U.S. nuclear hopes choked by low emission costs
Nuclear power advocates in the United States may see their hopes choked by low emissions costs. The latest moves in the U.S. Congress involve expanding the hodgepodge of available subsidies. But these will be hard pressed to overcome the cost advantages of fossil fuels — especially with natural gas prices so low.
As global warming has climbed the political agenda, lawmakers have tried hard to rouse the nuclear industry from a multi-decade slumber. Just to maintain its existing 20 percent market share, the nuclear industry would need around 25 new reactors by 2035, according to the U.S. Energy Department, assuming electricity demand increases as forecast. Yet no new reactor projects have made it past the drawing board since the Three Mile Island accident in 1979.
Streamlining the licensing process in the 1990s and dangling $18.5 billion in new government loan guarantees after 2005 has barely got the industry to the starting line. The Senate proposal this month roughly triples the loan guarantees available to cover perhaps nine new reactors and provides for more generous depreciation rules.
Even this is unlikely to do enough. Nuclear power plants are notoriously expensive — roughly $4 billion for one gigawatt of generating capacity, against $850 million for a similar amount of gas-fired capacity — and have a long history of blasting through their forecast costs. A reactor in Finland being constructed by France’s Areva is now 65 percent over budget and three years behind schedule.
The surge in natural gas discoveries in the United States has further raised the hurdle for nuclear power. The 616 trillion cubic feet of shale gas rendered accessible in recent years by new drilling techniques have sent prices diving, making gas generation cheaper still.
The upshot is that the government would have to price carbon emissions at $100 per metric ton to make new nuclear plants economical, according to nuclear operator Exelon. Even if that’s an exaggeration, the contrast with what’s proposed is stark: the Senate bill has a carbon price ceiling of just $25 a ton. The subsidies proposed so far won’t bridge that gap. The nuclear industry’s future may depend on America adopting an unexpectedly beefy levy on greenhouse gases.