July 2017 saw two court rulings both significant and positive for the future of clean energy. Federal courts in New York and Illinois ruled that states have the authority to place an economic value on the zero-emission production of electricity. More important, these rulings establish a precedent for other states to achieve their own goals to use clean energy credits for sources of electricity that don’t emit carbon dioxide into the atmosphere.
The noteworthy outcome of the policies upheld by the two courts is that nuclear facilities will continue to operate in New York and Illinois. A paper we co-authored, “Nuclear Energy as Foundational to Low Carbon Future,” elaborates on why this result is so critical right now.
The United States has made great progress in reducing carbon dioxide emissions. Since 2005, our country diminished its carbon dioxide output by 14 percent. And there is a sweeping consensus on the need to continue this momentum. Twenty states have issued goals or mandates to reduce carbon emissions.
Corporate leaders like Microsoft, Amazon and Apple have set in motion ambitious plans to power their companies with clean energy. Other significant consumers of electricity — including the largest automakers, oil companies and consumer packaged goods companies — support policies that establish a price on carbon emissions. Both political parties (as represented by the secretaries of energy for Presidents Trump and Obama) agree that a clean energy future needs nuclear power. Underpinning all of this are the shifting preferences of citizens who increasingly care about the environment.
Our report concludes that without nuclear energy and policies such as those adopted by New York and enacted by the legislature in Illinois, we cannot expect to maintain or continue meaningful carbon reduction. Nuclear energy is, by far, the largest source of zero-carbon energy generation in the country. As of last year, it represented 60 percent of the carbon-free electricity in the United States.
Nuclear energy now finds itself pinched between unusually low natural gas prices and rules that promote other carbon-free sources of electricity but exclude nuclear. According to published reports, about half of the existing nuclear fleet is seriously economically stressed. Because nuclear energy represents such a massive share of our carbon-free energy, these circumstances represent a crucial inflection point. Our next steps forward with regard to nuclear will determine the emissions from our nation’s electricity supply for the foreseeable future.
We have a few options to consider. The first is to allow nuclear facilities to close while still operational. Here we have historical examples of what happens. Most notably, nuclear generation is replaced by natural gas, leading to an increase in emissions. Within a year of the retirement of the nuclear facility in Vernon, Vermont, New England saw its first increase in its carbon emissions in five years.
That’s not to mention the human impact. The plant’s employees lost their jobs. They put homes up for sale and left town, taking with them consumer spending the local economy depended upon.
In Wisconsin, the May 2013 shutdown of the Kewaunee Power Station resulted in increased carbon emissions and triggered the loss of more than 600 jobs. Premature retirement of nuclear facilities is undesirable for many reasons, including that the United States will take a major step backward in pursuit of the goals that consumers, communities and states have set to reduce carbon emissions.
The next option is to retire operational nuclear plants and replace them with other zero-emission energies such as wind and solar. New York studied this option when exploring how to meet its clean energy goals. The first question as a matter of electrical engineering is whether solar and wind can replace the nuclear energy generation. Most say they cannot. But even if they could, it would cost more than $1 billion each year to replace existing upstate nuclear plants with other zero-emission resources.
Continued development of renewable sources of energy is essential for a lower-carbon future, but relying on renewables solely and immediately to replace nuclear power would not only be astronomically expensive but also doesn’t change carbon emissions. We’d be shelling out to stay in place.
The final option is to maintain our existing safe and efficient nuclear facilities. This is the least costly and most feasible solution. Not only does it make progress toward a low-carbon future but also there are numerous other benefits, monetary and otherwise, to our economy and national security.
Preserving nuclear facilities ensures a diverse energy supply that doesn’t over-rely on any one source of energy. This shields customers and businesses from cost increases that may arise from fuel unavailability, fuel price volatility and prospective source-specific changes in regulations.
A diverse energy mix also makes the grid better able to minimize effect and quickly recover from natural disruptions, like storms, as well as from malicious cyber or physical attacks. Energy Futures Initiative, the policy shop founded by former Energy Secretary Ernest Moniz, says nuclear energy is key to national security and in an August paper urged the federal government to “work with states to harmonize federal and state policies affecting the design of organized electricity markets to appropriately value attributes of nuclear electricity including supply diversity.”
Current Energy Secretary Rick Perry has consistently promoted nuclear as an essential part of the U.S. energy grid including the following remarks, “If you really care about this environment that we live in … then you need to be a supporter of this amazingly clean, resilient, safe, reliable source of energy.”
Ensuring a diverse, resilient energy grid is critical to national and economic security.
In addition, many policy experts anticipate the government will eventually address climate change by placing an economic cost on carbon. If this likely scenario comes to pass, consumers and businesses will gravitate toward the lowest cost carbon-free option still in the mix. Sustaining nuclear is a prudent financial hedge against future energy costs.
Businesses, elected officials, academics and consumers all say the same thing: they value low-carbon energy. But unless state policies and energy markets do the same, many nuclear facilities will close. Once a nuclear plant closes, it cannot be restarted. It is removed from service forever. And with it goes the cheapest and most effective options for keeping carbon emissions from electricity generation in check, leaving only technologies that are more expensive, less effective and not able to produce enough energy to substitute for nuclear power.
It is unlikely that the federal government will materially address this pressing situation. It is, therefore, the states that will face a critical decision: will they erase the progress of more than a decade in terms of carbon emissions? Or will they move forward and preserve our largest sources of zero-emission energy?
The path has been blazed by policymakers in Illinois and New York and paved by the recent court decisions to uphold them. Other states should follow them by pursuing the most practical, economical and expedient means to decarbonization: preserving nuclear energy.
Marc Spitzer is a partner at Steptoe &Johnson LLP where he specializes in energy law, policy and regulation. John Hanger is the president and CEO of Hanger Consulting.