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Posts Tagged ‘cap-and-trade’


Thursday, December 23rd, 2010

Nuclear Townhall
December 22, 2010


  Matt Bennett           Joshua Freed

Third Way was formed by a group of progressive Democrats in the aftermath of the 2004 Presidential election. The founders believed that “too often, our nation’s policy and political debates are defined by the rigid or outdated orthodoxies of both left and right” and that “this polarization leads to ideologically driven policies and political gridlock.”  The team included “a former Clinton White House deputy and Department of Housing and Urban Development chief of staff, former senior Senate and House policy aides, non-profit issue advocates and experts and campaign veterans” – not the kind of crew you’d expect to be embracing nuclear energy. Yet through carefully reasoned analysis and a penchant for shucking off ideological labels, Third Way has become one of nuclear’s biggest advocates in Washington. Two weeks ago, along with the Idaho National Laboratory, Third Way sponsored a “Nuclear Summit” that attempted to lay the groundwork for carrying the Nuclear Renaissance into the 212th Congress. Matt Bennett, co-founder and vice president for public affairs and Josh Freed, director of the Clean Energy Program, gave us their views on the current situation.
NUCLEAR TOWNHALL:  In pro-nuclear circles, you’re known as the progressive Democratic group that’s in favor of nuclear power. Looking at your website, however, it appears that you have a much broader agenda. How do you present yourself to other Democrats?  Do they think of you as “the pro-nuclear group?”
THIRD WAY:  No, we’re a multi-issue think tank. We care deeply about the future of nuclear energy, but we have program areas that include the Economy, National Security, Culture, Domestic Policy and, of course, Clean Energy. We advocate for private sector economic growth, a tough and smart security strategy, bold education and anti-poverty reforms, progress on divisive culture issues, and a clean energy revolution.
NUCLEAR TOWNHALL: After co-hosting this month’s Nuclear Summit in Washington, what was your overall impression of the mood within the nuclear industry?
THIRD WAY: They’re wary. There was great excitement about nuclear’s future before the sharp decline in natural gas prices. Now utilities – particular those in merchant markets – are taking a careful look at the financial implications of new nuclear. They are also watching to see how government policy – from the loan guarantee program to the NRC licensing process – plays out for the first movers.  
NUCLEAR TOWNHALL:  Press reports of the Summit concentrated on the possibility that nuclear might be included in some kind of omnibus “clean energy mandate” that Congress would impose on the whole country. Do you think that’s the right way to go?
THIRD WAY:  Absolutely. We have always argued that clean energy advocates – and we count ourselves among them – should recognize nuclear as clean. Indeed, nuclear is the mother of all clean energy sources. It can provide abundant baseload power without greenhouse gas emissions, and it’s a technology that we know how to build and deploy today. Any policy requiring utilities to have more clean energy sources in their portfolios should be built around that fact.
NUCLEAR TOWNHALL:  You were quite committed to cap-and-trade during the recent Congressional session. Now that doesn’t seem like a possibility. Is there anywhere we can go from here in putting a price on carbon?
THIRD WAY: It’s not at all clear what the new Republican majority in the House will want to do, but it’s fairly clear what they do NOT want to do and a price on carbon is one of those things. So while a carbon price or cap-and-trade systems are not politically viable now, we think there are other things – like a clean energy standard – that might pass muster, even in a Republican House.
NULEAR TOWNHALL:  In your analysis of cap-and-trade’s failure in The Washington Post you suggested that environmental groups had made every possible accommodation to various interest groups but still came up short. Yet they never really reconciled themselves to nuclear power, did they?  Or to put it more bluntly, couldn’t environmental groups have embraced nuclear power and admitted that it’s the only thing that can ever replace fossil fuels?  Wouldn’t the public have taken that more seriously than the fantasy world of running an industrial economy on windmills and solar collectors?
THIRD WAY: Without adopting your words about the “fantasy,” we do agree that one flaw in the campaign for the climate bill was the failure on the part of most of the outside advocates to accept a place for nuclear power. That was a mistake, for both political and substantive reasons. We’re not sure it was fatal, however. In the Senate, the bill’s chief advocates – Kerry, Graham and Lieberman – all embraced nuclear power and even Sen. Boxer had grudgingly agreed that it would be part of the mix. So while the outside groups should have come to that conclusion on their own, the Senators got there anyway and it still didn’t fly. Rejecting nuclear wasn’t what killed the bill – it collapsed under its own weight.
NUCLEAR TOWNHALL:  In a recent Wall Street Journal editorial, J. Wayne Leonard, CEO of Entergy, argued that substituting natural gas for coal would be the best way to deal with global warming. When the owner of Indian Point and Vermont Yankee starts arguing for natural gas, you get the feeling that nuclear isn’t going anywhere soon, don’t you?  What’s your take on increasing our reliance on natural gas?
THIRD WAY: There’s no question that utility executives, under pressure from boards and shareholders, are leaning toward the much cheaper alternatives at the moment. We think that they should be taking a longer view. The spot price of natural gas gives you a look – a guess, really – at the price of gas up to five years from now. With nuclear, a plant conceived today wouldn’t come on line for at least 10 years, but it would operate for another 60-120 years. It’s a huge mistake for the U.S. to be making 100-year decisions about energy based on today’s spot prices of a volatile commodity like natural gas. As John Dyson, the former Chairman of the New York State Power Authority, noted at the Nuclear Summit, the Niagara Falls hydro plant wasn’t economical when it was built but today it provides New York with power at less than half-a-cent per kWh.
NUCLEAR TOWNHALL:  Everybody is concerned with the idea that China, Korea and the rest of the world are soon going to be ahead of us in developing nuclear technology. Aside from the usual concerns of economic competitiveness, is there any other reason we should be worried about falling so far behind in nuclear? 
THIRD WAY: Yes – the nation that leads the world in the production of nuclear energy and the manufacturing of nuclear parts is also going to be the arbitrator of nuclear technology. Given the enormous geopolitical risks associated with this technology falling into the wrong hands, Americans should be demanding that this nation continue to lead the world in the development of civilian nuclear power and not cede that territory to other countries. China not only is our economic rival, it has a profoundly different view of the relative risks of nuclear proliferation – witness its actions toward North Korea and Iran. We want the U.S. to remain in the nuclear energy driver’s seat.
NUCLEAR TOWNHALL:  We recently talked with the owner of a small reactor company who told us that while people abroad greet him enthusiastically when they find he works in nuclear technology, he’s actually heard people in this country tell him they thought nuclear power was illegal in the U.S. Moving in the circles you do, are you ever surprised by a general lack of awareness about nuclear?
THIRD WAY: The general public’s lack of knowledge about nuclear energy is staggering. In focus groups, we’ve heard people say they know “nothing” about how nuclear energy is generated and others offer total misinformation. One man in a Virginia group we did in 2008 said that the Tennessee coal ash disaster was “nuclear waste.” Unfortunately, much of the public’s view of nuclear energy is formed by The Simpsons. For folks over 40, it’s The China Syndrome. An even bigger problem is that many in Congress are also ill- or under-informed about nuclear technology.
NUCLEAR TOWNHALL:  Thanks very much for your time and good luck with your efforts.
THIRD WAY:  Thank you – we appreciated the opportunity.



Friday, November 5th, 2010

In the outwash of the election, environmental groups are frantically pointing the finger elsewhere, saying their cap-and-trade agenda had nothing to do with the U.S. House Democrats’ historic mid-term elections defeat. Yet one thing emerges as crystal clear. If Greens had embraced nuclear energy in their clean air recipe, they might have had much more success in swinging public opinion behind them.

The battle of reading the tea leaves began almost before the ballots were counted. In a comprehensive analysis today,
Politico reports that environmental groups are already firing off emails saying that cap-and-trade played a role in only a handful of races. “Big picture, [the Natural Resources Defense Council] found that more than 80 percent of the 211 Democrats who voted for the climate bill will be coming back for the 112th Congress . . . . It found troubling results for only two members: [Rep. Harry] Teague [of New Mexico] and Rep. Zack Space of Ohio, who also lost.”

In an amazingly rapid bit of data-crunching, Michael Levi, senior fellow for energy and the environment at the Council on Foreign Relations, claims to have proven already that “Cap-and-Trade Didn’t Kill the Dems.”  Levi also maintains that the revolt against Democrats was across-the-board, with cap-and-trade providing no additional correlaiton.

It might seem hard to make this argument in an election where Democratic Governor Joe Manchin of West Virginia sealed his Senate victory by running an ad in which he fired a rifle bullet through the House of Representatives’ cap-and-trade bill. But in all fairness, environmental activists may have a point. Democrats were the target of voter wrath for a variety of reasons – the health bill, the budget deficit, government spending in general. As they point out, 27 Democrats who voted against the bill also lost for re-election on Tuesday. 

But this cover-your-base approach misses the most important point — regulating carbon emissions could have had much broader appeal if it had been couched in positive terms, as a way to prime the jobs pump and accelerate the transition to cleaner, cutting-edge nuclear energy.

In a post on Nuclear Townhall, a reader wrote: “All the thoughts about new nuclear construction (including all those license applications) were based upon the premise that there will be a price/limit placed on CO2 emissions at some point. If there are no prospects for such a limit/price. . . . nuclear will remain at least somewhat more expensive than coal, period. ”This sentiment is shared widely throughout the nuclear and utilities industries. Although cap-and-trade was a hot-button issue that divided the electorate, the only places where it appears to have been decisive is in states and regions heavily dependent on coal. A promise to expand the nuclear industry nationwide could have won widespread support and perhaps softened the blow on the coal industry.

But environmental groups could never reconcile themselves to supporting nuclear.  The result, as the President said yesterday, is that carbon regulations may be dead for a long time.


Read more at Politico


Monday, November 1st, 2010

You have to hand it to the California Air Resources Board.  They don’t play the usual political games.
One week before a crucial referendum on whether the Golden State will try to solve the world’s global warming problems, the CARB has released a complete blueprint of what the regimen will look like.  Seasoned politicians usually wait until the election is over before showing their hand.
The blueprint is a monument to how complicated life can be if you don’t look for the simplest solution – in this case, nuclear energy.  The state could simply build base load nuclear to replace the 40 percent of its electricity generated with natural gas.  Then it could sponsor small modular reactors for factory settings. Oil refineries would have to be moved offshore to Mexico or Trinidad & Tobago, but that’s already happening anyway.  At that it would have gotten rid of nearly all stationary carbon sources.
Instead, the state has a labyrinthine plan that bears a very close resemblance to the Waxman-Markey bill that passed the House of Representatives.  Utilities companies will be issued free carbon permits and then are allowed to sell them to the merchant companies that provide them with electricity.  (The utilities were stripped of most of their generators during California’s electrical deregulation.)  The utilities must then use the proceeds to give rate rebates to their customers, following the principle that no voter anywhere should feel in any way impinged by this effort.  How the merchant companies are supposed to reduce carbon emissions is anybody’s guess.  Most of them now burn natural gas and would have to build colossally expensive carbon capture systems to reduce any further.
Industrial sites all get different treatment, depending on their likelihood to pick up and leave the state.  Cement manufacturers get the most lenient treatment. They don’t have to do anything until 2020.  Oil refineries have until 2015.  It’s anybody’s guess what they’re going to do.  The utility program kicks in by 2012.  The program also puts a tight rein on “offsets,” the ambiguous reductions in other sectors that have turned out to be such a scam in Europe.  The CARB program only allows four possibilities – forestry management, landfill management, manure management and destruction of stores of refrigerants.
"This transition from the current state of the marketplace is designed to be gradual, rather than sudden," the regulators write in an explanatory section. "To ensure this is the case, staff is proposing high levels of free allocation to all industries deemed to have a significant level of exposure to carbon costs."
Environmental groups have worked hand-in-glove with the CARB in setting up the program and officials of the Environmental Defense Fund are serving as chief mediators in explaining it to the public.
The CARB’s bold move in releasing the details will be a fascinating test of its impact on the electorate.  In recent weeks, Proposition 23 – the ballot initiative that postpones all this until unemployment declines to 5.5 percent – has been losing steam at the polls.  It is now losing by about 10 points.  Will the alleged moderation of the plan impress voters or will the prospect of seeing every industry in the state regulated for carbon emissions suddenly revive voter interest in Prop 23?  We’ll know by tomorrow.


Read more about it at the New York Times Green blog



Thursday, July 8th, 2010

No matter what happens with an energy bill in Congress this year – if anything happens — the future doesn’t look bright for carbon. 

Congress might impose a straight up Cap-and-Trade provision limiting carbon emissions and allowing carbon-neutral energy producers to earn  credits that can be sold to carbon emitters.

Congress could just impose a simple tax on carbon emissions, or approve a deal with just the utilities to cut emissions.

And if Congress doesn’t act, the Environmental Protection Agency may issue its own carbon limits.

Utilities have known this for a long time, and they’re not waiting for Congress to figure it out.

Their websites may be graced with images of wind turbines and solar panels as carbon alternatives, but an expansion to nuclear seems a more likely hedge against carbon uncertainty and a surefire way to fill the high-energy demand/low carbon gap.

Case in point: Jacksonville, Florida’s JEA recently closed on the $2 billion purchase of part of a reactor to find safe harbor from a carbon-tax world.
According to the utility, The JEA Board of Directors approved the pursuit of nuclear energy partnerships at their March meeting with the goal of providing 10 percent of JEA’s power from nuclear sources. That is the equivalent of approximately 300 megawatts of capacity. Adding power from nuclear sources to JEA’s portfolio is part of a strategy to make the utility less dependent upon fossil fuels.

The Municipal Electric Authority of Georgia (MEAG) is developing a nuclear plant with Georgia Power that would be one of the first new plants licensed in the U.S. in decades. It is an expansion of the existing Vogtle nuclear complex outside of Augusta, Georgia.

Oglethorpe Power Cooperation, a Georgia-based cooperative, is also a player in the Voglte expansion. It operates natural gas, hydroelectric, coal and nuclear plants, but cited its Vogtle investment as a source of, “emission-free power.”

Adding heft to the project is President Obama’s decision to grant the Vogtle project $8.3 billion in loan guarantees. The administration, while sour on Yucca Mountain as a nuclear waste site, has used a 2005 funding bill to back nuclear energy as a carbon-free alternative that is already available.

Other projects are already lining up for federal loan guarantees. Rep. Steny Hoyer, a Maryland democrat and the House of Representatives majority leader, has said that Constellation Energy’s bid to build a reactor at Calvert Cliffs, Md., is "first in line" for a federal loan guarantee.

Projects in Texas also hope to snare some of the guarantees. Luminant, a Texas utility, has applied for a license to add two new reactors at Comanche Peak nuclear plant in Somervell County.

A two-reactor expansion project run by NRG Energy in San Antonio is also hoping for federal guarantees.

The International Energy Agency, in a “Nuclear Roadmap” report issued last month, found that nuclear power could generate nearly a quarter of the world’s power by mid-century.

The report cited global pressure to reduce carbon emissions. It found that reactor and fuel-cycle development will have to continue and overall capacity will have to triple if nuclear power intends to compete with other low-carbon technologies.

"Nuclear energy is one of the key low-carbon energy technologies that can contribute, alongside energy efficiency, renewable energies and carbon capture and storage, to the de-carbonisation of electricity supply by 2050," said IEA Executive Director Nobuo Tanaka.

Exelon Corporation, which operates in several states, has already made nuclear power the cornerstone of its operations. The company operates 10 power plants that utilize 17 reactors, as well as wind and solar farms. Exelon has three coal-fired plants and 31 natural gas units, but it has aggressively, and comfortably, moved to nuclear.

Exelon Chief Executive John Rowe has said that his company won’t build new reactors as long as there isn’t a price on carbon. Just the same, Exelon is expanding its current reactor capacity as the energy environment changes and a carbon price tag looms larger.

President Obama met with Senate leaders of both parties recently to press his energy agenda, which in the past has included a cap and trade provision.
During the meeting Democrats agreed to scale back proposed carbon limits.
“We believe we have compromised significantly, and we’re prepared to compromise further,” said Massachusetts Democrat John Kerry, a co-author of one energy bill. But Kerry added, “The president was very clear about putting a price on carbon."

Republican Sen. Lamar Alexander of Tennessee saw it a different way.

“We’ve got to take a national energy tax off the table in the middle of a recession,” he said.

Obama could find a way to follow the lead of the United Kingdom’s new conservative prime minister, David Cameron.

Cameron recently announced a carbon tax as a way to boost nuclear power production. He views nuclear power not as just a hedge against carbon production, but an outright alternative.

Cameron made no secret of a possible carbon tax during his recent campaign for prime minister, though his government, intent on cutting deficits, just nixed a $120 million loan to support reactor construction.

He and Obama hope that pricing carbon will give private markets enough incentive to expand other forms of energy production, including nuclear power.

It is not yet clear if Congress agrees, but some utilities are not willing to wait.


Tuesday, June 29th, 2010

By William Tucker
As President Barack Obama meets with key Senators this morning to discuss energy, the number of scenarios that could unfold in the passage of an energy bill through Congress this year keeps multiplying.

As The New York Times suggests in a lengthy article this morning, one more possibility – besides the adoption by the Senate of some form of cap-and-trade – is that Senate Democrats may pass some deliberately weak bill and then count on it being strengthened in the conference committee. Anything the Senate passes would have to be reconciled with the stronger Waxman-Markey adopted by the House. Then an up-or-down vote on the conference bill could be postponed until after the November election.

Another scenario has the Senate adopting an oil-spill bill with an energy bill attached. The main body of the legislation would involve punishing BP and improving drilling safety. Since acting against BP would be popular, Republicans would find it hard to vote against any cap-and-trade or renewable portfolio requirements that might be attached. Democrats would label them friends of the oil industry.

Beyond these strategies, the big question remains what will happen with any bill's four major provisions:  1) carbon restrictions, 2) renewable portfolio standards, 3) nuclear loan guarantees, and 4) offshore drilling regulations. If the Democrats manage to assemble one big package, as they did with health care, they might force Republicans to accept some things they don't like.

A strong nuclear title will likely be part of any package. The Kerry-Lieberman bill is very strong on nuclear, with expanded loan guarantees and a section telling the Nuclear Regulatory Commission to speed up the licensing process. Its inclusion is more than likely since- miracle of miracles – nuclear power has become something of a favorite in Congress with few anti-nuclear representatives raising their voices.

Cap-and-trade would also favor nuclear, since it would act against nuclear's main rivals, coal and natural gas. The real danger to nuclear would be a strong renewable portfolio standard -17-percent-by-2020 as in Waxman-Markey, for instance – that would exclude nuclear. This would lead to a decade of misplaced investment in wind-and-sunshine that would probably push nuclear into the background. Several Senators are urging a carbon-free standard instead of a "renewable" standard, since that would put nuclear back into the picture. In fact it is something of a mystery how proposals to generate electricity with wood instead of coal on the grounds that wood is more "renewable" ever made it into bill aimed at reducing carbon emissions.

It's high drama, with both the election and the nation's energy future hanging in the balance. After the sneak-preview offered by today's White House discussions, prime time will begin on July 12 when majority leader Harry Reid brings his oil-and-energy offering to the floor of the Senate.

Read more at the New York Times


Tuesday, June 22nd, 2010

As the U.S. Congress debates cap-and-trade over the next month it will be worth keeping an eye on Britain and the rest of Europe to see how the system is working over there.

Yesterday, British Prime Minister David Cameron made a startling announcement. The British government will set a FLOOR beneath carbon prices in an effort to promote the construction of new reactors. It seems the price of carbon has fallen so far during the recession that it’s no longer giving nuclear any advantage.

The incident is a lesson to American legislators. Putting a price on carbon may not be a job-killing “tax” that is the end of the world after all – especially if a good portion of the fee is rebated to consumers instead of being gobbled up by the government. Europe’s cap-and-trade seems to be working fairly smoothly – to the point where
the new pro-nuclear conservative government feels more intervention is necessary to give nuclear credit for being clean.

Of course the hugely disorganized sham market for “carbon offsets” – one of the biggest failures of the European system – is a negative lesson well worth learning as well.

Read more at Business Week