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.

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The Cost of Generating Electricity:

When the Free Market Isn't

I have been slow in commenting on the closure of Vermont Yankee announced a few weeks ago by Entergy.  This is because it is hard for me to know what to say.

In the end, it seems that the closure was triggered mainly by economics, and that some of the economic issues are so bizarre they simply make my head spin.

There are some economic issues I do understand.  Sort of.  I understand that the recent developments in the gas industry are leading to low costs for gas, making almost every other source of energy non-competitive.  I can argue that this is a short-sighted view, and I could wish the business world didn't have such a short-term view, but I understand that they do.

However, there are other economic issues that simply make no sense to me at all.  The fact that renewable energy suppliers are so heavily subsidized that they can bid negative numbers and still make money just doesn't make sense to me in a country that is supposed to be based on a free market.  Honestly, if I were Entergy, I would have given up long ago!

I have seen some very good coverage of this issue in other sources.  All the sources I respect feel, as I do, that something is irrational about what is happening.  Examples include a recent article in the New York Times by Matthew Wald, and a discussion on the American Nuclear Society (ANS) blog by Jim Hopf.

I do understand the government role in providing incentives to help new technologies get started, but the impacts of these incentives should be monitored to make sure they don't have unintended consequences.

As I see it now, we have subsidized renewables because we want to assure the viability of solar and wind power in the hopes of replacing dirtier and more polluting forms of energy supply, such as coal.  That might be a good idea--if that is what we actually accomplished.  However, what has really happened is that we have forced the closure of another source of clean power--that is, a nuclear power plant.

In the long run, the current situation is in no one's interest.  It will not lead to a cleaner environment and it will not lead to lower real costs for energy supply.  I do not know if the energy markets are as bizarre in other parts of the country, but if they are, it does not bode well for our national energy future.

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Voices for Vermont Yankee:

A New E-Book

I want to give a shout out to Meredith Angwin, who has just published a new Kindle e-book called, Voices for Vermont Yankee, now available on Amazon.  The book consists of testimony that people have given in favor of Vermont Yankee at Public Service Board hearings.

Meredith is a fellow blogger and awes me with how prolific she is.  She, her husband, George, and others have worked tirelessly for Vermont Yankee, and have had a huge impact on the prospects for this plant.

I have been following her work over the last several years and have been very impressed at the thoughtful and balanced approach she has taken to arguing the case for Vermont Yankee.  I have been particularly impressed at how she deals with the various kinds of personalities active on nuclear issues.  I am therefore delighted to see that she has consolidated so much information in book form.

The book is truly a cost-effective investment for anyone who engages in discussions about the merits of nuclear power.  It costs only $2.99 (25% of which Meredith and George have pledged to give to the Ethan Allen Institute, an independent, nonpartisan, nonprofit organization devoted to free-market public policy research and education).  It is a compendium of arguments for nuclear energy, in many voices and from many perspectives, so should be a valuable reference tool.  Meredith also hopes it will inspire others to take an activist role for nuclear energy.

Clearly, the book provides both a model for the types of actions that have proved successful and some of the facts that she and the others have found useful in framing their arguments.
 
On a personal note, I wish Meredith great success with this book.  In addition to inspiring activism, I am hoping it may inspire me to follow her lead and do the same thing with my blog some day!

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