Is nuclear energy gaining support from green groups? 

A report from the UK says it is, but some green groups in the US are as hard over as ever against it

In a news article datelined London, the Washington Post reports some green groups now see nuclear energy “as part of the answer” to the challenge of global warming.  This is good news in the U.K. where the government has committed itself to build 12 GWe of new nuclear power generation capacity at 10 sites. 

The newspaper reports that Stephen Tindale, (right) a former head of Greenpeace in the U.K., has changed his mind about nuclear energy.  After years of telling the public “nuclear power is evil,” he’s left the organization and now tells the Washington Post, “It really is a question about the greater evil – nuclear waste or climate change.”

Tindale’s trajectory from ant-nuclear opposition to pragmatic acceptance mirrors that of former U.S. Greenpeace leader Patrick Moore who since 2006 has stumped for the CASEnergy Coalition, a pro-nuclear group funded in part by the Nuclear Energy Institute (NEI).  With all of this retrograde activity, one could think that other hard line anti-nuclear groups in the U.S. are on the verge of doing the same.  Think again.

Shift from waste to cost

For a long time anti-nuclear groups could count on success by scaring the pants off the public spinning yarns about the alleged dangers of spent nuclear fuel.  By also vigorously opposing the development of Yucca Mountain, they could have it both ways. 

On one hand, they could say there was no solution to spent nuclear fuel, and on the other, prevent one from ever being licensed for use.  That has since changed and now even green-leaning NRC Chairman Gregory Jaczko (left) agrees that dry cask storage at reactors is a safe practice.  Paradoxically, Jaczko’s appointment to the NRC came as a result of having worked as a political aide for Sen. Harry Reid (D-Nev), the arch-druid of anti-Yucca forces,

The new battle now being waged by anti-nuclear organizations, like the Union of Concerned Scientists (UCS), is over the cost of new nuclear plants.  The group is drawing a line in the sand to prevent the award of loan guarantees by the federal government to four new nuclear power plants. 

OMB does heavy lifting for green groups

The New York Times reports that the Obama Administration, ever mindful of what’s going on in the green wing of the Democratic party, has allowed the Office of Management & Budget (OMB) to lock horns with the Department of Energy over what to charge nuclear utilities as a “premium” for the loan guarantees.  It is the same kind of insurance premium you pay to cover damage to your car or which a farmer pays for crop insurance.

OMB’s initial analysis of the risk issues associated with loan guarantees for new nuclear plants indicated a premium of 1% of the amount of the loan. If a utility wants a loan guarantee for $2 billion, then the premium it would pay to the government would be $20 million.  While the Energy Policy Act of 2005 authorizes loan guarantees up to 80% of the cost of a new nuclear reactor, it is unlikely that all of the four leading candidate reactor projects will seek the full amount of available coverage.

What has happened is that OMB has changed its mind about the scope of the premium.  Instead of a 1% charge, it is now pushing for a 10% premium.  This change would boost the cost of the example above from $20 million to $200 million.  The cost increase isn’t cost-effective for the industry. It's like going from beef bottom round to filet mingon.

Anti-nuclear groups, sensing an opportunity for leverage to stop new reactor projects, are pushing OMB to raise the cost of the premium to 50% of the loan.  They need not have bothered because they are ahead of the game with OMB’s revised view on risk.

Firms like Constellation (NYSE:CEG), which plans to build a 1,600 MW Areva EPR at Calvert Cliffs, MD, told the NY Times it will walk away from the loan guarantee program, and cancel the reactor project, if the premium is set at 10%.

What’s interesting is that the nuclear industry isn’t alone in its concerns about “unworkable rules” under DOE’s loan guarantee programs.  A letter sent to OMB Director Peter Orszag, this past July, and signed by nuclear, solar, wind, and biomass energy groups, asks him to fix numerous problems with DOE's regulations for operating the energy loan guarantee program.

In the meantime, Energy Secretary Stephen Chu said Nov 10 he hired a new director for the loan guarantee program.  Like his predecessor, Jonathan Silver has sterling credentials and a strong background in finance. Whether the latest executive in the chair will make more any more progress than the last guy remains to be seen.

From Washington to Vermont to Texas

While green groups are trying to make their influence felt at OMB by attempting to raise the bar to impossible heights for loan guarantees, out in the states, things are not much better.  In Vermont, opposition to the renewal of the 20-year NRC license for Entergy’s (NYSE:ETR) Vermont Yankee plant has become a movement which is characterize as having almost religious fervor.  

The U.S. Nuclear Regulatory Commission (NRC) has the sole legal authority to renew the reactor's license. However, some citizens in Vermont seem to think otherwise and it is because they've been encoouraged to so so by state legislators building a career by exploiting public fears.

What’s ironic about it is that the underlying dispute with the state legislature isn’t about safety or spent fuel management.  State Senate leader Peter Shumlin (right) is pushing the utility to submit a rate package for consideration when the legislature convenes in January 2010.  Entergy has committed to give them a package by mid-December.

The state legislature is pushing for the low rates it has always enjoyed having the plant within its borders.  Other New England states pay up to $0.15/Kw hr or nearly three times the rate for electricity that is generated at Vermont Yankee.

That hasn’t stopped a drum beat of anti-nuclear rhetoric which has resonated like a top 10 rock’n roll song with the state’s voters.  According to a Nov 24 report in the Vermont Valley News, a panel discussion on the future of Vermont Yankee was anything but civil on the subject.  James Moore, speaking on behalf of the Vermont Public Interest Group (VPIRG), counted coup with “lengthy applause” from 60 people in the audience in response to his call to close the reactor.

Less nuclear energy equals more carbon footprint

What’s startling about the green group’s cause is that if it is successful, it will raise electricity rates for everyone living in Vermont.  Dave Lamont, Director of Regulated Utility Planning for the State of Vermont, told the panel even if the state doubled its renewable resources, it would still have to buy electricity from natural gas powered plants at spot prices. 

In short, VPIRG’s plan to close Vermont Yankee will cost more per household and increase the size of the state’s carbon footprint.  If you live in Vermont, and the Shumlin/VPIRG combo succeeds in closing Vermont Yankee, be sure to thank them when you open your electricity bill this winter.

The anti-nuclear crowd in Vermont isn’t satisfied with the pursuit of their counter-productive strategy at home.  Mark Cooper, an analyst at the Institute for Energy & Environment at the Vermont Law School, has set his sights on NRG’s South Texas Project.  He told Forbes Magazine Nov 25 the utility’s plan to build two 1,350 MW ABWRs will depend on investors who are “suckers.”  Cooper has also testified in Florida opposing rate increases to pay for two new nuclear reactors planned by Progress Energy. 

The Nuclear Energy Institute, alarmed by Cooper's loose use of the facts, took the unusual step of going public with its criticisms.  NEI wrote in June 2009,

“Based on studies by the energy companies contemplating building new reactors and independent analyses, new nuclear power plants are expected to produce electricity at competitive prices. New nuclear plants in some markets may be one of the most cost-effective ways of generating electricity in a carbon-constrained world.

“Contrary to the study’s finding that ‘nuclear power cannot stand on its own two feet in the marketplace’, nuclear energy is expected to be among the most economic sources of electricity … New nuclear reactors have been affirmed as the least cost option for new generation by the Public Service Commission (PSC) in South Carolina, Florida, and Georgia.

Future of STP project

For its part, NRG has worked hard to bring investors to the table for its merchant plant.  Despite a recent controversy over the price of construction, NRG told Forbes it expects by January 2010 Toshiba will be able to provide a price to build the two new plants in the range of $10-12 billion. NRG will have an advantage in the fact that potential investors and customers in Texas have been burned by volatile prices for natural gas. 

On the other hand, if green groups are successful in convincing OMB to raise the cost of loan guarantees, on which NRG depends for success, CEO Dave Crane says, “it will be a very short conversation” about the future of the project.

We’re not out of the woods yet no matter how many former Greenpeace leaders change their minds about nuclear energy.

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