Carbon-Free Nuclear Energy Must Play Strong Role to Achieve U.S. Climate Goals, NEI Says

Marv Fertel

Following is a statement regarding President Obama’s plan to address climate change and control carbon emissions by the Nuclear Energy Institute’s president and chief executive officer, Marvin Fertel:

“The strength of America’s electric system is diversity of technologies and fuel types. When it comes to reducing the U.S. electric sector’s greenhouse gas emissions, efforts can succeed only if carbon-free nuclear energy plays a larger role in the nation’s electricity mix. That’s not simply the opinion of our industry. It is the determination made by several independent organizations that analyzed the leading climate change bills pending in Congress some five years ago when prospects for enacting legislative measures to curb greenhouse gas emissions appeared to have momentum. These include the Environmental Protection Agency and the Energy Information Administration, which found that between 69 and 187 new nuclear energy facilities would be needed to meet the bills’ carbon reduction objectives in the electricity sector.

“There is no debating this fact: Nuclear energy produces nearly two-thirds of America’s carbon-free electricity. As a nation, we cannot reach our energy and climate goals without the reliable, carbon-free electricity that nuclear power plants generate to power our homes, businesses and infrastructure.

“President Obama recognized this during the presidential campaign when he said, ‘It is unlikely we can meet our aggressive climate goals if we eliminate nuclear power as an option.’ Likewise, Energy Secretary Ernest Moniz supports the expansion of nuclear energy to meet national energy and environmental imperatives.

“Nuclear energy must continue to be a major part of the nation’s energy portfolio if we wish to effectively reduce carbon emissions to protect the environment, and to expand our supply of reliable, affordable electricity. We look forward to working with the administration to help achieve these extremely important goals.”

For more on the President's speech, please follow our Twitter feed.

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Why Nuclear Energy is Critical to American Energy Diversity

Entergy's Bill Mohl

Earlier today, William (Bill) Mohl, President, Energy Wholesale Commodities, Entergy Corporation, testified before the U.S. House Energy and Commerce Committee's Subcommittee on Energy and Power. His testimony was concerned with why it was important for the nation to maintain a diverse portfolio of energy sources. We've excerpted a couple of passages from the speech below (bold emphasis mine):

Another way of looking at the economic value of existing U.S. nuclear generation is to consider the potential cost of replacing it. Based on data publicly available from the U.S. Energy Information Administration, Entergy has calculated that building gas-fired Combined-Cycle Gas Turbine (CCGT) plants to replace the approximately 101,000 megawatts of capacity provided by U.S. nuclear plants would cost between $100 and $110 billion dollars. An investment of this magnitude to replace an existing asset class would be enormous for the U.S. power industry. To provide some perspective, in 2011 U.S. investor-owned utilities (including stand-alone transmission companies) invested slightly more than $30 billion aggregate in transmission and distribution facilities – well under one-third of the low end of the range of the estimated cost that would be required to replace nuclear generation with CCGT plants. Moreover, the $100 billion to $110 billion replacement cost estimate does not include any costs of expanding pipeline capacity to serve new gas-fired plants. The adequacy of pipeline capacity is a key consideration, as was recently demonstrated in New England.

Nuclear power is a crucial contributor to maintaining America’s air quality. Nuclear generation produces virtually no carbon emissions. Since 1995, U.S. nuclear plants have prevented the release of more than 11 billion metric tons of carbon dioxide into the atmosphere. Renewable energy sources can contribute to environmental sustainability, and should be considered for inclusion in a generation portfolio, taking account of emissions, cost, operating characteristics, land use, and other factors. Clean-coal technology shows promise but is not yet as cost-effective as existing nuclear as a source of baseload power. As reliable sources of baseload generation, nuclear plants provide a foundation in the power supply portfolio to support emerging wind and solar power projects, which are characterized by intermittent availability.

A few weeks ago, NEI's Richard Myers took note of some local market conditions in New England that clearly contradicted the conventional wisdom that American is awash in cheap natural gas, a topic that Energy's Bill Mohl also touched on this morning:

Bill Mohl testifies before the Energy and Power Subcommittee.

Earlier in my testimony I noted that nuclear and coal traditionally were the primary fuels used to provide baseload power in the United States. Over the last ten years, improvements in power plant technology coupled with recent low gas prices have created the opportunity to operate CCGTs as baseload units as well. While there are benefits to being able to operate CCGTs as baseload, diversification is a prudent strategy for a generation portfolio, just as it is for an investment portfolio. Sound utility resource planning practices suggest that “you don’t want to put all your eggs in one basket.” In addition to its other benefits, nuclear generation provides a valuable hedge for electric consumers against potential gas price volatility.

Aside from price concerns, there are also challenges presented by the existing pipeline infrastructure and its ability to meet rising demand, particularly in certain regions of the country such as New England.

Again, as our own Richard Myers mentioned, the spot price of natural gas in the Northeast at the end of January was anything but cheap:

Mohl continued:

Consider that replacing all U.S. nuclear units with gas-fired generation would require an additional 14.5 billion cubic feet per day of additional gas supply, a 70% increase over the 20.8 billion cubic feet per day of gas that electric generators used in 2011. Natural gas fired generators do not have on-site fuel inventory and must be continuously supplied through a pipeline system, and while some facilities may have access to gas storage facilities to ensure continuous supply, many facilities do not. Supply issues can arise during peak times, when pipeline capacity is needed to satisfy the demands of local gas distribution companies to serve homes and businesses, in addition to the needs of power plants that may not have contracts for firm delivery. By contrast, nuclear plants have up to eighteen months of fuel supply on site and do not compete with residential and business consumers for fuel, making nuclear plants far less likely to be affected by fuel supply interruptions.

[...]

In summary, every source of energy has advantages and disadvantages. We know this to be true in transportation, home heating and also with electricity. Each generation source varies in terms of cost, economic and environmental impact, and other factors that complement and may be weighed against each other. Generation diversity is simply necessary to ensure a reliable and secure generation portfolio for the nation.

Plenty of interesting facts to keep in mind. We'll share a link to the full text of the testimony once it's posted to the NEI website.

UPDATE: The complete video archive of the hearing has been posted to YouTube:



Finally, click here for a complete transcript of today's testimony.

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Guest Post: Nuclear Energy’s Value Proposition Still Strong, Will Reassert Itself in Next Decade

J. Scott Peterson

The following guest post was written by J. Scott Peterson, NEI's senior vice president, communications.

NEW YORK CITY—Despite challenging electricity markets and natural gas prices at a 13-year low, industry leaders are confident in the long-term prospects for nuclear energy and its contributions to the electricity mix and U.S. economic growth.

On average, America’s 104 commercial reactors are the most efficient power producers on the grid—operating at 86 percent capacity factor. Capacity factor is a measure of efficiency, with a 100-percent rating equaling full power production 24/7, 365 days. Absent reactors in California, Florida and Nebraska that have been closed virtually all year for extended maintenance, the capacity factor at the other 100 reactors was just shy of 90 percent.

“We continue to invest in these facilities to preserve their asset value,” NEI President and CEO Marv Fertel told nearly 200 financial analysts and journalists at the Institute’s annual briefing in New York. “We want them in position to operate beyond 40 years—perhaps more than 60 years—and to incorporate new upgrades to maintain the highest possible level of safety.”

Depressed natural gas prices, which set electricity prices in many markets, and flat electricity demand are putting near-term pressure on some nuclear energy facilities in deregulated markets. But Fertel and industry leaders are focusing on nuclear energy’s role providing fuel diversity in the electric sector for the longer-term and the value chain of nuclear energy that extends beyond low-cost, reliable power production.

“Our plans must be flexible to adapt to high- and low-price markets and must balance short- and long-term views,” Entergy Corp. CEO Leo Denault told analysts Feb. 8. He added that Entergy, which operates 12 reactors, would continue to advocate for markets that value nuclear energy’s added value: “a source of clean energy with effectively zero emissions, grid reliability…fuel diversity, and jobs and other contributions to the regional economy.”

Fertel echoed Denault’s value chain for nuclear energy on Thursday. “Low-carbon, baseload electricity is a crucial element of sustainable development and it is why many nations are building or planning to build more nuclear energy facilities. The value proposition for nuclear energy is still strong and will reassert itself as we move beyond the near term.”

Recognition of this value chain is growing among policymakers, environmental leaders and consumers. Eighty-one percent of U.S. adults in a Feb. 8-10 survey by Bisconti Research/GfK said nuclear energy is important to America’s electricity mix.

That value chain includes:

• Production of large quantities of electricity around the clock—nearly 770 billion kilowatt-hours in 2012;

• Job creation, including thousands of jobs at new reactor projects in Georgia, South Carolina and Tennessee and a doubling of uranium enrichment production in New Mexico;

• Providing clean air compliance, including the prevention of controlled emissions under the Clean Air Act and reducing the carbon compliance burden that would otherwise fall on natural gas and coal-fired power plant;

• Providing voltage support to the grid;

• Providing forward power price stability, particularly for large industrial users of electricity;

• Contributing to fuel and technology diversity that is one of the foundations of America’s reliable and resilient electric sector.

“We continue to believe that our [nuclear] assets are some of the lowest-cost, most dispatchable baseload assets,” Exelon CEO Christopher Crane told The Chicago Tribune on Feb. 8.

Nuclear energy facilities are increasingly important for fuel diversity as natural gas use for electricity generation grows. In Florida, where more than 60 percent of electricity is produced by burning natural gas, Florida Power and Light recently completed uprates totaling 490 megawatts at its Turkey Point and St. Lucie reactors. Based on the FPL’s latest projected price of fuel and other factors, this investment is projected to save customers $3.8 billion on fossil fuel costs that otherwise would have been used over their operating lifetime.

“This value proposition will become increasingly self-evident and will drive a bright long-term future for nuclear energy,” said Fertel.

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The Japanese Double Whammy

Haninonen, Japan's largest coal facility

A double whammy for energy companies in Japan: it’s really breathtaking:

Japan's new tax on carbon emissions will cost utilities about 80 billion yen ($1.02 billion) annually from 2016, adding to their already high costs of running power stations after the Fukushima crisis shut most of the country's nuclear plants, a government backed think-tank said.

Leaving aside the value of a carbon tax, about which reasonable minds can disagree, that’s a lot of money. For a country that has recently had to switch on some coal and oil plants to spell the nuclear energy shutdown, it just feels – mean. And as long as the companies pay the levy, it doesn’t actually help reduce carbon emissions.

Now, to be fair, the government wants to put the money into renewable energy sources. I don’t really understand well enough where the government’s interests intersects with those of industry. Furthermore, the story doesn’t explain whether this money will subsidize industry efforts in a public-private partnership or go forward as a government project. I read a report suggesting that the government could lower other taxes, but it was speculative.Other details just, um, detail the pain.

A nationwide safety shutdown of the country's nuclear power plants since last year has added an estimated 3.1 trillion yen to the cost of importing fuel for oil, gas and coal power stations in the 12 months through March next year.

And if a country is importing its energy resources, what’s the result? 

These rising costs may cause a trade deficit for the second straight year through March 2013, the institute said.

And ratepayers?

Utilities have mostly funded their energy purchases through debt, and have avoided passing on the cost to consumers, except for Tepco which was nationalized this year, but the new taxes could force a change of heart.

 That could be bluster on the part of the energy companies, but the money does have to come from somewhere. Again, there are some plausible relief notions mentioned here and there, but very vaguely. It’s really all bad all the way through.

Don’t get me wrong. Carbon taxes, cap-and-trade, even the flow of free enterprise can bring about carbon emission reductions while limiting the financial pain caused to ratepayers.

But Japan has a viable solution – not a total solution, but a good one. To paraphrase the sheriff in the John McCain ad a couple of years ago, Turn on the dang nuclear facilities.

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Fox Gets It Right on Emissions – Or Close Enough

Media Matters for America and Fox News are not the best friends in the media landscape, with the former often calling out the latter for what it perceives as bias in its reporting. I have no particular brief on that subject.

But I do recognize that the energy business has done a fair amount to bring down carbon emissions through the increased use of natural gas, renewable energy and nuclear energy (through uprates) – and is quite conscious of it - so I found this report from Media Matters somewhat amusing:

But Fox is ignoring the confluence of factors and touting the decline as a triumph of the free market. A Fox Nation headline today declared: "Free Enterprise Makes the Air Cleaner." On Varney & Company, Fox Business contributor Charles Payne said: "The free market, cleaning up our air. Says a lot about the free market, doesn't it?"

Payne is essentially correct here. We might focus on “bringing down carbon emissions,” though “cleaning up our air” is fine for the purpose. Media Matters says:

The Energy Information Administration announced earlier this month that U.S. energy-related CO2 emissions in early 2012 were the lowest measured for a January-March period since 1992. The report attributed the decline to a combination of three factors: reduced household heating demand during an unusually warm winter, a decline in coal generation due to low natural gas prices, and low gasoline demand as a result of a slowed economy and the shift towards more fuel-efficient vehicles.

Media Matters is correct, too – but you’ll note that it has to include items such as the “decline in coal generation due to low natural gas prices,” which the industry didn’t have to do a thing about – but it did – because it liked that it could bring down carbon emissions (and increase profit, too – let’s not be too naïve here – but let’s not be too cynical, either – this is an unalloyed good outcome.)

I’d also note “fuel-efficient vehicles” as a government-industry mandate/goal, disrupting the purring about the free market, but still – close enough.

If government priorities aren’t all bad, neither are free market prerogatives. The balance between the two can lead to (sometimes heated) arguments, but not the premise. So Payne has a valid argument to make here in favor of the marketplace.

We might have given all the points to Fox News on this one. But:

[Reporter Tracy] Byrnes went on to ask her guest why carbon dioxide emissions -- which are not "poisonous" or "inflammable" -- are even a problem in the first place.

So, there you go.

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Moving the Needle with Coal and the EPA

The Environmental Protection Agency has released a proposed rule that indicates, absent more progress (effective, scalable, reasonably economical progress) on carbon capture and sequestration, the days of coal are, perhaps, numbered:

The proposed rule — years in the making and approved by the White House after months of review — will require any new power plant to emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced. The average U.S. natural gas plant, which emits 800 to 850 pounds of CO₂ per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.

And nuclear energy? No carbon emissions at all. Natural gas will be the chief beneficiary here – you could say that the rule was crafted with that in mind - at least as long as gas prices stay low and fracking doesn’t shake up the landscape. Renewable energy sources should benefit, too.

All these point the way forward, with the coal industry now under pressure to get CCS working as it will need to work to keep coal relevant. I know, I know – but never say never – coal remains plentiful and works as advertised, so abandoning it without trying to make it plausible under this new scenario seems economically foolish.

There are about 20 coal plants now pursuing permits; two of them are federally subsidized and would meet the new standard with advanced pollution controls.

But:

The proposal does not cover existing plants, although utility companies have announced that they plan to shut down more than 300 boilers, representing more than 42 gigawatts of electricity generation — nearly 13 percent of the nation’s coal-fired electricity — rather than upgrade them with pollution-control technology.

The story makes clear that natural gas is as responsible for this as regulation, but it’s just as clear that the electricity sector is moving the needle on carbon emissions in the absence of cap-and-trade. (They also built a fair number of coal plants in the interim – that is, between 2009 – after cap-and-trade failed in Congress – and last year – in anticipation of this rule. This is a countervailing force that one may now consider, er, vailed.)

At this point, though, it’s just a proposed rule. More to come.

---

Here is Slate’s Matt Yglesias on this move:

The face of new fossil fuel based electricity will be gas (which is considerably cleaner than coal), and the alternative to gas in the event that the gas boom ends will be renewables.

He’s got quite the blind spot there, doesn’t he?

There are a surprising lot of nice shots of nuclear facilities, but surprisingly few of coal plants. They’re both big industrial structures, after all. I don’t know why that should be.

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Nuclear Energy: Where the Green Jobs Are

I wanted to share a note I received yesterday from my colleague David Bradish:

Last week for the first time ever, the Bureau of Labor Statistics published a news release estimating the number of green jobs that existed in the country in 2010 – 3.1 million. Below is the golden nugget on nuclear from the release:

Utilities

In private industry, the utilities industry accounted for 65,700 GGS [Green Goods and Services] jobs, or 11.9 percent of total private utilities employment. Among the industries involved in private sector electric power generation, nuclear power had the highest GGS employment with 35,800 jobs in 2010. Hydroelectric power generation had 3,700 total private GGS jobs in 2010.

The other electric power generation industry, which includes electricity generated from biomass, sunlight, wind, and other renewable sources, had 4,700 GGS private sector jobs. Within this industry, electricity generated from wind had the highest employment with 2,200 jobs, followed by biomass with 1,100 jobs, geothermal with 600 jobs, and solar with 400 jobs.

To provide more background, there were a total of 52,082 jobs in the nuclear industry in 2010. Of this amount, BLS classified 35,800 as a green job (68% of nuclear’s total). For comparison, hydro employed 7,045 people in 2010 but only 53% counted as a green job. As well, wind, solar and other renewables employed 8,344 people in 2010 but only 56% counted as a green job. Below is how they describe their methodology:

BLS identified 333 industries from the 1,193 detailed industries in the 2007 North American Industry Classification System (NAICS) that potentially provide goods and services that directly benefit the environment or conserve natural resources. These 333 industries, the GGS scope, consist of industries that may produce green goods and services within one or more of the following five groups:

1. Energy from renewable sources.
2. Energy efficiency equipment, appliances, buildings and vehicles,
and goods and services that improve the energy efficiency of buildings
and the efficiency of energy storage and distribution.
3. Pollution reduction and removal, greenhouse gas reduction, and
recycling and reuse goods and services.
4. Organic agriculture; sustainable forestry; and soil, water, and
wildlife conservation.
5. Governmental and regulatory administration; and education,
training, and advocacy goods and services.

The GGS scope was identified by BLS after consultations with industry groups, government agencies, stakeholders, and the public, which helped BLS identify industries that potentially provide green goods or services. Not every activity or product in the industries within the GGS scope is considered green. An establishment classified in one of these 333 NAICS industries may produce only green goods, both green and non-green goods, or only non-green goods. Only the employment associated with the production of green goods and services within these selected industries is counted as GGS jobs.

For more on this release, see the links below.

Press Release: http://www.bls.gov/news.release/ggqcew.nr0.htm
Tables: http://www.bls.gov/news.release/ggqcew.t03.htm

Very, very cool stuff. So, if you're a college graduate and you want to get a job in green energy, the best place for you to start is probably in the nuclear energy business. Over at The Atlantic, Jordan Weissman took a look at the numbers and had this to say:

“More than half of the ‘green jobs’ in utilities actually belong to the nuclear power industry -- an important source of zero emissions electricity to be sure, but not exactly what most environmentalists picture when they think of a 21st century green job.”

If that's really the case, perhaps those environmentalists need to think a little more broadly about what green energy is really all about. Just ask President Obama. The following is a brief excerpt from his speech yesterday at Hankuk University in Seoul, South Korea:

[L]et’s never forget the astonishing benefits that nuclear technology has brought to our lives. Nuclear technology helps make our food safe. It prevents disease in the developing world. It’s the high-tech medicine that treats cancer and finds new cures. And, of course, it’s the energy—the clean energy—that helps cut the carbon pollution that contributes to climate change. Here in South Korea, you know this. As a leader in nuclear energy, you’ve shown the progress and prosperity that can be achieved when nations embrace peaceful nuclear energy and reject the development of nuclear arms.

With rising oil prices and a warming climate, nuclear energy will only become more important. That’s why, in the United States, we’ve restarted our nuclear industry as part of a comprehensive strategy to develop every energy source. We’ve supported the first new nuclear power plant in three decades. We’re investing in innovative technologies so we can build the next generation of safe, clean nuclear power plants. And we’re training the next generation of scientists and engineers who are going to unlock new technologies to carry us forward.

Indeed.

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