Nuclear, gas, and the Clean Energy Standard

There's good news and some potentially worrisome news for nuclear on the Clean Energy Standard (CES) front.

Renewables-only standard very unlikely

The good news, for nuclear, is that it's becoming increasingly clear that an energy standard that includes only renewable sources has no chance of passing.

Even renewable energy groups like the American Wind Energy Association (AWEA) have decided to come out in support of an energy standard that includes nuclear and coal with carbon capture. AWEA is doing this because it knows that a renewables-only standard won't happen, and it believes that a CES  that includes nuclear and carbon capture projects will help its industry more than having no energy standard at all.

With the new conservative Republicans and Tea Party candidates in Congress, having no standard at all remains a significant possibility because these new conservatives may oppose the CES over concerns that it will raise electricity prices. Yet, many argue that a CES would give utilities clarity that allows them to make longer-term investments that hold costs down, reduce price volatility, and improve overall energy security.

Other policy organizations such as Third Way (which is associated with moderate Democrats) have also come out strongly in support of a CES, as opposed to a renewables-only standard.

Inclusion of gas in the CES?

In addition to the chance that no energy standard policy will pass, another possibility that is potentially worrisome for nuclear has developed. There has been talk recently, by Sen. Lindsey Graham (R., S.C.) and others involved in developing the CES, about the possibility of including natural gas in the policy. Some natural gas companies, as well as several members of Congress, have been pushing the idea.

The details of how natural gas would be worked into a CES have not been discussed in any press reports I've seen. In private discussions, I'm hearing that a policy that gives natural gas "half credit" may be considered. I'm guessing that the credit would apply only to new gas generation. The rationale for the "half credit" is that natural gas emits roughly half as much CO₂ as coal does.

The way it would work would be basically as follows:

If your utility generates 100 billion kW-hrs per year, and there is a CES that requires you to produce 20 percent of your electricity with clean sources by 2020, then you will need to generate 20 billion kW-hrs of clean energy in 2020 (ignoring demand growth for this example).

Under the "half credit for gas" scenario, any annual generation from new gas plants would be divided by two. Then it would be added to all of your annual generation from renewable or new nuclear plants, as well as any generation from carbon capture projects.

The net effect is that building new gas plants will move you toward the annual clean energy generation goal, but only by half as much as building the equivalent annual generation from renewable or new nuclear sources.

Is inclusion of gas justified?

My initial reaction to the notion of including natural gas in the CES was that it would defeat the whole point of the policy, since utilities will be mostly building gas plants in the absence of any new government policy. This may be the same reaction that renewable advocates had when they heard about expanding the energy portfolio standard to include nuclear and carbon capture. This raises the question of whether nuclear supporters are justified in supporting the inclusion of nuclear but not gas in the CES, or whether they are being hypocritical.

The general, philosophical reason to oppose CES policies that include gas is based on what I believe are the original principles behind energy portfolio standard policies: To encourage the building of non-emitting generation, and to make utilities build new generation that they would not have otherwise built (based on pure economic considerations).

A CES that includes gas does neither of those things. Although better than coal, gas plants still emit CO₂, as well as other air pollutants. Also, gas plants are (almost entirely) what utilities will be building anyway, in the absence of policy.

Unlike gas, nuclear is much like renewables in that nuclear plants emit no CO₂ or other air pollutants, and few nuclear plants will be built in the absence of new government policy. Also, unlike gas, both nuclear and renewable fuel supplies are essentially limitless. Thus, the argument that adding nuclear to energy portfolio standards defeats the purpose of the standards is much weaker than the argument that adding gas defeats their purpose.

In particular, opposing a CES that simply includes gas as a clean source (i.e., that gives gas "full credit") is clearly justified. Such a standard essentially supports all generation options except coal without carbon capture. Few, if any, new coal plants without carbon capture are being planned, and there is a good chance that none will be built in the future. Thus, this inclusive policy would have no impact, since it equally supports all new generation that utilities would have been building in the absence of government policy.

The one possible impact of such a policy would be that it could accelerate the replacement of old coal generation with non-coal sources. But to do that, the policy would have to require non-coal percentages that are much higher than those that would result from just not building any new coal plants.

A policy that gives gas "half credit" is somewhat easier to justify. It could be argued that the impact of such a policy would be similar to that of a CO₂ tax or cap-and-trade system, since gas plants would have to pay half as much for their CO₂ emissions as coal plants do under those CO₂-limiting policies. It is also possible that such a policy would produce the same result, over the near term, as the cap-and-trade system (i.e., the replacement of some old coal capacity with gas).

One key difference, however, is that the cap-and-trade system being considered would have eventually required dramatic cuts in CO₂, which would have ultimately required gas generation to be replaced with nuclear or renewable generation. These longer-term considerations were the primary reason why CO₂-limiting policies helped nuclear and renewables.

Thus, such a "half credit" policy will only take us so far with respect to our climate goals, and it should therefore only be an interim policy, to be followed up by policies that require or encourage truly non-emitting generation.

Aggressive CES goals necessary

Clean energy goals of 17 percent to 20 percent of total generation by 2020 were being considered for the old, renewables-only standard. If new gas (as well as nuclear) generation is included, then the policy should apply only to new generation, and the 2020 clean energy goal should be at least about 30 percent.

Even more importantly, the clean energy fraction required by the CES must increase with time. Energy Secretary Steven Chu suggested a requirement of 50 percent non-emitting generation (not including gas) by 2050. If gas is to be included, then the percentage should be significantly higher than 50 percent, perhaps 80 percent.

Hopf

Jim Hopf is a senior nuclear engineer at EnergySolutions, with 20 years' 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 Public Information Committee. He is a regular contributor to the ANS Nuclear Cafe.