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June 04, 2018

Bailout Coal and Nuclear Plants?

Civil war in the swamp

The US Energy Department is following orders from President Trump to find a way to keep economically failing coal and nuclear generating plants alive and on the grid.  Trump made a campaign promise to save coal jobs and received both votes and campaign contributions from those who benefit from coal. If the Energy Department finds a court-proof way to mandate that electric utilities buy over-priced power from these sources, Trump will be violating another campaign promise; he will be rehydrating instead of draining the swamp. Nevertheless, both the self-serving hypocrisy of the opponents of the proposed bailout and the very real issue of energy security (see An Antifragile Energy Supply) deserve attention.

Coal-fired and nuclear power plants have become uneconomical to operate largely because of competition from low-priced natural gas but also because of competition from wind and solar power. The draft Energy Department proposal is opposed by both the oil and gas industry and the renewable power industry.

Amy Farrell, vice president of the American Wind Energy Association , is quoted in the New York Times: "Orderly power plant retirements do not constitute an emergency for our electric grid… There's certainly no credible justification to force American taxpayers to bailout uneconomic power plants."

That statement, with which I agree, is not credible coming from an industry which would not exist in the US were it not for both government subsidies and mandates, like those Vermont has enacted, which force utilities to buy uneconomic wind and solar power and pass the cost on to ratepayers.

The rationale for mandates to support “renewables” is to avert a looming environmental catastrophe, which may occur if we continue to burn fossil fuels that add greenhouse gasses to the atmosphere.  Coal plants are a significant source of greenhouse gas so it is at least consistent to say their use should NOT be mandated. But nuclear plants don’t produce greenhouse gasses. If the amount of greenhouse gas emitted during the next decade is critical to maintain life as we know it, shouldn’t we want the nukes to keep operating?

This is not an academic question. Germany decided to shut down its nuclear plants after Fukushima. Even though Germany has invested heavily in renewable power and has some of the highest electric rates in the developed world, German emission of greenhouse gasses is going up! Coal-fired plants replaced the nukes.

Wind and solar are not sources of baseline power; coal and nuclear are. If coal plants are shutting down, we need the nukes more. Here’s what Climatologist Jim Hansen, one of the scientists most alarmed by climate change, says:

“To solve the climate problem, policy must be based on facts and not on prejudice. The climate system cares about greenhouse gas emissions – not about whether energy comes from renewable power or abundant nuclear power. Some have argued that it is feasible to meet all of our energy needs with renewables. The 100% renewable scenarios downplay or ignore the intermittency issue by making unrealistic technical assumptions, and can contain high levels of biomass and hydroelectric power at the expense of true sustainability….

“… a build rate of 61 new reactors per year could entirely replace current fossil fuel electricity generation by 2050. Accounting for increased global electricity demand driven by population growth and development in poorer countries, which would add another 54 reactors per year, this makes a total requirement of 115 reactors per year to 2050 to entirely decarbonise the global electricity system in this illustrative scenario. We know that this is technically achievable because France and Sweden were able to ramp up nuclear power to high levels in just 15-20 years.”

The same logic that says we ought to subsidize and mandate renewables says that we ought to subsidize nuclear power. But somehow that doesn’t seem like a good idea to either Big Wind or Big Oil. All of a sudden they don’t want the government interfering in the marketplace.

Before we leap into one more subsidy, however, what if we try some swamp-draining? Let’s get rid of some subsidies and mandates instead. We can start with corny ethanol, which, by law, must be blended into our gasoline supply because of Iowa’s first-in-the nation presidential primary. Then we can remove the subsidies for wind and solar; surely they’ve been jump-started by now. The tax code is full of “incentives” for oil and gas producers; now that fracking has made US oil and gas production competitive with the sands of Saudi Arabia, we could repeal these subsidies. Todd Snitchler of the American Petroleum Institute, the top lobbying group for the oil and gas industry, calls the draft proposal to mandate coal and nuclear "unprecedented government intervention in the energy markets to support high-cost generation [which] will hurt customers by taking more money out of their pockets rather than letting people keep more of what they earn.” He should agree that other taxpayers shouldn’t have to subsidize oil and gas production. Any bets?

If we stop subsidizing competitors of nuclear energy and if we finally open Yucca Mountain so nuclear waste can be stored safely and economically, we may be able to have the environmental advantages of nuclear power without yet one more swampy subsidy or mandate.

See also:

Combating Climate Change - The Nuclear Option

Don’t let the Perfect be the Enemy of the Good

An Antifragile Energy Supply

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