Restricting nuclear power has little effect on the cost of climate policies

ScienceDaily (Oct. 1, 2012) — By applying a global energy-economy computer simulation that fully captures the competition between alternative power supply technologies, a team of scientists analyzed trade-offs between nuclear and climate policies. Strong greenhouse-gas emissions reduction to mitigate global warming shows to have much larger impact on economics than nuclear policy, according to the study. Incremental costs due to policy options restricting the use of nuclear power do not significantly increase the cost of even stringent greenhouse-gas emissions reductions.

"Questions have been raised if restricting nuclear energy -- an option considered by some countries after the accident in Fukushima, Japan -- combined with climate policies might get extremely expensive. Our study is a first assessment of the consequences of a broad range of combinations of climate and nuclear policies," lead author Nico Bauer says. Restrictions on nuclear power could be political decisions, but also regulations imposed by safety authorities. Power generation capacities would have to be replaced, but fossil fuels would become costly due to a price on CO2 emissions, this in sum is the main concern.

"However, in case of restricted use of nuclear power, the flexibility of allocating a long-term carbon budget over time enables higher near-term emissions due to increased power generation of natural gas," Bauer says. Along with demand reductions and efficiency improvements, these provisions could help fill the gap on electricity. The price of natural gas is projected to decrease due to demand reductions, according to the study. Decommissioning existing plants will also avoid refurbishment costs for expanding lifetimes of old nuclear power plants.

As a result, early retirement of nuclear power plants would lead to cumulative global gross domestic product losses (GDP) that amount to about 10 percent of climate policy costs. If no new nuclear capacities are allowed, the costs would amount to 20 percent.

For their study, the scientists looked into different nuclear power policies. These cover a range of scenarios from "Renaissance," with a full utilization of existing power plants, a possible refurbishment for a lifetime expansion and investments in new nuclear power capacities, to "Full exit," with a decommissioning of existing power plants and no new investments. They contrasted each scenario with climate policies implemented via an inter-temporal global carbon budget which puts a price on carbon emissions. For the budget, the cumulative CO2 emissions from the global energy sector were limited to 300 gigatons of carbon from 2005 until the end of the century. This represents a climate mitigation policy consistent with the target of limiting global warming to 2 degrees Celsius.

"A surprising result of our study is the rather little difference between a 'Renaissance' or a 'Full exit' of nuclear power in combination with a carbon budget when it comes to GDP losses," Bauer says. While the 'no policy case' with a nuclear phase-out and no carbon budget has only negligible effect on global GDP, the imposition of a carbon budget with no restrictions on nuclear policy implies a reduction of GDP that reaches 2.1 percent in 2050. The additional phase-out of nuclear power increases this loss by about 0.2 percent in 2050 and hence has only little additional impact on the economy, because the contribution of nuclear power to the electricity generation can be substituted relatively easy by alternative technology options, including the earlier deployment of renewables.

Turkmen Gas Finally Gets Washington’s Attention – A Little too Late

One of Washington’s key policy tenets since the 1991 collapse of Communism has been to pry out from under Moscow’s control as much of the energy assets of the post-Soviet space as possible.

Nowhere has this policy been more evident than in the Caspian basin and the energy riches of the new post-Soviet states of Azerbaijan, Kazakhstan and Turkmenistan. To the north lies Russia, with whom Washington jostles for these assets while Iran rings the Caspian’s southern shore, a rogue “axis of evil” member state that Washington has been punishing with sanctions on its energy sector since well before the Evil Empire collapsed.

Now, in a stunning example of naïve hope over geopolitical and economic reality Washington is wooing Turkmenistan, hoping to get a slice of the pie of the world’s fourth or fifth-largest natural gas deposits.

What caused the drooling in Beltwayistan was the release in May of a report by the respected British audit firm Gaffney, Cline and Associates on Turkmenistan’s gas reserves. The report concluded that the South Yolotan natural gas superfield, discovered in 2006, contains reserves of more than 20 trillion cubic meters of natural gas, enough to satisfy European demand for more than 50 years and making it the second largest gas field ever found. It should be noted here that when in 2006, following the field’s discovery, Turkmenistan’s megalomania cal ruler, Saparmurat “Turkmenbashi” Niyazov claimed that the discovery boosted the country’s reserves up to 24 trillion cubic meters of natural gas, his claims were taken as mere braggadocio, with BP calculating them at slightly more than 1/10th that amount. A similar thing happened two years later, when Gaffney, Cline and Associates first audited South Yolotan, and their findings were initially ridiculed as overstated.

Who’s laughing now?

Secretary of State Hillary Clinton’s special envoy on Eurasian Energy, Ambassador Richard L. Morningstar was hurriedly dispatched to Ashgabat, where on 14 June he met with Turkmen President Gurbangeldy Berdymukhammedov after which he gurgled, “The U.S. praises the energy policy of Turkmenistan and its positive initiatives relating to global energy security and the development of broad international cooperation.”

Perhaps Morningstar’s staffers forgot to remind him that early last year Turkmenistan inaugurated two new pipelines to China and Iran that have given Turkmenistan additional export routes for its gas. If the special envoy felt that he had maneuvering room with Berdymukhammedov, it was because the Turkmen ruler is reportedly still annoyed with Gazprom, which unilaterally drastically cut its imports of Turkmen gas on 9 April 2009, causing an explosion at the 302nd-mile segment of the Soviet-era Truboprovodnaiia sistema Sredniaia Aziia-Tsentr (the Central Asia-Center, or SATS, pipeline system) SATS-4 Davletbat-Daryalik pipeline between the Ilyaly and Deryalyk compressor stations near the Turkmen-Uzbek border, halting Turkmen natural gas exports to Russia, which had been running at 42-45 billion cubic meters (bcm) per annum. Gazprom only resumed imports in January 2010, but at a much reduced level. While the new Chinese and Iranian lines have picked up some slack, the Turkmen government still remains angry with Gazprom for the reduced revenue stream.

Even assuming that Morningstar’s diplomatic charms are sufficient to woo Berdymukhammedov to consider gas exports westwards, there remains the small issue of dividing the Caspian’s offshore wasters and seabed, a niggling legacy of the collapse of the USSR two decades ago. Briefly put, Russia favors a solution whereby the five Caspian states receive allotments proportional to their coastline, while Iran is holding out for an equitable 20 percent division for all.

Despite their diplomatic distance however, there is little doubt that both Russia and Iran would oppose the construction of any such undersea Caspian pipeline linking Turkmenistan and Azerbaijan, and the military and diplomatic pressure they could bring on their neighbors would and could be formidable.

Oh, and did I mention that on 30 June that China announced its second pipeline with Turkmenistan, a $22 billion, 5,370 mile pipeline with an annual capacity of 30 bcm had begun operations and that Beijing is on target to replace Russia as Turkmenistan’s leading export market within a few years?

It would seem that Morningstar landed in Ashgabat more than a few days late and a few rubles – err, yuan, short.

Article by John Daly, appearing courtesy OilPrice.com.

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