Friday, October 19, 2012

Nuclear Takes Charge in Ontario–But Whither Coal?

This is good news worth attending to:

Nuclear generator Bruce Power's Unit 2 sent power to Ontario's electricity grid for the first time in 17 years yesterday, part of Bruce Power's revitalization program and an important step to eliminating the use of coal-fired electricity in 2014.

In Ontario, not all of Canada.

Over the past 10 years, Ontario has decreased its coal reliance by 90 percent, and Bruce Power has increased its nuclear output by 55 percent. Bruce is positioned to generate a quarter of the province's electricity -- enough to power cities the size of Ottawa and London, Ontario combined -- now that Units 1 and 2 are back and its full capacity of 8 units is being realized.

It may not be as obvious to us as it is to Canadians what Bruce Power is trying to do here. So let’s let Bruce Power tell you:

With the return to service of Units 1 and 2, Bruce Power will remain a key player in both reducing and staying off coal, which is one of the largest greenhouse gas reduction initiatives in North America.

Nuclear energy allows this outcome.

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The above excerpts mention coal about as many times as nuclear energy. I don’t have a brief on coal, really, and certainly not about Canada’s use of it, but surely, divergent views can converge on the fact that coal mining, processing and transportation is a considerable portion of the work force in some states in the U.S.

And coal lately has had a rough ride of it. This chart from the National Mining Association shows that the number of workers engaged in coal mining was almost 82,000 in 2011 – that’s a big number but only about half the 155,000 number in 1985 – and the 2010 number represents something of a comeback. The low was 62,000 in 2003, well less than half the 1985 number.

Although it is nuclear energy that is displacing coal in Ontario, that is not true in the United States. Indeed, if coal is under pressure in this country, it is from natural gas.

Coal won’t win back much of the share of electricity generation that it has lost to natural gas in the U.S., Moody’s Investors Service said.

“Coal will regain a bit of market share as natural gas prices recover somewhat, but most coal-to-gas substitution to date will be permanent,” Anna Zubets-Anderson, a Moody’s vice president and senior analyst, wrote in the report. Production from shale has boosted gas inventories and coal has faced more scrutiny from environmental regulators.

This is true. The low cost of natural gas has put some pressure on all baseload energy, including nuclear energy, and since it carries half the carbon emissions of coal, it is more attractive as a coal replacement - if a primary goal is plentiful base load energy with fewer carbon emissions. Nuclear energy would be even better, as Ontario is finding out – it produces no carbon emissions at all – but there you are. (Nuclear uprates, which allow facilities to produce more electricity through equipment upgrades, also has a role here.)

So – it’s natural gas that is applying pressure to the coal industry.

But maybe not. A rather odd op-ed column by the Washington Post’s Charles Lane links the fate of coal to the encouragement of renewable energy sources – and considers this bad because the higher cost of electricity thus generated has an impact on poorer Americans.

I found the column puzzling on its face because it takes a complex set of policy goals, simplifies them until they warp into an unrecognizable shape, then adds an ideological dimension that turns Democrats who support renewable energy into hypocrites. It’s an entertaining show, granted, but deeply weird:

Green energy is not cost-competitive with traditional energy and won’t be for years. So it can’t work without either taxpayer subsidies, much of which accrue to “entrepreneurs” such as [former Vice President Al] Gore, or higher prices for fossil energy — the brunt of which is borne by people of modest means.

I don’t get the quotes around entrepreneurs or grasp the idea that electricity to “people of modest means” could not continue to be subsidized, as is often the case now. The idea is not to punish those folks – if anything, it is the “entrepreneur” class that will help out with the subsidization, along with utilities and government. Lane seems to believe Gore will be personally breaking into shacks and stealing fuses if the United States dares to do anything with “uncompetitive” renewable energy.  But what about nuclear energy – and natural gas? 

Obviously, creative destruction is part of what makes capitalism go. There’s no inherent reason to protect coal mines any more than buggy-whip makers. The biggest threat to coal country comes from vast new supplies of natural gas, not from wind and solar.

The point remains: Government, with its inevitable susceptibility to lobbying and favoritism, should not be picking winners and losers, whether through green subsidies or tax breaks for oil and gas.

In other words, the argument doesn’t work – because natural gas is currently less expensive than coal – but we’ll stick with it anyway.

Additionlly, all energy generators receive government subsidies, depending on how tight you define subsidy – see page xiii of this Energy Information Agency document to compare the figures.

Nuclear energy has been rather unfairly dinged by some commentators for receiving outsized government subsidies, but really, coal and nuclear energy both depend far less on government subsidy than renewable energy types and natural gas – coal and nuclear are mature and well-understood.

See here for more on subsidies – this is a Management Information Services study. The MISI report shows that the main beneficiaries of more than $800 billion of federal energy incentives over the past six decades have been the oil and natural gas industries, and that nuclear energy and renewable technologies each have received about 9 percent of the total incentives provided by the federal government since 1950. (Of course, both came into their own after 1950, nuclear only a little after, but the study accounts for this.)

Another peculiar argument:

Fact is, subsidies for green energy do not so much create jobs as shift them around.

That’s true if we assume that jobs are only generated by subsidies. But that’s not true: nuclear energy and renewable energy do not soak up subsidies like sponges and create genuine additional jobs. So does natural gas. Coal picked up 20,000 additional miners since 2003.

To put it another way: electricity production is not going anywhere. In the absence of a price on carbon emissions – through a carbon tax or cap-or-trade or another mechanism – there’s no particular pressure on the price of electricity besides the usual ones (well, some particular pressures: state and federal regulation can certainly have an impact.)

I think the purpose of Lane’s column is largely an attempt to show that liberals support renewable energy that he supposes mostly benefits wealthy people (because they afford things like solar panels) instead of their traditional working class and union allies, thus opening up charges of hypocrisy. It seems an altogether pointless exercise that dismisses the benefits of renewable energy and elides nuclear energy right out of the picture.

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Just to keep up the bona fides, Lane mentions nuclear energy in passing:

For a sense of where this [favoring renewable energy over “traditional” energy sources] may lead, look at Germany, whose crash program to replace nuclear power with wind and solar is boosting electricity rates. Der Spiegel reports that 200,000 long-term unemployed lost power in 2011 because they couldn’t pay their electric bills.

I wrote about this the other day, so I won’t ride that hobby horse again, except to say that this is a false analogy. America is not like Germany, which is practically unique in its haywire energy policy. And I’d counter that the long-term unemployed are going to have trouble with their electric bills and all their other bills as well. That’s the nature of long term unemployment.

1 comment:

SteveK9 said...

It will be interesting to see what happens to electricity rates if methane doesn't go up a bit, but sees a substantial price rise, as it has in the past.