOR PRODUCING TRITIUM Tritium gas (a radioactive isotope of hydrogen) is used to enhance the explosive yield of nuclear warheads. Scientists generally produce tritium in nuclear reactors by bombarding target rods containing lithium with neutrons (because the fissioning of a reactor's uranium fuel generates lots of neutrons). More recently, scientists have produced small quantities of tritium in a particle accelerator by bombarding helium 3 gas with neutrons. The Department of Energy (DOE) formerly produced tritium in nuclear reactors located at its Savannah River site in South Carolina. The last reactor there was shut down in 1988, and since then no tritium has been produced in the United States. Tritium decays relatively rapidly, so its levels in the nuclear stockpile are being maintained by using the tritium from dismantled warheads. That recycling process can continue for only a limited time, however. Eventually, tritium production will have to be resumed. In response to Congressional requests, the Congressional Budget Office (CBO) has estimated the budgetary impact of three options for producing tritium. All of the options assume that DOE must make enough tritium to support a nuclear stockpile of the size allowed by the START I treaty. One option calls for producing tritium with a proton accelerator built and owned by DOE. The second option calls for completing the Bellefonte light-water reactor owned by the Tennessee Valley Authority (TVA) and producing tritium there. The third option calls for DOE to buy tritium from one or more of TVA's existing nuclear plants, a method referred to as purchasing irradiation services. Those alternatives involve different patterns of costs and receipts over time. In order to compare the options on an equal footing, CBO has converted the estimated future costs and receipts to their present discounted value. Present value expresses a flow of current and future income (or payments) in terms of an equivalent lump sum received (or paid) today. A present-value calculation adjusts for the opportunity cost of delaying a payment or receipt, as measured by the interest rate. That is, the cost of a dollar tomorrow compared with that of a dollar today is the forgone interest that would be earned on the dollar. To analyze the alternatives for tritium production, the opportunity cost (or discount rate) may be measured by the yield on government securities because that yield reflects the cost of borrowing by the federal government. CBO uses a real (inflation-adjusted) discount rate of 3.2 percent--the projected interest rate on 30-year Treasury bonds, 5.7 percent, minus the expected rate of inflation, 2.5 percent. In present-value terms, CBO estimates that the accelerator option would cost a total of about $6.0 billion over 40 years (see Table 1). The Bellefonte reactor option would cost $2.3 billion, and the option to purchase irradiation services would cost about $1.1 billion. Page I

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