Obama Carbon Plan Could Give Much-Needed Boost to Troubled US Nuclear Industry

The Obama administration's new rules aimed at reducing the emissions of greenhouse gases appear likely to boost a beleaguered yet enormous industry: nuclear power.

As experts sifted through the details of the regulations proposed by the Environmental Protection Agency and announced earlier this week, they anticipated that some states could lean more heavily on nuclear power plants as they are forced to diminish their reliance on coal-fired electricity.

States that had planned to mothball aging and expensive nuclear plants might choose to continue operating these facilities under the emissions plan. The nuclear industry— still grappling with fears spawned by the disaster in Fukushima, Japan, alongside competition from cheap natural gas—has effectively been handed an opportunity to push ahead, say experts.

Investing in nuclear “may be more attractive now with this rule,” said Doug Vine, a senior energy fellow at the Center for Climate and Energy Solutions, a policy organization. “We think it changes the [economic] equation.”

The EPA's proposal, unveiled Monday, aims to slash carbon dioxide emissions to 30 percent below 2005 levels by 2030, in large part by shifting the nation’s energy mix away from carbon-intensive coal plants and toward cleaner sources like natural gas, renewable energy and nuclear power. Reductions will also come through energy-efficiency measures such as retrofitting older buildings or installing “smart” appliances that use less energy.

In that context, nuclear offers a relatively straightforward way for states to achieve reductions in their carbon emissions: Since nuclear plants emit no carbon when they operate, states have an incentive to keep existing plants running or to build new ones in order to meet their individual targets.

Without an emissions mandate, aging or unprofitable plants would likely be retired and replaced mainly by coal or natural-gas fired electricity, Vine said. But under the regulations, such a swap would increase carbon emissions and make it harder for states to comply.

State lawmakers and regulators “are going to be seriously considering what their generation mix has to be, and it may be very cost-effective to find a solution that keeps the nuclear power plant open”—including extending power contracts with plant operators or potentially offering subsidies, he said.

The U.S. nuclear sector has struggled in recent years as cheap natural gas made it difficult for nuclear power to compete in certain electricity markets. The high costs of repairing damaged plants or upgrading older facilities—about half of the nearly 100 U.S. reactors are over 30 years old—is also economically unviable in some cases. Four nuclear reactors recently retired early in California, Florida, Vermont and Wisconsin for a mix of these reasons.

The EPA’s proposal outlines a variety of paths that states can take to reduce their emissions. To encourage nuclear investments, the EPA allows states to count 6 percent of their existing nuclear generation toward their reduction goals. The number mirrors the 6 percent of nuclear power nationwide that are at-risk economically, said Steve Clemmer, director of energy research at the Union of Concerned Scientists, an environmental advocacy organization.

States where new nuclear facilities are already under construction—two in Georgia, two in South Carolina and one in Tennessee—will be able to count electricity generation from those plants as part of the state’s reductions as well, Clemmer said.

Vine said he believed that the EPA proposals could encourage the build-out of additional nuclear power, including projects for smaller, lower-cost modular reactors that are now in the pilot stage, as well as huge maintenance overhauls called “uprates” that increase the electricity output of existing plants.

But the EPA’s projections don’t envision a huge revival of the nuclear sector. According to the proposal, nuclear power will account for 20 percent of the nation’s electricity mix in 2030--roughly the same amount it does today. “That’s basically saying that the existing fleet is going to continue to operate [as is],” Clemmer said.

The projections also indicate that as coal-fired power ramps down, natural gas, energy efficiency, wind and solar power will ramp up to fill the void—not nuclear power, said Mark Cooper, a senior research fellow at Vermont Law School’s Institute for Energy and the Environment.

“An old nuke is more expensive than efficiency, more costly than wind power, and it’s getting to be more costly than gas,” he said. The EPA proposal “doesn’t make that much of a difference for nuclear power. All they can hope for is to keep the old ones around,” he said.