US CO2 emissions at mercy of economics

Tuesday, 29 April 2014 An acceleration in nuclear power plant retirements over the coming decades would lead to an increase in anticipated carbon dioxide emissions, according to futuregazing scenarios released by the US Energy Information Administration (EIA).

Contributing to the EIA's Annual Energy Outlook 2014, which is being released in stages, Implications of accelerated power plant retirements looks at the effects of an accelerated rate of closure of both coal and nuclear plants going forward to 2040. While an increase in the closure rate of coal-fired power plants would lead to a significant reduction in predicted CO2 emissions, faster-than-expected closure of nuclear units would lead to a 4% increase in emissions, the study finds.

As the EIA study points out, nuclear generation at four US nuclear power reactors – San Onofre 2 and 3, Kewaunee and Crystal River – has already been brought to an end because of operator decisions, with Vermont Yankee expected to end generation this year and Oyster Creek in 2019. "Retirements often are the result of unique circumstances, but some owners of nuclear power plants have voiced concerns about the profitability of their units, sparking discussion of possible additional nuclear retirements," the study notes. It therefore attempts to evaluate the potential impacts of plant closures prompted by economic considerations.

The Accelerated Nuclear scenario looks at the likely effects of an environment where operating and maintenance (O&M) costs increase by 3% per year, prompting some plant owners to close their units before the end of an operating life which the scenario assumes is limited to 60 years. No additional nuclear capacity, beyond that which is already under construction today, is added to the US generation mix. The scenario assumes the resulting shortfall in generating capacity would primarily be met by a 13% increase in CO2-emitting natural-gas fired generation and a 5% increase in renewables which are assumed to be non-CO2 emitting. The findings are compared to a Reference case scenario predicated on currently planned nuclear plant closures and an assumption that all currently operating US plants will receive a regulatory approvals for a first, and if relevant, second, 20-year lifetime extension enabling them to operate beyond 60 years.

According to the study, these assumptions would lead to the retirement of 42 GWe of nuclear capacity in the period to 2040, with most of the plant closures taking place later in the projection as plants reach a 60-year operating lifetime. Estimated electricity sector CO2 increases are some 85 million tonnes higher in 2040 than under the reference scenario, with the retail price of electricity projected to be nearly 4% higher, at 11.5 cents per kWh.

Coal crash

Coal continues to provide the largest share of the US generation mix under EIA projections (until 2034, when it is overtaken by gas), but coal-fired capacity could also face early closure prompted by adverse profitability - for example from the costs associated with complying with regulatory requirements such as the installation of scrubbers or filtering systems. The EIA's Accelerated Coal Retirements case, like the nuclear scenario, assumes an increase in O&M costs of 3% per year from 2012 to 2040.

The replacement of the lost coal capacity by natural gas, which emits significantly less CO2 than coal, and renewables means that the accelerated coal closure scenario would see a 20% decrease in emissions over the Reference scenario. A third scenario, in which both coal and nuclear plants close at an accelerated rate sees 2040 emissions some 14% below Reference case levels.