Atomic Insights

Atomic energy technology, politics, and perceptions from a nuclear energy insider who served as a US nuclear submarine engineer officer

Above board competition in energy markets finally emerging. API Ohio pushing for nuclear shutdowns

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The Ohio division of the American Petroleum Institute (API Ohio) recently issued a press release urging members of the “Ohio legislature to reject legislation that would subsidize nuclear power companies, and called on corporate supporters of the legislation to stop misleading Ohio consumers with false information on the economic and environmental consequences of shuttering nuclear power plants in the state.”

The Wall Street Journal (see Oil-Gas Lobby Opposes State Subsidies for Nuclear Power Producers) and Environmental Progress (see Big Oil is trying to kill clean energy in Ohio and Pennsylvania. Here’s who will pay the price.) have taken note of the API’s activities in Ohio.

This is one more example of what might be an important trend in the long running conversation about energy supply and consumption. It appears that at least part of the oil and gas industry has decided it’s time to openly battle nuclear energy so that it can capture additional energy market share.

Confrontation Isn’t Working, Let Surrogates Get The Attention

The coal industry, never very skilled at public relations, invested resources throughout the 1960s in a lobby group called the National Coal Policy Council (NCPC) . That group, an uneasy alignment that included coal mining companies, coal miner unions, railroad companies, coal mine equipment companies and coal burning utility companies, directly challenged the federal government’s programs designed to make the peaceful atom an economically viable competitor.

Unsurprisingly, NCPC’s efforts didn’t work very well. It wasn’t easy to convince Americans and their elected officials to stop investing in the new thing – atomic energy – to protect King Coal, the railroads that carried the coal and the unions that occasionally held the entire country hostage during strikes. By 1970, perhaps partly as a result of acquisitions of coal companies by the more PR savvy oil and gas industry, investments in the NCPC fell off. The organization was disbanded in 1971.

Though it’s not easy to find meeting minutes or to point to a specific strategy document with clear talking points, it’s reasonable to assume that there were numerous thoughtful discussions in the 1960s among skilled propagandists about the best way to respond to the rapidly growing threat from nuclear energy.

The results of those discussions can be discerned by looking at that actions that are a matter of historical record.

Since the late 1960s and early 1970s, most of the voices associated with what I generally refer to as “fossil fuel interests” have been notably quiet about nuclear energy. If possible, they have avoided the subject entirely, neither voicing support or opposition in public. Instead of actively engaging in the almost-expected business behavior of criticizing and opposing market competitors, they have followed a strategy of allowing surrogates to be the public faces of the opposition to nuclear energy.

Handicapped race - nuclear vs methane

Handicapped race – nuclear vs methane

As antinuclear surrogates successfully waged battles over safety, nuclear waste, siting, financing, regulations, radiation protection and exports constraints justified by carefully stoked fears of nuclear weapons proliferation, the fossil fuel industry took advantage of a slowing competitor. It gladly supplied replacement fuels and power plants whenever and wherever nuclear growth was stymied. It also enjoyed several periods of substantial market pricing power that stocked its coffers with enormous financial and political resources.

It also invested substantial resources in technological improvements that improved its ability to produce higher quality products in ever increasing quantity.

The nuclear industry, started by engineers, scientists and business developers used to working on government or monopoly utility projects, didn’t recognize the competitive landscape. It was poorly equipped to fend off the accumulating burdens, partially because it was used to the customers picking up any additional costs imposed by changing rules and requirements.

During several periods of time, the nuclear industry accepted so many burdens that nearly all of its capital was expended in reacting to criticism by adding complex systems that were often designed to be idle nearly 100% of the time. Browns Ferry, Three Mile Island, 911 and Fukushima were all used to justify efforts that interfered with numerous improvement initiatives that would have lowered costs and increased production capacity.

Nuclear Industry May Eventually Benefit From More Honest Competition

Now that groups like API Ohio, the Pennsylvania Independent Oil and Gas Association and Marcellus Shale Coalition have decided to openly engage in opposition to nuclear energy, perhaps the industry will take the steps necessary to mature and prosper.

Here is a partial list of suggestions. Feel free to add more in the comment section.

  • Recognize that energy is perhaps the world’s largest and most competitive commodity enterprise
  • Recognize that all energy sources compete against each other, sometimes through a degree of separation or two
  • Understand that in commodity markets, cost is a key differentiator
  • Even in commodity markets, quality and other characteristics vary. Suppliers have to invest resources in convincing customers differences exist and are worth higher prices
  • Understand that hypothetical improvements in hypothetical damage frequency probabilities don’t produce exciting sales literature
  • Recognize that a positive vision of a future with almost unlimited quantities of affordable, clean energy can excite people enough to become self-fulfilling prophesy
  • Fight back against the deceptive tactics being employed even as the true competitors begin to come out of the shadows

I understand what Alex Epstein calls “The Moral Case for Fossil Fuels.” I am an unabashed and unashamed consumer who enjoys the good things that abundant availability of hydrocarbon power gives to society. Fossil fuels can be extracted, transported, refined, distributed and consumed in ways that harm the environment less than most non-nuclear alternative for producing an equal amount of power.

Since our current world population has so many people who have cannot access or afford the reliable energy that enables the kind of comfortable lifestyle taken for granted in the mid to upper echelons of developed countries, there is a lot more room for increased energy consumption than most current models predict.

If energy suppliers would invest more effort in growing the overall size of the pie they would have less reason to kneecap each other. Instead, they now fight over a slowly growing market that is full of customers that might be interested in buying more power to improve their lives and control their living conditions. Unfortunately, the energy industry has invested a big chunk of its communications resources convincing people to feel guilty about using its valuable and lifestyle enabling products.

Pennsylvania Independent Oil and Gas Association and Marcellus Shale Coalition join antinuclear “citizens group”

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The Beaver Valley (PA) Times has published an important article titled Group forms to oppose bailout of struggling nuclear power industry. That article needs to be read and retained by those of us who believe that existing nuclear plants are important pillars of the U.S. electricity supply network that is often called “the grid.”

The article, if read with a critical eye and an understanding of business tactics and strategy, contains valuable information about the interest groups that are banding together to oppose any effort to treat nuclear generated electricity like the high-quality, emission free-product that it is. It qualifies as a smoking gun because it openly lists a couple of trade groups representing competitive suppliers with a strong interest in permanently driving nuclear generators out of the market.

Citizens Against Nuclear Bailouts said Tuesday it stands in opposition to “any legislative effort to require consumers to pay higher energy rates to bail out an uncompetitive nuclear energy industry.”

The coalition comprises groups including the Pennsylvania Manufacturers Association, AARP, Pennsylvania Independent Oil and Gas Association and Marcellus Shale Coalition.

The coalition that the interest groups have formed is deceptively named. It’s not a citizens’ group.

Though AARP might qualify as representing citizens, few reasonably intelligent and politically aware people would classify the Pennsylvania Manufacturers Association, the Pennsylvania Independent Oil and Gas Association or the Marcellus Shale Coalition as representing citizens.

It would be a good bet to predict that future references to the group may not include open recognition of the fossil fuel lobby groups with a direct business interest in opposing temporary financial assistance that keeps struggling nuclear plants from leaving the market while under severe pricing pressure.

Though I have not studied any proposals for Pennsylvania, I suspect they will be modeled on the Zero Emission Credit programs that have been implemented in New York and Illinois. Those programs have the effect of putting a floor under the prices paid to nuclear generators; when wholesale market prices return to more normal levels, the subsidies phase out.

Though you will probably never hear this outside of a closed door conference room, I suspect that there have been conversations about the need of gas interests to band together in a “grass roots” effort to convince the public and the politicians to take action. ZECs interfere with the price war against competitive electricity suppliers.

If the ZEC keeps the nuclear plants operating, gas suppliers will not achieve their goal of increasing their market share and restoring their pricing power.

Replacing 1000 MWe of nuclear generated electricity would require burning about 180-200 million cubic feet of natural gas every day. That is enough to make a small, but steady difference in the supply/demand picture, both during the “injection” season and the storage consumption season when the demand for space heating kicks in. In addition there is no doubt that burning gas produces far more air pollution and CO2 than the emission-free operation of a nuclear plant.

The natural gas industry has done a terrific job in marketing its product as a lower carbon and lower pollution alternative to coal, but it has logically never tried to make a cleanliness case against nuclear. It would be a complete failure or fabrication if it tried.

Once nuclear plants are forced to close, natural gas prices will inevitably rise. Profits will improve for the suppliers. There will be a ripple effect that results in some distributed, often temporary job growth associated with new drilling and new pipeline infrastructure.

The immediate negative effects of the closure will be concentrated in the communities near the power plant and especially in the families of the skilled workers who are displaced. There is little doubt that most of the younger workers will be able to eventually find other work, but it will often require a disruptive move, a cut in pay and a reduction in seniority. Workers who are closer to retirement might be forced to become Wal-Mart greeters if they do not have sufficient savings to actually retire yet.

Communities near closed nuclear plants rarely recover the pleasant, steady middle class prosperity that they enjoyed while the plant was operating.

Instead of hosting a valued, productive, clean energy production plant that pays a big chunk of the local tax bill, the community becomes the home to a white elephant on a large site. What was a terrific, infrastructure-rich power plant site becomes a cluttered clean-up chore with massive foundations and stored materials that inhibit reuse.

I learned last week during my trip to Pittsburg that Pennsylvania is the second largest energy exporting state in the U.S. Texas is the only one that sells more energy in the form of coal, oil, gas and electricity to its neighboring states. Those products help bring money into the state that is then used to purchase those products that the state is not so skilled or experienced in producing.

In contrast to Texas, Pennsylvania exports all four major energy products; Texas produces little coal and has a grid that is virtually walled off from the rest of the country.

It would be better for the state’s economy to resist interest groups seeking short term profits by increasing the in-state demand for natural gas. Perhaps there is a viable way to convince oil and gas suppliers that Beaver Valley and other nuclear plants should be seen as partners in the effort to increase exports of valuable Pennsylvania products. Such cooperation capitalizes on the state’s core competencies and brings a growing stream of outside money into the state.

Natural gas burners file suit challenging fairness of New York Zero Emission Credts

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A coalition of electric power producers that operate natural gas-burning generation plants have filed suit in the U.S. District Court Southern District of New York. They are challenging the New York State Department of Public Service’s (NYSDPS) recently enacted Zero Emission Credit. Competition wasn’t designed with customers in mind The lawsuit filing document Indicates that […]

Corporate environmental contributions: Greenwashing or worse?

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Ken Silverstein posted a thought-provoking piece on Forbes.com titled Being ‘Good Neighbors’ And Staying Out Of Print Motivates Companies To Be Environmental Stewards. The following quote stimulated me to provide a slightly different interpretation and expansion on the reasons why companies and investors large and small are often actively involved in the environmental movement. And […]

Rockefeller Foundation’s hefty influence on education. Propagating fears about health effect of low dose radiation

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In my continuing efforts to produce a narrative about the way that the public was taught to be afraid of ionizing radiation, no matter how low the dose, I came across an interesting write up in the Rockefeller Foundation Annual Report for 1958. Here is some important temporal context. The Foundation Board of Trustees asked […]

More financial motives for UBS’s effort to encourage nuclear plant retirements in Northeast

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Yesterday, I wrote a quick post that linked a recently issued UBS report’s negative views about the economic viability of merchant nuclear power plants in the US to UBS’s large portfolio of troubled loans to companies involved in various aspects of the natural gas extraction technique known as “fracing” (alternatively spelled as fracking in many […]

Why would UBS root for Entergy’s Merchant Nukes to Close?

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UBS Investment Bank holds a large portfolio of loans to companies involved in extracting natural gas using the combination of horizontal drilling and hydraulic fracturing. Because of the healthy fees associated with generating those loans initially, UBS, along with several other large investment banks, supported drilling programs for production that was not justified by the […]

How would a Rockefeller crony react to Eddington’s vision of subatomic energy?

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Recently an Atomic Insights reader shared a document that inspired a new line of thinking about the chronology of atomic energy development. The inspirational document was a PDF copy of a chapter titled Little Red Schoolhouse from Freeman Dyson‘s memoir, Disturbing the Universe. It was a brief tale about a memorable burst of creativity in […]

Stanford climate scientists promote 100% renewable revolution using natural gas money

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We’ve been repeatedly told that 97% of climate scientists agree that CO2 emissions from human activity are a major cause of climate change. Scientists who question that assertion are villified as “climate change deniers” and marginalized as representing a fringe point of view. They’re frequently accused of being paid by fossil fuel interests. Politicians, journalists […]

Following the money: who’s funding Stanford’s Natural Gas Initative

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A few days ago, I wrote about Stanford University’s new Natural Gas Initiative (NGI) and described why I thought the existence of that program helped to explain why some prominent Stanford professors — like Mark Z. Jacobson — actively promote an unrealistic energy supply system dependent on 100% renewable energy. It’s my contention that the […]

Stanford’s University’s New Natural Gas Initiative

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It is virtually impossible to get an educational institution to understand something when its revenue depends on its audience not understanding it. – Rod Adams, Stanford’s New Natural Gas Initiative, Atomic Insights, May 30, 2015 Aside: In case the allusion doesn’t work for you, the above is deliberately structured to align with a quote from […]