Market Intel Desk


Nuclear Politics
By Diane Borska, president, The Borska Group, Inc.

For anyone considering plans to invest or otherwise participate in the next cycle of nuclear construction, the upcoming presidential election should be of some interest. While the Bush administration’s support of nuclear power is well-known and spelled out in the Energy Policy Act of 2005 with the promise of loan guarantees and investment tax credits, it is the next administration, which could be led by Democrats, that will actually preside over the administration and distribution of said financial incentives. By the way, the actual appropriation of funds and detailed structure of the loan guarantees and tax credits promised in EPAct have yet to be completed and an anxious industry is hoping these issues will be resolved by year’s end.
This week’s much-ballyhooed CNN-YouTube debate among the Democratic presidential hopefuls, which I must admit I found immensely entertaining if not informative, revealed the perspective of several candidates on nuclear power. One intrepid You-Tube video maker from Ann Arbor, MI, directly confronted the issue, linking global warming mitigation, energy independence and nuclear power. John Edwards was first to respond, stating emphatically “I do not favor nuclear power,” explaining he feels the capital intensiveness, the time-consuming construction-licensing cycle and the unresolved waste disposal problem render nuclear an unacceptable alternative. He then urged development of wind, solar and cellulose-based biofuels. In contrast, current frontrunners Barak Obama and Hilary Clinton offered lukewarm support. Obama, while first expressing support for solar, conceded that “we should explore nuclear power as a part of the energy mix,” explaining “there are no silver bullets to this issue.” Clinton’s response was the most thoughtful, suggesting she has spent some time on these issues. While first emphasizing the potential role of energy efficiency – explicitly distinguishing between fuel efficiency for cars and energy efficiency for buildings – she cast nuclear in the light of innovation and technology. “I’m agnostic about nuclear power. John (Edwards) is right, that until we figure out what we’re going to do with the waste and the cost, it’s very hard to see nuclear as a part of our future. But that’s where American technology comes in. Let’s figure out what we are going to do about the waste and the cost if we think nuclear should be part of the solution.” A quite pragmatic perspective for this point in the race, and a rather encouraging sign, I think. While Bill Richardson, former energy secretary and governor of New Mexico, was not asked to respond to this question, his views on nuclear power are well known. Responding to a press question about the future of nuclear power, Richardson also responded with his support for renewables,but clearly stated, “The future in nuclear power is one that has to be on the table. The nuclear option has to be on the table – not, however, at the expense of investments in renewable energy and technologies, which I believe hold more promise. But because nuclear power emits hardly any greenhouse emissions, and because its technology is improved, you have to look at it as an option...And nuclear power still has to resolve problems in waste, cost, safety, although its safety is improved. “And then Richardson raised a key and critical point for industry to consider, offering some real advice.” And nuclear power still has a lot of problems with the public, which the (nuclear industry) needs to explain, which it has not done so adequately. Politically they’ve sheltered themselves with one party. So they need to build alliances with environmental leaders, with local officials; they sort of sit in a bunker.” I think Richardson really hit the nail on the head with this comment, giving industry fair warning about the hard work it really needs to do. Hmm… Could/should the nuclear power lobby get behind a Clinton-Richardson ticket?

The Republican candidates will subject themselves to the CNN-YouTube format this Fall. Hopefully, energy policy will be among the accepted video questions there as well. However, generally speaking, the Republican candidates have offered more explicit support for nuclear power (why is that?). On the stump, Giuliani, Romney and McCain all express a strong link between nuclear power and energy security. Undeclared but potential frontrunner Fred Thompson’s views are not as well known at this point, but rumors are flying that former energy secretary and Areva USA board member Spencer Abraham will play a key leadership role in his campaign.
While candidates from both parties square off on the nuclear question, and the industry has been taken to task to do a better job building bridges with the Democratic Party, the industry was handed some unexpected support from an interesting policy analyst recently. Jesse Ausubel, director of the Program for the Human Environment at the Rockefeller University, published a scholarly article in the International Journal of Nuclear Governance, Economy and Ecology, 2007, 1, 229-243, that has the both the pro and con nuclear power blogosphere absolutely on fire. Entitled “Renewable and Nuclear Heresies,” Ausubel’s work analyzes the amount of energy that renewable energy sources – wind, hydro, solar, biomass - can produce in terms of watts of power output per square meter of land use. Comparing this with the watts per meter produced by nuclear power, he concludes, “Nuclear energy is green. … Considered in watts per square meter, nuclear has astronomical advantages over its competitors.” To fully appreciate the impact of his conclusion, one must first understand Ausubel’s green cred. As one of the main organizers of the first UN World Climate Conference in Geneva in 1979, Ausubel can claim credit for substantially elevating the global warming issue on both scientific and political agendas. During 1979-1981 he led the Climate Task Force of the Resources and Environment Program of the International Institute for Applied Systems Analysis near Vienna, Austria. Given his seat at the forefront of the policy debate on climate change during the last 25-plus years, Ausubel’s perspectives garner notice in the green policy community.
Ausubel’s main premise is that technologies succeed when economies of scale form part of their evolution. He lays out a compelling, albeit arguable, analysis to demonstrate that there are no economies of scale that benefit renewables. His claim is that more renewable kilowatts require more land in a constant or even worsening ratio. In his analysis, Ausubel considers each renewable energy source. In a hyperbolic analysis of hydro power, he points out that hypothetically flooding the entire province of Ontario, Canada, about 900,000 square kilometers, with its entire 680,000 billion liters of rainfall, and storing it behind a 60-meter dam would only generate 80 percent of the total power output of Canada’s 25 nuclear power stations. Put another way, he concludes that each square kilometer of dammed land would provide the electricity for just 12 people.

In his analysis of today’s increasingly popular wind power, Ausubel points out that while wind farms are between three to 10 times more compact than a biomass farm, a 770-square-kilometer area is needed to produce as much energy as one 1,000 megawatt electric (MWe) nuclear plant. To meet 2005 US electricity demand and assuming round-the-clock wind at the right speed, he says an area the size of Texas would be necessary.

Beyond just defining these limits on renewable resources, Ausubel also offers some very valuable advice to the nuclear power industry. Commenting on the enormous amount of venture capital being invested in wind, water, solar and biomass energy sources, Ausubel sees nuclear industry expertise as not keeping pace with the kinds of innovation being underwritten in the renewable space. “In order to grow, the nuclear industry must extend beyond its niche of electric power generation,” says Ausubel. He suggests that the nuclear industry form alliances with methane suppliers to produce green power in the form of hydrogen for powering electricity-generating fuel cells, not only in vehicles but in other grid-independent sources. Such technologies will succeed when economies of scale form part of their conditions of evolution, Ausubel explains. In contrast, there are, he suggests, no economies of scale involved in simply erecting more and more wind turbines.

With his analysis, Ausubel has made an effort to change the stakes in the energy policy game. While this work has enraged many in the green community, it offers very valuable perspective and balance to the creation of sound energy policy. Let’s hope all those present at the policy table read and consider it.

Diane Borska is a leading market analyst and strategic market support consultant. She can be reached at 617/592-7301 or e-mail her directly with your questions or comments at borska@rcn.com. Check out The Borska Group Web site at www.borskagroup.com.