An agency which performs impartial economic and financial analysis for Congress has put a number on the nuclear renaissance. The Congressional Budget Office (CBO), says in a new report that without carbon dioxide charges of $45/ton, "few of the currently proposed plants will be built." CBO also said that incentives under the Energy Policy Act don't go far enough and will only help with "limited additions to base-load capacity."
In a summary of the report's findings CBO's director Peter Orszag, a former scholar at the Brookings Institution, wrote on his blog the agency examined future private investment in new nuclear power plants. The report concludes that the extent of new investment depends on a combination of charges for carbon dioxide emissions and effective incentives under existing legislation. CBO says that given the lack of such charges, most of the additional electrical demand in the U.S. over the next decade, a 20% increase, will be met by conventional fossil-fuel technologies.
In effect CBO says that without a high enough charge on CO2 emissions and deep enough loan guarantees that new nuclear builds will have virtually no impact on reducing the effects of global warming. It is an alarming set of findings.
What would make a difference?
CBOs says that if Congress enacts carbon dioxide charges of $45/ton that would make nuclear energy competitive. That "price point" could lead utilities to replace existing coal fired power plants with nuclear energy. CBO also calculated levels at which the CO2 charge would not impact fuel switching from fossil to uranium.
Another issue considered by CBO is rapidly rising construction costs. The report has an alarming finding that if costs of new nuclear power plants really get out of control, because of rising prices for steel and concrete, that carbon charges of $80/ton for CO2 would be required for nuclear energy to be competitive with natural gas and coal fired power plants. On the other hand if CO2 charges start out low, perhaps as little at $5/ton, utilities will keep their coal-fired power plants.
The current incentives in the Energy Act of 2005, CBO says, just aren't broad enough to produce more than limited benefit to the nuclear industry. Congress authorized $18 billion in loan guarantees which at current costs will likely support just three or four "first mover" plants before the program hits its financial limits.
Anyone who wants to avoiding having current and future generations of the human species turned into crispy critters from the effects of global warming ought to start looking at carbon charges as a means to stimulate new nuclear builds.