The United States needs to develop clear policies to support its ailing nuclear industry—which is prone to seeing old reactors close rather than new reactors open largely because of the impact on energy prices of cheap natural gas from fracking, the International Energy Agency said in a report released today.
"The domestic nuclear industry is therefore at a critical juncture as a consequence of its declining economic competitiveness, and existing market mechanisms do not favour investment in high capital-intensive nuclear technology," according to the IEA's comprehensive review of U.S. energy policy for 2014.
"There is a need, therefore, to develop and articulate a clear strategy for nuclear power, including a statement of how the federal government will provide long-term support. Given the long lead times for construction and the declining share of nuclear power in the energy mix, these considerations should be concluded quickly."
The IEA considers nuclear power, which produces electricity without producing greenhouse-gas emissions, an important element of a environmentally sustainable energy system, which it contends is within the nation's grasp.
IEA praised U.S. progress on sustainability, noting the U.S. has made progress in the last six years on a coherent national energy policy. The IEA report mentions the Obama Administration's "Blueprint for a Secure Energy Future," and the president’s "Climate Action Plan," as significant advances in policy, as well as the "Quadrennial Energy Review," which is designed to keep the U.S. on track to its greenhouse-gas reduction goals.
While praising advances in policy and reductions in emissions, the IEA warns that the latter have depended on market forces, notably cheap natural gas from hydraulically fractured shale-gas wells.
"The report said the US natural gas boom has resulted in stable wholesale electricity prices, lower greenhouse gas emissions and greater system flexibility," according to an IEA press release announcing the report. "But it also noted that the entire system is in need of significant investment if the United States is to meet its electricity demand growth forecasts and strengthen resilience to climate change."
The free market is unlikely to revive the U.S. nuclear industry without government intervention, it says.
"Specifically, there is a concern that competitive electricity markets may not trigger investments in large, high-fixed-cost investments with long lead times, such as nuclear, carbon capture and storage, and large renewable portfolio projects."
The IEA report will embolden efforts by nuclear utilities like Exelon that have sought government support for nuclear energy and reduced support for competitors, such as tax subsidies for wind power.
This afternoon, IEA Executive Director Maria van der Hoeven will meet with Energy Secretary Ernest Moniz at the Bipartisan Policy Center in Washington D.C. to discuss the report's findings. Watch this column for updates from that event.
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