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Amory Lovins, Subsidies and Environmental Action

Over at the Environmental Action blog, Navin Nayak is objecting to our post from yesterday listing all of the work we've done looking at Avory Lovins and the Rocky Mountain Institute. And he's calling us out:
For today, we'll focus on RMI's main argument, which is that nuclear power is not competitive without massive federal support; if every energy source (including efficiency) were allowed to compete on a level playing field, nuclear would sink to the bottom.
Funny, but the issue of subsidies is one that my friend Lisa Shell took on a couple of months ago, both here and in a letter to the editor at the Fredericksburg Freelance-Star. So, rather than go point by point with Nayak, just read Lisa's response.

Here's more from Nayak:
So I guess all I'm really wondering is why the nuclear industry bothers?
Why? It's simple, really. Because more often than not, plenty of anti-nukes cherry pick the data in order to support erroneous conclusions. And folks like Lovins and Nayak just figure most people are too busy to check their math.

Nayak has yet to respond to the central critique of Lovins' work that's been forwarded by my colleague David Bradish -- that when you take a closer look at his studies, things are not quite as they seem.

Here's David:
The Rocky Mountain Institute’s summer newsletter “debunked” nuclear’s theology and their press release “doused the hype about ‘nuclear revival’ in an icy bath of real-world data”. Well, after checking out the data and doing some analyses, I was far from being doused.
Go back and take a careful look at what we've written.

One other thing: Everyone is welcome to leave comments at NEI Nuclear Notes. But Nayak's own blog doesn't allow comments at all. I wonder why that is.

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Don Kosloff said…
There are some simple items which clearly show how out of touch the RMItistas are. Here is one: The claim is made that replacing two 100W bulbs per home would save yadda yadda energy. I am 59 years old with an income of over $100,000 per year and I have never lived in a house or apartment with two 100W bulbs. Most fixtures are limited to 60W bulbs. I do, by the way, use many fluorescent bulbs, in the summer. In the winter, no energy is saved by using fluorescent bulbs.

In fact the use of fluorescent bulbs is quite widespread, particularly in new hotels and motels. Even most older hotels and motels have replaced incandescent bulbs with energy-savers. There are really few negawatts left to be saved in this conceptual area. But most greenies and politicians are too stupid and lazy to check out reality.

Sweden remains the best example of the utter social bankruptcy of Lovins' ideas. If any of these things worked the Swedes would have used them. Of course Italy is another example. They shut down their nukes and still remain energy importers, including nuclear-generated electricity. Hopefully the watermelon Germans will give us another bad example. Their economy will go completely down the drain, which won't break my heart.
Starvid, Sweden said…
One thing that do work is swithcing from direct electrical heating to geothermal heat pumps which only use 1/3 as much power as the direct heaters. The investment will repay itself in just a few years even in a place like Sweden where power is really cheap.

Still, most US homes are not heated by electricity but with natural gas.

A switch to geothermal heat pumps in the US would increase power consumption, not reduce it.

But it would reduce natural gas consumption so it is obviously a good idea.

Back to Sweden. All our energy saving measures have been rather succesful: they have kept the growth in electricity use at almost zero instead of the usual +2-3 % per annum during the last 15 years.

But don't think electricity use will ever decrease as there is a constant switchover to electricity from other energy carriers.

Anyone interested can check the Swedish energy statistics. Since the 70's our energy consumption has been constant (unlike in some countries I could mention), while electricity use has increased massively and carbon dioxide emsissions have fallen strongly.

Back to heating. The absolutely best way to heat homes is with hot water from cogeneration plants. These plants can be steam plants of any kind: oil, coal, gas, trash, biofuels or nuclear.

We mainly burn trash and biofuels, but only politics stopped us from using the waste heat from our reactors.

As far as I am concerned that is the ultimate plant, a nuclear cogeneration facility.
Don Kosloff said…
Thank you for the details Starvid. For those who don't recall, Sweden decided in 1980 to eliminate all nuclear energy in Sweden by 2010. The nuke plants were supposed to be slowly phased out as the fraudulent Lovins energy sources and methods were introduced. A couple of years ago, out of pure embarassment, the watermelons shut down Barsebek I, even though they didn't have anything to replace it with. The moment it was shut down, Sweden went from a net energy exporter to a net energy importer.
Rod Adams said…
I have posted a rather long answer to Environmental Action's stated question "Why does the nuclear industry bother?" on the Atomic Insights blog.

Since I do not speak for the nuclear industry, the post is titled "Why I bother".

Please do me the honor of providing feedback if you have any comments.
Navin Nayak said…
I figured I would take advantage of NEI’s graciousness and post a comment directly on your blog. Thank you for the opportunity.

To stick with the subsidy issue first, it is worth noting that the oped by Lisa, which Eric directed readers to for his response, was penned prior to passage of the energy bill. A not-so-subtle way of avoiding the “point-by-point” response but still appearing to make his argument appear as a direct response. Thus, while the industry was still on the federal dole back then, Lisa makes no mention of the loan guarantees, the risk insurance, or the construction and operating subsidy for the Idaho plant. On the production tax credit for nuclear power, she writes this:

“The most recent proposal capped support at $125 million for up to 6,000 MW for the first eight years.”

I’m assuming to keep the word count down (and the truth concealed), she was forced to cut out the all important word “each.” That’s right, the industry is now eligible to receive $125 million for EACH of the first eight years of production. In other words, each of the first six plants can receive $1 billion (note again how important the use of the word “each” is in this sentence—indicating that the total industry subsidy from this one provision is $6 billion). Also worth noting, the nuclear industry’s tax credit—passed in 2005—will stay on the books until 2025 (unless a more fiscally responsible and visionary government repeals it)—providing the industry with a necessary long-term security blanket.

On Price-Anderson Lisa says this:

“For both property and liability insurance, commercial nuclear operators pay 100 percent of the premiums; taxpayers and the government contribute nothing.”

Two things on this point. First, the industry is clearly subsidized because the cost of its premiums are reduced. If the federal government were to cover damages to my house above a certain amount, I’m pretty certain that Allstate or State Farm or really any company would be happy to charge me significantly less for my own insurance. Hence the obvious and often repeated statement that Price Anderson is a subsidy to the industry. But there’s more…not only are the industry’s premiums subsidized, but their liability is capped. To provide a sense of perspective, the cost of cleanup and compensation in Chernobyl was in the hundreds of billions of dollars; in the event of an accident in the U.S., the nuclear industry would only be liable for approximately $10 billion—a very small fraction of potential costs.

Just to make sure this overall point is clear: the U.S. nuclear industry will never build another plant in this country without billions of dollars in subsidies from the federal government; nuclear power still remains the least competitive source of electricity, which is precisely why many economists (and investors) including Amory Lovins are correct in signaling the demise of the industry. If it turns out otherwise, it will be because the federal government made the unwise and expensive choice to back a turkey.

To be fair, from my experience in talking and debating with the industry, they generally agree with the statement in bold. Clearly they believe in their product, but the honest ones will always recognize that the industry will never get off the ground without significant federal involvement—the likes of which no other industry (except perhaps oil) has ever seen.

Now onto the particular arguments against RMI. I’ll admit that when I posted the initial response to NEI, I didn’t re-read RMI’s press release and newsletter, which NEI critiqued. So it has been more than six months since I read RMI’s analysis. My second reading did surprise me. Did you notice that Amory also used the statement “Why bother?” in reference to investing in nuclear power? Apparently, I’m not as clever as I thought, but the question’s aptness remains.

Before we look at Bradish’s analysis let’s pull a key quote from RMI’s analysis:

"In 2004, decentralized cogeneration and renewables, excluding big hydro dams (any over 10 megawatts), added 5.9 times as much worldwide net capacity as nuclear power added, and raised annual electricity production 2.9 times as much as nuclear power did. By the end of 2004, these decentralized, nonnuclear competitors’ global installed capacity totaled ~411 GW*—12% more capacity than global nuclear plants’ 366 GW—and produced ~92% as much electricity. Thus the “minor”alternative sources actually overtook nuclear’s global capacity in 2003, rivaled its 2004 and will match its 2005 output, and should exceed its 2010 output by 43%. They already dwarf its annual growth."

Now it is clear that RMI’s analysis is analyzing several different parameters including total capacity, annual growth (increased capacity) and electricity generation. These can all become very confusing when they are muddled together in one short paragraph, which may explain part of the problem.

Let’s take each of David Bradish’s points in turn:

1)He demurs RMI’s decision to use capacity instead of generation. To be clear, RMI doesn’t mislead—they are clear about the fact that part of their research compared installed capacity of different energy sources. Measuring capacity is a legitimate (and often used) benchmark for comparing different electricity resources. NEI can quibble about RMI’s decision to graph one data point vs. another but what they fail to acknowledge is that RMI states clearly in the text that alternative energy sources produced 92% as much electricity as nuclear power. So while RMI emphasizes capacity graphically, they provide the electricity generation figure verbally. Hardly the basis for condemning an institution, but then again if you haven’t got much to work with…

Unfortunately that first point is actually the best critique that NEI could make. From there, Bradish’s straws getting thinner and thinner—but to his credit, he holds on tight.

2)In his second critique, David suggests that RMI didn’t examine total operating capacity in existence and instead only calculated yearly capacity increases. Unless I’m missing something, RMI explicitly did this in certain places—i.e. when they were comparing annual capacity increases—but in other places examined operating capacity. So in some places, the very point that RMI was making was that alternative energy sources are “growing” faster (measured as an increase of annual capacity) than nuclear power. How else would Brandish expect RMI to document the “increase in capacity?” When they weren’t measuring increases in capacity, they were referring to total capacity or electricity generation as the statement from RMI above indicates.

3)The third point against RMI’s analysis is itself confusing. Here’s the paragraph from NEI:

"The third reason the graph is misleading is because it uses five different sources for its information. For example, when conducting a search on EWEA, they said that wind could supply 12% of the world’s electricity by 2020. After doing some calculations, 1,250 GW (the amount needed to achieve 12%) would be a wind farm the size of Texas. Let’s be realistic here, right now the total capacity in the US of wind is about 4 GW."

Now is the critique that RMI used different sources or is it the result? Since it doesn’t make a difference, I may as well address both. The decision to use various sources is hardly a research flaw in and of itself—assuming a few things: you clarify your sources, use similar units, and don’t double count. Double counting is a definite no-no. Good scientists that they are, RMI follows these rules. But then it occurred to me that Bradish’s actual critique could be that the potential result is itself unrealistic. But Bradish doesn’t provide his own analysis to document where EWEA or RMI’s calculations are wrong he only suggests that 1,250 GW is an impossible figure. Forget for a minute that the folks at NEI are the same people who strongly “believe” that nuclear waste can be safely disposed of and that we will someday find an alternative use for spent fuel. Let’s dispense with the belief argument. Show me some numbers and then we’ll talk.

4)Finally, NEI disputes RMI’s decision to limit the analysis to 2010. Hmm. I doubt that NEI complained when the Joint Committee on Taxation decided to limit its analysis of the tax provisions in the energy bill to 10 years, thereby masking the $6 billion cost of the nuclear production tax credit. Let me go back and check whether Bradish raised this point with JCT, or whether someone raised this issue in this blog—urging JCT to calculate the full cost of the nuclear production tax credit. Couldn't find anything. Maybe NEI’s Vice President sent a letter directly to the committee staff urging them to change the calculations? Eric, I missed that letter—please send me that letter when you find it.

This is truly the most pathetic argument of the lot, and I am embarrassed to have to spend five minutes responding to it. I could understand NEI’s frustration with RMI’s decision to limit the analysis to 2010 if the nuclear industry was planning for 20 plants to be completed and online in 2011—thereby clearly biasing their analysis. But how far does Bradish expect RMI’s analysis to extend? Would 2015 have been acceptable? 2020? As Bradish himself says at the end of his piece “In another 10-15 years, as the world has to make intelligent choices involving economic growth and environmental protection, it may begin skyrocketing again.” Just because the industry “may” add capacity in 10-15 years doesn’t imply that every analysis should extend far enough to accommodate the nuclear industry’s dreams. And 2010—being a round number and the beginning of a new decade and all—seems like a pretty defensible end point for an analysis.

What is not defensible is that I've spent more than a half hour responding when I could just have easily said "Why does the nuclear industry bother?"

Eric--don't forget the letter, oh and an explanation of why you need ALL THOSE SUBSIDIES...
Eric McErlain said…

Thanks for your contribution, you'll always be welcome here in our comment strings.

However, please note that the link is marked, "Comments," and not "Submit Article." From here on in, keep your comments pithy and too the point -- something that Don Kosloff did quite well in a compact post of a little more than 210 words.

A submission of the length you left here is more appropriately placed on your own blog. Then again, it's just the sort of reaction we've seen before when anyone dares to challenge the conclusions of many environmental activists -- something Bjorn Lomborg has been experiencing for a number of years now.

And please, let us know when EA enables comments on its blog. Something tells me we'll be waiting a long while.
David Bradish said…

I appreciate the half hour response.

Do you know that in RMI's analysis "Nuclear power: economics and climate-protection potential" which we are debating, the bulk of generation growth is from cogeneration (page 2)? Do you also know that right now natural gas is the primary fuel for cogeneration (about 95%)?

I don't know much about your blog, Environmental Action, but I'm guessing from the title that clean air is one of your topics. Why are you backing RMI's analysis which implicates an increase in emissions due to the growth in natural gas cogeneration?

Why do I bother? Because I want to breathe better.

David Bradish
Rod Adams said…
There is an interesting and lively discussion (38 comments so far) occurring on Energy Pulse in response to a February 28, 2006 article by Amory Lovins in which he claims that "mighty mice" (small renewables and cogeneration plants) are going to eliminate any need for nuclear power developments.
Anonymous said…
Among many misrepresentations, Nayak provides a false analogy for Price Anderson. The Federal Government does not promise to pay all costs above insurance coverage, it indemnifies the owner against liability for those amounts - the same as it does for vaccine manufacturers and other entities. In the event there are lawsuits, the Fed Gov could choose to pay or not to pay. If you take a $100,000 liability policy from Alstate or State Farm, they don't care if you have insurance or indemnification above that amount, the initial $100,000 costs the same. There is no "subsidy" only protection against insolvency of the nuclear plant owner, which is in the public interest.
Anonymous said…
In the discussion of subsidies, Nayak never gives consideration to a couple of common sense rules learned in childhood: always compare apples to apples, and always weigh pros against cons.

Subsidies have to be normalized with respect to generation. Compare cents per kw-hour, not billions of dollars. The amount of electricity generated by nuclear power overs the years (or within a given year) is so large that the subsidy received is actually minimal and comparitively small. Many an anti-nuke concedes this point. I don't know why Nayak ignores this, other than cognitive dissonance.

Taxes paid offset subsidies received. If you are going to curse the nuclear industry for its subsidies, you must credit it for cash flows back to the public in the form of users fees, property taxes, state and local taxes, etc. On a state and local level, nuclear plants are cash cows for the cities and counties where they are situated. Property taxes alone average roughly 10 million dollars for each site.

Nayak would do well to look at the economic impact studies prepared by the NEI to understand just how much the industry pays out. It's unfortunate that there are only a few such studies; if each plant had a such a study, we could tally taxes paid and compare the total to subsidies received. Looking at the available studies suggest each plant dishes out tens of millions in taxes and user fees. With fifty five sites, it's clear that nuclear pays it's fair share and then some.
Jim Hopf said…
I'm not going to take the time to respond to all the faults in Navin's piece, but I thought I'd mention this article (today) about Duke power picking a site to build yet another new nuclear plant.

The upshot of the article is that they've all but announced their intention to build a new two-unit plant. The stock price reaction? Up by ~1%.

Apparently, Wall St. is not as negative about nuclear as everyone kept saying it was.

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