(FORTUNE Magazine) – 10

Environmental sage James Lovelock sparked a debate in England last spring when he published an impassioned defense of nuclear energy--on environmental grounds. "I am a Green," he wrote, "and I entreat my friends in the movement to drop their wrongheaded objection to nuclear energy." His argument: Splitting atoms is the only way to generate huge quantities of electricity without producing the volumes of global-warming gases that plants fired by coal or natural gas emit.

Lovelock's view hardly qualifies as a groundswell--especially in the U.S. Yet there are hints of a resurgence in respectability for the most maligned of power sources. The bipartisan National Commission on Energy Policy included it in a December proposal to "end the energy stalemate." Columbia University's Earth Institute was willing to consider the option in its State of the Planet assessment. And Richard Smalley, a Nobel Prize-winning chemist at Rice University who has been delving into energy issues, echoes Lovelock: "We ought to, and probably will, start building nuclear power plants again."

It's a measure of how low the industry has sunk that even its leaders hesitate to proclaim a rebirth. "We're on the edge of a comeback," says Marilyn Kray, president of NuStart Energy, a consortium of nuclear utilities and equipment vendors. Says GE Energy CEO John Rice: "The stars are beginning to align." A confluence of factors is driving renewed interest in nuclear power, which now generates 20% of U.S. electricity: high natural-gas prices, energy-security fears, and worries about climate change. A new generation of technology being developed by Westinghouse and GE is being touted as safer, simpler, and less expensive.

Despite perennial disaster concerns--exacerbated now by the dread of terrorist attacks--the most crucial factor may be cost. Most experts agree that nuclear power can't compete with coal or natural gas without significant federal subsidies. It is the Bush administration's support for such measures that stokes industry enthusiasm. A production tax credit could be offered if the President's tax bill passes. And the Department of Energy announced in November that it will pay to help two nuclear-power consortia navigate a new, streamlined licensing process. Among other things, federal rules now let companies seek approval for a site long before they ever decide whether they'll build there. (Exelon, Dominion, and Entergy have applied for such licenses.)

Nuclear power has far to go. No company has announced plans for a new plant, and it is extremely unlikely any will open in less than a decade. Still, says GE's Rice, under the Bush administration the industry has its best chance in decades. "If something is going to happen," he says, "it's going to happen in the next two to three years." -- Nicholas Varchaver