November 07, 2007
Small Carbon Tax Would Make Nuclear Power Cheaper Than Coal

With a carbon tax of a mere $10 per metric ton nuclear power might become cheaper than coal for generating electricity.

The Electric Power Research Instituteís staff estimates the effect of a charge on carbon dioxide emissions on the price of a kilowatt-hour, the amount of electricity needed to run 10 100-watt bulbs for an hour. Natural gas produces 0.84 pounds of carbon dioxide per kilowatt-hour, and coal produces more than twice as much, 1.9 pounds.

At $10 per metric ton, the impact is minimal. But at $50 a ton, for example, the cost of a kilowatt-hour produced by coal goes from about 5.7 cents to about 10 cents. Wind power currently isnít competitive, according to the instituteís calculation, but it becomes competitive when carbon dioxide costs $25 a ton. By their calculations, nuclear energy, with negligible carbon dioxide emissions, looks sensible at a small carbon charge.

Thanks to "Fat Man" for the article tip. He suspects that the New York Times is using Nuclear Energy Institute estimates for nuclear costs (PDF) by way of an Electric Power Research Institute (EPRI) report. Until we see some nuclear power plants built in the United States using the newer designs we aren't going to know for sure. But my guess is that the NEI numbers aren't too far from reality. Otherwise we wouldn't be seeing so many plans for new nuclear power plant construction.

The nuclear revival got its official kickoff last month with an application from NRG Energy Inc., Princeton, N.J., for the first new nuclear plant in three decades. The NRC is preparing for 32 nuclear-power-plant applications by 2009, including as many as nine this year.

The electric power industry is factoring in some probability of a carbon tax in coming years and it is hedging its bets. The passage of a carbon tax of just $10 per metric ton would likely stop all new coal electric plant construction in the United States. I'd like to see that happen just to prevent mercury, particulates, and other conventional pollution. However, even if that happens Asian demand for electricity looks set to put new 1000 coal plants online in just the next 5 years alone.

More than 1,000 coal-fed power plants will be built in the next five years, mostly in China and India, according to the U.S. Department of Energy. China, the world's biggest coal producer, became a net importer for the first time this year, taking supplies from Indonesia, Australia and South Africa and reducing the amount available for Europe.

The mind boggles. Asian economic development makes so many Western debates about the environment seem almost irrelevant. Decades after the environmental movement took off in the United States the world is going to become a more polluted place. Our best hope is the development of cheaper ways to generate electricity using nuclear, solar, and wind power. A carbon tax in China or India seems a distant prospect.

Share |      Randall Parker, 2007 November 07 10:59 PM  Energy Electric Generators


Comments
Brock said at November 8, 2007 8:35 AM:

I think a carbon tax is a good idea, but I wonder is a more nuanced approach to a "dirtyness" tax would be better. As you mention, coal has a lot of particulates that other fossil fuels do not, and so is quite a but worse for the environment and our health. I am wondering if a more holistic approach to an energy source's overall environmental and health impact may be superior.

For instance, this approach would favor solar over nuclear, since nuclear power has the waste issue. Natural Gas would be favored over coal. But a complete accounting would have to look at the environmental impact of solar cell production, shipping oil from Saudi Arabia, the Albertan oil sands impacts, etc. etc. as well.

The best way to do it would be for the DOE (or whomever) to assign "values" to certain emissions, and then simply let the companies themselves audit and report their own emissions (audited by PricewaterhouseCoopers or some specialty firm), and pay the fee; with occasional government audits and fines for non-compliance.

The biggest problem with this though is regulatory capture. If the DOE had to weigh the environmental/health "costs" of mercury or nuclear waste, those values would be subject to intense lobbying, and we may end up worse off than with a simple but Congressional carbon tax.

Fifi said at November 8, 2007 12:30 PM:

A carbon tax in China or India seems a distant prospect.

Yes, but a carbon tax on imports of Chinese or Indian goods and services may do the trick. Those imports would pay for the carbon their production releases the same way they would if they were produced in the US.

Cervus said at November 8, 2007 12:39 PM:

The difficulty of assessing a "carbon tariff" on imported goods is that it could have an effect similar to the Smooth-Hawley Act in 1930 that ended up making the Great Depression so much worse.

China today indicated that they won't adopt any carbon restrictions post-Kyoto.

Now what?

Wolf-Dog said at November 8, 2007 1:04 PM:

If I understood the article below, the amount of uranium contained in coal that gets released in the air (in the United States) from combustion per year, is higher than the amount actually used by the 100 nuclear plants in the United States:

http://www.ornl.gov/info/ornlreview/rev26-34/text/colmain.html

If somehow this uranium can be captured, it can be used for nuclear plants also. Additionally, this uranium in the air probably causes a lot of lung cancer in the first place.

Jerry Martinson said at November 8, 2007 1:39 PM:

If the EU and US came up with a common carbon tax scheme and taxed imports from countries that didn't comply with a similar scheme, then I think you could realistically get a Kyoto-like carbon dioxide reduction across the whole world that would be somewhat enforceable. Basically we'd tell countries to either tax yourself at $10/ton via some scheme or your exporters have to face a tarrif. I'm surprised the EU hasn't pulled this one on the US yet. The problem is that China, India..etcc.. could just block market access to our companies if they get upset about it and it'd be a Smoot/Hawley disaster.

K said at November 8, 2007 3:27 PM:

IMO the worst possible course for dealing with energy costs, supplies, AGW, or pollution is insisting upon change in other nations. Or relying upon the fantasy of international agreements and happy faces.

I will speak only of China to simplify the text. Other nations are growing rapidly too and that compounds the problems.

I premise that energy costs and pollution are more important than CO2 and AGW. Rising costs and pollution are certain and upon us. We know how to deal with each. CO2/AGW is less certain and we don't know how to deal with it anyway.

China is going to do as they wish about these matters for several years. Selective tariffs are impossible with current world trade agreements. Politically there is no chance that those agreements will change; the entire world economy is based on open trade now.

China isn't going to flinch. One big reason is that the Chinese domestic market itself is growing fast. They can and will absorb a great deal of their production at home for the next decade. Other nearby asian markets are also growing rapidly. They are good customers of China and relatively indifferent to environmental concerns today. Asia itself will be the big market for the huge oil and gas fields within or abutting Asia. Fast growing economies also suck in foreign investment capital, much of which comes from better developed nations with lower growth.

China faces no prospect of sanctions from the UN or other international bodies. China has as much influence as we do in these usually hapless forums. Probably more.

Dismiss the fallacy that they need our technology to clean up or modernize. It is a big world and we don't run it. The technology of cleanup is not complex.

Now dismiss the fallacy that our lawmakers can create an energy policy that hurts no one. Energy already costs more and some feel it. It is going to cost a lost more and many people will feel it. And perhaps worse governments are going to tax more while we change our basic energy structures.

A sad consequence is that costly oil and gas will financially sustain several bad regimes for a long time. The reader can supply his favorite names.

There is a great deal we can do to improve our energy prospects. The most effective and urgent is a flat tax on fossil fuel. Five to ten percent for now. It is hard to evade, simple to collect, and conforms to trade agreements when we treat domestics and imports the same. Raising the price of fossil fuel encourages efficiencies, responsible behaviors, and energy alternatives throughout the economy.

Brock said at November 8, 2007 4:54 PM:

China and India are "export economies" in the sense that they trade 20% of their GDP globally, rather than the 5-10% that the USA and Europe do. A lot of that trade is with OPEC for energy, other developing nations for raw materials, and each other (IndiaChina trade is big stuff). All told, mabye 10% of their GDP is traded with the USA and Europe. Most of it is consumed internally or traded with nations that won't implement a carbon tariff any time soon. A US/EU Carbon tariff would amount to 0.01% of their GDP. And that number would go down as their economies grow wealthier and their at-home consumption and intra-asian trade become larger percentages of their activity.

That wouldn't do crap economically, and it would piss a lot of people off.

simon said at November 8, 2007 8:30 PM:

Carbon taxes are a bad idea. They are based upon the BELIEF (not fact) that we have a problem with rising CO2 levels. We do not have sufficent evidence for these beliefs to influence policy.

Further, any such tax creates more incentive problems. We already have bio fuels causing problems.

I do not want any so called experts creating more problemsas they engineer solutions to problems that do not exist.

Randall Parker said at November 8, 2007 10:27 PM:

simon,

Carbon taxes are a good idea because they will reduce pollution from burning coal. For a fairly small carbon tax we can shift most electric power generation to nuclear power.

Less coal burning means less particulates, less heavy metals, less mercury in particular.

Paul Dietz said at November 8, 2007 10:30 PM:

If I understood the article below, the amount of uranium contained in coal that gets released in the air (in the United States) from combustion per year, is higher than the amount actually used by the 100 nuclear plants in the United States:

You did not understand the article correctly. The uranium released into the air (that which is in the fly ash that escapes the electrostatic precipitators) is, according to the article, only about 1% of the uranium originally in the coal. Since coal is about 10 ppm U (more or less), the amount released is a small fraction of the natural uranium that needs to be mined to provide the fuel for a nuclear reactor of similar capacity.

Fat Man said at November 8, 2007 10:54 PM:

Let me see if I can straighten this out.

If you go this link and download the power point you will see that: NEI [Nuclear Energy Institute, which is a trade group] claims that: nuclear generated electricity has a production cost of $0.0132/kWh and that coal generated electricity has a production cost of $0.0237. Now they cite Global Energy Decisions which I take from their web site to be an information vendor, but NEI does not cite a specific document. Further they go on to say that this is: "Production Costs = Operations and Maintenance Costs + Fuel Costs". I am not sure that this includes the capital cost of the power plants, in which case, the cost comparison is misleading, because the capital cost of a nuke plant is higher than that of a coal plant.

In a previous thread I calculated (real roughly) the capital cost of a nuclear plant as between $0.023 and $0.035 cents/kWh. I also estimated other costs (such as fuel, operations, waste storage, and decommissioning) as about $0.0195/kWh. That would give a total cost of about $0.05/kWh.

In the NYTimes article linked above, there is a chart showing the cost of electricity from coal, natural gas, solar thermal, and nuclear power plants under various carbon tax scenarios. The chart shows nuclear power at around $0.065/kWh, pulverized coal at about $0.055/kWh before any carbon tax, and gasified coal about $0.065/kWh before any carbon tax$0.065/kWh. It shows natural gas generated electricity as being around $0.0655/kWh before any carbon tax if ng is $6/mBTU or $0.075/kWh before any carbon tax if ng is $8/mBTU. EIA says ng is now around $7.42/mBTU.

The NYT cited the chart to the Electric Power Research Institute, a nonprofit utility consortium, but not to a specific document. I cruised around the EPRI web site, and all I could find was this article: In Pursuit of a Nuclear Renaissance[PDF], which contains a chart on its fourth page labeled "Production Costs", which is cited to NEI!, but not a specific document. The chart appears to use the same production cost numbers I discussed above.

I think that the confusion was created by NEI which provided, what I believe is a misleading, production cost number that does not include capital cost. The total cost numbers used in the EPRI chart are probably more like the real cost comparison between energy sources.

As a final note I there was an AP article published 11/7/07 which began: "China will reject any agreement that calls for binding limits on carbon dioxide emissions that will replace the Kyoto Protocol".

Randall Parker said at November 8, 2007 11:13 PM:

Fat Man,

I've previously come across estimates for coal and nuclear power that put them as much as 2 cents per kwh different in price. But other estimates come out with a narrower range.

These estimates are bound to be ranges because coal's price varies, construction materials costs vary, interest rates vary, costs at different locations differ, and so on.

My guess is that natural gas prices are going to go up as US and Canadian natural gas production declines. So gas electric's cost will rise.

But I'm less clear on the future of coal prices. Right now the Chinese are buying coal from countries that export to Europe and this is driving Euro coal costs so high they are importing US coal. You can see how Asian demand can push up US coal prices. Enough to make coal electric more expensive than nuclear electric? Dunno.

Regulatory changes can boost coal electric costs too. Tougher regulations on mercury, particulates, and other pollutants will raise coal electric costs. Seems to me coal electric has bigger upside price risks than nuclear electric. Though nuclear electric also faces rising costs from rising Asian demand for steel and other materials.

North said at October 29, 2009 6:03 AM:

Brock: A minor point. The nuclear waste issue would/could/should be reduced significantly by small regulatory changes in the US. The vast majority of what we call nuclear "waste" is quite capable of being reprocessed/recycled into new fuel. At the moment with regulation and incentives that were instituted during the Carter years reprocessing was banned for a while and still remains uneconomic due to regulations that were put in place partially out of fears of proliferation (reprocessing does produce plutonium) and out of animus towards nuclear power (in the pre-AGW world a lot of the left were antinuclear fanatics for reasons both fair and unfair). In France for instance nuclear fuel is reprocessed and the actual unusable waste is currently stored in glass caskets under a single building about the size of a gymnasium. Personally I have found that the seriousness of people actually concerned about AGW (instead of merely seeking to use it as a stick against market economies) can be accurately gauged by how knee-jerkedly they reject or how vigorously they soft pedal the place of nuclear power in the solution to carbon emissions.

North said at October 29, 2009 6:04 AM:

Brock: A minor point. The nuclear waste issue would/could/should be reduced significantly by small regulatory changes in the US. The vast majority of what we call nuclear "waste" is quite capable of being reprocessed/recycled into new fuel. At the moment with regulation and incentives that were instituted during the Carter years reprocessing was banned for a while and still remains uneconomic due to regulations that were put in place partially out of fears of proliferation (reprocessing does produce plutonium) and out of animus towards nuclear power (in the pre-AGW world a lot of the left were antinuclear fanatics for reasons both fair and unfair). In France for instance nuclear fuel is reprocessed and the actual unusable waste is currently stored in glass caskets under a single building about the size of a gymnasium. Personally I have found that the seriousness of people actually concerned about AGW (instead of merely seeking to use it as a stick against market economies) can be accurately gauged by how knee-jerkedly they reject or how vigorously they soft pedal the place of nuclear power in the solution to carbon emissions.

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