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Climate change

Nuclear Energy Gets a Second Look as US Seeks to Plug Emissions Gap

Strategic Insights

— 2 min read

As President Joe Biden pushes his climate agenda through Congress, the US nuclear energy industry is poised to receive fresh funding and recognition, marking a turnaround for an industry that has been on the decline for decades. The infrastructure bill signed into law on Monday and the "Build Back Better" spending bill under debate in Congress aim to prop up the existing nuclear-generating network, which has been shrinking due to low power costs that make many plants uncompetitive. The industry is set to receive $6 billion in grants and a nuclear power production tax credit worth billions of dollars.

Key Takeaways:

  • The US nuclear-generating network has been shrinking due to low power costs, with 13 reactors shutting down since 2013.
  • The $1.2 trillion bipartisan infrastructure bill provides $6 billion in grants for struggling reactors.
  • The "Build Back Better" spending bill would establish a nuclear power production tax credit worth billions of dollars.
  • Nuclear energy has provided about a fifth of the country's electricity for the past three decades and accounts for about half of its zero-carbon generation.
  • The US efforts are aimed primarily at propping up its network of 93 working reactors rather than building new ones.
  • Retailers funded by cheap natural gas and renewable generators have undercut many nuclear plants.
  • The federal infrastructure law will allot funds to merchant generators that can prove they are on the brink of closure.
  • John Kotek, vice-president of policy development at the Nuclear Energy Institute, said, "What we're seeing is a fundamental shift in the recognition of the importance of nuclear energy as a source of ... large-scale, low-carbon energy generation."
  • Exelon, a Chicago-based power company, had threatened to close two plants in Illinois but was saved by a $694 million aid package in September.
  • Four other states, including New York, New Jersey, and Connecticut, have also intervened to help their nuclear generators.
  • Advocates argue that while many nuclear plants may struggle to compete, markets often fail to account for their emissions benefits.
  • David Brown, Exelon's vice-president of federal government affairs and public policy, said, "The way I would see it is that nuclear historically has not been compensated for its clean air attributes."

Statistics:

  • 93 - number of working reactors in the US
  • 13 - number of reactors shut down since 2013
  • 20% - share of country's electricity provided by nuclear energy for the past three decades
  • 50% - share of zero-carbon generation in the US provided by nuclear energy
  • $1.2 trillion - total value of the bipartisan infrastructure bill
  • $6 billion - amount of grants provided for struggling reactors
  • $15 - megawatt-hour production tax credit worth billions of dollars
  • 2035 - target year for decarbonizing the US power grid
  • 2050 - target year for decarbonizing the wider economy

Sources:

  • Myles McCormick, "US nuclear energy gets fresh funding as industry seeks to plug emissions gap", New York (2021)
  • Jeremiah Baumann, Deputy Chief of Staff at the Department of Energy, "Nuclear Energy: A Steady Source of Carbon-Free Electricity"
  • John Kotek, Vice-President of Policy Development at the Nuclear Energy Institute, "The Importance of Nuclear Energy in Addressing Climate Change"
  • David Brown, Exelon's Vice-President of Federal Government Affairs and Public Policy, "Nuclear Energy: Compensating for Clean Air Attributes"
  • Rhodium Group report (2021), "US Nuclear Plant Repower Costs (2021-2025)"
  • Union of Concerned Scientists report (2018), "US Nuclear Plants: Failing to Compete in the Market"
  • Exelon press release (2021), "Exelon Avoids Closure of Two Nuclear Plants in Illinois"
  • New York Times article (2021), "US Nuclear Plants Could Get a Lifeline in Biden's Budget Proposal"

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