The Energy Debate

A near nuclear meltdown at the Fukushima plant in Japan has restarted the debate about the safety of nuclear energy. It has also marked the third time that the Obama administration has faced a tragedy after announcing an expansion of his energy policy. The first was the Upper Big Branch mine disaster and the second was the BP oil spill, both occurring after Obama pledged financial backing for "clean coal" and sustained offshore oil drilling. Now, after Obama presented a energy future that included loan guarantees for Nuclear Plants in the US, Japan's Fukushima plant faced a meltdown after being damaged by a combination earthquake/tsunami. Bad luck, man.

But, the energy debate has evolved significantly since Obama's seemingly centrist pledges. There is a disconnect between the rhetoric in Washington and the real economics of energy which connects electricity consumption, auto use and our national debt. Let's take a look at the three main energy sources which Obama has decided to expand and the underlying message behind them:

1. Nuclear - Obama has pledged over $80 billion in loan guarantees from the Dept of Energy towards building more nuclear plants. Energy advocates have called this a beginning of a new "nuclear renaissance."
Reality #1: Nuclear is too expensive. Even as the regulatory process was streamlined (operating and construction permits combined), the cost to construct and maintain a new nuclear plant with even the most basic of cooling systems is prohibitively expensive. The author of a recent 2009 update of an MIT study on a nuclear future told the LA Times that those who tout nuclear see the future through "rose-colored glasses." According to him, its all about economics, and investors are shying away from financing new nuclear, even with heavy government subsidies. Politically, it sounds nice. But, those same Senators/Reps (as the Times points out) who support nuclear also reject any policy that would make nuclear cost competitive, like a carbon tax. In another twist of irony, those who support nuclear are trying to find ways to chop the budget of the DOE, the same government agency that is financing new nukes. So, either you put in a tax on carbon and up the subsidies (political non-starter) or you look for more economically viable energy sources
Reality #2: We have no viable way to store nuclear waste. The only place that was accepted was the Yucca Mountain reserve, and those plans were scrapped years ago. Even if nuclear became economically viable, the first thing we would have to look for is a way to stably store our waste or increase funding (yet another cost) to recycling the spent fuel rods.

Which brings me to...

2. Coal - Coal power accounts for about 50% of the US electricity generation. And, if you live in Los Angeles, it accounts for 44% of electricity consumption. The price of coal from the ground to the mouth of the mine is cheap. 40% of our coal comes from the Montana/Wyoming Powder River Basin. On average, the mine-mouth price is $12-13/ton. The Dept of the Interior recently announced coal leases of over 758 million tons for this area. Coal also comes from Appalachia, Alaska and Utah/Colorado area. Obama has pledged, as part of his "all-of-the-above" strategy to inject government subsidies towards building up "clean coal" and Carbon Capture and Sequestration projects.
Reality #1: Coal pricing does not take into account a myriad of externalities, all of which are reasonably quantifiable. Wha?! Translation: There are secondary effects of coal that are not often reported in the publicized "political price." These include the:
a. Environmental degradation caused by strip and underground mining
b. The health affect associated with mining and burning of coal (run in the tens of billions/yr)
c. The transportation costs of shipping coal (can be more expensive than the mining costs, esp. in the case of the PRB and Alaska)
d. Costs of pollution retrofits to reduce particulate, mercury, sulfur, nitrogen and carbon dioxide pollution from burning coal
e. Costs of maintaining coal waste ponds/landfills and preventing water contamination by any of the highly poisonous chemicals that are leached (Include, but not limited to Arsenic, Chromium(VI), Boron, Magnesium, Lead and Molybdenum).
f. Fines for coal mine/plant violations
Reality #2: Clean coal is a myth. From "cradle-to-the-grave," coal is a very dirty energy source. Strip mining, mountaintop removal and underground mining all make a myth out of the idea of "clean coal." Mining coal leads to high particulate emissions which can contaminate the water and the air and lead to chronic respiratory conditions, like the infamous pneumoconiosis (Black Lung). Mining also destroys the local environment and vital water sources by inundating them with waste. The transportation of coal creates hazards for local communities with particulate pollution from uncovered coal cars and diesel pollutants from train exhaust. When coal is burned, it releases toxins and waste that contribute to climate change and negatively affect the health of local communities (mostly low income or underrepresented). Toxins like mercury, nitrogen oxides, sulfur dioxide and particulate matter can cause cancer, neurological disorders, birth defects and chronic and short term respiratory illness.
Reality #3: Carbon Capture and Sequestration (CCS) is too expensive. Like nuclear, even with heavy government subsidies, plants with CCS are prohibitively expensive and investors are moving away. Example: The FutureGen plant, a joint venture between private utilities and the Dept of Energy has overshot its budget 3 times, and its still not operational. There are no economically viable pilot projects that even prove CCS can be done, even on a small scale (>50 MW). And, geological pore space to store tens of billions of tons of carbon dioxide does not exist. Even if it did, there is a chance that it will escape and contaminate local aquifers and drinking water sources.
Reality #4: The US is shying away from burning coal and the cost for a new coal boiler (even without CCS) is too expensive. The new announcement by the Obama Admin to bid out new coal leases is a plan to tout his international economic cooperation initiatives instead of his energy policy. The PRB has been a good driver of plans to export coal to China and India, where markets are growing rapidly (about 9%/yr even during the recession). Most of the coal mined in the PRB will most likely follow that trend. Costs and regulations in the US have made it difficult to add new coal boilers. For example, a 100MW coal boiler in WY added in 2009 caused the local utilities to raise their rates a whopping 26.6%. Coal plants are traditionally up to 10 times that size.

3. Oil/Natural Gas Drilling - In his trip to South America, Obama touted an energy partnership with Brazil to help it harvest its offshore oil reserves. With the BP spill set squarely out of sight and out of mind, the Dept of the Interior announced new offshore gas leases in the Gulf of Mexico. These leases will fill the US market with domestic oil/gas and stop our dependence on foreign oil. That dependence has hit consumers with $4/gallon gasoline.
Reality #1: Drilling for oil offshore will not make gas prices go down. There is not enough viably drillable reserves to affect the market. Without a highly stable supply, the price of oil will not be affected at all.
Reality #2: Drilling for oil offshore furthers our dependence. In a recent blog, I mentioned that we can achieve independence from oil. Oil and gasoline burned by automobiles, trains and planes are a main cause of global climate change, ozone and particulate pollution. Like with coal, taking into account these health costs, the cost of more oil drilling is much higher and avoids the bigger picture of moving towards a cleaner energy future. We also do not have enough domestic reserves to wean ourselves off of foreign oil. We supported regimes in the middle east because instability has caused the kinds of price volatility we have seen in the last couple decades. Increasing a dependency on oil, coupled with consumption growth only makes our oil demand higher and necessitates further foreign oil injections.
Reality #3: Natural Gas fracking causes your water to catch on fire. While it is cheaper than coal and nuclear, natural gas hydraulic fracturing releases pollutants into groundwater and makes local community water supplies undrinkable. Also, the cocktail of chemicals that companies inject in the ground, along with a helluva lot of water (scientific measurement - many thousands of acre ft), are exempt from the clean water act, clean air act and myriad of other regulations aimed at keeping drinking water safe. This exemption was muscled into the 2005 Energy Policy of the Bush Admin by Dick Cheney. This allows for the cocktail to stay unknown to regulators because it is a "trade secret." Only recently, have people found out what is in the cocktail by testing their drinking water after it caught on fire. I recommend seeing "Gasland" if you would like to know more.

When listening to the debate in Washington about Energy, take it with a grain of salt. The rhetoric means nothing, if a dose of reality is not included. We have heard about the coal mine explosion in West Virginia and Kentucky, the explosion on the Gulf Oil platform that killed 11 and soaked the beaches with 200 million gallons of crude, the flammable water in Dimock, PA from gas exploration, the radiation in Fukushima and the thousands of coal miner deaths in China. These events should show that we need to move away from expensive and destructive fossil fuels and towards a clean energy future.