How Not to Save Nuclear

Emergency Bailouts Aren’t Climate Policy

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April 10, 2018 | Jameson McBride

Nuclear closures are dramatic affairs. The past week has been a tragedy for FirstEnergy. It announced the planned retirement of three of its nuclear plants in Ohio and Pennsylvania, declared Chapter 11 bankruptcy for its subsidiaries, and requested an unlikely emergency subsidy — putting the fate of its nuclear plants in the hands of the federal government. The maelstrom of uncertainty surrounding FirstEnergy illustrates the challenges facing American nuclear as a whole. Nuclear is politically unpopular and economically undercut by natural gas; at least a dozen nuclear plants across the country are scheduled for retirement in the next ten years.

Most mainstream environmental groups seem not to care. Regardless, FirstEnergy’s three reactors generated about as much low-carbon power as all US utility-scale solar in 2016. We need to save nuclear if we want to decarbonize the grid as quickly and cheaply as possible.

But ad hoc, rent-seeking, emergency bailouts — like the FirstEnergy federal subsidy request and the Trump Administration's failed NOPR for coal and nuclear plants last fall — are not enough. Moving from crisis to crisis, with mounting political and economic risk, is not a model for a sustainable industry. Even if FirstEnergy gets its emergency subsidy, this is not climate policy at all. It is policymakers and industry taking climate goals hostage to compensate for their failure to keep nuclear viable in the long run.

The issue sits at the core of the recent turmoil in nuclear among industry groups and policymakers. Earlier this year, the utilities Entergy and NextEnergy withdrew from the Nuclear Energy Institute, nuclear’s main lobbying group, after the group advocated for the Trump NOPR bailout that would have also supported coal. Meanwhile, the nuclear drama in Ohio comes less than a year after state lawmakers rejected a proposal to create zero emission credits, analogous to tradable renewables credits, which would have made nuclear generation more profitable in the long run.

What would help? Three progressive states — New York, Illinois, and Massachusetts — have adopted Clean Energy Standard laws that provide nuclear plants with zero emissions credits, like those rejected in Ohio.

These zero emissions credits are a good start: they compensate nuclear for its climate benefits. A price on carbon would also help, as it would protect nuclear from being undercut by cheap fossil fuels like natural gas. Breakthrough has previously proposed expanding Renewable Portfolio Standards, the state-level mandates for renewable deployment, into Low-Carbon Portfolio Standards, which would include nuclear. (I have a forthcoming report with Third Way that illustrates the value of an LCPS for state legislators.)

In the long run, though, saving nuclear will require rethinking the traditional model of the industry. Reactors under construction around the world, from Georgia and South Carolina to Britain and France, have struggled with crippling cost overruns and construction delays. Startups and entrepreneurs in the advanced nuclear industry promise radical solutions to the traditional problems in nuclear engineering and construction, but these solutions will require sustained public and private support to bring to market.

Ultimately, all stakeholders need not agree on the best method or reason for saving nuclear. Whether for the climate benefits, the abundant electricity, the local jobs, or a financial stake in the technology, the broad emergent coalition around nuclear should advocate for long-term solutions over short-term bailouts. In this political landscape, we have more than enough unnecessary crises already. A real solution to the nuclear tragedy might be the least dramatic of them all.


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