Llewellyn King: The Nasty Magic of the Market
The late, great neo-classical version of Pennsylvania Station, whose construction was completed in 1910. The grand structure was torn down in 1963, to be replaced by the claustrophobic current version.
As architectural historian Vincent Scully wrote: "One entered the city like a god {with the old Penn Station}. One scuttles in now like a rat.''
The market is a wondrous place. It ensures you can drink Scotch whisky in Cape Town and Moscow, or Washington and Tokyo, if you prefer. It distributes goods and services superbly, and it cannot be improved upon in seeking efficiency.
But it can’t think and it can’t plan; and it’s a cruel exterminator of the weak, the unready or, for that matter, the future.
Yet there are those who believe that the market has wisdom as well as efficiency. Not so.
If it were wise, or forward-looking, or sensitive, Mozart wouldn’t have died a pauper, and one of the greatest — if not the greatest architecturally — railway station ever built, Penn Station, wouldn’t have been demolished in 1963 to make way for the profit that could be squeezed out of the architectural deformity that replaced it: the Madison Square Garden/Penn Station horror in New York City.
Around Washington, Los Angeles and other cities are the traces of the tracks of the railroads and streetcar lines of yore. These were torn up when the market anointed the automobile as the uber-urban transport of the future. As Washington and Los Angeles drown in traffic, many wish the tracks — now mostly bike paths — were still there to carry the commuter trains and streetcars that are so badly needed in the most traffic-clogged cities.
Now the market, with its concentration on the present tense, is about to do another great mischief to the future. An abundance of natural gas is sending the market signals which threaten carbon-free nuclear plants before their life is run out, and before a time when nuclear electricity will again be cheaper than gas-generated electricity. World commodity prices are depressed at present, and no one believes that gas will always be the bargain it is today.
Two nuclear plants, Vermont Yankee in Vernon, Vt. , and Kewaunee in Carlton, Wis., have already been shuttered, and three plants on the Exelon Corp. system in the Midwest are in jeopardy. They’ve won a temporary reprieve because the Federal Energy Regulatory Commission (FERC) says the fact that they have round-the-clock reliability has to be taken into account against wind and solar, which don’t. In a twist, solar and wind have saved some nuclear for the while.
Natural gas, the market distorting fuel of the moment, is a greenhouse gas producer, although less so than coal. However gas, in the final analysis, could be as bad, or worse, than coal when you take into account the habitual losses of the stuff during extraction. Natural gas is almost pure methane. When this gets into the atmosphere, it’s a serious climate pollutant, maybe more so than carbon dioxide, which results when it is burned.
Taken together — methane leaks with the carbon dioxide emissions — and natural gas looks less and less friendly to the environment.
Whatever is said about nuclear, it’s the “Big Green” when it comes to the air. Unlike solar and wind, it’s available 24 hours a day, which is why three Midwest plants got their temporary reprieve by the FERC in August.
When President Obama goes to Paris to plead with the world for action on climate change in December, the market will be undercutting him at home, as more and more electricity is being generated by natural gas for no better reason than it’s cheap.
As with buying clothes or building with lumber, the cost of cheap is very high. The market says, “gas, gas, gas” because it’s cheap – now. The market isn’t responsible for the price tomorrow, or for the non-economic costs like climate change.
But if you want a lot of electricity that disturbs very little of the world’s surface, and doesn’t put any carbon or methane into the air, the answer is nuclear: big, green nuclear.
Llewellyn King (lking@kingpublishing.com) is host and executive producer of White House Chronicle, on PBS, and a longtime publisher, editor, columnist and international business consultant.
— For InsideSources.com
Llewellyn King: Bad news for climate: U.S. nuclear plants closing
This will be a bleak Christmas for the small Vermont community of Vernon. It is losing its economic mainstay. Entergy, the owner of the midsize nuclear plant there, which has sustained the community for 42 years, is closing the plant. Next year the only people working at the plant will be those shuttering it, taking out its fuel, securing it and beginning the process of turning it into a kind of tomb, a burial place for the hopes of a small town.
What may be a tragedy for Vernon may also be a harbinger of a larger, multilayered tragedy for the United States.
Nuclear – Big Green – is one of the most potent tools we have in our battle to clean the air and arrest or slow climate change over time. I've named it Big Green because that is what it is: Nuclear-power plants produce huge quantities of absolutely carbon-free electricity.
But many nuclear plants are in danger of being closed. Next year, for the first time in decades, there will be fewer than 100 making electricity. The principal culprit: cheap natural gas.
In today’s market, nuclear is not always the lowest-cost producer. Electricity was deregulated in much of the country in the 1990s, and today electricity is sold at the lowest cost, unless it is designated as “renewable” -- effectively wind and solar, whose use is often mandated by a “renewable portfolio standard,” which varies from state to state.
Nuclear falls into the crevasse, which bedevils so much planning in markets, that favors the short term over the long term.
Today’s nuclear-power plants operate with extraordinary efficiency, day in day out for decades, for 60 or more years with license extensions and with outages only for refueling. They were built for a market where long-lived, fixed-cost supplies were rolled in with those of variable cost. Social utility was a factor.
For 20 years nuclear might be the cheapest electricity. Then for another 20 years, coal or some other fuel might win the price war. But that old paradigm is shattered and nuclear, in some markets, is no longer the cheapest fuel -- and it may be quite few years before it is again.
Markets are great equalizers, but they're also cruel exterminators. Nuclear- power plants need to run full-out all the time. They can’t be revved up for peak load in the afternoon and idled in the night. Nuclear plants make power 24/7.
Nowadays, solar makes power at given times of day and wind, by its very nature, varies in its ability to make power. Natural gas is cheap and for now abundant, and its turbines can follow electric demand. It will probably have a price edge for 20 years until supply tightens. The American Petroleum Institute won't give a calculation of future supply, saying that the supply depends on future technology and government regulation.
Natural gas burns cleaner than coal, and is favored over coal for that reason. But it still pumps greenhouse gases into the atmosphere, though just about half of the assault on the atmosphere of coal.
The fate of nuclear depends on whether the supporters of Big Green can convince politicians that it has enough social value to mitigate its temporary price disadvantage against gas.
China and India are very mindful of the environmental superiority of nuclear. China has 22 power plants operating, 26 under construction, and more where construction is about to start. If there is validity to the recent agreement between Chinese President Xi Jinping and President Obama, it is because China is worried about its own choking pollution and a fear of climate change on its long coastline, as well as its ever-increasing need for electricity.
Five nuclear-power plants, if you count Vermont Yankee, will have closed this year, and five more are under construction in Tennessee, South Carolina and Georgia. After that the new plant pipeline is empty, but the number of plants in danger is growing. Even the mighty Exelon, the largest nuclear operator, is talking about closing three plants, and pessimists say as many as 15 plants could go in the next few years.
I'd note that the decisions now being made on nuclear closures are being made on economic grounds, not on any of the controversies that have attended nuclear over the years.
Current and temporary market conditions are dictating environmental and energy policy. Money is more important than climate, for now.
Llewellyn King (lking@kingpublishing.com) is executive producer and host of “White House Chronicle” on PBS.