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Nuclear At a Crossroads

Wind, nuclear, and gas resources must work together – not at cross-purposes.

Fortnightly Magazine - July 2014

The role nuclear generation must play in our energy future has thus far received too little attention. Nuclear and renewable energy represent our only viable forms of carbon-free generation today, and are thus critical components for the U.S. to meet 2050 carbon reduction goals. But, nuclear energy is currently facing significant challenges that leave owners and developers of these resources uncertain about the future of nuclear energy. To achieve our carbon reduction objectives, those uncertainties must be resolved.

Nuclear generation currently makes up 20 percent of our electric generation. 1 Nuclear facilities are extremely reliable generation resources, consistently operating in the 90 percent capacity factor range over the past decade. 2 The low variability of fuel costs for nuclear plants also provides for long-term price stability. However, current gas prices have reduced energy prices to below some nuclear facilities' cost of production. 3 In the past two years, five power companies have announced the retirement of six nuclear reactors. 4 In addition, industry analysts are projecting the potential for more nuclear retirements in the near term due to revenue shortfalls. 5 Each retired nuclear plant will increase both the difficulty and the expense for states to achieve the carbon reduction targets under the EPA's recently proposed Clean Air Act section 111(d) rule. 6

While many expect that as a result of 111(d) our generation fleet will become increasingly reliant on natural gas, 111(d) does assume that much of our existing nuclear fleet will remain intact. But, as I explain in more detail below, our nuclear fleet is under significant economic stress due to a number of factors. It appears that we will be unable to achieve our carbon objectives, both for 2030 and 2050, if we intend to replace nuclear generation retiring in the near term solely with natural gas generation. 7

John R. Norris serves as commissioner on the Federal Energy Regulatory Commission.

While we have seen a reduction in carbon emissions over the past five years as a result of gas displacing coal, using gas to replace nuclear generation will reverse that trend. As discussed below, the rush to build new gas generation facilities could succeed in meeting the proposed 111(d) emissions reduction requirements for 2030, but may also make meeting the 2050 carbon reduction goals extremely difficult. States currently relying on nuclear generation may find themselves adding to their 111(d) challenge if measures to maintain the nuclear fleet are not taken.

The numbers are compelling.

• 2,417 MMT of CO 2 were emitted by our generation fleet in 2005. 8

• 1,692 MMT of CO 2 emissions represents the 2030 target level for our generation fleet under 111(d), based upon a 30 percent reduction from 2005 carbon emission levels. 9

• 1,511 MMT of CO 2 were emitted by coal-fired generation in 2012. 10

• 493 MMT of CO 2 were emitted by gas-fired generation in 2012. 11

• 483 MMT of CO 2 emissions represents the 2050 target level for our generation