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The debate about cap-and-trade legislation took an unusual twist recently when the news media began reporting some utilities had resigned their membership in the U.S. Chamber of Commerce because it opposes legislation passed by the House. These utilities support the House bill and want the Chamber to change its position.
The exodus from the Chamber of Commerce comes under the leadership of John W. Rowe, chairman of Exelon, a Chicago based utility. While Rowe stresses the need to cut carbon dioxide emissions, many wonder if his real reason for wanting the House’s cap-and-trade bill is profit motivated. Exelon’s power plants are fueled by nuclear power, which does not emit CO2. If fossil fuels were going to have to endure the additional costs of cap-and-trade, nuclear would gain a competitive advantage over coal, natural gas and oil.
Nuclear power also would become more insulated from price volatility that plagues natural gas. If a utility builds a $10 billion nuclear power plant based on being competitive at $6 natural gas and natural gas falls to $3, the $10 billion nuclear plant can no longer provide electricity that is competitively priced. One, little-known, but very important fact that has not come up on the radar screen in the nuclear debate is that 85 percent of the uranium used in U.S. civilian nuclear power reactors comes from foreign countries. Most people think that nuclear energy is 100 percent American. Not so! Even though a large portion of the uranium imported into the U.S. comes from Australia – 24 percent of total usage – the second largest importer is Russia with 23 percent of total usage, according to the Energy Information Administration. The U.S. imports 8 percent from Kazakhstan and 8 percent from Namibia. Some believe that being 23 percent dependent on Russia to provide our current uranium needs is cause for concern. Becoming more dependent on uranium imports from our former Cold War adversaries may not be the smartest energy policy move. While the utilities have been drawing the big headlines, a group of natural gas producers have been trying to tout the advantages of natural gas to senators as they work on the Senate’s version of cap-and-trade legislation.
There have been some reports that a group of publicly-held independent natural gas producers have signed onto the Senate version. If true and the Senate passes a bill that treats all utilities equally regarding emission allowance, natural gas would gain an advantage over coal. However, if the Senate passes a bill, it will have to go to a conference committee to work out the differences between the two bills. If that happens, natural gas will be at a disadvantage because the House leadership knows that it cannot get enough votes in the House to pass a cap-and-trade bill unless coal-fired utilities get some sort of advantage. House leaders had to “buy” some 30 votes from Democrats from the Midwest earlier this year to narrowly pass the House bill by a 219 to 212 margin. Those Midwest Congressmen were not going to vote for any legislation that raised energy costs on their constituents. Remember, one main purpose of cap-and-trade, after all, is to raise the price of fossil fuels and to be 83 percent free of fossil fuels by 2050. Do we want nuclear to be the “fuel of the future?” It certainly will not be wind and solar unless there is a major technological breakthrough. If nuclear is to be our leading electric-generating fuel, will our imports of uranium from Russia increase? Is that what we want in an energy policy that has an expressed goal of “energy independence?” Cap-and-trade legislation is nothing more than the federal government creating something (greenhouse gas emission credits) that nobody wants to buy. It is bad public policy, and it should be rejected. Alex Mills is president of the Texas Alliance of Energy Producers, the largest state oil and gas association in the nation. The opinions expressed are solely of the author. |
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