Energy Policy

Former Sen. Bayh discusses market, technology factors contributing to nuclear energy's U.S. downswing

As the nuclear energy industry continues to face challenges in the United States, what market, technology and policy changes could help revive the industry? During today's OnPoint, former Sen. Evan Bayh (D-Ind.), co-chairman of the Exelon Corp.-funded Nuclear Matters campaign, discusses the role he believes nuclear energy should play in the U.S.'s energy future and explains how the industry can get there.


Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is former Sen. Evan Bayh, a co-chair of the Nuclear Matters campaign. Senator, thank you for coming on the show.

Evan Bayh: Good to be with you, Monica.

Monica Trauzzi: Senator, you have years of experience on a variety of energy issues. You were a member of the Senate Energy and Natural Resources Committee when you were in Congress. Why have you decided to put your efforts behind nuclear energy right now?

Evan Bayh: Because it's going to be very important going forward, Monica, to some things I care deeply about, No. 1, the vitality of our economy, No. 2, how we're going to deal with the issue of climate change and CO2 emissions and, No. 3, the reliability and stability of our energy supply for consumers across our country and across my state. It touches upon all of that.

I'll just give you two data points. Nuclear constitutes 20 percent of the electricity we generate in the country, so one-fifth, very substantial. Many people aren't aware of that. It's also 62 percent of the carbon-free electricity that we generate. You have wind, solar, geothermal, that sort of thing. But nuclear is 62 percent. So if you're going to be serious about our economy, you're going to be serious about climate change and CO2, you've got to be focused on the vitality of the nuclear industry.

Monica Trauzzi: But it's also facing some serious economic challenges right now. How do you pull the industry out of that?

Evan Bayh: Well, that's a great question, but first, we're starting with an information campaign to just let the public know, "You may be a lot like me. I flip the light switch in the morning. I don't give a whole lot of thought to where it comes from until it doesn't go on." We've got to let people know the role that nuclear plays, and then get into the perfect storm of factors, sluggish demand, the incredibly cheap natural gas that we have for the time being. Who knows how long that will last, and then some things to do with the legislative regulatory arena that mean that the playing field is not entirely level. So first informational, then we get into sometime later what to do about all this.

Monica Trauzzi: All right. So let's talk about the timing of the Nuclear Matters campaign. It comes at a time when we're seeing the nuclear industry put pressure on Congress to reconsider an extension of the wind energy production tax credit. Is that what's happening here? You were trying to sort of push the conversation in that direction to rethink what to do on wind?

Evan Bayh: That may be going on, Monica, but it's not a part of Nuclear Matters that I and former Sen. Gregg are involved with. That's an issue. That may be part of the conversation at some point. But today, there have already been two nuclear plants closed, one in Vermont and one in Wisconsin, and we're sort of sleepwalking into the future. If nothing is done, these plants will continue to close. There will be some significant consequences as a result of that, some of them adverse. It's important that the American people understand that so we can make an informed decision.

Monica Trauzzi: So why are they closing?

Evan Bayh: And, by the way, just one other data point. In Germany, where they made a decision to start cutting back on nuclear generation, they have seen their CO2 emissions rise substantially in Germany at a time when we're trying to grapple with global warming.

Monica Trauzzi: Why are these plants closing? Is it because the playing field is not level? Is it because the technology isn't up to speed? What's the key driver there?

Evan Bayh: Well, there are a variety of factors, some of them macroeconomic. We're just in a period of sluggish demand right now because the economy has not been strong. Some of it has to deal with regional/local factors, the transmission capabilities. The price of natural gas has been incredibly low. Now it's coming back some, and who knows how long that will last? That's another important point. It makes sense to not have our energy generation too concentrated in just a few areas, because you never know what's going to happen. So it makes sense to have it be a little more diverse. As I said, nuclear is one-fifth. That's good.

But the final factor is that because of some policy decisions you have some generators that are actually able to sell electricity at below the cost of production. And so if that's setting the market price at below their cost of production, it makes it difficult to compete with that for more other types of generation that don't have that advantage so nuclear brings to the table reliability, even back during was it polar vortex or snowmageddon? I can't remember. I think this time was the polar vortex.

Monica Trauzzi: This year was the vortex.

Evan Bayh: Yeah. When other types of generation were not as reliable, nuclear was right in there going 24-7, so it's very reliable. It's entirely domestic. It's entirely carbon-free, and yet the market price does not price in some of those attributes that have a real value; there's it's what the economists would call an externality here. There are some benefits that nuclear brings to the table that are real but that the spot market doesn't price in and, therefore, the nuclear generation doesn't get the benefit of that.

Monica Trauzzi: I recently interviewed Exelon's Bill Von Hoene, and Exelon is facing a particularly challenging environment right now with several reactors that are considered to be economically challenged. What is Exelon's role in the Nuclear Matters campaign?

Evan Bayh: Exelon is funding the first year of the campaign. We're hoping to broaden that to several other stakeholders going forward. So Exelon is paying for the first year, but beyond that we're hoping to broaden to other people who care about this issue.

Monica Trauzzi: Is the nuclear industry's downswing simply a factor of markets at work?

Evan Bayh: Well, it's a factor of several things. I touched on them. Some longer-term, sluggish rate of the economy, some dealing with transmission, but you have currently it depends. In regulated markets, it's not so big an issue. In deregulated markets, you have spot prices being set in some cases by generators that sell below cost and that makes it very difficult for long-term other generators to compete with that. So we need to have a long-term energy strategy in this country that's not set quite so much by the vagaries of spot market pricing.

Monica Trauzzi: The Center for Climate and Energy Solutions' Eileen Claussen recently said, "The best way to advance low-carbon solutions, including nuclear power, is to put a price on carbon." Would you agree with that?

Evan Bayh: That would certainly be one way. We don't have that today, as you know, and I think looking at it realistically, the chances of Congress enacting such a thing are not high, and so we need to look at what the potential solutions are that are feasible, and focus on those. So that would certainly be one way. And the fact that nuclear is entirely carbon-free, that benefit that it brings to the table is not factored into the pricing currently.

Monica Trauzzi: So in the absence of congressional action, EPA is moving forward with its authority to regulate greenhouse gas emissions under the Clean Air Act. How do you believe nuclear energy could fit into those efforts?

Evan Bayh: Well, that's difficult to society without knowing what they're doing, but the fact nuclear is carbon-free in a more highly regulated environment might be something that would work to its advantage. But there will still be other producers out there that have the legislative benefits of being subsidized, and that's obviously difficult to deal with when you're not.

Monica Trauzzi: You mentioned a big part of what Nuclear Matters is trying to do is sort of educating the public, members of Congress. What do you believe the biggest piece of misinformation is within Congress on nuclear energy?

Evan Bayh: Well, I think there would be several. Some of the leading climate scientists are starting to come out and speak to this, even those who've been very aggressive about, "Look, we have to deal with the CO2 emission issue and we need to deal with it much sooner, rather than later." Your average citizens, if you ask them, "Yeah, we need to deal with climate change and carbon. It doesn't really -- oh, nuclear, that's right. No carbon emissions whatsoever." So I think there's just we got to make that connection that if you want to be serious about climate change and CO2 in today's -- no pun -- intended today's environment, nuclear has to be part of the solution; wind, solar, hydro, geo, all great, but they're really not going to get up to scale in the near or intermediate term to compensate for taking nuclear offline. That's just wishful thinking you might get there. In the real world, that's just not practical.

So if you care about climate change, you have to care about the vitality of nuclear generation, and it is threatened with two plants already having closed down. And we could just wander into the same sort of situation Germany finds itself in, which is paying more for our electricity and having carbon emissions going up. That's not a future we want.

Monica Trauzzi: All right, senator. We'll end it there. Thank you for your time. Thanks for coming on the show.

Evan Bayh: Thank you, Monica.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]



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