Nuclear looms large in first
My August 20 post talked about the Regional Greenhouse Gas Initiative, a coalition of seven northeastern U.S. States that has started the first cap-and-trade system for electricity generation–related greenhouse gases (GHGs). I said the RGGI had set an ambitious cap of 121 million tons per year. Actually, the cap is a bit more realistic. I mistakenly compared the 121 million tons with published figures from the Energy Information Administration, which indicate that power generators in the seven RGGI states emitted 142 million tons in 2004.
According to figures from the Environmental Protection Agency (EPA)—which are more credible and accurate, says one of the RGGI’s coordinators—the seven states emitted 115 million tons in 2004. Power generators in the RGGI have, collectively, 5 million tons of room between now and 2009.
So how strict is the 121-million-ton cap? Much will depend on the weather. A hot summer, such as that of 2005, produces higher demand for electricity. Preliminary data suggest RGGI states collectively emitted more than 121 million tons in 2005. If extremely hot summers become the norm, as many predict they will, fossil generators covered by the RGGI will be under a lot of pressure to keep their emissions below the cap.
This puts the Constellation Energy opportunity into clearer perspective. As I mentioned, Constellation will likely apply for a license to build a 1,600 megawatt nuclear reactor at one of its existing plants in
Depending on how Maryland and other RGGI states allocate carbon allowances—it could be on the basis of generator output—and on how much electricity Constellation generates in a given year, and from what sources, the company would likely emerge from a normal year in possession of surplus emission permits which it could then sell. The value of emission permits will of course be ultimately determined by the proposed permit market. But with modern risk management techniques, it might be possible to forward-purchase and forward-sell emission rights. Techniques for valuing these rights are being developed right now, by European market players drawing on the rich data sets from current and recent ETS operations.
Combined with support from the
At July’s G-8 summit in
If he were to frame this properly, Harper could show the pro-Kyoto crowd how federal support for nuclear is the biggest step Canada has yet taken toward addressing climate change and clean air—bigger by far than any step his two most recent predecessors ever took, or even contemplated. It could help him win votes in
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