Archive for the ‘Climate Bill’ Category

Nuclear Townhall

November 16, 2010

The Hill’s E2 reports this morning that the Coalition for Green Capital headed by former Clinton Administration official Reed Hundt will outline a “broad blueprint” today for post-cap-and-trade energy policy, which includes a clean energy standard that “would allow non-renewable low-carbon sources, like new nuclear power plants, to qualify.”

The Hill quotes a coalition spokesman Bracken Hendricks saying:  “We talk about the possibility that we could allow more of a clean energy standard on a state-by-state basis, and in exchange for that you would have a higher bar.  We feel that some level of regional flexibility in the standard can actually get a much more robust overall national commitment to clean energy deployment.”

Hendricks said the new plan – which he called a “springboard” for discussion – is crafted to find a political sweetspot on the energy policy front in light of the collapse of the Waxman-Markey cap-and-trade proposal in the outgoing Congress and given the election of a new House Republican majority.

The concept – which is being outlined at an event with the former Clinton Chief-of-Staff and Democratic partisan John Podesta’s influential Center for American Progress and the American Council on Renewable Energy – represents a thaw in environmental activists’ doctrine adhering to a strict renewal standard that excludes nuclear energy.  The move to open the door to nuclear also reflects brass political pragmatism given the fleeting chance of the lame-duck Democratic majority pushing a renewable standard forward in the post-election session as well as the potential attractiveness of a clean energy standard that includes nuclear to some Republicans.

Even under the best circumstances, passage of a clean energy standard in the new Congress is considered an uphill gambit.  “Can you imagine the new tea party House pushing through a sweeping government mandate of this kind on top of states’ rights without any compelling national reason to do so?” said one Capitol Hill observer.  “That said, this represents progress toward recognition of nuclear energy as a leading clean energy resource and its bipartisan political appeal.”

The package also includes low-cost financing, Federal Energy Regulatory Commission reform to facilitate deployment and “backstop transmission siting power.”

Read more about it at The Hill

Just when longstanding Congressional energy observers thought that the window had closed, Senate Majority Leader Harry Reid (D-NV) is once again making noises about pushing a “renewable energy portfolio” through Congress before or after the November mid-term elections.
 
As the Kerry-Lieberman climate and energy proposal – which offered some robust nuclear energy provisions – collapsed this summer, the possibility emerged that Congress might give revert back to a “renewable mandate” that would dictate huge investment in solar and wind projects without giving any credit to nuclear for its carbon-free capacity.
 
Now that possibility is back in play. Last week Reid told The Hill that a renewable standard is “absolutely” in the mix for a revived energy effort this month. Since then the tom-toms have been beating loudly for a renewed renewable effort.
 
The loudest talking point is that without a renewable standard, China is going to beat the U.S. to the punch in wind and solar energy leadership. “China has passed the U.S. for the first time to become the most attractive destination for global clean energy investment,” laments a report in Grist. “This follows the failure in the US Senate’s proposed energy bill to include a Federal Renewable Energy Standard (RES) provision.”
 
This allegation conveniently  ignores the fact that — at the same time — China has just announced the construction of a “Nuclear City” in Haiyan to consolidate its own efforts to convert its economy – and the rest of Asia – to nuclear.
 
An attempt to push a stand-alone RES failed last August because Senators from the Southeast – short on both wind and sunshine – feared they were going to be pushed into stripping their forests in order to satisfy the renewable mandates. Reid may have a plan to entice them– or perhaps he just offering election year hope for his environmental constituents.
 
The real question is how an effort to lower carbon emissions ever ended up as a mandate to states and utilities to burn wood instead of coal on the grounds that it is “renewable,”  said a nuclear energy industry consultant.
 
“If we’re going to have a standard, how about a true clean energy portfolio fashioned around a carbon-free standard that would give credit to nuclear’s extraordinary ability to produce electricity without producing any exhausts or pollution,” he added.

Read more at Grist.org

Climate legislation may be over for this year, but it’s worth taking note that it wasn’t likely utility companies that killed it.  This was emphasized yesterday when Charles Patton, in-coming president of Appalachian Power Company, of Virginia and West Virginia, said he regretted that Congress had been unable to enact anything.  “We were disappointed no action was taken,” said Patton. “Power companies need legislation to provide them with certainty about what will be expected, and to give them time to plan new pollution controls or entirely new power plants. We can’t turn on a dime.”

Appalachian Power burns almost 100 percent coal in its boilers. It is a division of American Electric Power, which is 90 percent coal and 10 percent nuclear form the D.C. Cook reactor in Michigan.  Patton complained that the lack of climate legislation leaves utility companies without any certainty of how to proceed. “The dilemma we face as an industry is there appears to be some amount of inevitability that something in the carbon world is going to happen."Instead, he said, the utilities are now likely to be governed by EPA regulatory efforts, which will not allow emissions trading that might produce economies.

Ironically, it was Democratic legislators from West Virginia and other coal-producing states who dealt the death blow to cap-and-trade by siding with the Republican opposition.

Read it at the West Virginia Gazette

The Obama Administration’s 18-month effort to pass significant climate and energy legislation effectively ended yesterday as Senate Majority Leader Harry Reid made it official that he will not introduce a truncated energy bill for a vote before the scheduled Senate August recess.

The anticipated bill had limited climate-related  aspects.  Its main concern was the BP oil spill — removing liability caps and tightening permitting for offshore drilling. The effect, according to Senators from the Gulf states, would be to turn the Administration’s temporary moratorium on drilling in the Gulf into a permanent state of affairs. Opposition from Republicans and Gulf State Senators convinced Reid he could not get the 60 votes needed to advance the bill.

Representatives of the offshore oil industry breathed a sigh of relief but said that the six-month moratorium on drilling imposed by the Obama Administration is already having a devastating impact. "This is a very competitive international market," said Jack Victory, a spokesman for Transocean, the Swiss company whose rig blew up at Deepwater Horizon. "These rigs are in demand all over the world.  Several have already left the Gulf for Egypt, Brazil and West Africa.  It’ll be a long time before they come back."

Although the drilling slowdown will not have any immediate impact, it could start to show up in diminishing production within a few years.  One-third of domestic oil production now comes from the Gulf and domestic production only provides one-third of the U.S.’s oil consumption.

Nuclear energy sources generally conclude that the demise of an energy bill with carbon pricing put more more pressure on a policy lift from federal loan guarantees, which also seem to be grinding to a halt as well. This week both NRG and Constellation Energy slashed plans for spending on new projects in anticipation that the Department of Energy would not be making any more awards in the near future.

With only two weeks to go before the August recess, the chances that the Senate would adopt a climate bill that would give a boost to nuclear power appear to be slim to none.

Senator John Kerry and other Democratic leaders met with the CEO’s of utility companies to sound them out about Kerry-Lieberman’s "utilities only" system of cap-and-trade. Ironically, the utilities are worried about getting a cap WITHOUT a trade – which is what they will get if the Environmental Protection Agency goes ahead with its command-and-control approach, which seems likely if nothing passes the Senate.

Still, the industry as a whole is playing a double game. Individual CEOs have said they could live with a cap-and-trade system but as a whole the industry has too many old coal plants to make that plausible. Sao instead they are asking for more time, quietly hoping the whole issue will go away.

All this leaves nuclear out in the cold. Without a price on carbon emissions, nuclear’s carbon-free electricity holds no economic advantage. The old coal plants, some of which date back to the 1930s and 1940s, will go on chugging forever. The "nuclear industry," perceived by environmentalists to be so powerful, should be in there winning points by plugging for a utilities-only policy right now.

But of course there is no "nuclear industry" – only a bunch of utilities that have lots of coal plants and a few reactors. And so nuclear’s best chance at getting a leg up on the future may be going by the boards.

Read more at The Politico

Next week, if all goes as anticipated, Senate Majority Lead Harry Reid (D-NV) will take the first steps towards bringing an energy bill to the Senate floor with the hope that he can hammer something through before the August recess.

This could be a turning point for the Nuclear Renaissance. There are several possible outcomes that could be disadvantageous for nuclear. The worst would be if Congress decides to abandon a carbon-based approach altogether and settle for a “compromise” of a huge “renewable portfolio standard.”  Such a mandate would lead to much misallocated investment while giving no advantage to nuclear’s zero-carbon electricity.

There are several pieces of legislation already on the menu that could form the basis of the Majority Leader’s effort:

¤  Kerry-Lieberman

The bill has a very strong nuclear title, including expanded loan guarantees and a charge to the U.S. Nuclear Regulatory Commission to speed its licensing. It contains no renewable portfolio but is premised on a cap-and-trade system that applies first to utilities and later to industry.

¤ Senate Energy

Largely crafted by New Mexico Democrat Jeff Bingaman, Chairman of the Senate Energy and Natural Resources Committee, more than a year ago, the bill is “energy only,” mostly a package of incentives for wind, solar and electric cars. It was voted out of Bingaman’s Energy Committee but never made it to the floor. Getting Republican support might mean adding Kerry-Lieberman’s nuclear title plus a concession to swing Republicans.

¤ “Utilities Only”

A tripartite commission has advanced the American Power Act, which would apply cap-and-trade only to utilities.  It would avoid imposing cap-and-trade on the entire economy and concentrate most of its effects on old coal plants. This probably minimizes impacts on the price of electricity, since old coal plants are not the marginal provider. However, pivotal Republicans such as Alaska Senator Lisa Murkowski and Indiana Senator Richard Lugar of Indiana are rejecting any form of cap-and-trade.

¤ Lugar Bill

Senator Lugar has introduced his own bill, the Practical Energy and Climate Plan Act, which is “more carrots than sticks.”  The plan would add $36 billion in loan guarantees for new nuclear reactors and add more money for energy conservation.  Oil drilling and biofuels would also get a boost, but there is no provision for taxing or capping carbon.  The stick, says Lugar, would be the threat of EPA regulation of carbon emissions.  The bill has won the support of Republican Senator Lindsay Graham of South Carolina, which is significant in the Graham was a co-author of Kerry-Lieberman before withdrawing his support just as the bill was introduced.

¤ Waxman-Markey

One widely rumored option is that Democrats could adopt some mild form of energy legislation and count on having cap-and-trade revived in the Senate-House Conference Committee. Final passage could be postponed until after the November election. Cap-and-trade could not muster 60 votes in the Senate but might survive through the same parliamentary maneuver that led to the passage of health care reform. If the Democrats lose badly in November, however, political pressures against it would be very strong.

¤ EPA Regulations

Lurking in the background is the possibility that if nothing passes the Senate, the Obama Administration may fall back on having the Environmental Protection Agency impose a command-and-control carbon regime on the entire economy. Nobody seems to want this but both sides could blame each other if it becomes the end point. Many supporters of nuclear are talking about substituting a “carbon-free standard” for the “renewable standard” so that nuclear could be included. It makes sense and support for nuclear is rising, but it may be a little late in the game for such a change.

Threading the needle with something that secures nuclear’s benefits while not creating runaway incentives for other forms of energy is going to be extremely difficult. What’s your proposal for a winning strategy?