Smoking gun part 13 – Energy Reorganization Act of 1974
Many observers of the nuclear industry will point to the disestablishment of the Atomic Energy Commission as one of the major turning points in the development of nuclear power as…
Conventional wisdom tells us that “Environmentalists” worried about one or more of the below complaints have influenced world opinion and encouraged the current negative investment perception that surrounds new nuclear power plants:
There is another explanation for the widespread, well-endowed effort to hobble nuclear energy development. The people with the most means, motive and opportunity for hobbling the development of nuclear energy are the people who are involved in the discovery, extraction, transportation, refinement, storage, distribution, and financing activities that supply the world’s fossil fuel addiction. Both nuclear fission and hydrocarbon combustion produce the same intermediate product – controlled heat – and both can be used in similar machinery to convert that heat into useful work or high value products like electricity.
Unlike unreliable, but politically acceptable soft energy sources like wind, solar and geothermal, nuclear fission has successfully taken markets away from fossil fuels. It has increased the overall supply of accessible energy faster than demand, and has worked to increase the independence of customers from the influence of fossil fuel suppliers. Though nuclear energy has been beneficial for customers, it has harmed competitive energy suppliers. There should be no surprise in learning that individuals, corporations, and even governments have taken action to mitigate or eliminate the threat that nuclear energy poses to their wealth and power.
Some may protest that soft energy sources like wind turbines, solar panels and geothermal steam plants pose the same threat, but that assertion is illogical. Humans have understood that there is energy that can be captured in the sun and the wind for thousand of years, but technically competent designers have nearly unanimously abandoned attempts to do so as soon as they found more readily accessible and reliable sources like wood, coal and oil. Interestingly enough, the established energy industry often spends money to promote the use of unreliable, weak alternative energy sources like wind or solar. They tell people they are looking into the future; I think they are simply using distraction techniques, realizing that solar and wind will have little to no impact on the demand for their profitable product. (Note, look down the page to see the full page ad that included “Solar, Not Nuclear” clip here.)
As late as December 1942, no one was sure that it was possible to split atomic nuclei to release the energy contained there. After December 2, 1942, atomic chain reactions that could release 2 to 4 million times as much energy per unit mass as hydrocarbon combustion became well known throughout the scientific community. Nuclear energy density offers the potential for concentrated, reliable, and low cost energy. Energy practitioners understand that energy dense fuel can lead to a greater quantity of energy output per unit of invested material capital.
In January 1955, a mere 13 years after the first chain reaction, the USS Nautilus reported that it was “underway on nuclear power.” Within a few years, the USS Nautilus had famously transited from Hawaii to England by way of the North Pole. By 1963, less than a decade later, General Electric told the world that it had designed a nuclear power plant that could produce electricity for a price that was competitive with coal and oil, even though oil cost less than $2 per barrel at the time.
Here is a quote from Bertrand Goldschmidt’s The Atomic Complex: A Worldwide Political History of Nuclear Energy: (p. 327)
“The Oyster Creek sale received wide publicity – President Lyndon B. Johnson was quick to call it an economic breakthrough – which brought about a sudden awareness of the viability of atomic power stations and a massive start up of nuclear electricity production, but also aroused the antagonism of the coal producers.”
Here is another one that shows how the fossil fuel industry recognized the competitive threat from nuclear energy developments. (p. 329)
“During these early years of the American “nuclear boom,” some companies even considered abandoning coal and oil and burning only uranium in their new power plants. A particularly noteworthy event was an order placed by the government-owned Tennessee Valley Authority for one of the larger nuclear power stations to be built in the very heart of American coal-producing country.”
In the mid 1960s, the world’s single largest oil customer was the United States Navy, but that customer was rapidly weaning itself from oil by building nuclear powered submarines, cruisers, destroyers and aircraft carriers. There were a few demonstration nuclear powered commercial ships in operation, including the NS Savannah in the US and the Otto Hahn in Germany. Here is how Mr. Goldschmidt described his ride on the NS Savannah in 1964. (p. 322)
“From the traveler’s point of view – or so it seemed to me during those few hours – an atomic ship differs from a conventional ship only in its greater acceleration power and in having no funnel; the difference seems no more than that between an electric and a steam train.”
In nearly every segment of the energy market outside of personal automobiles, nuclear power was making an impact and capturing markets held by fossil fuel.
In the electrical power market, nuclear plant sizes grew as rapidly as the order book. An increased number of ever-larger units indicated real market troubles ahead for coal and fuel oil suppliers. According to Goldschmidt (p. 331)
“By the end of 1973, the cost of such a
(1200 MWe nuclear) station was in excess of half a billion dollars. This was higher than the cost of a conventional power station of similar capacity although, with fuel costs during the lifetime of the plant (estimated at approximately 30 years) clearly below those of the corresponding coal or fuel oil, the balance remained in favor of the nuclear kilowatt-hour.”
(Note: The assumption of a 30 year operating lifetime was conservative and chosen to modestly make the point about nuclear power’s lifetime fuel cost advantage. That advantage grows the longer one assumes that a plant will operate. Most of the plants that were built in the period from 1960-1996 have already received license extensions that will allow them to operate for at least 60 years.)
“However, due to the falling prices of coal and fuel oil throughout the 1960s, no doubt partly as a reaction to the nuclear breakthrough, (emphasis added) the price difference between the nuclear and conventional thermal kilowatt-hour would probably have turned in favor of conventional energy. That this did not happen was due to the fourfold increase in oil prices in late 1973, which once again and indisputably tipped the scales in favor of electricity derived from the fission of uranium.”
In 1973, the Arab Oil embargo successfully demonstrated to the developed world that energy was such a valuable commodity that customers would pay three to four times as much for it as they did the year before without reducing their consumption.
That event put an unprecedented amount of money into the coffers of oil producing companies and exporting nations. It encouraged France, a famously independently minded country, to declare that it had no coal, no oil, no gas and no choice but to develop nuclear energy. In contrast, the nascent anti-nuclear movement gained strength and financial support in the rest of Europe and in the United States. That organized effort, with leading groups like the Clamshell Alliance, the Critical Mass Energy Project, and Greenpeace, began loudly questioning safety, security, nuclear weapons proliferation and used fuel storage schemes.
During the Carter years, nuclear was put at the bottom of a list of alternative power sources while switching from oil and gas to coal received official encouragement. Nuclear energy treaded water during the vocally supportive Reagan administration, but their action to turn the Nuclear Regulatory Commission into a user fee generator whose costs were paid through fees on licensees and new project applications that discouraged risk-taking investment. (The saddest part about the “fee for service” decision is that the NRC still does not receive its money directly. Instead the NRC has to wade through a politically charged annual appropriation cycle that requires more than two years of advance work to obtain an increased budget. It cannot respond nimbly to increases – or decreases – in the demand for its regulatory services.)
Through dedicated commercial marketing efforts, political lobbying, and petroleum industry subsidized financing arrangements for independent power producers, natural gas became the fuel of choice for new electric power plant development throughout the 1990s and into the early 2000s. That trend slowed considerably when increasing demand without increasing supply caused a methane gas price escalation that changed the competitive landscape. Electric power producers did not stop building new gas plants until after energy dependent industries and those industries that use methane as an industrial raw material moved to locations outside the US where gas was cheap and plentiful. The voracious demand for methane gas by electric power producers permanently eliminated a large number of good manufacturing jobs here in the US.
With the passage of the Energy Policy Act of 2005 and the continued increase in the cost of natural gas and coal, nuclear projects attracted significant investment interest, with approximately 32 new plant projects reaching the stage of informing the Nuclear Regulatory Commission that they needed a place on the calendar for a license application review. That interest has largely dissipated as the price of gas has fallen and as the gas industry has begun a well-funded advertising and lobbying campaign to convince decision makers that new technologies have made gas so abundant that low prices – which are fundamentally the result of demand collapse during a deep recession – will remain in place for decades to come.
The message in ads, blog posts and news articles is that gas is so abundant, cheap and clean that it is a “game-changer” which provides a rapid return on investment in both financial and greenhouse gas emission reduction. The underlying message is that there is no need to invest the time and effort required to restore our nuclear power plant construction industry.
What casual observers fail to notice is that the natural gas drilling rigs whose continued success is so important in making those newly exposed resources available to the market are no longer actively drilling. Last week there were less than half as many drilling rigs in operation in the US as there were in the summer of 2008 when natural gas sold for $13 per million BTU compared to today’s price of about $3.50 per MMBTU. Many of the crews that operated those rigs and provided the technical knowledge required to reach and exploit tight shale gas deposits are no longer employed.
Current low prices in the US may soon disappear if new nuclear plants do not produce electricity and the economy begins to recover. Of course, the gas industry would love to operate in a market with higher prices as a new normal. They have intense economic motivation to do all they can to slow the development of new nuclear power plants that might compete with their product’s popularity as the “cleanest fossil fuel”.
Just as they did in the first Atomic Age, coal and oil industries have similar motivation, similar access to politicians and similar access to the media. Over the past several decades of anti-nuclear activity there have been plenty of people who willing stand up and claim to have succeeded in their efforts to slow nuclear power development, but those with the real access to powerful decision makers, the real money to buy advertising and favorable publicity and the real motives to hamstring a competitor have been more reticent. They are quite willing to let others bask in the spotlight as they truck their profits to the bank.
Note: This post was originally written at the request of another energy focused blogger interested in having me write something about the history of the anti-nuclear movement. It did not fit his needs; he wanted something that focused on what he called “historic opposition of “Big Environmentalism” to nuclear”.
(Graphic added and some minor editorial corrections made on February 9, 2011.)