Carbon Price Alone Cannot Unlock US Nuclear Ambitions

A federal carbon price would provide a major boost to the US nuclear power industry, but would not solve all its problems, experts said.

"That would turn the industry around," Richard Caperton, policy analyst for the Center for American Progress, told attendees of the Society of Environmental Journalists conference in Missoula, Montana last week. "There are still some other issues: cheap natural gas, short-term low electricity demand. But a carbon price really reshapes the electricity industry and I think reshapes it to the benefit of the nuclear industry."

But there is a lot of cheerleading for an industry that would only generate 4-5GW by the end of 2020, he said. In comparison, the wind sector brought 10GW of power online last year.

"Nuclear power has a lot of benefits, and there are certainly some drawbacks to renewable power, but the renewable industry has taken off," Caperton said.

The nuclear industry would also thrive if there was a level playing field, argued Paul Genoa, director of policy development for the Nuclear Energy Institute. The renewable sector is supported by state renewable portfolio standards and subsidy fees for loan guarantees paid by the government, he said.

However, nuclear power also has comparable production tax credits and comparable, if not more advantageous, research and development funding, Caperton countered. "It's not like the nuclear industry is hurting for government support," he said.

The US has four nuclear plants in the pre-construction phase in Georgia and South Carolina, with 21 applications under review by the Nuclear Regulatory Commission, Genoa said.

Right now, the biggest problem for the industry is that the economy is "in the tank" and electricity demand is lower because of the recession, Genoa added. "We don't have a single problem with siting plants," he said.

Safety concerns are often cited as the basis for anti-nuclear backlash. But the industry has significantly lowered the risk of a catastrophic accident, with plant operators such as Entergy and Exelon spending hundreds of millions of dollars to correct safety problems at existing US facilities, argued blogger Roger Witherspoon, who tracks the nuclear power sector.

Disposal of nuclear waste remains a key barrier to further development. Federal law requires spent nuclear fuel to be taken to a national repository, but currently Yucca Mountain is the only repository and its relicensing is in regulatory and litigation limbo. Waste is being stored onsite at existing nuclear plants.

"Until we decide what we're going to do with it, it's going to be really hard to build a new power plant," Caperton said.

The rising cost of new nuclear generation, particularly compared to declining costs for wind, solar and geothermal power, also remains a major hurdle.

"If you want to have new generation, it costs a fortune," Witherspoon said. "The industry is trying to get the public to pay for it."

The nuclear industry has sought government loan guarantees to develop new power stations. But the nuclear loan guarantee programme requires the borrower to pay the costs associated with the guarantee, unlike other loan guarantee programmes where Congress appropriates funds, Caperton said.

Constellation Energy last week declined a Department of Energy loan guarantee for a new unit at its Calvert Cliffs nuclear plant because the White House Office of Management and Budget's (OMB's) calculations would have required it to pay an upfront fee of about $880 million or 11.6% of the guarantee, which Constellation rejected as unworkable.

"I'm very sympathetic to them for not liking that fee," Caperton said. But he expressed confidence that the proposed fee accurately reflects the risk of the project as calculated by OMB.

By. Gloria Gonzalez

Source: Environmental-Finance