Wednesday, September 25, 2013

The Win Place Show of Nuclear Energy

horseThe Guardian’s latest story on nuclear energy is heavy on the industry’s perceived travails. A lot of its points depend on nuclear critics to make those travails palpable – which is a few strikes against it. Regardless, the story has a number of striking features that tilt it toward balance even if it doesn’t quite get there.

For example, NEI gets to add some useful context to the thesis that plant closures spell doom:

Officials at the Nuclear Energy Institute, an industry lobbying group, remain hopeful.

"It's certainly true that a handful of older, smaller nuclear power plants—like older, smaller coal-fired plants—are vulnerable to weak market conditions," NEI Vice President Richard Myers told a London audience earlier this month. "How many additional nuclear plants shut down, if any, will depend on a number of factors, all difficult to forecast with any confidence."

But Myers stressed that the U.S. industry has weathered tough times before. A similar combination of economic stresses led to the closure of ten reactors in the mid- to late-1990s, prompting the Department of Energy to predict that 50 reactors would be mothballed between 1995 and 2015, he said. Including the recent announcements, 15 reactors have been scrapped since 1995.

"Although the short-term picture is challenging, the long-term prospects for nuclear energy in America remain strong," Myers said, noting that there are many proposals for new reactors at the NRC that have not been cancelled. "No one expects construction on any of them to start anytime soon, and some may never be built," Myers conceded. "But post-2020, some surely will."

In much of the piece, writer Elizabeth Douglass creates a kind of fictive horse race with energy winners and losers. It’s like the weekly box office, which news sites use to determine who’s up and who’s down in the movie business. But just as such numbers tell you less than such sites tout, so does an insistence that a few plant closures portend doom. As Myers points outs, it portends less, even if Douglass describes this as merely “hopeful.”

Let’s also throw policy into the mix. Myers focuses on economics, but policy plays an important role, too. Douglass does her readers a service by insisting on that (though not in nuclear energy’s favor, wouldn’t you know):

Around that time [around 2005], there was growing concern about pollution and the climate-changing effects of carbon dioxide emissions, so industry advocates began touting nuclear energy as a cleaner way to power the economy. When lawmakers started backing the concept of putting a price on carbon emissions through a cap-and-trade system, the clean energy argument seemed poised to turn into an economic advantage over natural gas and coal power plants.

But the good news didn't last. The cap-and-trade plan never materialized, and the concept of a carbon tax never got off the ground. In addition, the price of natural gas fell in late 2008  because of  the recession and an unexpected surge in U.S. production from shale formations. The flood of new supplies drove U.S. natural gas prices down to $1.91 per million Btu in April 2012, the commodity's lowest closing price on the New York Mercantile Exchange since just after the September 2001 terrorist strikes.

Climate change is still a policy concern – which natural gas cannot help mitigate as effectively as nuclear energy – and the policy is still evolving – see here, for example, about the EPA’s proposed regulations on coal plant emissions. But let’s not play the horse race game ourselves – what might have an impact on coal should not encourage huzzahs from the nuclear faithful.

So, no, the lack of cap-and-trade is not a case of “good news” not lasting. It’s a case of businesses adjusting to the reality of current policies and to the ebb and flow of business. As Myers points out, the commercial nuclear energy industry has had economic ups and downs in its long history. Moreover, the last round of dire predictions about nuclear energy proved, shall we say, wrong. Douglass understands the current energy configuration is just that – current - and prone to change:

The price of natural gas is historically volatile, and there's no guarantee that gas costs will stay low. Any number of things—unsustainable production rates, soaring demand, robust exports or new drilling and fracking regulations, for example—could force natural gas prices to revert to previous levels.  

California just put a fracking regulation bill in place and France has banned the practice – though the latter decision is getting some constitutional scrutiny. Again, that’s policy (potentially) impacting electricity production.

Remember, though, this is the Guardian, not a noted friend of nuclear energy, so the tone of the piece can get rather breathless:

With the industry's survival hanging in the balance, nuclear power supporters and equipment makers have focused on overseas markets where growing energy demand is fueling power projects of all stripes.

Survival hanging in the balance? Really? Makes it sound like The Hunger Games, atomic edition.

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