Low-Carbon Portfolio_POST (1)

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LOW-CARBONPORTFOLIO STANDARDS

Raising the Bar for Clean Energy

Jessica Lovering, Ted Nordhaus Will Boisvert, Jack Shaked

and Michael Shellenberger

MAY 2016

ON THE COVER:Center: the spillway on the Kananaskis hydroelectric dam on the Bow River, Alberta, Canada

Bottom Right: The nuclear fueled Diablo Canyon Power Plant, in San Luis Obispo County, California

2


Raising the Bar for Clean EnergyJessica Lovering, Ted Nordhaus, Will Boisvert, Jack Shaked

and Michael Shellenberger

MAY 2016

LOW-CARBON PORTFOLIO STANDARDS: RAISING THE BAR FOR CLEAN ENERGY MAY 2016

EXECUTIVE SUMMARY ......................................................4

INTRODUCTION................................................................6

IMPORTANCE OF CLEAN-ELECTRICITY MANDATES ................9

CHALLENGES FACING EXISTING NUCLEAR PLANTS ............12

POTENTIAL EMISSIONS IMPLICATIONS OF ........................16NUCLEAR RETIREMENTS

BENEFITS OF TRANSITIONING TO LOW-CARBON................18PORTFOLIO STANDARDSTHE IMPORTANCE OF STATE RENEWABLE PORTFOLIO STANDARDS................................................18

CALCULATED BENEFITS OF CHANGING STATE RPS MANDATES TO LOW-CARBON MANDATES ..........19

TRADE-OFFS AND PRACTICAL CONSIDERATIONS ........................................................................22

COST CONTAINMENT ................................................................................................................23

CONCLUSION ................................................................24

ENDNOTES ....................................................................25

ABOUT THE AUTHORS ....................................................27

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TABLE OF CONTENTS

Expanding existing state Renewable Portfolio Standards (RPS) into Low-Carbon Portfolio

Standards (LCPS) would more than double the statutory requirements for clean energy in

the United States. Such a policy shift would prevent the premature closing of many of Amer-

ica’s nuclear power plants and assure that nuclear power plants will be replaced with

low-carbon electrical generation when they are retired.

In aggregate, the existing RPSs require a total of 420 terawatt-hours of annual renewable

generation across 30 states and Washington, DC by 2030. If nuclear were included in new

low-carbon standards in all states that currently have both RPS policies and operating nuclear

plants, the mandated amount of clean energy would increase to 940 terawatt-hours of annual

carbon-free electricity. Assuring these additional 520 terrawatt-hours of electricity remain

low-carbon would prevent 320 million metric tons or carbon dioxide emissions, or 17% lower

than would otherwise be the case.

THE MANDATED AMOUNT OF LOW-CARBON POWER UNDER EXISTING RPSs AND UNDER THE PROPOSED LCPS.

The right axis shows the share of mandated national electricity generation that will be required from clean energy under each policy.

SOURCE: EIA

Replacing carbon-based sources of energy with low-carbon sources remains the most reliable

indicator of long-term progress toward emissions reduction goals. In the power sector,

Renewables Portfolio Standards have been a driving force behind deployment of renewable

energy technologies in the United States. However, nuclear generation in the United States

0

250

500 10%

23%

750

1000

RPS LCPS

Mand

ated L

ow-Ca

rbon E

lectri

city (

TWh)

Nuclear Renewables

EXECUTIVE SUMMARY

MAY 2016 LOW-CARBON PORTFOLIO STANDARDS: RAISING THE BAR FOR CLEAN ENERGY4

has stagnated over the last 20 years and may decline substantially in the coming decades. If

existing nuclear plants close prematurely and are replaced with natural gas, as is likely, much

of the gain in low-carbon share of US electricity generation associated with renewables

deployment will be lost.

The loss of clean and reliable nuclear power will make the challenge of decarbonizing the

US power sector much more difficult. This loss of clean electricity will threaten US climate

commitments made as part of the Paris Agreement under the United Nations Framework

Convention on Climate Change in December of 2015. This is true even if wind and solar

replace a substantial share of the lost generation from retiring nuclear plants, since every

megawatt-hour of nuclear replaced by renewables is a megawatt-hour renewables can’t

replace from fossil fuels. As such, transforming RPSs into LCPSs would move the ball

significantly farther downfield towards full power-sector decarbonization by midcentury.

In this report, we recommend expanding state Renewable Portfolio Standards into more

ambitious Low-Carbon Portfolio Standards to include existing nuclear power plants. An

LCPS would assure that premature retirements of existing nuclear plants do not erode some

or all of the carbon and clean energy benefits of continuing deployment of wind and solar

power in the short-term, while significantly raising the statutory requirement for deployment

of low-carbon electricity generation over the long-term. LCPSs would also include new

nuclear power, hydroelectric power, and fossil fuels with carbon capture and storage.


Execut ive Summary

5

In December 2015, as part of the Paris Agreement under the United Nations Framework

Convention on Climate Change, the United States, along with 190 other nations, reaffirmed

its commitment to limiting global temperature increases to less than 2 degrees Celsius above

pre-industrial temperatures. As an interim step toward that goal, President Obama agreed to

cut total US greenhouse gas emissions 26-28% below 2005 levels by 2025. Central to that

commitment was the Environmental Protection Agency’s (EPA) Clean Power Plan (CPP),

which will come into force in 2022 and will reduce carbon dioxide emissions in the US power

sector by an estimated 32% by 2030.

While significant, the Administration’s short-term commitments and the rules established

through the Clean Power Plan will not be sufficient to achieve the long-term goals reaffirmed

in Paris, which will require domestic emissions reductions of roughly 80% below 2005 levels

by midcentury. In the power sector, the focus of this report, the replacement of virtually all

fossil fuel electricity generation with low-carbon generation will be required. In this regard,

the true measure of progress toward full decarbonization is not short-term trends in power

sector emissions but rather long-term expansion of the share of power generation that comes

from low-carbon sources.

By this measure, current trends in the United States are not consistent with achieving full

decarbonization of the US power sector, nor do current policies at the state and federal level—

focused heavily upon supporting and deploying renewable energy technologies—appear likely

to sufficiently accelerate those trends.

The majority of emissions declines in the US power sector over the last decade have been

the result of shifting generation from coal to gas, not higher shares of low-carbon energy

such as solar, wind, hydroelectric, and nuclear power.1 In fact, the total share of low-carbon

energy in the US power sector has hardly increased at all over the last three decades. While

wind energy has increased to 5% of US generation and solar energy to 1%, the total low-car-

bon share of US electrical generation is today 33%, compared with 29% in 1989.2

The stagnation of low-carbon power as a share of US power generation is the result of two

factors: flat or falling generation from the two largest sources of low-carbon energy—nuclear

and hydroelectric—and rising total electricity demand. Despite robust deployment and policy

support, growth in renewable energy has only just managed to keep up and has not been

sufficient to significantly grow the overall share of low-carbon electricity in the US power

sector mix.

INTRODUCTION


Thanks to state renewable energy mandates, continuing federal renewable energy tax incen-

tives, and falling costs, wind and solar energy are expected to see continuing growth over the

next few decades. Wind is expected to see its share of US power generation rise to 6% and

solar to 2% between now and 2040, according to the US Energy Information Administration

(EIA).3 These projections are often criticized for being conservative, but renewables deploy-

ment is highly dependent on the continuation of federal subsidies, and wind and solar in

particular face the compound obstacles of extensive land use, intermittency, and system

costs.4 Due to limited potential for new hydroelectric generation, limited present market

demand for new nuclear power plants, and premature retirements of existing US nuclear

plants, the share of clean energy in the US power sector may continue to stagnate or even

fall in the coming decades.

The EIA projects that low-carbon sources of electricity will provide 34% of total generation

by 2040,5 up from 32% in 2013. This projection may be overly conservative if estimated

growth in renewable energy generation is too pessimistic, but it may also be overly optimistic,

as it does not account for accelerated closures of existing nuclear power. Even with more

optimistic assumptions about the growth of renewable energy, the growth rate of low-carbon

electricity will likely be insufficient to achieve full decarbonization of the US power sector

by 2050.

Along with federal subsidies for renewable energy, state mandates for renewable energy

deployment—called Renewable Portfolio Standards (RPS)—have proven to be among the

most popular policies to increase low-carbon power generation, with RPS policies operating

in 30 states and Washington, DC as of 2016, covering 55% of retail electricity sales nation-

wide.6 Renewable Portfolio Standards vary across states but generally mandate that retail

electricity suppliers produce or purchase a certain share of their electricity from eligible

renewable resources like wind, solar, small hydro, biomass, or geothermal. Additionally,

many states allow utilities to meet the RPS using tradable Renewable Energy Credits (RECs),

which increase the profitability of renewable sources of power.

Lawrence Berkeley National Laboratory estimates that 60% of growth in renewable energy

generation is associated with state RPS requirements.7 Some studies argue that the demon-

strated impact of RPSs may be limited, but that the stringency of the standards and the role

of RPSs in neighboring states increase their efficacy.8 These studies also found that comple-

mentary policies implemented to aid the RPS had larger effects.


In t roduct ion

7

Herein lies an opportunity to substantially raise statutory requirements for low-carbon energy

deployment between today and 2050. Adding existing nuclear plants to state RPS policies

holds the potential to kill two birds with one stone, assuring that premature retirements of

existing nuclear plants do not erode some or all of the carbon and clean energy benefits of

continuing deployment of wind and solar power in the short-term, while significantly raising

the statutory requirement for deployment of low-carbon electricity generation over the long-

term. Ultimately, all existing and new sources of low-carbon power generation should be

credited in these standards—including conventional hydroelectric, nuclear, and fossil fuels

with carbon capture and storage (CCS)—such that states can optimize their power supply

for the lowest carbon intensity and lowest price given available resources.

While it is possible that some combination of accelerated low-carbon technological change,

market forces, and other public policies might result in low-carbon energy deployment out-

pacing that required by statute, RPS policies represent a minimum level of low-carbon

electricity generation that is required by statute. In this paper, we consider the practical oppor-

tunities and the climate mitigation benefits of raising long-term statutory requirements for

low-carbon electricity deployment by expanding state Renewable Portfolio Standards to

include existing and future nuclear power, thereby creating new and more ambitious Low-

Carbon Portfolio Standards (LCPS) at the state level.

MAY 2016 LOW-CARBON PORTFOLIO STANDARDS: RAISING THE BAR FOR CLEAN ENERGY

Int roduct ion

8

While energy-efficiency standards, conservation, and mass transit can help lower carbon

emissions in the industrial, housing, and transport sectors, the most dramatic reductions in

emissions have come from the decarbonization of the power sector, by replacing fossil-fueled

generators with lower-carbon fuels. Countries with the lowest per-capita carbon emissions

have the highest proportion of clean energy in their power sectors. The five OECD countries

with the highest portion of low-carbon electricity generation in 2011 (Iceland, Norway,

Sweden , Switzerland, and France), and the lowest per-kilowatt-hour carbon dioxide emis-

sions from the power sector, were also the lowest in per-capita emissions from the power and

heat sector and lowest in total carbon emissions per dollar of GDP.

TABLE 1. OECD COUNTRIES WITH LOWEST CARBON DIOXIDE EMISSIONS

SOURCE: IEA, CO2 Emissions from Fuel Combustion Highlights, 2013 Edition; electricity generation data from EIA

These countries have low emissions because their power sectors rely on low-carbon sources

of electricity: mainly nuclear power and hydro-electricity, and geothermal power in Iceland.

The centrality of the electric power sector will grow as more energy needs are shifted to elec-

tricity with the introduction of electric heat pumps for home heating and the adoption of

COUNTRY POWER SECTOREMISSIONS INTENSITY (G CO2/KWH)

PER CAPITA EMISSIONS (KG CO2 PERCAPITA)

EMISSIONS INTENSITY OF ECONOMY (G CO2/GDP)

ELECTRICITY GENERATION FROM LOW-CARBON SOURCES, %

Iceland 0 12 21 100

Norway 13 9 16 96

Sweden 17 6 14 89

Switzerland 30 35 12 98

France 61 6 18 89

OECD average 434 3960 330 37

USA 537 18 46 32

IMPORTANCE OF CLEAN-ELECTRICITY MANDATES

LOW-CARBON PORTFOLIO STANDARDS: RAISING THE BAR FOR CLEAN ENERGY MAY 2016 9

electric vehicles, among other forms of electrification. The electric grid is also the easiest and

cheapest element of the energy supply to decarbonize.9

Unfortunately, the share of low-carbon electricity globally dropped from 38% in 1995 to 33%

in 2014, shown in Figure 1. This was due in large measure to the loss of nuclear, which

declined 10% in absolute terms over the last decade.

FIGURE 1. THE SHARE OF GLOBAL ELECTRICITY COMING FROM LOW-CARBON SOURCES.

SOURCE: BP 2015 Statistical Review

In the United States, after roughly two decades of stagnation, the low-carbon share of US

elec tricity generation grew in recent years, thanks in part to President Obama’s green stimulus

investments and in part to aggressive renewable portfolio standards in many states.

But nuclear power generation in the US has been flat since 2007, while hydro generation has

declined 27% since its absolute generation peaked in 1997. With limited prospects for new

nuclear or hydro generation in the short-term, the prospect is very real that a wave of early

nuclear retirements over the next two decades may erode much if not all of the growth in

total low-carbon generation over the next few decades.

The decline in hydropower in the United States highlights the significant variability of renew-

able power sources, even a large-scale, baseload source of electricity such as hydroelectric

dams. Multi-year droughts have caused a decline in hydropower, first in the Pacific Northwest

0

10%

20%

30%

40%

Hydro Nuclear Renewables


Impor tance of c lean -e lec t r i c i ty mandates

10

from 2003-2005, then in the southeast from 2006-2008, and most recently in California.10

Such trends could be amplified by climatic variability caused by climate change, but more

immediately by the trend in dam removal across the country.11

FIGURE 2. SHARE OF US ELECTRICITY GENERATION FROM LOW-CARBON SOURCES.

SOURCE: BP Statistical Review

Moreover, even in the best case, in which wind and solar power continue to grow consistent

with recent trends while existing nuclear and hydro facilities operate until the end of their

useful lifetimes, low-carbon electricity deployment is still not growing fast enough to reach

aggressive decarbonization goals.12 Even if solar and wind deployment significantly exceeded

EIA projections between now and 2040, and accounting for planned, not early, nuclear retire-

ments, the United States would still fall well short of its long-term climate goals.13

0

0.1

0.2

0.3

0.4

Hydro Nuclear Renewables


Impor tance of c lean -e lec t r i c i ty mandates

11

Notwithstanding the clean power stagnation described above, nuclear energy continues to

represent America’s largest source of low-carbon electricity generation, accounting for 20%

of total US electricity generation in 2015 and 60% of low-carbon electricity generation.14

The future share of nuclear energy generation, however, is uncertain. While there are five

new reactors under construction in the United States today, there aren’t any planned projects

after those are completed.15 The main obstacle is economics: utilities cannot afford the large

capital cost of a new nuclear power plant, especially when a combined-cycle gas turbine is

a fraction of the cost. In addition, several states have prohibitions on new nuclear until a

permanent waste repository is available for commercial spent fuel (California, Connecticut,

Illinois, Kentucky, Maine, Oregon, West Virginia and Wisconsin).16

Moreover, many existing nuclear power plants are at risk of premature closure. Despite the

fact that America’s nuclear fleet is performing better than ever by all safety and efficiency

measures and has long since paid down the costs associated with construction and finance,

many existing nuclear plants face a host of adverse economic, regulatory, and political threats.

Nuclear plants in the United States have the second lowest operating costs (after hydro) of

all baseload power plants, and are thus generating cheap and reliable electricity year-round.17

But nuclear plants are disadvantaged by policies, like state RPS, and federal subsidies, skewed

toward solar and wind, as well as increased competition from cheap natural gas, priority grid-

access for intermittent renewables, and deregulated power markets that undervalue the

reliable, low-carbon power that nuclear provides.

Underlying the economic challenges facing nuclear plants is the restructuring of electricity

markets that has deregulated rates, fostered competition, and divested utilities of their gen-

erators. The result has been the rise of a new kind of merchant nuclear plant—unattached to

a regulated utility—that sells its power into wholesale markets at the going price. Companies

like Entergy and Exelon own large fleets of reactors around the country, whereas other util-

ities may own and operate a single nuclear reactor.18

Nuclear plants could have benefited from deregulation, as they have lower operating expenses

than fossil fuels.19 But the collapse of natural gas prices and thus wholesale electricity prices

made the economics of existing nuclear plants very difficult. Entergy pegged operating losses

at its 680-megawatt Pilgrim plant in Massachusetts at $45 million per year,20 and at its 848-

megawatt Fitzpatrick plant in New York at $60 million per year;21 the company has

announced that both plants will close within two years. Exelon’s Clinton plant and Quad

CHALLENGES FACING EXISTING NUCLEAR PLANTS


cities plant in Illinois have collectively lost $800 million over the last six years, according to

press reports.22

Nuclear plants operating in regulated electricity markets are shielded from the short-term

market fluctuations affecting merchant plants in unregulated states. Plants owned by publicly

regulated utilities can add the cost of capital upgrades from post-Fukushima safety measures,

relicensing upgrades and cooling tower retrofits into their rate bases, on which they receive

a guaranteed rate of return. Merchant plants cannot rely on such supports.

Since the Public Utility Regulatory Policies Act of 1978 (PURPA) started US utilities on the

path to deregulation, more and more electricity is bought and sold on the wholesale market.

The wholesale price changes day-to-day and is set by the lowest bidder, which has historically

been coal but is now much more often natural gas. Slow economic growth, flat electricity

demand and increasing oversupply all contribute to depressed wholesale electricity markets.

The largest factor is the decline in natural gas prices caused by the boom in hydraulic frac-

turing of shale deposits. Natural gas-fired generators usually set the spot-market price for

electricity, and their costs are mainly determined by the variable cost of fuel. Gas prices in

the last few years are about half what they were in 2007-8, and wholesale electricity prices

have fallen in turn.23

The resulting price plunge has reduced revenue below operating costs at some nuclear plants.

Small plants have been hit hardest because of high overhead and staffing expenses compared

to their output. (Each reactor has similar staffing costs and pays the same $5 million yearly

oversight fee to the Nuclear Regulatory Commission whether it is a small plant of 600

megawatts or a large one of 1,200 megawatts.24) Merchant plants selling power on the open

market have lost money, especially in the Northeast and Midwest, and others with fixed-price

contracts with local utilities have lost them to gas plants. Two plants, Kewaunee in Wisconsin

and Vermont Yankee, have closed because of economic losses and Entergy has announced

that the Fitzpatrick plant in New York will follow suit by 2017 and that its Pilgrim nuclear

plant in Massachusetts will close by 2019.25 Also struggling with millions of dollars in losses

are upstate New York’s RE Ginna plant, Ohio’s Davis-Besse plant and Illinois’ Quad Cities,

Clinton and Byron plants.26

Cheap gas benefits the environment and climate if it displaces coal-fired generation, but not

if it displaces nuclear power. However, unstable wholesale power prices are an even bigger

problem than low natural gas prices.


Cha l lenges fac ing ex is t ing nuc lear p lants

13

Electricity generation from wind power has grown significantly in the last decade, seeing a

ten-fold expansion from 2003. The United States now gets 5% of its electricity from wind,

thanks in large part to federal deployment subsidies. Wind farm developers receive a $23 pro-

duction tax credit (PTC) on every megawatt-hour generated for the first ten years of

operation. Wind farms are also major beneficiaries of state renewable portfolio standards

that mandate the purchase of renewable electricity by utilities.27

But the federal production tax credit can also distort electricity markets. Sometimes gluts of

wind power turn wholesale prices close to zero or even negative as grid managers try to force

generators off a congested grid by making them pay to feed power into it. The effect became

noticeable in the Midwest in 2013, when prices on the Illinois wholesale spot market reached

a record low of -$41 per megawatt.28 Because of the PTC, wind generators can turn a profit

even if they are paying negative prices, all the way down to -$23 per megawatt-hour. They

therefore have no incentive to curtail overproduction.

Subsidies for wind and solar power have so far had a small effect on wholesale prices in most

of the country. That effect will increase as incentives bring more intermittent renewable capac-

ity into the market. There is an environmental and climate benefit if wind power lowers prices

enough to drive coal or natural gas generation off the grid. There is none if wind drives

nuclear plants into retirement to be replaced with natural gas-fired plants that provide

the reliable baseload power that wind turbines cannot. The challenge here is that coal-

and gas-fired power plants have higher variable costs, so when they curtail power generation

they are also saving money. But since most of the cost of running a nuclear power plant con-

tinues whether the reactor is on or off, the financial incentive is much larger to run as much

as possible .

In addition to their initial construction costs, nuclear plants face significant capital expenses

incurred during their service lives for repair and upgrades. These costs can influence or force

a decision to close a plant. Many plant operators must upgrade equipment when they apply

for a license renewal after 40 years of operations.a Almost all US reactors have received exten-

sions of their licenses from 40 years to 60 years, but about 40% of these licenses will expire

before 2035. Relicensing for 80 years will require significant equipment upgrades. Before

California’s San Onofre plant was closed in 2013, Southern California Edison estimated the

costs of re-licensing upgrades at $150 million.29 Expenses for licensing upgrades may seem

a Post-Fukushima safety upgrades will cost an average of $35 million per reactor, according to a Platts survey — a major expensefor economically marginal plants.


Chal lenges fac ing ex is t ing nuc lear p lants

14

expensive, but are manageable for a utility that expects to operate the nuclear plant for another

20 years.

The most serious capital expense faced by some existing plants is the unpredictable require-

ment to retrofit for cooling towers. All new thermal plants—even coal and gas—are now

required by the EPA to use “closed-cycle” cooling towers that reduce water draws by over

90% and reduce discharge water temperatures. The EPA doesn’t require existing nuclear

plants to install cooling towers necessarily, but leaves the issue up to state environmental

agencies to settle by their assessment of the “best technology available” (BTA) at each plant

site, which could be cooling towers, mesh screens, lowered water intake velocity, or something

else. The EPA also enjoins officials to consider extenuating circumstances and side effects

of cooling-system fixes, like increased air pollution (cooling towers that use seawater spew

salt particulates), land availability (cooling towers may not fit on a plant site) and the remain-

ing plant lifetime. Officials can leave a once-through system as is if they determine that “the

social costs [of a new cooling system] are not justified by the social benefits.”30

By leaving the decision to states under a non-specific BTA standard, the EPA set the stage

for political battles around this issue in several states. For many plants, the requirement of a

cooling tower can be the final straw, making the plant uneconomic to continue operating.

For example, New Jersey’s Oyster Creek plant will close in 2019, ten years before its license

expires, to avoid a state requirement to build cooling towers.31


Chal lenges fac ing ex is t ing nuc lear p lants

It is difficult to predict how many nuclear power plants will close prematurely in the next

few decades, but there are some estimates of the potential emissions impact. In a Third Way

analysis, the authors proposed three different scenarios for nuclear power in the United States:

all reactors operating to their 60-year license; all reactors operate to their 40 year license; and

all reactors phased out by 2025. For the first scenario, where plants run through their 60-year

licenses, emissions would grow by about 6% from 2012 levels by 2025, or about 20% higher

than the CPP target. When plants close after their 40-year licenses expire, Third Way found

that emissions would rise about 13% above 2012 levels by 2025. The magnitude of these

emissions increases is shown in the figure below.

FIGURE 3: US CO2 EMISSIONS UNDER NUCLEAR CLOSURE SCENARIOS

SOURCE: Third Way report “When Nuclear Ends: How Nuclear Retirements Might Undermine Clean Power Plan Progress”

Premature nuclear retirements will deal a serious setback to America’s decarbonization

efforts. Lost nuclear generation will be primarily replaced by increased natural gas-fired

generation , as has been observed on regional grids with recent plant closures.32 Even when

reactors are nominally replaced by renewable power, nuclear closures will result in an equiv-

alent increase in fossil-fired generation, because a kilowatt-hour of renewable electricity used

to replace lost nuclear power is a kilowatt-hour that is not available to displace coal- and gas-

fired power from the grid.

4600

5166.667

5733.334

Ener

gy R

elat

ed C

arbo

n Em

issio

ns (

MM

T CO

2)

Historic 60-Year Lifetime 40-Year Lifetime 2025 Phase-Out

POTENTIAL EMISSIONS IMPLICATIONS OF NUCLEAR RETIREMENTS


But still more premature closures are likely if electricity markets remain depressed from cheap

fossil fuels and supply continues to swing from renewable generators supported by subsidies

and portfolio mandates. Merchant plants in deregulated states are particularly at risk. Six

reactors will reach their 60-year license expiration before 2030, with an additional three reac-

tors already scheduled for early closure before 2020. But many more plants may announce

early closure before then for economic reasons. If all of America’s nuclear plants are lost,

the increase in emissions would wipe out 74%-100% of the gains expected under the Clean

Power Plan.b Preserving the nation’s nuclear sector is therefore crucial to making progress

on decarbonization.

b The Third Way report, “When Nuclear Ends”, estimates that a phase-out of nuclear in the US would increase annual emissionsby 269-360 million metric tons of CO2. The EPA estimates that the Clean Power Plan will reduce emission to 30% below 2005levels, which is about 360 million metric tons lower than in 2014, according to the EPA’s Greenhouse Gas Inventory.


Potent ia l Emiss ions Impl i cat ions of Nuc lear Ret i rements

17

THE IMPORTANCE OF STATE RENEWABLE PORTFOLIO STANDARDSAs of today, the United States does not have a federal mandate or target for reducing carbon

emissions. The Clean Power Plan finalized by the Obama Administration in 2015 estimates

that if every state complies with the rules, total national carbon emissions will decline by

32% from 2005 levels, or about 8% from 1990 levels. Nevertheless, this is not a formal target

of the rule.

FIGURE 4: RENEWABLE, LOW-CARBON, AND NUCLEAR SHARES OF CALIFORNIA IN-STATE ELECTRICITY GENERATION.

Percentage of in-state, utility-scale generation, except for the 2014 and 2015 data points,

which include distributed solar generation.

SOURCES: California Energy Almanac and EIA

The only explicit targets for clean energy that exist in the United States are at the state level.

Currently, 30 states and Washington, DC have binding Renewable Portfolio Standards, and

0%

18%

35%

53%

70%

Nuclear Renewable Energy Total Low-Carbon

BENEFITS OF TRANSITIONING TO LOW-CARBON PORTFOLIO STANDARDS


another 7 have voluntary standards. These RPSs require utilities to procure a share of either

their electricity generation or retail sales from renewable sources. The RPS targets range from

0.5% to 100% and the target year ranges from 2010 to 2045. These mandatory standard cur-

rently apply to 55% of retail electricity sales in the US.33 The influence of these standards

extends into states without an RPS because they are often mediated by the purchase of renew-

able energy certificates (RECs). RECs let a utility fund and lay claim to the environmental

benefits of clean electricity without generating it themselves, and are often bought from out-

of-state generators, but the rules depend on the state.

Unfortunately, aggressive deployment of renewables does not guarantee progress on reducing

carbon emissions if other low-carbon sources of electricity are shut down, specifically nuclear

power. California provides a good example of how RPSs can struggle to make a dent. While

California has one of the most aggressive RPSs in the country (50% of retail sales from

renewable sources by 2031), renewables’ share of California generation is actually at a rela-

tively low level (see chart below). Meanwhile, the state’s low-carbon share of generation has

fallen substantially from its peak in 1986, and declines in hydro and nuclear have not been

offset by growth in wind and solar since then.

While most states are on track to meet their RPS mandates, the closure of more nuclear

power plants could result in the total share of low-carbon electricity in the United States

declining, as nuclear currently provides 20% of US electricity generation.

CALCULATED BENEFITS OF CHANGING STATE RPS MANDATES TO LOW-CARBON MANDATESMany have argued that RPSs should be more aggressive.34 Adding nuclear power (and hydro

and CCS) to these standards would accomplish two objectives: establishing much more

aggressive clean energy mandates in the long term while keeping existing nuclear (and hydro)

plants online over the next few decades.

Transforming state Renewable Portfolio Standards into comprehensive Low-Carbon Portfolio

Standards (LCPS) that include nuclear power along with renewables would entail simply

adding the share of a state’s electricity generation to the percentage of renewable electricity

already required by the RPS, and allow nuclear generation to count towards fulfilling the

standard. In many states, this would both protect nuclear plants and dramatically raise the

mandated clean-energy target.


Benef i t s o f Trans i t ion ing to Low-Carbon Por t fo l io Standards

19

TABLE 2. PROPOSED LOW-CARBON PORTFOLIO STANDARDS

SOURCES: State RPSs, http://ncsolarcen-prod.s3.amazonaws.com/wp-content/uploads/2015/11/Renewable-Portfolio-Standards.pdf , state share of generation from nuclear, https://www.eia.gov/electricity/data/state/



20

RPS TARGET 2014 NUCLEAR GENERATION

PROPOSED LOW-CARBON STANDARD

Arizona 15% by 2025 29% 44%

California 50% by 2031 9% 59%

Connecticut 27% by 2020 47% 74%

Illinois 25% by 2025-26 48% 73%

Iowa105 MW of renewable capacityby 2010

7% 8%

Maryland 20% by 2022 38% 58%

Massachusetts 15% of sales by 2020 19% 34%

Michigan 10% by 2015 29% 39%

MinnesotaXcel Energy: 31.5% by 2020Other IOUs: 26.5% by 2025Other utilities: 25% by 2025

22% 49%

Missouri 15% by 2021 11% 26%

New Hampshire 25% by 2025 52% 77%

New Jersey 25% by 2027-28 46% 71%

New York 50% by 2030. 31% 81%

North CarolinaIOUs: 12.5% by 2021Electric cooperatives, municipalutilities: 10% by 2018

32% 44%

Ohio 12.5% Renewables by 2027 12.5% 25%

Pennsylvania 18% Renewables by 2027 36% 54%

Texas10,000 MW Generation by 2025

9% 10%

Washington 15% renewables by 2020 8% 23%

Wisconsin 10% by 2015 15% 25%

In aggregate, the existing RPSs require a total of 420 terawatt-hours of annual renewable

generation across these 30 states and Washington, D.C. by 2030. If nuclear were included in

a new low-carbon standard in all states that currently have both RPS policies and operating

nuclear plants, the mandated amount of clean energy would increase to 940 terawatt-hours

of annual carbon-free electricity (see Figure 5).c

While total national electricity demand is difficult to forecast, doing so is not necessary to

estimate the total share of low-carbon power implied in an aggregation of state RPS man-

dates. The distribution of demand may change and we do not attempt to account for this in

our calculation.

FIGURE 5. THE MANDATED AMOUNT OF LOW-CARBON ELECTRICITY GENERATION UNDER EXISTING RPSs AND UNDER THE PROPOSED LCPS.

TThe right axis shows the share of mandated national electricity generation that will be required from clean energy under each policy.SOURCE: EIA

However, absent dramatic shifts in the location of electricity demand among states, we believe

our calculations are illustrative of the benefits of including nuclear in current RPS policies

and give a rough, if not exact, sense of the magnitude of additional clean energy deployment

c To calculate the total nationally mandated renewable energy implied by these standards, we summed the product of each state’srenewable portfolio standard and its 2014 electricity generation. We divided this sum by the total US electricity generated in2014. For the low-carbon percentage, we added the RPS number with existing nuclear generation from 2014 in states with RPSs(minus Vermont since their sole nuclear power plant closed in late 2014).

0

250

500 10%

23%

750

1000

RPS LCPS

Mand

ated L

ow-Ca

rbon E

lectri

city (

TWh)

Nuclear Renewables



21

and avoided emissions that such a shift would ensure. In the aggregate, current state RPS

mandates require that 10% of US electricity come from renewable energy by 2030. Including

nuclear in an expanded Low-Carbon Portfolio Standard would require that 23% of national

electricity must come from low-carbon sources by 2030.

This doesn’t mean that US low-carbon generation won’t exceed these numbers. In 2014 the

US generated 548 terawatt-hours (13% of electricity) from renewables and 800 terawatt-hours

(19% of electricity) from nuclear. But these numbers oscillate from state to state, as hydro

and wind follow climatic variation and nuclear plants are prematurely closed. A state-man-

dated LCPS could put floors in place that ensure a certain amount of electricity will come

from low-carbon sources.

Expanding current RPSs to include nuclear power would also safeguard the 520 terawatt-

hours of clean generation in states with both an RPS and nuclear plants. If these nuclear

plants were to close and be replaced by combined-cycle natural gas plants, an extra 320 mil-

lion metric tons of carbon dioxide emissions would result.

TRADE-OFFS AND PRACTICAL CONSIDERATIONSAn LCPS would be a straightforward extension of RPSs already in place in states, with

the same legal format and the same mechanism of marketable (low-carbon) energy certifi-

cates. It would let nuclear and renewable plants alike bid to supply the enlarged mandate,

without favoring one over another. A sufficiently large LCPS would likely result in secure

market shares for both existing nuclear and new renewable plants rather than cut-throat com-

petition between the two sectors. Given the difficulty of developing new nuclear projects

quickly, it is unlikely that new nuclear plants would crowd out short-term growth of renew-

able energy. New renewables could also compete for the share of electricity supplied by

nuclear power, but given the fairly cheap generating costs and reliable performance of nuclear

plants, utilities are unlikely to switch their procurement from existing nuclear plants to renew-

ables particularly given more ambitious mandates requiring the displacement of coal and gas

fired generation.

A few states have taken steps in this direction. Ohio’s low-carbon portfolio standard allows

12.5% of the 25% target to be sourced from technologies other than renewables, including

nuclear power. Ohio’s current nuclear fleet produces about 12% of the state’s generation, but

phase-in of the standard has been frozen and may be reversed by the legislature.35 Illinois

has a bill pending in the state legislature that would change the state’s RPS of 25% to an



22

LCPS of 70%.36 Since RPSs are so widespread, implementing such initiatives stands a good

chance of success in other states.

An LCPS would give renewable energy room to grow, while forestalling the possibility that

decarbonization gains will be undone by a re-carbonization of the grid following the loss of

nuclear plants. But adding existing nuclear power to existing RPS mandates is just a start.

EPA forecasts anticipate that, with the Clean Power Plan in place, renewable energy will

grow by 2030 to comprise 20% of the nation’s electricity supply, with nuclear power pitching

in another 19%. That 39% low-carbon electricity share would be an improvement over

the 33% share in 2014, but decarbonization needs to proceed much faster to match national

and global climate ambitions. An LCPS can serve as a policy template for dramatically

accel erating clean-energy targets. With new nuclear power plants (and hydro and eventually

fossil fuels with CCS) added to the roster of clean energy sources that can fulfill portfolio

mandates, state LCPSs could feasibly be raised well beyond the targets we have suggested

above. That would ensure that the nation’s decarbonization efforts are as vigorous and com-

prehensive as possible.

COST CONTAINMENTMany ratepayers could be concerned that setting more ambitious targets for low-carbon gen-

eration would cause costs to rise. In the shortterm, however, including existing nuclear power

under state clean energy mandates entails little risk of increasing electricity rates. Existing

nuclear plants have some of the lowest operating costs of any source of electric power gen-

eration and are already factored into the rate base.37

Longer term, there could be new costs associated with complying with higher mandates when

existing plants are retired. Replacing a gigawatt of low-carbon power with new low-carbon

generation given present options would be a costly endeavor. This, however, only underlines

the value of existing nuclear power plants and of policies to keep them online throughout

their full operational lifetime.

Moreover, many states already have some type of cost cap on their RPSs. The mechanisms

vary from alternative compliance payments, rate impact caps, per-customer cost caps, contract

price caps, and funding limits.38 Applying these measures to additional low-carbon generation

capacity associated with currently operating nuclear plants would be a straightforward step.

In the event that replacing nuclear plants with cost effective low-carbon generation, be it

future nuclear or renewable technology, proves to be ruinously expensive, there are measure

that states have already put in place, or could put in place to safeguard electricity rates.



23

Embracing expansion of state RPS policies to incorporate existing nuclear power plants does

not require proponents to embrace a nuclear future. It does require proponents to recognize

the nuclear present and to embrace a low-carbon future over any a-priori technological

preference . Existing nuclear plants account for 20% of US electrical generation and 60%

US low-carbon generation. So long as there is fossil generation to displace, the priority for

all new low-carbon electricity deployment, be it nuclear or renewable, must be to displace

fossil generation.

At such time as existing nuclear plants must be retired, an LCPS requires that they be replaced

by low-carbon generation technology. It does not, however, stipulate what low-carbon tech-

nology it must be replaced with. If one believes that renewable energy technologies will soon

be able to replace baseload generation at large scale and acceptable costs, then renewables

will be the obvious choice to replace those plants. If one believes that a low-carbon future is

likely to require advanced nuclear energy and that new nuclear technologies that are cheap

and scalable can be widely commercialized over the next several decades,39 then advanced

nuclear will be the obvious choice.

State Low-Carbon Portfolio Standards do not seek to adjudicate such differences but rather

to assure that today’s nuclear fleet operates safely and economically for as long as possible,

and that whatever replaces today’s nuclear plants will be low-carbon. In so doing, LCPSs

would dramatically raise the mandated levels of required clean energy. That, this paper sug-

gests, should be something that all advocates of a low-carbon future can agree upon.

CONCLUSION


1 Nordhaus, T., Trembath, A., Shellenberger, M. & Swain, M.. “Natural Gas Overwhelmingly Replaces Coal: New Analysisof US Regional Power Generation Between 2007 and 2013” The Breakthrough Institute, December 15, 2014.http://thebreakthrough.org/index.php/issues/natural-gas/natural-gas-overwhelmingly-replaces-coal

2 BP. “2015 Statistical Review – Data Workbook.” http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

3 US Energy Information Administration, “2015 Annual Energy Outlook.” http://www.eia.gov/forecasts/aeo/

4 Free, J., Bennett, M. and Matt Goldberg. “The Climate Challenge: Can Renewables Really do it Alone?” Third Way.December 16th, 2015. http://www.thirdway.org/report/the-climate-challenge-can-renewables-really-do-it-alone

5 US Energy Information Administration, “2015 Annual Energy Outlook: Electricity Generation.”http://www.eia.gov/forecasts/aeo/section_elecgeneration.cfm

6 Barbose, Galen. “U.S. Renewables Portfolio Standards: 2016 Annual Status Report”. Lawrence Berkeley NationalLaboratory. April 2016.

7 Op cit. note 6.

8 Shrimali, G., Jenner, S., Groba, F., Chan, G. & Indvik, J. Have State Renewable Portfolio Standards Really Worked?Usaee.Org 1–20 (2013). at http://www.usaee.org/usaee2012/submissions/OnlineProceedings/Shrimali Online ProceedingsPaper.pdfCarley, S. State renewable energy electricity policies: An empirical evaluation of effectiveness. Energy Policy 37, 3071–3081(2009).

9 Intergovernmental Panel on Climate Change Working Group 3. Chapter 6: Assessing Transformation Pathways. In FifthAssessment Report. (2014) https://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_chapter6.pdf

10 US Energy Information Administration. “U.S. hydropower output varies dramatically from year to year.”http://www.eia.gov/todayinenergy/detail.cfm?id=2650

11 American Rivers. “Improving – or Removing – Outdated, Harmful Dams.”http://www.americanrivers.org/initiatives/dams/

12 Williams, J.H., B. Haley, F. Kahrl, J. Moore, A.D. Jones, M.S. Torn, H. M. Pathways to Deep Decarbonization in theUnited States. (2014).

13 Biello, D. “How Far Does Obama’s Clean Power Plan Go in Slowing Climate Change?” Scientific American. August 6,2015. http://www.scientificamerican.com/article/how-far-does-obama-s-clean-power-plan-go-in-slowing-climate-change/

14 US Energy Information Administration. “What is U.S. electricity generation by energy source?”https://www.eia.gov/tools/faqs/faq.cfm?id=427&t=3

15 Nuclear Regulatory Commission. “Location of Projected New Nuclear Power.” Updated April 1, 2016.http://www.nrc.gov/reactors/new-reactors/col/new-reactor-map.html

16 National Conference of State Legislatures. “State Restrictions on New Nuclear Power Facility Construction.”http://www.ncsl.org/research/environment-and-natural-resources/states-restrictions-on-new-nuclear-power-facility.aspx

17 US Energy Information Administration. Table 8.4. Average Power Plant Operating Expenses for Major U.S. Investor-Owned Electric Utilities, 2004 through 2014 (Mills per Kilowatthour).https://www.eia.gov/electricity/annual/html/epa_08_04.html

18 Davis, L. & Wolfram, C. Deregulation, Consolidation, and Efficiency: Evidence from U.S. Nuclear Power. (2012).http://www.nber.org/papers/w17341

19 US Energy Information Administration. Table 8.4 Average Power Plant Operating Expenses for Major U.S. Investor-Owned Electric Utilities, 2004-2014. https://www.eia.gov/electricity/annual/html/epa_08_04.html

20 Entergy. “Entergy to Close Pilgrim Nuclear Power Station in Massachusetts No Later than June 1, 2019.” 10/13/2015.http://www.entergynewsroom.com/latest-news/entergy-close-pilgrim-nuclear-power-station-massachusetts-no-later-than-june2019/

21 Entergy. “Entergy to Close James A. FitzPatrick Nuclear Power Plant in Central New York.” 11/02/2015http://www.entergynewsroom.com/latest-news/entergy-close-jamesfitzpatrick-nuclear-power-plant-central-new-york/

ENDNOTES


22 Exelon. Exelon Statement on Early Retirement of Clinton and Quad Cities Nuclear Facilities. May 6, 2016.http://www.exeloncorp.com/newsroom/exelon-statement-on-early-retirement-of-clinton-and-quad-cities-nuclear-facilities

23 Linn, J., Muehlenbachs, L. & Wang, Y. How Do Natural Gas Prices Affect Electricity Consumers and the Environment?Resources for the Future. (2014).

24 NRC. “§ 171.15 Annual fees: Reactor licenses and independent spent fuel storage licenses. http://www.nrc.gov/reading-rm/doc-collections/cfr/part171/part171-0015.html

25 Faher, Mike. “Entergy Juggling Shutdowns At Multiple Nuclear Plants“. VTDigger.orghttp://vtdigger.org/2015/11/05/entergy-juggling-shutdowns-at-multiple-nuclear-plants/

26 Smith, R. Nuclear Power Goes Begging, Likely at Consumers’ Expense. The Wall Street Journal. April 17, 2015.http://www.wsj.com/articles/nuclear-power-goes-begging-1429289139Orr, S. “New study: Ginna subsidy plan is inefficient.” Democrat & Chronicle. June 17, 2015http://www.democratandchronicle.com/story/news/2015/06/17/study-says-ginna-bailout-bad-idea/28873859/Matyi, B. “Exelon to decide fate of Quad Cities nuclear power plant in September: CEO.” May 29, 2015.http://www.platts.com/latest-news/electric-power/louisville-kentucky/exelon-to-decide-fate-of-quad-cities-nuclear-21526498

27 Giberson, M. Assessing Wind Power Cost Estimates. (2013).

28 Huntowski, B. F., Patterson, A., Schnitzer, M. & Group, T. N. Negative Electricity Prices and the Production Tax Credit. TheNorthBridge Group (2012)

29 McSwain, D. “Regulators killed San Onofre, not engineers.” The San Diego Union-Tribune. July 20, 2013http://www.sandiegouniontribune.com/news/2013/Jul/20/regulators-killed-san-onofre-nuclear-not-engineers/2/#article-copy

30 Environmental Protection Agency. National Pollutant Discharge Elimination System—Final Regulations To EstablishRequirements for Cooling Water Intake Structures at Existing Facilities and Amend Requirements at Phase I Facilities;Final Rule. Fed. Regist. 79, 48299–48439 (2014).

31 “Oyster Creek Reactor in New Jersey to Close by 2019” New York times. December 9th, 2010.http://www.nytimes.com/2010/12/09/nyregion/09nuke.html

32 Op cit. note 1.

33 Op cit. note 6.

34 US Energy Information Administration. “Higher Oregon renewable portfolio standard targets likely to boost wind power.”April 22, 2016. http://www.eia.gov/todayinenergy/detail.cfm?id=25932 EIA. “Hawaii and Vermont set high renewable portfolio standard targets.” June 29, 2015.http://www.eia.gov/todayinenergy/detail.cfm?id=21852 Energy and Environmental Economics, Inc. “Investigating a HigherRenewables Portfolio Standard in California.” January2014. https://www.ethree.com/documents/E3_Final_RPS_Report_2014_01_06_ExecutiveSummary.pdf

35 Mufson, Steven and Tom Hamburger. “Ohio Govenor Signs bill Freezing Renewable-Energy Standards.” The WashingtonPost June 13, 2014. https://www.washingtonpost.com/business/economy/ohio-governor-signs-bill-freezing-renewable-energy-standards/2014/06/13/730d8b44-f33b-11e3-9ebc-2ee6f81ed217_story.html

36 Tomich, J. “Exelon seeks low-carbon standard to aid its Ill. Reactors.” EnergyWire. February 25, 2015http://www.eenews.net/stories/1060013995

37 US Energy Information Administration. Table 8.4 Average Power Plant Operating Expenses for Major U.S. Investor-Owned Electric Utilities, 2004-2014. https://www.eia.gov/electricity/annual/html/epa_08_04.html

38 CPI. Renewable portfolio standards – the high cost of insuring against high costs.http://climatepolicyinitiative.org/2012/12/17/renewable-portfolio-standards-the-high-cost-of-insuring-against-high-costs/

39 Nordhaus, T., Lovering, J. & Shellenberger, M. How to Make Nuclear Cheap. (2013).http://thebreakthrough.org/images/pdfs/Breakthrough_Institute_How_to_Make_Nuclear_Cheap.pdf


Endnotes

26

ABOUT THE AUTHORSTHE BREAKTHROUGH INSTITUTE is an environmental policy think tank in Oakland, California,

dedicated to giving people new ways to think about energy and the environment.

ENVIRONMENTAL PROGRESS is a new environmental organization advocating ethical and practical

solutions for nature and prosperity for all.

JESSICA LOVERING is the director of energy at the Breakthrough Institute.

TED NORDHAUS is research director and cofounder of the Breakthrough Institute.

WILL BOISVERT is a writer focused on energy, environmental, and urban policy.

JACK SHAKED is an energy analyst at the Breakthrough Institute.

MICHAEL SHELLENBERGER is the president of Environmental Progress.





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