In the wake of Russia’s invasion into Ukraine, Washington is rushing to find new sources of a particular kind of advanced nuclear fuel whose sole commercial producer is a Russian company.

The scramble is for high-assay, low-enriched uranium fuel (HALEU—pronounced hey-lou). It’s needed in nine out of the 10 reactors awarded funds in a U.S. Energy Department program, Undersecretary of Energy Geri Richmond told lawmakers during a March hearing.

TENEX, a subsidiary of the Russian state-owned Rosatom, is the world’s only major commercial supplier of the fuel.

“Russia was always seen as problematic,” said Alan Ahn, senior resident fellow for the climate and energy program at Third Way, a centrist think tank. “Those fears played out with the invasion.”

The federal government and the nuclear industry had always planned on establishing domestic processing for this fuel, but TENEX was going to provide the initial fuel batches.

This HALEU dilemma is an extreme example of how America lacks the capacity to make a range of materials the world needs to tackle climate change. Like solar panels and critical minerals, nuclear fuel comes largely from places other than the United States, a decades-long trend set in motion due to myriad domestic and geopolitical factors.

Nuclear power has been a controversial source of zero-emitting power. Worries persist about nuclear accidents, proliferation risk and how to store radioactive waste safely. Costs have also ballooned for many projects.

Despite those obstacles, Russia’s invasion is prompting experts, led by the International Energy Agency, to call on the world (especially Europe) to embrace nuclear power as a stable and domestic source of energy.

HALEU is enriched to higher levels than current nuclear fuel, but still far less than weapons-grade uranium. Thus, it’s more efficient and produces less waste compared to current fuel, according to an April 14 analysis by BloombergNEF shared with Cipher.

Yet the analysis warns: “Developing a domestic supply would be an expensive proposition and presents a regulatory gauntlet.”

Two U.S.-based companies, TerraPower and X-energy, are leading the charge. They have received Energy Department awards in 2020 supported by over $3.2 billion total in federal funds authorized in the infrastructure law that private dollars would match. The awards require projects to be complete in seven years and the reactors will need the HALEU a year or two earlier than that.

To meet those deadlines, the companies had initially considered acquiring HALEU from TENEX. Although Rosatom hasn’t been sanctioned (yet), the companies have indicated they no longer see supply from TENEX as a viable option.

The Energy Department is “exploring feasible options to address this issue,” Richmond said in response to questions from Sen. John Barrasso (R-Wyo.) at the March hearing. “Any solution will require a substantial and sustained source of government funding.”

For initial fuel batches, the Energy Department is considering whether it could “downblend” current domestic sources of highly enriched uranium (suitable for weapons but used for other purposes, too) to the levels needed for HALEU, an Energy Department spokesperson told Cipher.

“We are also interfacing with X-energy and TerraPower, as well as other reactor technology developers, to determine if various downblended products will meet their needs,” the spokesperson said by email.

Sourcing HALEU from TENEX would have been the most cost-effective option for technologies whose costs face scrutiny, a BloombergNEF expert says.

“Downblending is certainly an option, but it’s a more costly and inefficient option,” said Chris Gadomski, head of nuclear research at BloombergNEF. “You’re doing more work for the same result.”

In a nod to the fact that Russia’s TENEX was never in long-term plans, the Energy Department began a bureaucratic process in December seeking information from industry about how to supply domestic sources of HALEU. The next step is for the department to seek proposals, which industry experts hope happens by this summer.

The House-passed Build Back Better bill, which stalled in the Senate earlier this year, would have put $500 million toward supporting HALEU supply, Richmond said at the hearing. Congressional negotiations are underway to revive some energy portions of that bill.

“We are stuck in this loop of the commercial market demand signal not being firm for capacity to justify capital investment by an enrichment company,” said Ben Reinke, senior director for corporate strategy at X-energy. “If you can help backstop initial deployment with support from DOE, all this flows naturally.”

A U.S.-based enrichment firm, Centrus Energy Corp., has been working with the Energy Department to build a demonstration-sized plant in Ohio. That facility could begin producing small quantities of HALEU within a year or so—if the company wins an additional competitive contract with the department.

The initial amount pales in comparison to what’s needed for first batches, Ahn of Third Way says.

Dan Leistikow, vice president of corporate communications for Centrus, said: “With appropriate funding and offtake commitments, we could scale it up to any level of production.”

Editor’s note: One of TerraPower’s primary investors is Bill Gates, who is chairman of the board. Gates is also the founder of Breakthrough Energy, which supports Cipher.