The Clean Power Plan and Its Impact on Nuclear

October 8, 2015, 7:13PMANS Nuclear Cafe

Republished with permission from ANS News, September/October 2015, p. 5.

It's official. The Environmental Protection Agency has finalized its Clean Power Plan rule, which-if fully implemented-will reduce emissions from the U.S. electricity generation sector by roughly a third by 2030.

To say the CPP is complex is a monstrous understatement. At 1,560 pages, the final rule is a byzantine labyrinth of state emissions targets, performance standards, and penalties. I don't think any one person or organization-even the EPA-fully understands the CPP's long-term impacts at this writing. However, while the fine print continues to be parsed by many, we can draw some general conclusions.

Is the final CPP rule good for nuclear energy? On balance, I think it is. Clearly, the five plants currently under construction fare better, as the EPA will now count their energy generation toward each host state's target, rather than the draft rule's approach of "assuming" their completion in their host state's emissions baseline. (This was an ANS recommendation.) In addition, the final rule allows upgrades to existing plants to be counted toward compliance, a nice new feature that was not in the initial rule. Finally, as in the draft rule, the generation of any new nuclear project brought online between now and 2030 (whether it be Generation III+, a small modular reactor, or Gen IV) would count 100 percent toward a state's compliance.

O.K. New nuclear is treated fairly. How about the current fleet? That's where things get complicated. The draft rule included a 5.8 percent credit for keeping a current plant running, which ANS deemed to be insufficient incentive. States merely need to backfill 5.8 percent of the generation of a closed plant to stay even with their emissions performance standard. The final rule provides no credit for continued/extended operation of existing plants, which on the surface would seem to be a big step backward for nuclear.

However, the final rule provides a new way for states to reach compliance that could prove to be an important regulatory bonus for the nuclear industry: the "mass-based compliance target." In addition to the familiar emissions performance standard proposed in the draft rule (expressed as pounds of CO2 emitted per MWh), the final CPP includes an alternative compliance target for each state based on actual carbon emissions from electricity generation (expressed as annual average CO2 emissions in short tons). Any state choosing a mass-based compliance approach would effectively put 100 percent of its existing nuclear generation in play for compliance. Our early analysis suggests that the EPA's mass-based goals are generally less onerous than their performance standard counterparts, and furthermore, states that choose the mass-based approach could more easily participate in multi-state carbon emissions allowance trading programs.

So what's next? In a word: lawsuits. At least 15 states have already indicated that they will challenge the CPP's legality in federal court. The EPA used some novel legal interpretations in writing the rule, and I suspect that it may go all the way to the Supreme Court. Also, a Republican president could roll back portions of the rule in 2017, although, just like Obamacare, each day that passes with the rule in force makes it harder to hit the "undo" button.

The bottom line is that whether or not you take issue with the science of climate change, or would prefer a simpler approach, such as a tax on carbon, it is clear that nuclear is better off with the Clean Power Plan than without