Climate Change Agenda Benefits Nuclear Energy
U.S. Nuclear Future
President Barack Obama's 2009 pledge to cut greenhouse gas emissions 17 percent by 2020 is in serious jeopardy, as coal use and carbon emissions are up and forecasts have numbers growing in years to come.
In his speech at the University of Georgetown earlier this week, the President addressed the threat of carbon pollution and vowed to take swift action with policies that would curb the use of coal, improve efficiency in appliances, and boost clean energy investments.
The new steps include the Environmental Protection Agency (EPA) putting a cap on carbon pollution from power plants. There will be new efficiency measures for large trucks carried out by the administration. The Interior Department will install clean energy on federal property, less support will be given to coal projects overseas by the government, and energy use will be cut by appliances and in federal buildings.
The President rounded out his pledge by stating that expansion efforts would be made for nuclear power generation.
The plan doesn’t give any timetable, and there was no indication as to just how much the U.S. Environmental Protection Agency will curb power plant emissions, but he did call for a set of rules to be proposed by June of 2014.
If the President’s 2009 goal is still to be reached, coal-fired generation would need to be reduced by 21 percent and replaced by the most efficient natural gas plants available, according to Bloomberg. And if renewables were to take over, it would be about a 13 percent replacement in power supply.
How quickly these new rules take effect is what we’ll all be waiting for. Similar legislation in California took more than five years to implement.
The U.S. utility Edison International (NYSE: EIX) gave up on plans to reopen its San Onofre nuclear plant in southern California because of the state’s strict regulations.
Other reactors, like Crystal River in Florida and Kewaunee in Wisconsin, are being shut down this year because they’re not economically viable.
The U.S. shale boom has sent gas and electricity prices down so low that some plants can’t operate, and the idea of building new plants is unattractive.
Exelon Corp. (NYSE: EXC), the biggest U.S. nuclear power producer, is one nuclear provider that is jumping for joy this week. It's been patiently waiting for a word from its president that would pay off in a big way.
Exelon shifted focus towards a low-emissions strategy four years ago when the President announced his 2009 stance on climate change. It then proceeded to promise $1.1 billion in annual earnings to its investors on hopes of new climate legislation.
Well, that legislation failed to win approval in both houses of Congress, and the company’s shareholders have been paying the price ever since. The Chicago-based company has been lackluster in the Standard & Poor’s 500 Index for the past five years, according to Bloomberg, and it has lost $30.5 billion of market value since 2008 on falling natural gas and wholesale electricity prices.
But this week, those who decided to stick it out are getting a huge boost in confidence on President Obama’s announcement.
Exelon is one of the very few companies that is ahead of the game with its 17 nuclear reactors and 44 wind-powered projects that reap the rewards of carbon dioxide regulations.
The new limitations will likely drive up the price of electricity by making coal-fired plants too expensive to operate or even run at all.
Exelon emits just a quarter the amount of greenhouse gases as its next cleanest competitor with the same amount of power, so once these new policies are implemented, everyone else is going to stick out like a sore thumb. And when it comes to nuclear, Exelon is far above the competition.
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Coal, which has been on the upswing as of late, is not going to benefit from the President’s new policy – not one iota.
Producers like Peabody Energy Corp. (NYSE: BTU) and Arch Coal Inc. (NYSE: ACI), while attacking the plan this week for taking away jobs and harming the economy, they also fell to their lowest levels since the recession sent stocks tumbling in March 2009.
Bottom line: the worst things are for coal, the better they are for nuclear.
Natural gas is the low-cost option with the shale boom taking place, but it also emits more carbon dioxide and puts commodity price risk on the U.S. energy supply. It might be a life saver in the short-term, but it’s not the answer for decades down the line.
Other winners that will come out of this week’s presidential announcement will be wind power operators like NextEra Energy Inc. (NYSE: NEE) and First Solar Inc. (NASDAQ: FSLR), a builder of utility solar projects.
Nuclear will be strong and prove to be an integral part of the U.S. energy mix in the foreseeable future, and by doing so, it will put the U.S. back on the right track to cleaner burning energy.
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