The Race to Consolidate Power and Stave Off Disaster
Today, in the midst of United Nations climate change negotiations in Bonn, U.S. President Donald Trump’s envoys are hosting a parallel event promoting fossil fuels. This has angered many of the representatives gathered in Bonn to implement the Paris climate accord, from which Trump already announced in June that he would withdraw the United States. Because the United States cannot legally leave the climate pact until 2020, it is thus entitled to a seat at the negotiating table in Bonn. That Washington would come to peddle fossil fuels added insult to injury.
Lost in the uproar over fossil fuels, however, was the fact that the offending U.S. delegation event also will promote a much cleaner energy source: nuclear power. As the largest source of clean energy in the United States, nuclear energy will be crucial to limiting global greenhouse gas emissions and confronting climate change. Yet because the Trump administration links its support for nuclear to that for fossil fuels such as coal, it cedes any appearance of responsible environmental stewardship and strains strategically important relationships.
At home, the administration has proposed a controversial policy to provide large subsidies to both nuclear reactors and coal power plants. The link is largely unnecessary; the U.S. Department of Energy claims that the two types of power plants would best improve the resilience of the country’s electric power system, but a bipartisan chorus has panned the proposal as a transparent attempt to prop up energy sources that the administration prefers. By tying the fortunes of nuclear and coal, the administration is jeopardizing the future of an industry that offers climate, diplomatic, security, and economic benefits with that of one that is in irreversible and overdue decline. Trump should disentangle his policies towards the two energy sources and focus efforts on fostering an advanced U.S. nuclear industry.
NOPE TO THE NOPR
In September, U.S. Energy Secretary Rick Perry directed the Federal Energy Regulatory Commission (FERC) to create a rule to, in effect, protect coal and nuclear power plants from closing. In his Notice of Proposed Rulemaking, he proposed altering wholesale electricity markets—through which power plants sell bulk quantities of electricity, often to utilities that purchase the power to deliver to end customers—so that plants that store three months’ worth of fuel onsite are paid a premium price for their power. Nuclear and coal plants are capable of stockpiling that much fuel, so they could rake in billions of dollars of subsidies if the rule is enacted. Theoretically, the rule would protect the U.S. power system from natural disasters or other disruptions to energy infrastructure.
The response to Perry’s proposal was fast and furious—from both sides of the aisle. A diverse coalition including lawmakers from both parties, as well as analysts, environmental activists, and natural gas and renewable industry groups decried the proposal. (Predictably, pro-nuclear and coal groups supported it.) Many argued that it wouldn’t materially improve resilience, given that just 0.00007 percent of all major U.S. power disruptions over the past five years resulted from insufficient onsite fuel supply. What’s more, Perry’s proposal would only grant subsidies to plants that store fuel for 90 days or more, an arbitrary threshold that disqualifies natural gas plants, which could also store fuel onsite to ride through a major disaster but not enough to meet the 90-day requirement.
Perry’s proposal would only grant subsidies to plants that store fuel for 90 days or more, an arbitrary threshold that disqualifies natural gas plants.
These rejoinders suggest that Secretary Perry may care less about resilience than simply supporting nuclear and coal power. He suggested as much in remarks at a public event in November, asserting that his proposal is “rebalancing the market” in response to former President Barack Obama’s support for renewable energy. Recognizing a thumb on the scale for what it is, a bipartisan collection of former FERC commissioners delivered a stinging rebuke, calling Perry’s proposal “a significant step backward from FERC’s long and bipartisan evolution to transparent, open, competitive wholesale markets.”
There are several reasons that coal and nuclear energy industries are faltering. Both sources have been undercut by cheap domestic natural gas, produced from hydraulic fracturing (or “fracking”) of shale formations. And the cost of renewable energy has fallen so sharply that, taking into account federal subsidies, it is now often cheaper to install new solar and wind farms than it is to keep operating aging coal or nuclear plants. Indeed, coal plants have gotten more expensive to run as a result of federal environmental regulations to reduce emissions of toxic pollutants, and few new plants are on the drawing board. The outlook for new nuclear reactors is similarly grim, after recent projects experienced soaring cost overruns and one of the last U.S. nuclear companies, Westinghouse, declared bankruptcy in March.
This strident chorus of opposition has left virtually no chance for Perry’s proposal to pass in its current form. FERC must take final action on the proposal by December 11, and the only way that it can be enacted is with a majority of the commissioners’ support. But two out of five FERC commissioners have intimated that they will not support the measure, and a third is likely to follow suit. The best that the administration can hope for is that FERC seeks to replace Perry’s proposal with a modified rule. Yet if the next iteration also links nuclear with coal, it will still unhelpfully lump together a promising energy source with a decrepit one.
A TALE OF TWO ENERGY SOURCES
Supporting domestic nuclear energy is a laudable goal. Today’s aging reactor fleet represents the largest source of domestic carbon-free energy; as reactors shut down without new ones to replace them, the United States will struggle to keep reducing its greenhouse gas emissions. By turning around the nuclear industry, the administration might rebuild some of the diplomatic goodwill that was lost after the announcement that the United States planned to pull out of the Paris agreement.
Saving the U.S. nuclear energy industry would also advance vital U.S. national security interests. Historically, a thriving domestic nuclear industry enabled the United States to sign what are known as “123 Agreements” with countries around the world to export nuclear reactor technology and reactor fuel. Such agreements followed strict protocols to prevent proliferation of weapons-grade nuclear material. But with the U.S. industry in decline, countries are increasingly dependent on other nuclear suppliers, such as Russia, which require less stringent nonproliferation protocols and thus increase the risk of nuclear material falling into the wrong hands. Moreover, the ailing American nuclear industry jeopardizes the domestic supply chain for maintaining the nearly 100 nuclear reactors that power U.S. military aircraft carriers and submarines.
Finally, the nuclear sector has long been a source of economic prosperity for the United States. Rejuvenating a domestic industry that deploys new reactors at home as well as abroad—for example, in Asian countries eager to power economic growth with nuclear power—would boost job creation and economic growth.
There is a strong case for saving the domestic nuclear industry, but not so for coal. By and large, coal plants are dirtier than any other power source: they pollute the air and spew carbon dioxide into the atmosphere, which contributes to climate change. What’s more, coal is not strategically important for domestic energy security now that the United States is a net exporter of cheap and abundant natural gas. The coal industry is in structural decline as a result of more affordable alternatives, not as a result of unfair subsidies to cleaner energy sources.
THE NUCLEAR OPTION
Perry was right to point out that the U.S. electric power system is vulnerable to disruption from disasters, both natural and manmade. However, the DOE proposal does not offer the right solutions. A more comprehensive approach would plan for a wider range of natural and manmade disasters than the 90-day fuel supply requirement addresses. For example, hardening and modernizing the electricity grid are crucial to prepare for the risks cited by Perry’s proposal, including the “devastation from Superstorm Sandy and Hurricanes Harvey, Irma, and Maria.” Perry’s proposal would not even inoculate power plants from the disasters he cited; flooding as a result of a hurricane, for example, can knock out a coal power plant even if it has 90 days of fuel stored onsite.
In addition to improving the resilience of the power system, it is important to support the country’s domestic fleet of aging nuclear reactors, which will otherwise shut down in the face of stiff economic competition from natural gas and renewable energy. Individual states have created a patchwork of policies to prop up reactors, but a nationwide scheme to support nuclear energy could improve the crippling economic uncertainty that threatens the industry. The Trump administration should work with Congress to set aside funds for keeping the existing fleet of nuclear reactors running, recognizing the climate, diplomatic, security, and economic benefits of doing so.
But today’s reactor technology will not suffice for tomorrow’s power systems. Current light-water reactors are neither the most efficient nor safest way to generate nuclear energy. The U.S. federal government should invest heavily in research, demonstration, and development of new nuclear technologies, as well as update its regulatory licensing approach to rapidly deploy meltdown-proof, cheaper, and more versatile next-generation reactors. It should also modernize today’s antiquated regime of nuclear export controls that put U.S. exporters at a disadvantage against foreign competitors. Taking these steps could catalyze a resurgent domestic nuclear industry that harnesses innovation to secure economic and security gains for the United States.
So long as the Trump administration chains the future of nuclear to the sinking coal industry, prospects for a nuclear turnaround are dim. The administration should withdraw its botched proposal to subsidize both coal and nuclear and instead pursue a thoughtful strategy to foster a domestic nuclear renaissance.