EPA Releases Final Rule for Clean Power Plan – How Did Nuclear Fare? – Part 1

August 24, 2015, 4:47PMANS Nuclear CafeJim Hopf

On August 3, 2015, the U.S. Environmental Protection Agency released the final rule for its Clean Power Plan (CPP), the goal of which is to reduce CO2 emissions from the U.S. power generation sector. The plan establishes state-by-state requirements for power sector emissions reductions, over designated timeframes. The plan allows states to either reduce overall power plant CO2 emissions or to reduce the tons of CO2 per MW-hr generated (each by EPA-specified amounts).

Plan details

One might think that a requirement to reduce tons of CO2 per year or tons of CO2 per MW-hr (by given amounts, for each state) would be fairly simple, but it never seems to work that way with government regulations and laws (the CPP rule is more than 1500 pages long). As with the preliminary CPP, the requirements don't exactly correspond to limits on tons of CO2 or tons of CO2 per MW-hr. There are complications and exceptions.

The plan establishes limits on tons of CO2 (per year) or tons of CO2 per MW-hr generated, for gas plants and for coal plants. (Different limits apply to each.) Those limits then decrease with time, so that the emissions reduction goals for each state are met. Requirements begin in 2022 and the final reduction goal must be met by 2030. The plan does not address CO2 emissions after 2030. States may choose to meet either the limits on tons of CO2 or the per MW-hr limits.

Coal and gas plants may employ efficiency measures to reduce emissions, and could also use carbon capture and storage (CCS) to meet the steadily decreasing emissions limits, but the main idea is to replace the generation from those plants with non-emitting or low-emitting generation. The plan specifies various permissible measures that may be taken that generate emissions reduction credits (ERCs) that can be used to effectively reduce the emissions from the state's coal and gas plants.

These measures include converting coal plants to burn gas (or biomass) instead, replacing coal generation with additional generation from existing gas plants (i.e., running gas plants more often), or replacing coal or gas generation with new non-emitting generation from renewable or nuclear sources. Uprates of existing nuclear plants count as new generation. States are allowed to enter into cap-and-trade like programs with other states, to meet those states' overall collective emissions reduction goals.

Interestingly, the plan was tailored so that replacement of coal generation with generation from new gas plants does not generate ERCs, and thus does nothing to help a state meet its emissions reduction goals. That, despite the fact that replacing old coal plants with new, efficient gas plants would clearly reduce emissions. This is an example of how the EPA just couldn't keep things simple. (This tweak was put in to appease pro-renewables-only groups, which have clearly had a very strong influence on the CPP.) As I discuss later, the plan also does not allow keeping existing nuclear plants open to generate ERCs, or count toward emissions reduction goals.

Clean Energy Incentive Program

The CPP also includes a Clean Energy Incentive Program (CEIP), which applies only to solar, wind, or energy efficiency projects that will generate power (or demand reduction) by 2020-2021. Such projects would generate ERCs in addition to the ERCs that those non-emitting sources would earn under the main plan described above. The program is limited, in that the EPA will grant such ERCs for up to 300 million tons of CO2 emissions.

This plan is another example of different means of emissions reduction not being treated equally (thus violating the principle of just requiring reductions and letting the market decide the cheapest means of achieving those reductions).The CEIP has the effect of handing more of the "emissions reductions market" to renewables, specifically.

Treatment of nuclear

The CPP's treatment of new nuclear, and plant uprates, is clear. Such new nuclear generation counts as non-emitting generation that generates ERCs, based on the reduction in tons/year of CO2 or tons of CO2/MW-hr that would result. Nuclear is treated just like new renewable generation in that respect. With respect to existing generation (e.g., keeping existing nuclear plants open), the EPA stated that neither existing nuclear nor existing renewable generation would count at all toward emissions reduction goals (i.e., they do not generate ERCs).

One might conclude that this means that there is no incentive to keep existing nuclear (or renewable) plants open, but it's more complicated than that. In fact, one might think that since the EPA assumed that all nukes remain open when it established the state emissions reduction goals, the CPP would actually effectively apply a significant incentive to keep those plants open. The real question boils down to what would happen, under the plan, if a state closed an existing nuclear plant and replaced it with new gas generation (which emits CO2). Surely that would move a state further away from the specified goal, right? It was very difficult (and disappointing) for me to determine the answer to that question. Based on my reading of the actual 1500+ page regulatory document, as well as various commentary by other groups (here, here and here, and here), my understanding of how it works is as follows:

With respect to the tons of CO2 per year emissions reduction requirements, replacing a nuclear plant would indeed move a state further from the emissions reduction goal. Those goals are somewhat weak (for example, the EPA actually made them weaker for states that anticipate new gas capacity coming on line to meet new demand), but at least the allowable CO2 emissions are fixed. Thus, there is a disincentive to replace nuclear capacity with emitting generation such as gas.

Unfortunately, it appears that the CO2 per MW-hr reduction option provides no disincentive at all against replacing an existing nuclear plant with new gas generation. The requirements for the CPP's CO2/MW-hr option apply only to existing fossil plants, with ERCs earned through various means described above being used to "reduce" the emissions from those plants. As discussed above, new gas generation does not provide ERCs that can be used to "reduce" the CO2/MW-hr of a state's existing fossil plants. But an existing nuclear plant doesn't generate ERCs either. Thus, closing a nuclear plant and replacing it with gas generation would have no impact at all on the (adjusted) CO2/MW-hr of a state's existing fossil plants, and thus would not move a state farther away from its reduction goal.

Further discussion

Further discussion of the impacts of the CPP on nuclear, as well as some political considerations, will be discussed in Part 2 of this post.

jimHopfJim Hopf is a senior nuclear engineer with more than 20 years of experience in shielding and criticality analysis and design for spent fuel dry storage and transportation systems. He has been involved in nuclear advocacy for 10+ years, and is a member of the ANS Communications Committee. He is a regular contributor to the ANS Nuclear Cafe.