Federal support for
There has been a lot of speculation in recent months about exactly how the U.S. Energy Policy Act (EPAct) of 2005 will support new nuclear projects in that country. The EPAct introduced a series of measures—construction delay insurance, loan guarantees, and power production tax credits—designed to underpin a new wave of nuclear construction.
As I pointed out in some recent posts (August 20 and August 27), the RGGI cap-and-trade system for electricity-related GHGs, involving seven northeastern
However, there is now some question as to whether this, in combination with the support measures in the EPAct, gives an unfair competitive advantage to nuclear over fossil generation. This question will acquire greater urgency if and when generation source becomes an issue—and a selling point—as power hungry jurisdictions enter into new supply agreements, especially if these involve trade between covered and non-covered jurisdictions.
For this reason, I predict the emergence of a further form of integration in power companies: integration based on generation type. Because of carbon trading, generating companies’ output will be valued and marketed at least in part on the basis of its emission intensity, measured in grams emitted per watt-hour. This will push up the cost of operating coal-fired plants, thereby removing at least in part their current cost advantages. Fossil-dominated generating firms that operate in cap-and-trade areas—like NRG Energy, which has 6,800 megawatts of fossil-fired capacity in the RGGI—will acquire, or be acquired by, firms with nuclear fleets.
How will this play out in
In this configuration, who would and should get credit for the carbon-free electricity that Bruce Power generates in a future cap-and-trade system?
Difficult question, but not unanswerable. The critical thing is that the federal government should support
The problem is the partisan political landscape in
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