Friday, November 1, 2013

The Energy Market and Carbon:

Another Look at the Energy Marketplace

A Washington Post editorial on nuclear power a few weeks ago caught my attention.  It was reacting to the continued bad news coming from Fukushima in Japan, as well as to the Entergy announcement in the US regarding their decision to close Vermont Yankee.  

The editorial made the case for nuclear power quite strongly.  Despite all the bad news, the editorial concluded that we should continue to operate nuclear power plants in the US, and even possibly to build more.  One of their arguments was that Fukushima had some underlying problems that sound regulation could address.  Their other argument was that nuclear power would be competitive if the marketplace put a value on the fact that nuclear power doesn't produce carbon emissions.  They also noted some of the attributes of advanced reactor designs, both to improve safety margins and to lower costs.

The argument about regulation looked at the situation at Fukushima and concluded that it shows us clearly how not to run a nuclear power plant.  The underlying problems at Fukushima, basic design flaws, and subsequent mismanagement, they observed, are not intrinsic to nuclear power plant operations, but rather, can be addressed by effective regulation.  They went on to cite the fact that the US Nuclear Regulatory Commission (NRC) has established requirements for precautionary upgrades, and to note that, of course, continued vigilance is necessary.  They also note that advanced nuclear designs are more "passively" safe.

The argument about the marketplace, and particularly that it doesn't value the fact that nuclear power produces very low carbon emissions, really struck me, coming as it did so soon after learning that Vermont Yankee was being shuttered because of marketplace inequities--that is, for pricing rules for renewables that skewed the marketplace.

At first glance, it seemed that placing a cost on carbon emissions might also skew the marketplace.  However, I concluded that this is like comparing apples and oranges.  In the first place, we have acknowledged that there is a societal cost to carbon emissions, and that cost is presently not built into the market prices.  In the second place, a market mechanism that focused on carbon would treat all low-carbon technologies equally.    Nuclear power would benefit.  Renewables would benefit, too.

The issue of just how the societal cost of carbon emissions should be monetized is way out of my area of expertise.  I realize that there are different mechanisms--a carbon tax, carbon trading mechanisms, etc.--and that each has pros and cons.  I am also aware that carbon pricing mechanisms that have been tried to date have not all met expectations.  But I trust that unexpected flaws we have found in implementation can be addressed, just as we have improved on new technologies when our field experience revealed deficiencies we hadn't anticipated.  Or, perhaps there are other solutions altogether. 

I do not know what the best solution is.  However, I do know this.  Repealing existing renewable energy benefits will be difficult politically without substituting some other provisions.  I also know that we must find a better path than one that favors one clean energy source to such an extent that it drives out other clean energy sources.  Surely, we should be able to come up with one.

What we are doing right now seems to be the worst of all worlds.  Yet the reality is that it is in the public good to support the introduction of new, cleaner technologies, and this support usually ends up as a "subsidy" of some sort.  The trick is to find a mechanism that isn't counterproductive, and that doesn't drive out other energy sources that carry similar benefits for society.


No comments:

Post a Comment