PA's Unprofitable Nuclear Plants: Where Do We Go From Here?

The Pennsylvania General Assembly’s nuclear caucus today released a report proposing several possible options for state action concerning Pennsylvania’s increasingly uneconomical nuclear plants.

Analysis by NRDC has shown that the U.S. can slash carbon emissions while allowing nuclear plants to retire. However, Pennsylvania and other states are considering action to subsidize their unprofitable plants. Our issue brief, Transitioning Away from Uneconomical Nuclear Power Plants: Protecting Consumers, Communities, Workers, and the Environment, examines policies that states should consider and include, If they take this path. The issue brief was first published in November, 2017; it has been updated to reflect recent developments.

The latest U.S. National Climate Assessment and a recent report by Intergovernmental Panel on Climate Change highlight the urgency of transitioning to a low-carbon economy, and have increased a growing focus on the U.S.’s nuclear power sector. NRDC’s issue brief argues that any state considering financial support for nuclear plants must start with a vision for transitioning away from nuclear power to a truly clean energy future based on efficiency and renewables, and must design policies that are economically just for consumers, workers, and communities.

Background

The U.S. is making significant progress in decarbonizing its economy. In 2017, carbon dioxide emissions were down 27 percent from 2005 levels in the electricity sector—14 percent on an economy-wide basis—and renewables generated 16 percent of our power. But not only are we not on track to meet our Paris Accord commitment to reduce greenhouse gases by 26 percent to 28 percent below 2005 levels; that commitment doesn’t go nearly far enough. Based on the new IPCC report, we need to achieve net-zero carbon emissions by 2050 to limit warming to 1.5 degrees.

The U.S.’s nuclear power sector currently accounts for most of the nation’s emissions-free-electricity and 20 percent of our power overall. Most of the 60 nuclear plants operating in the U.S. today were built before 1990 and are scheduled to reach the end of their operating licenses by 2050. Some, however, are facing near-term closure on economic, rather than engineering, grounds. In large part, this is due to the fact that wholesale electricity markets aren’t designed to account for the economic and environmental costs of carbon pollution. This gives coal and natural gas plants an unfair and unsafe economic advantage in those markets.

Uneconomical Nuclear Power Plants

For all of these reasons—and because nuclear plants support a large number of jobs and contribute significantly to the tax bases of the communities that host them—Pennsylvania and other states are considering financial support for plants that are struggling.

NRDC’s issue brief on nuclear transition makes clear to policymakers that while nuclear power has beneficial low-carbon attributes, it also has significant safety, global security, environmental, and economic risks. Until these risks are properly mitigated, and the complete nuclear fuel cycle is sufficiently regulated, nuclear power should not be a leading strategy for diversifying America’s power sector and reducing carbon pollution.

NRDC’s 2017 report, America’s Clean Energy Frontier: The Pathway to a Safer Climate Future, outlines an economically and environmentally sustainable strategy for cutting greenhouse gas emissions while transitioning away from nuclear. We need to reduce our overall energy demand by 40 percent by making dramatic improvements in efficiency, generating 13 times more electricity from wind and solar sources, using low-carbon electricity to power our vehicles, buildings, and industries, and decarbonizing much of our remaining usage of fossil fuels (e.g., through carbon capture and storage technologies). If we do these things, we can cut greenhouse gas emissions 80 percent by 2050 while reducing nuclear power from 20 percent of our generation mix today to less than 3 percent.

The problem is that we haven’t been doing any of this fast enough. Consequently, the abrupt closure of any given nuclear plant is likely to mean more fossil generation at a time when we need much less.

The Nuclear Caucus Report

Against this backdrop, the nuclear caucus’s report lays out four policy options “to preserve the Commonwealth’s clean energy resources,” a phrase used to mean both Pennsylvania’s nuclear plants and the various “alternative” energy sources currently supported by the Alternative Energy Portfolio Standards Act (AEPS). Preservation of the AEPS resources is invoked because an ongoing proceeding at the Federal Energy Regulatory Commission (FERC) is likely to prevent AEPS-supported resources from earning money in PJM’s capacity market, a reliability mechanism that pays plants for their commitment to be available in the future. As a result, whatever action Pennsylvania takes concerning the state’s nuclear plants, it will likely have to change its laws to ensure that AEPS resources are fairly compensated for the capacity they provide.

The report outlines four options to preserve nuclear power in Pennsylvania:

  1. Do nothing,

  2. Amend the AEPS to include nuclear power as a resource, or establish a “zero emission credit” (ZEC) program that compensates nuclear power for its low-carbon attributes,

  3. Amend the AEPS or establish a ZEC program with a “safety valve” mechanism that, after FERC issues an order in an ongoing proceeding on PJM’s capacity market, would allow AEPS resources to be paid for their capacity outside the PJM market, or

  4. Establish a state carbon-pricing program.

These ideas are an important starting point for discussing a clean energy transition in Pennsylvania, but they fall short of the broad range of policies the Commonwealth really needs to address climate change. There is no discussion of how much energy Pennsylvania could save by ramping up efficiency. And in response to the idea that nuclear power should be replaced by renewables, the report answers simply that “replacing the lost output from nuclear retirements with renewables would take years at current development rates.” But the relatively slow rates of development now are exactly why the Commonwealth needs policies to spur efficiency, wind and solar. The caucus’s report does not appear to propose anything that would do that.

This is a serious shortcoming and a missed opportunity. As our nuclear transition issue brief makes clear, any legislation based on these recommendations must do better.

About the Authors

Mark Szybist

Senior Attorney, Climate & Clean Energy Program

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