Monday, August 29, 2016

How Nuclear Energy Can Help Count the Cost of Carbon

Matt Wald
The following is a guest post from Matt Wald, senior director of policy analysis and strategic planning at NEI. Follow Matt on Twitter at @MattLWald.

A Federal appeals court recently ruled against companies that make commercial refrigerators in a case involving energy efficiency standards. What does this have to do with nuclear power? Potentially, a lot.

The Federal government’s goal is to reduce emissions of carbon dioxide, which the Intergovernmental Climate on Climate Change and the Environmental Protection Agency have found are destabilizing the climate. But the United States does not have a tax on carbon, or even an overall limit on emissions. This gap in regulations is one reason that nuclear power plants usually do not get credit for the fact that their production is carbon-free.

But the government does have an emerging tool, called the "Social Cost of Carbon." That cost, determined jointly by several federal agencies, puts a dollar number on the damage caused by an additional ton of carbon dioxide emissions.

As of last year the cost was put at between $11 and $56 per ton of carbon dioxide.

The recent decision, by the Seventh Circuit Court of Appeals, concerned appliance efficiency standards. The Energy Department sets efficiency standards for 60 categories of devices, everything from ceiling fans to light bulbs to air conditioners, under a 1975 law intended to cut oil consumption (oil was widely used to make electricity in those days) and to produce “potential environmental benefits.” And it used that law to set a standard for commercial refrigerators.

As part of the cost/benefit analysis, it counted the benefits of reduced carbon dioxide production from reduced electricity demand. But the refrigeration industry argued that the Department of Energy was not authorized to use the Social Cost of Carbon. In fact, the department has been doing so for several years now. Here’s a list of standards in which the social cost of carbon played a role.

The Court ruled that the government can, in fact, use the social cost of carbon and count carbon pollution reduction as a benefit when it decides on energy efficiency standards.

The case, may be relied on in a variety of future decisions by the Energy Department and other agencies, and other courts as well, as they consider arguments over rules and policies that have an impact on climate change.

This is another step in the acceptance of the Social Cost of Carbon, a yardstick for determining the value of avoiding a ton of carbon emissions.

Recently New York State used the Social Cost of Carbon to calculate the value of electricity production from several nuclear reactors whose continued operations were threatened by inexpensive natural gas and subsidized wind power.

And the court decision in the refrigerator case made another significant point: because U.S. emissions of carbon dioxide affect the climate globally, “those global effects are an appropriate consideration when looking at a national policy.” Thus the Energy Department was permitted to use a measure of global damage avoided by a carbon-saving measure when it calculated benefits and costs. Other governmental agencies can also take account of the global benefits.

On Friday, for example, the Justice Department cited the decision in the refrigerator case in defending a case against the Clean Power Plan, which seeks to put state-by-state limits on carbon emissions from power plants.

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